Senator the Hon Mathias Cormann

PATRICIA KARVELAS: Last financial year’s Budget deficit was $33.2 billion, a big number, but lower than projected by $4.4 billion. Though lower than forecast in May, it is still three times what was said out in the Coalition’s first Budget after returning to power in 2014. Gross National Debt will reach half a trillion dollars next year, the highest level in Australia’s history. Mathias Cormann is the Minister for Finance and I spoke to him a short time ago.

Mathias Cormann, welcome to the program.

MATHIAS CORMANN: Good to be back.

PATRICIA KARVELAS: Let’s look at the Budget bottom line, you projected a deficit when you started as Finance Minister back then we had another Treasurer, Joe Hockey and now that deficit is three times as large as you predicted in 2014. Are you disappointed that you couldn’t reach that goal that you had planned.

MATHIAS CORMANN: What people can see is that the actual performance against the 2016-17 Budget which we released in May 2016 is a $4.4 billion improvement. So that is what people should be focusing on.

PATRICIA KARVELAS: So you are saying do not look at what you were originally doing, look at the revision a couple of years later.

MATHIAS CORMANN: No that is not right. We explained all the way through the challenges that we are dealing with, including the unfunded and unsustainable spending growth trajectory we inherited from Labor and also global economic headwinds, significant falls in global prices for our key commodity exports and the impact that that has had on revenue. But the plan that we took to the last election, the plan that we put forward for the 2016-17 financial year, has now been executed and Labor at the time, in May 2016 said that our economic growth forecasts were heroic, well economic growth has come in above what we expected. They said our employment growth forecasts were heroic and couldn’t be delivered, well employment growth was significantly stronger than what had been expected and consequently, the revenue is quite a bit higher than what had been expected. That is really what is important.

PATRICIA KARVELAS: Gross debt is at the highest level ever, half a trillion dollars. How high will it go? What is the peak going to be in dollar terms next year?

MATHIAS CORMANN: That is something that will be updated in the half-yearly Budget update in MYEFO. What we can say is that consistent with a better than anticipated outcome in the 2016-17 financial year, net debt in 2016-17 has come in lower than anticipated. What the flow-on effects over the forward estimates are, in terms of net debt and gross debt, that will be updated in the usual way in the half-yearly Budget update before Christmas.

PATRICIA KARVELAS: So you can’t provide the figure? 

MATHIAS CORMANN: No I can’t. These are updates that will have to be put together by Treasury and Finance in the usual way. What I can say to you is that in the 2017-18 Budget, we published a series of forecasts and medium-term projections there and what the 2017-18 Budget that we released in May 2017 shows, is that Government net debt is expected to peak next financial year, the 2018-19 financial year, at 19.8 per cent as a share of GDP and is projected to reduce down to 8.5 per cent by the end of the medium term by 2027-28. The important point is, the Government’s net debt and the Government’s gross debt position is better than it would have been if Labor had been re-elected in 2016-17 because by their own admission, they went to the last election with a $16 billion bigger deficit so…interrupted.

PATRICIA KARVELAS: But Finance Minister you have been in power for four years now, so I think people are getting tired of hearing what the alternative might be four years later.

MATHIAS CORMANN: People will always have to make a comparative assessment and I am not talking about four years ago, I am talking about what Labor took to the last election last year and when Labor went to the election last year, they promised to increase the size of the deficit by $16 billion.

PATRICIA KARVELAS: Let me take you to your numbers and your Government. Your Budget forecast in May was for wages growth to double in three years but it remains at a 20-year low despite company profits being up. When will the wage growth you projected kick in?

MATHIAS CORMANN: Well wage growth has actually started to increase in the last quarter if you look at the data that has been released recently. So, what we are seeing now is that economic growth has strengthened compared to what was anticipated, employment growth has been running at 1.9 per cent nearly double the 1 per cent expected in the 2016-17 Budget. So things are heading in the right direction and if the Parliament legislates the full ten year enterprise tax plan to ensure that our business tax rate is internationally competitive so we can further boost investment, boost productivity then that will flow through to more jobs and higher wages…interrupted.

PATRICIA KARVELAS: You don’t have any evidence that people will have higher wages.

MATHIAS CORMANN: Yes we do, we do have evidence. If you look at our track record over 26 years of continuous economic growth, the only way that you can sustainably achieve stronger wages growth is on the back of stronger productivity. The way that you achieve stronger productivity is by increasing the level of investment, the way you attract additional investment is by making sure that your business tax arrangements are internationally competitive. At the moment they are not and that is why we are very much pursuing a growth agenda.

PATRICIA KARVELAS: And do you agree with the Treasurer that workers should go and ask their bosses for pay rises? That is what he said several weeks ago.

MATHIAS CORMANN: That is always a matter for employers and employees.

PATRICIA KARVELAS: But is it as easy as that? They should re-negotiate enterprise agreements?

MATHIAS CORMANN: Our objective as a Government is to ensure that businesses across Australia can be as successful, as profitable as possible, so they can hire more Australians and pay them better wages over time. That is why we are pursuing a more growth friendly tax system, that is why we are pursuing an ambitious free trade agenda, helping our businesses be more successful in exporting Australian products and services into markets around the world. More profitable and more successful businesses will be able to hire more Australians and pay them better wages and if businesses are less profitable and less successful, they will not be able to hire more Australians and pay them better wages. Now Labor will want to increase the tax burden, they want to increase the level of red tape, they want to pursue all sorts of anti-business, anti-growth and anti-opportunity policies and that will mean fewer jobs and lower wages. Our policies are designed to deliver more jobs and higher wages over time.

PATRICIA KARVELAS: The savings also can be contributed, some of them, to a slower than expected uptake of the NDIS. What is the cause of this, because it seems to me, quite unusual, have you got to the bottom of what it means? Why? Are we going to see an uptake later? What is your analysis of what is happening here?

MATHIAS CORMANN: What is happening here is the rate of take-up and the rate of transitioning into the NDIS system depends to a large degree on work done by the States and also depends on the uptake by individual Australians who are eligible. What I can say is that compared to what we had provisioned for in our Budget, which is of course a very cautious and prudent approach when it comes to making sure that the appropriate funding is available to provide those services. Well, compared to what we had provisioned for, the uptake has been slightly slower and also the cost per eligible participant has been slightly less than what we had anticipated and so that is one of the factors in why we have been able to perform slightly better than what had been anticipated at Budget time.

PATRICIA KARVELAS: Minister I am going to ask you to put your other hat on, you are the Acting Special Minister of State. One of Australia’s most senior Catholics, Archbishop Mark Coleridge of Brisbane made some pretty controversial comments this morning, here he is;

ARCHBISHOP COLERIDGE [EXCERPT}: Parents can’t marry their children, children can’t marry their parents. Sibling marrying sibling has always been ruled out, but so too have people of the same sex. But that is, that is not to say that they are not equal, it is too simply say that they are not the same and that they don’t qualify for what we call marriage.

PATRICIA KARVELAS: Is this an appropriate comparison

MATHIAS CORMANN: Well the question in front of Australians is not any of the examples that were mentioned there. The question that is before Australians is whether or not the law should be changed to allow same sex couples to marry. Nobody is suggesting that parents should be able to marry their children or whatever. I do not think that they are the same proposition. The proposition that has been put to Australians in the survey form is a very simple question as to whether or not same sex couples should be allowed to marry.

PATRICIA KARVELAS: I have heard you refer to a voter turnout you might like being around 45 per cent, you say happened in the republic delegate process. You would like it to be higher than 45 per cent, how much higher?

MATHIAS CORMANN: Well actually, in the election to the constitutional convention prior to the republican referendum, the participation rate was 47 per cent. Based on the anecdotal feedback and talking to people across the community and even among my friends on both sides of the argument, what I am hearing people say is that yes, they have received their survey form and yes they have sent it straight back, that is invariably what I have been told. I am sensing that Australians are enthusiastically embracing this opportunity to have their say and I am certainly hopeful that the participation rate will be higher than what it was when this methodology was last utilised, which was for the Constitutional Convention back in 1998.

PATRICIA KARVELAS: How much higher would you like it to be?

MATHIAS CORMANN: Look, I am not going to speculate. I would like it to be as high as possible. I would just note that 100 per cent of Australians, 100 per cent of Australians eligible to vote at a Federal Election have the opportunity to participate in this process, have the opportunity to have their say and have their voices heard. I would encourage all of them to return their survey forms as soon as possible, certainly no later than 7 November.

PATRICIA KARVELAS: Okay, if one side wins 51 per cent of the vote, is that a win? What is your message to those, who are I think, very likely to discredit the results?

MATHIAS CORMANN: I believe that this will be a credible result. 16 million Australians eligible to vote at a Federal Election have been given the opportunity to have their say and in a democratic system, the way that you resolve differences, as I have said to you on your program in the past, good Australians, good people have strongly and sincerely held views on both sides of this argument and we are going through an exercise to settle what the view of the Australian people is on this question. Whatever the outcome, I believe it will be respected by the Australian Parliament. As would be the case in an election, a majority is a majority and I am not going to get into, there is no proposition that there is a need for a qualified majority.

PATRICIA KARVELAS: Okay because I obviously am basing this on an educated position, based on the fact that I have had many conversations. Clearly the Yes or the No camp will challenge the results given the soggy envelopes at apartment blocks if it is a tight result. What is your message to those camps?

MATHIAS CORMANN: The process has got great integrity I would say. When you have 16 million survey forms go out, it is a huge logistical exercise, but there is great integrity in this process. The ABS has put measures in place to ensure where there are incidences like the one you just mentioned, that they can be appropriately rectified. For example, the example that was reported in the media where supposedly 39 envelopes had been found in a bin, well the ABS was in a position to retrieve those, to identify the addresses, to invalidate the relevant barcodes from whoever essentially got hold of those letters and offer the opportunity to the relevant people again to issue their vote, their response, in an appropriate fashion. So, there are strategies in place by the ABS, which are designed to deal with any of these sort of examples that are being circulated as evidence that this process lacks integrity. This process has got great integrity, overwhelmingly Australians are engaging in this process in an appropriate fashion and I believe that the result that comes out at the other end will have great credibility and great authority.

PATRICIA KARVELAS: Just finally, on religious protections, obviously the Dean Smith Bill is the one that many people refer to. But I know Lyle Shelton  who is effectively the head of the No campaign and head of the Australian Christian Lobby, has suggested that bakers should be able to discriminate against gay weddings for instance. Do you think bakers should be able to discriminate?

MATHIAS CORMANN: I am not going to get into this argument now. The first bridge to cross is to get a response from the Australian people as to whether or not the Australian people believe…interrupted.

PATRICIA KARVELAS: Okay but aren’t people entitled to know whether bakers might be discriminating if a Yes vote comes back.

MATHIAS CORMANN: People are entitled to have a view. In terms of my role, in terms of the process that we are going through now, the first step is, the essential question is, do the Australian people want the Australian Parliament to change the law to allow same sex couples to marry? If the answer to that question is yes, then what the Government has said and it was a conscious and deliberate decision, is that we would facilitate in the final sitting fortnight before the end of the year, the consideration by the Parliament of a Private Members Bill to change the law to allow same sex marriage... interrupted

PATRICIA KARVELAS: I understand that but what is your instinct?

MATHIAS CORMANN: If I may, the Prime Minister, the Leader of the Opposition, myself, the Treasurer, Peter Dutton, a whole range of us are on the public record as saying that appropriately strong religious protections are going to be an important part of any legislation that is put to the Parliament. But it will be a Private Members Bill, it will not be a Government Bill and it will ultimately be a matter for the Parliament to resolve what form the final Legislation will take. From my point of view, I do believe that there is a need for appropriately strong religious protections, but I am not going to engage on this path until such time that I know what the verdict is of the Australian people on the threshold question of whether or not the law should be changed at all.

PATRICIA KARVELAS: Mathias Cormann, thank you for coming on.

MATHIAS CORMANN: Always good to talk to you.