Senator the Hon Mathias Cormann

PETER VAN ONSELEN: As mentioned of the top of the program, our first guest today is the Finance Minister, the Deputy Leader of the Government in the Senate. I’m talking about Senator Mathias Cormann. He joins us live from WA. Thanks very much for your company.

MATHIAS CORMANN: Good to be here. 

PETER VAN ONSELEN: I have to start if we can before we get to a myriad of issues within your portfolio to talk about, I have got to ask you about that interview that you did right here on Sky News last Friday. You were one of the most loyal lieutenants of Tony Abbott in the last leadership spill before going on to now serve in the Turnbull administration in the capacities that you have. But on Friday you really gave it to Tony Abbott. Do you think that he will get back in the tent, if I can put it that way, going forward? 

MATHIAS CORMANN: That is entirely a matter for Tony Abbott. I certainly hope so. That is entirely a matter for him. 

PAUL KELLY: But Minister, your intervention was seen as a turning point in this issue. What prompted you to intervene in that way in such a decisive fashion? 

MATHIAS CORMANN: I watched the interview live from my office in Perth on Thursday night. What I said on Friday morning was my view as I was watching the interview. I thought it was important to send a very clear message. Private messages had not been heeded. I thought it was important to send a very clear message and to signal that enough is enough. 

PETER VAN ONSELEN: When you say private messages hadn’t been heeded. Is that your understanding that there were plenty of private attempts by people to try and dissuade Tony Abbott from making public comments like he did? 

MATHIAS CORMANN: I was a proud member of the Abbott Government. As you say I was a loyal, strong and long-standing supporter of Tony Abbott’s right from the very beginning. I was there from the beginning of his leadership in 2009 all the way through right until the very end. I would much rather if we all could reflect on the great successes of the Abbott era and all the fantastic things that were done to put Australia on a stronger economic foundation for the future and all the fantastic things that were done to ensure that Australia is safe and secure. It is harder to reflect on all of the positive parts of the Abbott legacy when we have to deal with some of these issues that again emerged on Thursday night. 

PETER VAN ONSELEN: So from here, Mathias Cormann, Tony Abbott, you say it is a matter for him, whether or not he decides to reign in some of this commentary. His former Chief of Staff Peta Credlin, who will join us on this program later today, she has written today in the Sunday papers that he did absolutely nothing wrong. As a former leader he has a right and in fact a duty to the Liberal party to speak out in the way that he has been doing. She is indirectly saying that you are dead wrong with what you had to say on Friday. 

MATHIAS CORMANN: The duty that all of us in the Liberal party have, in the best interests of the Liberal Party, our country is to ensure that we implement the agenda that we took to the last election effectively and competently. We have to ensure that we stop Labor from having the opportunity to implement their disastrous policies in government. We have a better platform, a better agenda for a stronger, more prosperous economy to help ensure that families across Australia have the best possible opportunity to get ahead. Bill Shorten has a socialist agenda, which would make it harder for business to be successful, which would make it harder for business to employ more Australians, which would lead to higher unemployment. So first and foremost, our responsibility is to do the very best we can to ensure that we have the opportunity to implement our agenda in Government. All of us in the Liberal party party room, whatever position we hold, we should always ask ourselves the question whether our actions are going to help us successfully put Australia on a stronger foundation for the future, whether we are helping to promote our cause or whether we are making it harder for ourselves to be successful for the Australian people. I believe the Thursday night intervention fell into the latter category. 

PAUL KELLY: Minister, what is the best way of fixing this problem? This is a political problem for the Government but it is a personal issue here between Abbott and Turnbull. What is the best way of fixing it? Is it possible for there to be any reconciliation between the two men? 

MATHIAS CORMANN: I think the best way to fix this is to, as I said in my interview on Friday morning, John Howard was not only an outstanding Prime Minister during his nearly twelve years in office, he has been an outstanding former Prime Minister. He has really set the benchmark on how former Prime Ministers can best contribute to public policy debates after they have left office. What I would like to think is that Tony Abbott reflects on the reasons for John Howard’s magnificent success both as a Prime Minister and a former Prime Minister and on why he is held in such high esteem right across the country. 

PAUL KELLY: Just on this question of the leadership, is there any support at all for Tony Abbott returning as Liberal party leader? 

MATHIAS CORMANN: I answered that question on Friday. I can’t see any scenario in which Tony Abbott would return to the leadership. I don’t believe that he himself - and he said so on Friday - I don’t think that he believes there is a scenario in which he comes back to the leadership. 

PAUL KELLY: Has he said that to you?

MATHIAS CORMANN: I do not talk about private conversations. 

PAUL KELLY: Can we also assume that the idea of bringing Tony Abbott back to the Cabinet is really not a viable proposition?

MATHIAS CORMANN: Well look that is well and truly beyond my pay scale. Appointments to the Cabinet are a matter for the Prime Minister. I might just say though, the Prime Minister has been very clear on that point for some time. 

PETER VAN ONSELEN: Just one final question on all of this and then we will get onto the main game Mathias Cormann. When you said what you said, was it off your own bat or was it coordinated with Malcolm Turnbull’s office? 

MATHIAS CORMANN: It was not coordinated Peter. It was off my own bat. I have a regular interview slot on Friday mornings at 5:30am WA time and as I was driving in at quarter to five I had a fair expectation that I would be asked questions about it and I gave some thought as to how best to handle it. It was entirely a reflection of my own views and I made the judgement that it was necessary and appropriate to say what I said. 

PETER VAN ONSELEN: You would agree, wouldn’t you Senator, the reason a lot of us have reflected on this is because it is not your style to do what you did on Friday and it was a significant moment, as I think Paul Kelly said a moment ago. Conservatives I have spoken to since then said it was a pretty significant moment, you doing what you did.

MATHIAS CORMANN: I made a judgement that it was warranted and necessary in the interests of our broader cause and making sure that we have got the best possible opportunity to provide effective Government for Australia moving forward. 

PAUL KELLY: As Finance Minister, is it your view that if the omnibus savings bill relating to child care and social security is not substantially passed by the Parliament then the Government will have to look at the option of taxation increases? 

MATHIAS CORMANN: We are working very hard to get the omnibus savings bill passed. As we did with the first omnibus savings bill after the election, we engaged in a process in the Senate, seeking to secure a majority for as much of our proposals in that omnibus savings bill as possible. We are pragmatic and we are open to talk, but if we are not able to secure all of the spending reductions that are currently reflected in the Bill then our intention would be, as we did with the first omnibus savings bill, to achieve the same savings by spending reductions in other parts of the Budget. We went with about $6 billion worth of savings into to the Parliament for the first omnibus savings bill and we went out of the Parliament with about $6, $6.3 billion worth of savings at the time. Our intention is to do the same. 

PAUL KELLY: Well can I assume from that answer therefore Minister that you would not look at taxation increases?

MATHIAS CORMANN: What we are looking at is to implement and legislate the budget improvement measures that are reflected in the last Budget. If you are asking me questions about the next Budget, work on the next Budget is underway and will be delivered on the second Tuesday in May. 

PAUL KELLY: I am asking you a general question about the Government’s in principle view on these spending and tax issues, seeing that this has been discussed at great length over the last fortnight. I am asking you if this bill is substantially defeated, which is quite likely given what Nick Xenophon has said, whether the Government would look to some form of taxation increases? 

MATHIAS CORMANN: The Government’s in principle view is that we want to pass the Budget improvement measures that are reflected in our Budget. We will do the absolute best we can to get as much of our agenda through the Senate as possible. These conversations are still live, they are still ongoing. I certainly am not prepared to put up the white flag as I sit here with you today. Once we know how much of our agenda we have been able to get through, we will have to make judgements on what best we can do to keep getting the Budget back into balance as soon as possible. 

PAUL KELLY: Okay, you are negotiating with Nick Xenophon and Nick Xenophon has said he would like to see a small increase in the Medicare levy. Is that an option for the Government? 

MATHIAS CORMANN: I have noted that Nick Xenophon has put that proposition publicly. It is not the position of the Government. It never has been and it never will be my habit to conduct negotiations on behalf of the Government through media outlets. Not even an august program like Australian Agenda on a Sunday morning. 

PAUL KELLY: Can we also look at the question of changes to the capital gains tax provisions? As you know there have been reports over the last fortnight that the Government is looking at changes to the capital gains tax provisions in the context of housing affordability. Is this an option for the Government? 

MATHIAS CORMANN: Again, I have been extremely clear in relation to all these matters. We took a very clear policy agenda to the last election. We said that we would not reduce the capital gains tax discount and that we would not make changes to negative gearing. Our intention is to stick to our election commitments, deliver on our election commitments and as I have said previously, as the Prime Minister has said, as the Treasurer has said, we do not have any plans, no intention to reduce the capital gains tax discount. We do not have any plans, any intention to make changes to negative gearing. 

PETER VAN ONSELEN: You were very quick on both those issues, Mathias Cormann when asked about it. But the Prime Minister and the Treasurer, less so. It took sort of four or five questions in Question Time before Malcolm Turnbull was quite so clear and equally so with Scott Morrison, they left more wiggle room than you. Why the different approach? 

MATHIAS CORMANN: I completely disagree with that characterisation. Question Time in the House of Representatives coincides with Question Time in the Senate. But I did end up watching the Prime Minister’s answers and the Treasurer’s answers. The spin that the press gallery seemed to have put on it, I do not agree with. I thought that the Prime Minister was very clear. I thought that the Treasurer was very clear. I do not think that there is any difference at all.

PETER VAN ONSELEN: Can I ask you about the deficit levy which comes off half way through this year. It looks like, based on the forecasts that the Budget deficit will not have moved much between when you guys came to office versus what is going to be handed down in May of this year. Which means that the deficit levy, all that it has done is not actually contribute to reducing the deficit, but it has allowed the Government to at least not have blown the deficit during the course of its time in power. Is that fair? 

MATHIAS CORMANN: It did contribute to reducing the deficit. Self-evidently without it, the deficit would have been larger. It was put in place in our first Budget for a specific period. As you say, that period is coming to a close at the end of the 2016-17 financial year. 

PAUL KELLY: Do you agree with the position put by the Reserve Bank Governor, Philip Lowe that in a sense there is good debt and bad debt? The bad debt being funding recurrent expenditure, the good debt being relating to infrastructure and more should be done on the infrastructure front. Do you agree with that?  

MATHIAS CORMANN: We have always made that point that there is a difference between good debt and bad debt. Of course we agree with that. The problem with our current fiscal situation which we are still working to fix, given the spending growth, the unaffordable, unsustainable spending growth trajectory that we have inherited, is that we are having to borrow money to pay for the recurrent expenditure of the Government. That is not a sustainable position. The previous Government did not only leave behind a spending position at a single point in time. They locked in a spending growth trajectory into legislation across a whole range of areas, legislation, which they passed with the support of the Greens in the Senate, which Labor is now frustrating to reduce.

PAUL KELLY: How serious is the challenge to fully fund the NDIS?

MATHIAS CORMANN: It is a serious challenge. It is one that we are committed to meet. In the most recent budgets and budget updates a number of savings we have identified in the social services space have been specifically quarantined to help fill the funding gap that Labor left behind in relation to the NDIS. We believe that there is more work to be done on this front. We are committed to doing it. 

PETER VAN ONSELEN: Stay with us here on Sky News on this Sunday morning, we are talking to the Finance Minister as well as the Deputy Leader of the Government in the Senate, Senator Mathias Cormann. We will continue the chat when we come back. 

[break]

Welcome back you’re watching Sunday Agenda where Paul Kelly and I are speaking to the Finance Minister, Mathias Cormann live from Perth. Senator Cormann, let me ask you about penalty rates, Paul Kelly in his editorial made the point about essentially the hypocrisy in some of what Bill Shorten is saying politically versus what Labor has done around the Fair Work Commission and so forth. Having said that though, the Government is in a bit of a bind here. This is an independent decision but is the Government prepared to back it in. Or is it just going to spend the whole time saying it was set up by Labor as though it doesn’t want to own further industrial relations changes?

MATHIAS CORMANN: It is not our job to back it in, it is our job to respect the independence of the umpire. The reality is, Bill Shorten is a complete hypocrite on this. He is undermining the independence of an organisation that Labor set up. The people that made the decision were appointed by Labor. They have reviewed the facts and the information and all of the data and they have come to a view on the appropriate arrangements moving forward. Bill Shorten during the election campaign, not just at any time, during the election campaign promised that he would respect the independence of the Fair Work Commission. That he would respect the independence of the umpire and because it did not go the way he thought it would go, given Labor had stacked all the odds in their favour, or so they thought, he is now taking a very hypocritical approach. 

PAUL KELLY: Minister, do you think that implementation of the decision will help activity and jobs in the hospitality sector and overall be good for the economy?

MATHIAS CORMANN: That is the judgement of the independent Fair Work Commission. They have reviewed all the information, they have reviewed all of the data, they have made that judgement. As I say it is a body that was set up by the Labor party. Bill Shorten himself amended the fair work legislation to give the Fair Work Commission specifically the job to review penalty rates. The reason why there has been this review is because of the actions, the direct actions taken by Bill Shorten. Having given them the job, having asked them to make this judgement based on all of the best available advice to the Fair Work Commission, he should be respecting the independence of the decision. 

PAUL KELLY: But do you agree with the decision in terms of economic merit?

MATHIAS CORMANN: We agree that the Fair Work Commission was set up as an independent body that makes these judgements independently. It is not a matter for us to second guess all of the information and data that was reviewed by the Fair Work Commission. I did not conduct the review. The Government did not conduct the review. The Fair Work Commission conducted the review. The Fair Work Commission had all of the information in front of them, they were set up by the Labor party, the people that made the decision were appointed by the Labor party and the review that was initiated into penalty rates was explicitly and specifically set up by the Labor party. Given the Fair Work Commission has come to the view that they have, the Government has got absolutely no reason to disagree or second guess the conclusions that they have reached. 

PAUL KELLY: If we look at what the ACTU have said, it is pretty clear that they are going to wage another ferocious campaign on this front, which may well be a fairly effective campaign. Is it your judgement that the Government will be able to withstand this campaign and not suffer too much electoral damage? 

MATHIAS CORMANN: If this was not just about partisan politics, if this was an honest campaign, the ACTU would be running a campaign against Bill Shorten. Because the outcome from the Fair Work Commission when it comes to adjustments to some penalty rates on Sunday, is the direct result of the actions of Bill Shorten. Because Bill Shorten is now embarrassed by the consequences of his actions that is why he is coming out as he is, jumping up and down trying to create an impression which is false. This is fairly and squarely a decision that is a result of the actions of none other than Bill Shorten. 

PETER VAN ONSELEN: Just for sake of our viewers, I should just let people know that the screen in the bottom right hand corner of your television set is the arrival of the various officials as well as the Indonesian President Joko Widodo to the Governor General’s residence in Sydney. We will keep the box up on screen as it happens. 

Senator Cormann before we run out of time I wanted to ask you about indexation of the Medicare rebate. This was an issue that Labor was very strongly attacking the Government on at the last election for the freeze. There has been some suggestion that that freeze might be lifted do you anticipate that will happen?

MATHIAS CORMANN: Firstly the policies of the Government are the policies reflected in the Budget. We cannot afford to spend any more money on any measure in the Budget unless there is a capacity to pay for it with spending reduction in other parts of the Budget so… interrupted

PETER VAN ONSELEN: That is essentially my question then Senator. I mean will you look to try to find those other ways of finding reductions in the Budget in order to deal with the indexation issue because you say you cannot afford to economically speaking, politically speaking a lot of people would say you cannot afford not to act on this issue after that campaign.

MATHIAS CORMANN: It is not just that we cannot afford to economically speaking, we cannot afford to because we haven’t got the money. The only way you can pay for increased expenditure anywhere in the Budget, given that we are in deficit, is by reducing expenditure elsewhere. That has got its own challenges. So let us just see where the various processes in the Parliament and elsewhere will take us when it comes to passing the spending reductions that are currently on the books and adding to them, if people want to spend more money in other areas. 

PAUL KELLY: Is it your view as Finance Minister, given the warnings from the ratings agencies, that the Government will have to eliminate the zombie measures from Budget accounting given the need for a hard and credible Budget bottom line and the fact that these measures are not likely to be endorsed by the Senate? 

MATHIAS CORMANN: Firstly, I do not agree with that partisan description of unlegislated Budget measures at all. There is nothing unusual, the Labor party when they were in Government had various unlegislated measures which took a little while, took quite a while, to get through the Parliament. We continue to work our way through the outstanding list of unlegislated Budget measures. In the first six months after the election we were able to pass $22 billion worth of Budget improvements, many of which people had previously said they did not think we would be able to get through the Senate and we did. We have about $13 billion or so, a bit more of outstanding unlegislated measures left. We are committed to the measures in the Budget. We will do everything we can to see them legislated through the Senate. 

PAUL KELLY: Just on those measures, given that answer, you therefore have some confidence do you or some hope that some of these measures will be legislated in future? 

MATHIAS CORMANN: We are absolutely committed to doing everything we can to have all of them legislated through the Parliament. That is why they are in the Budget. If we did not think we could legislate them, they would not be in the Budget. But we are confident and committed to the measures that are in the Budget.  

PETER VAN ONSELEN: Just finally if we can Mathias Cormann, can I ask you about the issue related to an article I that wrote on Saturday. I was arguing that your good self should be promoted to Treasurer of this country for two very good reasons. One the performance of the Prime Minister needs to be the focus in Question Time and at the same time as that, yourself as a good negotiator in the Senate where that is the main game in the context of the crossbench negotiations would be the ideal spot for a Senator in a breaking of convention. Any circumstances under which you could see that happen? 

MATHIAS CORMANN: No, that is never going to happen. To be frank, I did not take that piece very seriously. I thought it was just you creating some mischief Peter. Scott Morrison and I, we work together extremely well. We work as a team. He is the leader of the economic team. I very much enjoy working with him. He is very effective at the job he does. It is a difficult job. I am not going to get distracted by this sort of mischief. I am focused on working with Scott, a very good friend and great Treasurer on putting the next Budget together. 

PETER VAN ONSELEN: Alright, I did say at the end of the piece that I did not think anyone would thank me for the free advice, that seems to be the case. Senator Cormann we do appreciate your time though this Sunday morning, thanks very much. 

MATHIAS CORMANN: Thank you.