Senator the Hon Mathias Cormann

PAULA KRUGER: So WA Liberal Senator, Mathias Cormann, is the Finance Minister in the Federal Government and he joins us now in the studio. Senator, good morning.

MATHIAS CORMANN: Good morning.

PAULA KRUGER: Now you got a highly credentialed bunch of people and you put them all together to come up with an independent report. they have spent months on it and you have rejected one of the key recommendations that they put forward, before they even managed to hand down the report. So why did we have this in the first place?

MATHIAS CORMANN: It has been a very important piece of work and it has flushed out a whole range of issues. It has confirmed what the Turnbull Government has been saying for some time and is that WA’s share of the GST is unacceptably low and that the arrangements are unfair to WA. It is the Turnbull Government which first took steps to stop the drop in WA’s share of the GST by initiating GST top-up payments to Western Australia towards infrastructure, which was subsequently copied by Bill Shorten. Just to pick up on one of the points that was made there by my good friend Ben Wyatt earlier. Look, in the end what we are focused on is achieving a reform that could be delivered. We were focused on making sure that we could deliver a fairer deal for Western Australia, which was good for the national economy and which also ensured that no State was worse off, that all of the other states are slightly better off. In the end, we can have a proposal in front of us which is intellectually and academically perfect but which is politically unachievable and nobody is better off. We were focused on getting the best possible outcome for WA, for the country and we are making sure that what we are doing is fair to everyone across the country.

CLINT WHEELDON: So from what the Treasurer, the State Treasurer said, he is not making any deals in terms of reducing spending cuts, or changing that until he sees when the money is in his pockets. When will the money be in the State Treasurer’s pockets to spend?

MATHIAS CORMANN: The eight-year plan that we have announced, the eight-year proposal that we have put forward starts in 2019-20. What we have said is that in the first three years we would immediately lift WA’s share of the GST effectively to 70 cents in the dollar through further Federal top-up payments to Western Australia. After that we will lock in a 70 cent in the dollar floor from 2022-23, which then becomes a 75 cents in the dollar floor from 2024-25, while all the while through from 2021-22 we are changing the formula, the distribution formula, as well as putting additional money inside the GST pool, which helps us ensure that no other state is worse off. We have already made about $1.4 billion worth of top-up payments to Western Australia, including for the 2018-19 financial year. We now will engage with all of the States, including Western Australia, through the next Treasurer’s meeting. We are hopeful an agreement can be secured from all States and that is the process that is now underway. But 2019-20 is when this kicks off.

PAULA KRUGER: Minister, Clint mentioned earlier how the report recommended that it could be brought in, it is manageable to bring this in within four to eight years. Why have we gone from eight years instead of four years?

MATHIAS CORMANN: Well we are doing it in a way that is manageable for the Commonwealth…interrupted

PAULA KRUGER: But the report said it was manageable within four years. Is that economically manageable as opposed to politically manageable?

MATHIAS CORMANN: The Productivity Commission does not manage the Federal Budget. It does not manage budgets of State and Territory Governments around Australia. We have had to make judgements on what was affordable, what was achievable. But importantly, we are taking immediate steps, when it comes to Western Australia, we are taking immediate steps to lift WA’s share of the GST to 70 cents in the dollar from the first year of that eight year period. By 2024-25, it will go up to 75 cents in the dollar and at the end of the eight year period, we are projected to get to 83 cents in the dollar. We are now on a trajectory that delivers a much fairer, much better deal for Western Australia. We are very grateful for the way the State Government here in Western Australia incidentally has engaged with us. We are very grateful with the way that the business community and the Chamber of Commerce and Industry in Western Australia has engaged with us. A lot of work has gone into this. We have secured the best possible deal for Western Australia in a way that is good for the country and that is good for every other State.

CLINT WHEELDON: So the word was pragmatic, that was used by the State Treasurer, Ben Wyatt…interrupted

MATHIAS CORMANN: It is a good word.

CLINT WHEELDON: …And that is because you had thought, even though WA would have been better off by $3 billion if you had adopted all of the recommendations, and I would imagine West Australians after what has happened after the last few years, would understandably think why can’t other States be worse off, because we have been for a number of years now, significantly worse off. It is pragmatic because you need to make sure that you can get the deal done.

MATHIAS CORMANN: Well Western Australia would be no better off at all, in fact we would be worse off, if we could not get the deal done. We have essentially here secured the best possible outcome for Western Australia in a way that is achievable. In the end, as the Western Australian Treasurer said, this has been a wicked problem for a long time, this has been kicked down the road for a long time. We would have liked to have been able to reach a landing on this sooner, but we now have a way forward, a proposed way forward which is achievable, which is realistic, which delivers a much better deal for Western Australia in a way that can be secured at a national level.

CLINT WHEELDON: So Minister, pragmatically in making sure it happens, what about pragmatically politically, with a number of your Members, Christian Porter, Ken Wyatt, both on small margins. Were you concerned if this could not happen, that they might lose their seats?

MATHIAS CORMANN: All of us, all of us who represent the Liberal Party in the Federal Parliament out of Western Australia, we are always focused on doing the right thing by our State. In the end the politics will take care of themselves. Good policy is good politics. As we go into the next election, we will present our achievements for our State and for our country. We will present our plan for the future. We will point out the flaws in the alternative. Bill Shorten wants to go to the next election with higher taxes on working families, higher taxes on business, higher taxes on retirees, higher taxes on everyone and everything that moves. We will be putting forward to people in Western Australia, across all of the electorates in Western Australia, that we have the better plan for the economy, the better plan for jobs, that we have stood up for Western Australia and that the alternative would deliver worse outcomes. We are working to ensure that at the next election we can help secure a continuation of good government by the Turnbull Government.

PAULA KRUGER: It is ten minutes to nine, you are on ABC Radio Perth and WA with Paula and Clint and we are speaking to WA Senator Mathias Cormann, he is also the Finance Minister. Senator, we have had a text from the former Member of O’Connor, Tony Crook. He has asked, he says “Ask Senator Cormann, why Julie Bishop sat with Labor and the Greens to vote against a 75 per cent floor years ago, the same floor the Government is now proposing to bring in?”

MATHIAS CORMANN: Because the work had not been done at that time. The Labor Government that he was supporting, even though he was elected by the National Party, the Labor Government which he was supporting did not have a plan that would deliver a better deal for Western Australia in a way that left the country and every other State better off.

PAULA KRUGER: Senator, with these changes it will not require legislation, but you need all the States to sign off on it, is that the next step?

MATHIAS CORMANN: The next steps are that the Federal Treasurer, Scott Morrison is going to take this proposal to a meeting of Treasurers in August. Ultimately, we would like to finalise an intergovernmental agreement that locks all of this into stone so that the States, all of the States have certainty around what has been committed. But the Treasurer has got certain authorities and responsibilities in relation to the Commonwealth Grants Commission and he can give effect to what we are proposing after the appropriate consultation. But our intention is to reach an agreement with all of the States and Territories. Based on the initial response, we believe the initial response right across the country on a non-partisan basis has been positive, has been open-minded and people have been prepared to work with us through the detail to ensure that it is all as we say it is.

CLINT WHEELDON: Minister, you say ‘set in stone’. Could a change of Government, a future Government, change this deal at the drop of a hat? Would it be easy for them to change this deal?

MATHIAS CORMANN: If it is locked into an intergovernmental agreement then you have a legal document and that is why I say that. For State and Territory Governments around Australia there is clearly upside in having this locked into an intergovernmental agreement, to provide that additional level of certainty and it would certainly help. We hope that at the next election there is not going to be a change of government at the federal level. At some point there will most likely be a change of Government at the federal level. So if there was bipartisan, clear bipartisan support behind our proposal at a national level that would be helpful and would add to the certainty. But in the end, can I promise you that a future Labor Treasurer at a federal level would not change the direction to the Commonwealth Grants Commission? No I cannot.  That is why it is important to lock this into an intergovernmental agreement, but that is also why it is important for both major sides of politics, nationally to lock in behind what we have proposed.

CLINT WHEELDON: Minister, one last one from our text line. Mike asks the question here, “With GST and the top-up from general revenue, does that mean a reduction in revenue from other areas, because there is only so much money in the pot?”

MATHIAS CORMANN: No it does not. That is, not surprisingly, a question that some of the Premiers and State Treasurers have asked us as well. No, this is not going to lead to a reduction in what is called discretionary funding to the States from the federal level in other areas. This is genuinely a net increase in federal funding into the GST pool that does not come at the expense of other funding to the States.

PAULA KRUGER: Thanks for joining us, that is the Finance Minister and WA Senator Mathias Cormann.