Senator the Hon Mathias Cormann

SANDY ALOISI: Well there is still a day to go before the Budget. But the Government has already released large parts of its economic plan. Last week, pension changes were announced and yesterday the Government set out childcare plans. And today there are reports the Government is targeting Departments including Health and Education in its continued search for savings. For the latest on the Budget, Marius Benson is speaking here to the Finance Minister Mathias Cormann.

MARIUS BENSON: Mathias Cormann, good morning.

MATHIAS CORMANN: Good morning Marius.

MARIUS BENSON: Can I begin with that latest news in The Australian this morning reporting that you have targeted these Departments, Health and Education and you’re looking for functional reviews to extract savings? You’re also planning to sell some assets around Canberra, maybe some rail assets. What do you have in mind there?

MATHIAS CORMANN: It is really all about ensuring the taxpayer gets best value for money. We want to ensure the public service is as efficient, as effective, as streamlined and as well targeted as possible. Which is why we have had a Smaller Government reform agenda in place now since we came into Government. At every Budget and every Budget update we deliver some further progress and that is what we are doing in this Budget.

MARIUS BENSON: And what sort of money are you talking about in those measures?

MATHIAS CORMANN: So far we have saved through about $1.4 billion through our Smaller Government reform agenda. The efficiencies across the Departments that we have looked at specifically in this round come to about $450 million. This is a rolling reform process. Essentially, over the last few decades, there has been an efficiency dividend in place all the way through which applies in a general sense across the board. What we are trying to do here is to be a bit more scientific, a bit more strategic, looking right at what the functions performed by those various Departments actually are, making sure that we can eliminate any waste, duplication and inefficiency to ensure that the taxpayer gets the best possible value for money.

MARIUS BENSON: The childcare measures announced yesterday by the Social Services Minister and the Prime Minister add up to a spend of $3.5 billion. And the Government says that depends, that spending depends on getting savings stalled in the Senate through the Senate. Have you had talks with the crossbench that indicate there might be a change of heart in those crucial Senators?

MATHIAS CORMANN: There have been consultations with crossbench Senators and obviously a number of us in the Government have conversations with crossbenchers on a regular basis. Now in terms of the specific measures here, the principle is a very important one. That wherever we as a country want larger investment in a higher priority area, we have got to offset that with savings in other areas. We can’t afford to keep adding to the deficit. We have to bring the deficit down. We have to continue on a credible path back to surplus. But in the meantime, there are higher priority areas for investment such as helping families get better, more affordable access to high quality childcare. But that additional spending does have to be offset with savings elsewhere in the Budget.

MARIUS BENSON: Politics is all about priorities. There are always plenty of worthwhile ways to spend money. It is a question of priorities. Labor says that there priority is on, in terms of the Family Tax Benefit, children don’t get cheaper at six; don’t cut it off at six or we still will oppose that.

MATHIAS CORMANN: The principle is that once the youngest child goes to school, parents can make a choice to go back to work. In relation to the childcare arrangements of course, the whole focus is about helping families get into work and stay in work by being able to access cheaper, simpler, more flexible childcare arrangements. This is part of our plan to strengthen economic growth, strengthen job creation across the Australian economy and also helping families with dealing with their cost of living expenses.

MARIUS BENSON: Joe Hockey announced yesterday an end to what to he called double dipping for paid parental leave. The calculation in the Fairfax papers is that means that 80,000 new mothers will lose some or all Government parental leave payments. Do you accept that calculation? Is that your number?

MATHIAS CORMANN: Our number is that this is a measure which will save just shy of $1 billion. The principle is that every working mother, every mother who has a baby, who we would like to see get back into work should be able to have access to paid parental leave arrangements. Across the Federal public service for example right now, people are able to access paid parental leave at their replacement wage level and then top that up with the legislated taxpayer funded paid parental leave arrangement on top of that. We don’t think that’s fair. We think that all Australian women should have access to the same paid parental leave arrangement which is, at a minimum, the legislated Government paid parental leave arrangement, but if there is a more generous paid parental leave arrangement that people can access, they will choose to go with that one. But we don’t think that some people should be able to access two, whereas others can only access one.

MARIUS BENSON: 12 months ago you were warning of a debt and deficit disaster when the deficit was at $18 billion. It’s now put it at about $45 billion. Is that a double disaster? Triple disaster?

MATHIAS CORMANN: Firstly you’re making a very serious mistake here in suggesting that what Labor promised in their last Budget in May 2013 was the budget deficit that we inherited. Anyone who looked at what happened to the budget numbers under Labor between their last Budget and the Pre-Election Economic and Fiscal Outlook knows that the deficit rapidly deteriorated in those few weeks. The deficit that we inherited from Labor over the forward estimates was $123 billion in projected deficits on top of about $200 billion worth of accumulated deficits in their first five Budgets. We have worked very hard to get the unsustainable spending growth trajectory we inherited under control. We made quite a bit of progress in last year’s Budget. In this Budget, we are building on the progress that we have made over the past 12 months and the numbers will be revealed by the Treasurer tomorrow night.

MARIUS BENSON: Mathias Cormann, thank you very much.

MATHIAS CORMANN: Always good to talk to you.