Senator the Hon Mathias Cormann

HELEN DALY: Some big political announcements in the last couple of days on tertiary education cuts. Changes to schools and the funding model over the next decade and the coming of Gonski 2.0. Also big news on the second Sydney airport with the Federal Government confirming it will build the Badgerys Creek Airport and then possibly sell it after the private sector in the form Sydney Airport Corporation decided to the reject the massive infrastructure project as basically too risky. This is all in the lead up to next Tuesday evening’s Budget. Well I am now pleased to say we are joined by Finance Minister Mathias Cormann who is in our Canberra studio. Mathias Cormann thanks for joining us.

MATHIAS CORMANN: Good to be here.

HELEN DALY: A few key announcements. Let’s talk schools first, the new schools funding deal with Gonski 2.0. Malcolm Turnbull says he is increasing spending by 75 per cent over a decade, but you are creating losers with this new funding deal because some schools will be worse off, won’t they?

MATHIAS CORMANN: Julia Gillard entered into 27 different special deals. There was quite a lot of inequity in the system as a result of the mish mash of arrangements that the previous Labor government entered into. There were some very attractive, very special over the top deals and then there were some very unattractive deals. Somebody who is comparatively over funded will be slightly less well off as a result of the change, which will put everybody on the same footing, based on the same terms and conditions. Somebody who currently is not getting what they should be getting based on a fully needs based funding model will be better off. Overwhelmingly schools will be better off, but yes you are quite right, those schools who are currently getting more than what they should be getting will be getting a bit less.

HELEN DALY: Now will that be 24 schools or possibly 300 schools?

MATHIAS CORMANN: Simon Birmingham as the Minister for Education has released all of that detail openly and transparently. I will let him continue to go through that detail in the public conversation.

HELEN DALY: But nonetheless you are conceding that in fact some schools will be losers and your Government is walking away from the pledge by former PM Gillard that no school would be left worse off. So do you as Finance Minister very much support…interrupted

MATHIAS CORMANN: Hang on. What Julia Gillard did was promise the absolute impossible. She said that she would pursue a needs based funding model, a so called Gonski reform and then entered into 27 special deals where she threw way too much money at some schools who quite frankly should not have been getting some of what she was promising and too little at other schools. What we are doing, we are actually pursing, genuinely pursing, the implementation of a needs based funding model. We are implementing the true spirit of the Gonski reforms which Labor never even tried.

HELEN DALY: Alright so you as Finance Minister do fully support this new funding model to end that special deals that Julia Gillard struck particularly for Catholic schools. But you are risking a fight with the Catholic schools. They will fight you on this because they think you are declaring war on them. A lot of the families will be Liberal party base, you risk animosity there don’t you?

MATHIAS CORMANN: We are not declaring war on anyone. What we are doing is putting forward a proposed funding arrangement, which yes as Finance Minister I fully support. I was self-evidently centrally involved in putting the policy together with the Expenditure Review Committee and under the leadership in this portfolio of Simon Birmingham as the Education Minister. So of course I support it. What we are setting out to do here is to put forward a funding model which will significantly boost funding but in a way that is fair and equitable to everyone. It is actually seeking to implement the genuine needs based funding model that Gonski put forward.

HELEN DALY: Alright on the university courses funding cuts. You are shifting more of the cost burden really onto students and away from taxpayers. One of the big universities, the vice chancellor said that that was a disaster averted and some of them think that is a good thing. But can you guarantee the community that these cuts will not dissuade some lower income students and their families from going in for tertiary university education?

MATHIAS CORMANN: Yes I can guarantee that, absolutely. No student will have to pay a cent up front when accessing a tertiary education. Through our system the taxpayer fully underwrites relevant degrees. Nobody will not be able to access higher education because of their personal financial circumstances and the taxpayer …interrupted

HELEN DALY: But you are making cuts to universities to their courses.

MATHIAS CORMANN: So when it comes to the taxpayer funded contribution, instead of contributing 58 per cent to the cost of a degree, taxpayers will be funding 54 per cent towards the cost of on average of a degree. When it comes to universities, you say we are making cuts, well what we are saying is that we want a fair deal for taxpayers. Universities have been able to make significant efficiencies in recent years. Since the introduction of the demand driven system and the removal of the student enrolment cap, student enrolments have increased by 31 per cent, funding per student has significantly increased, the cost of providing services has not increased to the same level because the universities have been able to achieve efficiencies from the economies of scale. We believe that the taxpayer deserves some of that efficiency dividend. The same way as we apply efficiency dividends across the public sector, across any other part of Government, we believe that universities as Government funded services to a large degree to the extent that they are able to achieve efficiencies then the taxpayer should get the benefit of some of that efficiency dividend.

HELEN DALY: Minister, Labor of course is saying the opposite I guess as you would expect them to. They are saying that students and children and their families are being punished to pay for your company tax cuts. Will you be able to convince the community that this a fair sort of distribution of taxpayer’s money?

MATHIAS CORMANN: We are making the case now. Firstly, when it comes to our proposal to reduce our company tax rate, that is designed to protect our economy, it is designed to protect jobs, it is designed to ensure that on the back of additional investment into Australia we can boost productivity and over time increase real wages. Right now Australia’s corporate tax rate is very high by international standards at 30 per cent. You would be aware that the UK has already reduced their corporate tax rate down to 19 per cent and they are going down further to 17 per cent. The US is moving to reduce their corporate tax rate from 35 per cent to 15 per cent. Australia is competing globally for capital and we need capital to continue to develop and grow our economy. If we are not internationally competitive, we will miss out on investment, we will miss out on growth, we will miss out on job opportunities. That would be very bad for Australia indeed. By reducing the corporate tax rate to 25 per cent over a ten year period, prioritising small and medium sized businesses in the first instance, we help ensure that people across Australia can still have the best possible opportunity to get ahead.

HELEN DALY: Minister, you did not get obviously all that cut in over the ten years. Business is very supportive of it. Are you still going to persevere with the full ten year tax cut plan and keep pushing the Senate to support the full plan?

MATHIAS CORMANN: The short answer to that last question is yes of course. We are committed to the ten year plan. What I would correct there though, we were able to legislate 100 per cent of the company tax cuts that we promised for this current term of Parliament. What we have legislated a few weeks ago and through the Senate was the first three years of a ten year plan. That is from 2016/17, 2017/18 to 2018/19. We are absolutely committed to legislating the remainder of the plan, but we have already legislated 100 per cent of what we promised to deliver in terms of company tax cuts in this term of Parliament.

HELEN DALY: Mathias Cormann on the Sydney airport issue, the Government has announced it is going to go ahead and build it, when I guess perhaps normally a Coalition Government would support private sector building this. The private sector in this first instance any way has said no thanks. Tenders will open soon as we understand it for the construction and is the idea for the Government to build it, maybe operate it for a while and then sell it off?

MATHIAS CORMANN: Eventually we would want to sell it as we have sold previous airports. This is a big and complex project. We can understand that somebody looking at this from a purely commercial point of view, in terms of investors looking for a bit of a shorter term return, that was not necessarily going to work for them. From the Government’s point of view, we have got broader considerations. There is an economic development element in Western Sydney. It is an airport that is needed. It is an airport that will provide important competition in that market. But it also will deliver significant jobs and significant additional economic dividends to the broader region, New South Wales and the country. Over time, eventually after it has been built, after it is in operation, we do believe that this is an asset that will be able to be sold and that is certainly the intention.

HELEN DALY: Alright, in the beginning will it be funded through a special Government owned corporation, I guess a bit like the NBN? And will it be debt funded in the beginning? The so called good debt that the Treasurer speaks of?

MATHIAS CORMANN: All of these details will be in the Budget next week. I will leave it to the Treasurer to announce all of those details.

HELEN DALY: But it will mark I guess will it the really very big commitment by your Government to infrastructure and infrastructure spending?

MATHIAS CORMANN: Yes. Nobody should be surprised by this. We have been working on this for some time. We have had very firm commitments that we wanted to see the Western Sydney Airport built. There were some requirements under the terms of the Kingsford Smith Sydney Airport sale that needed to be complied with. There was a right of first refusal. There was a notice of intention period, that came to an end earlier this week, when we received the notification that the owners of Sydney Airport were not going to take advantage of their right of first refusal. We are now proceeding as a Government with developing this project. The detail will be in the Budget.

HELEN DALY: Alright Minister Mathias Cormann, thank you so much for joining us. Appreciate it in this lead up period to the Federal Budget.

MATHIAS CORMANN: Always good to talk to you.