Senator the Hon Mathias Cormann

VIRGINIA TRIOLI: More now on Federal politics for you. The Prime Minister Malcolm Turnbull has used a keynote speech to challenge the Federal Opposition to support more than $6.5 billion worth of Budget savings. Finance Minister Mathias Cormann joins me now from Perth. Mathias Cormann, thanks so much for joining me this morning. According to Bill Shorten in the Financial Review quoted today, you're not going to get much joy there. He said if you think that he's just going to sign off on all these changes and what you're proposing in Parliament, you have got another thing coming. So where do you go from there?

MATHIAS CORMANN: What that means is that the Australian people can't trust what Bill Shorten says during an election campaign, because the $6.5 billion worth of savings that the Prime Minister spoke about are savings that Bill Shorten said during the election campaign they were now supporting. You have to remember, during the campaign Labor had to admit that under their policies our deficit would be $16.5 billion larger. That was after more than $100 billion in higher taxes and also after changing their mind in relation to a whole series of savings measures that they previously opposed. We took Labor at its word. Clearly it appears that that might have been a mistake. Let's just see what happens when the Parliament goes back in just over ten days from now. Once Bill Shorten actually refreshes his memory on the commitments that he has made during the election campaign, I only hope that he will be true to his word and that he will start focusing on the national interest rather than just on petty political games.

VIRGINIA TRIOLI: You are calling of course on Labor not to stand in the way of Budget repair and that's what this war of words is about. But if they are under Bill Shorten as oppositional as the Coalition was with the Gillard hung Parliament, would you call that karma?

MATHIAS CORMANN: I would just remind you that when we were in Opposition, we went to the 2013 election having supported all of the savings measures that Labor put on the table at that time, even though we might not have liked all of them. We actually were quite bipartisan when it came to Budget repair in Opposition in the lead-up to the 2013 election. We would just call on Bill Shorten to reflect on the national interest.

VIRGINIA TRIOLI: But your own leader now has just reflected in the last few days, Tony Abbott at that time and looked back on that time and described it as creating this toxic battle now between the two sides that actually would've gone better for the Australian public if there'd been a little bit more give and take a bit more support from your then opposition side. So do you see how that kind of behaviour has brought us to this pass, that goes to my question about karma, you reap what you sow?

MATHIAS CORMANN: We are at the beginning of the 45th Parliament. We are looking forward. During the election campaign Bill Shorten made very firm statements in relation to those savings that they now support, savings in the Budget which they now support. We take him at his word. The Australian people take him at his word. I think the Australian people will be very disappointed if Bill Shorten now were to backflip again and as a result put Australia in a weaker position to deal with global economic headwinds, to deal with the external challenges that we will continue to face in the months and years ahead.

VIRGINIA TRIOLI: This will likely be a negotiation. Can you give us this morning the ordered list of priorities? What matters most in that list of cuts?

MATHIAS CORMANN: The $6.5 billion as I say are bipartisan savings. They are savings that both the Labor party and the Coalition took to the last election. Beyond that, there is a another $12 billion worth of net savings, that we will seek to pursue through the Parliament. We will work with Members of all parties to seek and achieve, hopefully achieve common ground. The first week when we go back to Parliament, we will be introducing legislation to restore the Australian Building and Construction Commission, to deal with the registered organisations standards, to deliver the personal income tax cuts, which we announced in the Budget and we will initiate the ten-year enterprise tax plan as part of our plan for a stronger economy and more jobs. Finally, we will be seeking to legislate immediately those savings, which Labor has indicated during the election campaign they were now supporting.

VIRGINIA TRIOLI: Wages growth, on another subject has stalled at a record annual low now of 2.1 per cent. Should Australian workers just accept this as the new normal, or do you have a strategy?

MATHIAS CORMANN: We are also in the period of low inflation. Our economy is an economy in transition. We are dealing with lower global economic growth. We are dealing with global economic headwinds. We are dealing with significantly lower global prices for our key commodity exports. Despite that, our economy continues to grow at about 3.1 per cent. Employment growth is strong, but yes, wages growth in the context of low inflation is lower than what it has been in the past. In order to ensure that we have continued strong employment growth and stronger wages growth, what we need is to implement a plan for stronger growth, more jobs, increased productivity, increased international competitiveness. That is why it is so important that we deliver on things like our more competitive company tax rate.

VIRGINIA TRIOLI: It's interesting though that others see it quite differently. A Commonwealth Bank economist John Peters, quoted in the Fin Review today says a more flexible labour market has enabled employers to cap wages growth in what a rather lacklustre jobs market and he says workers possess little negotiating clout and they just have to cop it sweet. He's no socialist so it's interesting to hear him say something like that. What can be done about that or is that again just the new normal for employees now?

MATHIAS CORMANN: No, we are an economy in transition. We are facing certain global economic external challenges. I said that very clearly. We are working  ... interrupted

VIRGINIA TRIOLI: Just to jump in there for a second, sorry to jump in but we have been talking about this transition for so long now, and it seems that business really can't get it together with where you might find the new incubators of the new jobs. That connection has not been made for more than ten years now?

MATHIAS CORMANN: We are into our 26th year of continuous economic growth, which is an amazing achievement. Employment growth continues to be strong. Yes, we are in an environment of low inflation and that includes lower than historical wages inflation. But we continue to have strong employment growth. If you do want to achieve stronger wages growth into the future, one of the key drivers of that will be a more competitive business tax rate. That is precisely what we are putting to the Parliament in just over ten days from now.

VIRGINIA TRIOLI: Just finally, on another topic this morning, the Manus Island detention centre about to be closed down. But the Western Australian Premier, the Liberal Premier Colin Barnett has said that if you, if the Commonwealth changed your mind, his State would be more than happy to resettle people from Nauru. Would you be prepared to allow him to do that?

MATHIAS CORMANN: No we will not change our mind. We have been able to close 17 detention centres as a result of our successful and effective border protection policies, which very importantly included offshore processing. We have been able to remove all children from detention. We are about to close the Manus regional processing centre, negotiating the details with the PNG Government. In order to preserve the success and the effectiveness of our border protection framework and to ensure that the boats don't start coming again, we need to preserve the integrity of offshore processing. Changing our mind in relation to that would undermine the integrity of offshore processing.

VIRGINIA TRIOLI: We'll leave it there. Mathias Cormann, thanks so much for that.

MATHIAS CORMANN: Always good to talk to you.