Senator the Hon Mathias Cormann

FRAN KELLY: Internal divisions are emerging in the Morrison Government following the forced resignation of Bridget McKenzie over the sports rorts affair. Barnaby Joyce has now confirmed to RN Breakfast that he will challenge Michael McCormack for The Nationals leadership if there is a spill at tomorrow’s party room meeting. Labor will pursue the sports rorts matters when Parliament opens for the year this week, amid reports implicating the Prime Minister’s own office in the scandal. On another front, concerns are mounting over the economic impact of the coronavirus which could strip billions of dollars from the Budget and further imperil the surplus. Finance Minister Mathias Cormann joins us in our Parliament House studios ahead of this political year. Mathias Cormann, welcome back to Breakfast.

MATHIAS CORMANN: Good morning Fran. Good to be back.

FRAN KELLY: Barnaby Joyce will challenge The Nationals leadership if there is a spill tomorrow. Would you welcome Barnaby Joyce back into the Cabinet?

MATHIAS CORMANN: That is entirely a matter for the National Party. It is not up to me to determine who the leadership team of the National Party is. We have a very good relationship with our Coalition partner. I have worked very well with Michael McCormack as Deputy Prime Minister. But I have also worked very, very well with Barnaby Joyce… interrupted

FRAN KELLY: Do you have a preference? I know it’s not a matter for you decide, but Barnaby Joyce is of the view that he’d do a better job than Michael McCormack. You have sat in Cabinet with both of them. Would he be a stronger voice for the Coalition in regional Australia?

MATHIAS CORMANN: It would be entirely inappropriate for me to comment. It is entirely a matter for the National Party party room. As their Coalition partner, we totally respect that.

FRAN KELLY: Minister, Bridget McKenzie resigned effectively on a more minor matter. Why wasn’t she forced out on the much bigger issue, the scandal, around the marginal seat bias that the Auditor-General found in the sports grants program?

MATHIAS CORMANN: We do not accept that premise … interrupted

FRAN KELLY: You don’t accept the findings of the National Audit Office?

MATHIAS CORMANN: We have taken on board the findings of the Auditor-General and … interrupted

FRAN KELLY: And rejected them.

MATHIAS CORMANN: … we have taken on board the recommendations and we have started to act on those recommendations. The Minister is the final decision maker and has a level of discretion when it comes to decisions of this kind … interrupted

FRAN KELLY: Yes Minister, but a level of discretion is one thing. 70 per cent of the approved projects not recommended by Sport Australia is another. That’s why the National Audit Office found a distribution bias in this $100 million program. Are you saying that the Auditor-General just got it wrong? Is that the Government’s finding?

MATHIAS CORMANN: In the end, a Minister is the final decision maker. Governments are elected to make these sorts of decisions and governments are accountable to the Australian people at an election having made these decisions in government … interrupted

FRAN KELLY: Hang on. Yes, governments are accountable. There’s not an election for two years. This is $100 million. Yes, the rules say that the Minister can make the decisions, but the guidelines are there for a reason and there is a general sense of probity around this. Surely it’s your view isn’t it, that Ministers should make the decisions, as they are allowed to, within the rules of probity?

MATHIAS CORMANN: Of course Ministers should make decisions within the rules of probity. That is… interrupted

FRAN KELLY: Has that gone on here?

MATHIAS CORMANN: That is why of course the Government has taken on board the recommendations from the Auditor-General on how the administration of programs like this can be further improved. An important point to note here is that Sports Australia was in a somewhat different position because they are a corporate entity which does not come under the Commonwealth Grants Rules and Guidelines. That is one of the things that we will be addressing.

FRAN KELLY: So what? Why does that matter?

MATHIAS CORMANN: It matters because that means that a whole range of check and balances that would normally apply did not directly apply in this particular circumstance. That is one of the recommendations that the Prime Minister indicated yesterday that we would be acting on swiftly.

FRAN KELLY: Is it your view that the Sport Australia recommendations were wrong?

MATHIAS CORMANN: To be frank, I do not have visibility either of the recommendations that were made or the specific decisions that were made. I have seen the reporting. But individual Ministers obviously administer their own grants programs. I did not have visibility of the recommendations that were made by Sports Australia at the time. As I did not have visibility of the specific decisions that were being made.

FRAN KELLY: We have got a problem though because people who have had visibility of it since are the Auditor-General and Phil Gaetjens, the head of the Prime Minister and Cabinet office. And Phil Gaetjen’s report is completely at odds with the review by the Auditor-General. He found, quote, no basis for the suggestion that political considerations were the primary determining factor. If political considerations weren’t the factor, what was it that drove Bridget McKenzie to ignore 73 per cent of the final round recommendations from Sports Australia in the month before an election?

MATHIAS CORMANN: Bridget McKenzie made judgements on which eligible projects she thought … interrupted

FRAN KELLY: On what basis?

MATHIAS CORMANN: Obviously on the basis of having assessed the advice that she received and having made final decisions as she was entitled to do as a Minister. That is what the Secretary of Prime Minister and Cabinet has found as well.

FRAN KELLY: So Minister are you saying now to everybody listening that you’re relaxed about the way Bridget McKenzie made these decisions and the decisions she made?

MATHIAS CORMANN: Again, Bridget McKenzie as the Minister for Sport … interrupted

FRAN KELLY: I’m asking what you think. You’re the Finance Minister, what do you think?

MATHIAS CORMANN: I was not the decision maker. I did not have in front of me the advice of an agency and I did not have all of the advice in front of me and all of the information in front of me that Bridget McKenzie had at the time. It is very difficult for me to second guess this after the event. What I can say is that we have taken on board the recommendations of the Auditor-General in his report. We will be acting on them as appropriate.

FRAN KELLY: Phil Gaetjens is Scott Morrison’s former chief of staff. The Prime Minister won’t release Phil Gaetjens’ report. Doesn’t that make a mockery of all the Prime Minister’s talk yesterday about accountability and transparency and standards? Why shouldn’t we see it?

MATHIAS CORMANN: Firstly, Phil Gaetjens is a longstanding, distinguished senior public servant who, yes, has also spent time in ministerial offices, as many senior public servants … interrupted

FRAN KELLY: All I’m asking is that why we shouldn’t we see his report?

MATHIAS CORMANN: If I may. That was not all that you asked. You also made a reflection on Phil Gaetjens and like many senior public servants on both sides of politics, has spent some time in ministerial offices. Now in relation to the report, that was a submission that was considered by the public governance committee of Cabinet. Consistent with all of the usual arrangements under governments on both political persuasion, submissions to Cabinet and Cabinet committees do not get publicly released.

FRAN KELLY: They can be put in a form where they can be publicly released, that’s not obvious at all.

MATHIAS CORMANN: That is entirely obvious. Submissions to Cabinet or Cabinet committees are subject to Cabinet confidentiality. That is a longstanding convention in the Westminster system that has not just started with our Government.

FRAN KELLY: It’s 19 to eight. Our guest is Mathias Cormann, Federal Finance Minister ahead of the first week back of the Parliament. Minister, on the challenges piling up for the economy, Australia has now effectively closed its borders to China which will hurt tourism, it will hurt the international student economy of course. Together they’re worth about $16 billion a year to Australia. The Treasurer has conceded that coronavirus will have, quote, “a significant impact on the economy”. Are we heading for a negative quarter?

MATHIAS CORMANN: It will have a significant negative impact on the economy. It is too early to assess precisely what that will be. We are dealing with a number of challenges at the same time, including the bushfires and now the implications of the coronavirus. We are working as hard as we can to minimise the impact, including you mention international students. Dan Tehan will be working with universities in coming days. He will be meeting with the board of Universities Australia today to explore ways that the impact on that particular sector can be minimised. We have already made decisions to provide additional support to the tourism sector. But there is no question that there will be an impact. We will be reviewing all of the data and information as it comes through and will be providing updates as appropriate.

FRAN KELLY: It won’t take much will it to get negative? Growth slowed again in the September quarter to just 0.4 per cent. Now with the bushfires and the coronavirus, do you expect the Reserve Bank to downgrade forecasts when it meets tomorrow?

MATHIAS CORMANN: Trend growth is 0.75 per cent a quarter. We had 0.6 per cent growth in June quarter, 0.4 per cent in the September quarter. Our growth compares favourably to countries around the world … interrupted

FRAN KELLY: Do you expect a further downgrade?

MATHIAS CORMANN: And our economy has proven to be quite resilient. I will not speculate on what will happen to economic growth in the December quarter except to say that we had a number of issues that we are dealing with that are having a negative impact. We will report on the outcomes when they come through.

FRAN KELLY: And what about the surplus? Can we conclude it’s already blown do you think?

MATHIAS CORMANN: Again, these things are updated twice a year, at Budget and half-yearly Budget update. At our most recent update, we remained on track for a surplus this financial year and every year over the forward estimates and the medium term. The next update will be at Budget time, the second Tuesday in May.

FRAN KELLY: The decision by the Australian Government to effectively ban all foreign nationals coming in from China, this is exactly the opposite of the advice given by the World Health Organisation, so why did the Government decide to do that?

MATHIAS CORMANN: We acted on the advice of Australian experts. The Commonwealth Chief Medical Officer is working together with chief medical officers from around the country. I think you will find that the actions of the Government are consistent with the actions of a number of governments around the world. Our job is to focus on protecting Australians from the spread of this virus. That is what we are doing. We will continue to act on the expert advice as appropriate.

FRAN KELLY: Minister can I ask you on a personal level, still finding it hard to escape the leadership upheaval from eighteen months ago. Now we have got Malcolm Turnbull’s autobiography which will be coming out in April. But there is a little excerpt from it today, revealing that the former Prime Minister accused you of being quote weak and treacherous, after you switched support to Peter Dutton. Will your reputation ever fully recover do think, from being called a traitor?

MATHIAS CORMANN: It is ancient history. I stand by my actions that week. Malcolm took me by complete surprise when he brought on a surprise leadership ballot on the Tuesday. I was not part of any planned insurgency or planned conspiracy or planned spill that week. Malcolm brought on that leadership ballot. After he did that and given the result of that particular ballot, the rest of us had to deal with the consequences … interrupted

FRAN KELLY: But if you hadn’t switched though, he would have had the numbers?

MATHIAS CORMANN: I completely disagree with you. I read that story this morning. I happen to believe that Malcolm Turnbull’s position at that time had become irretrievable and that he had lost the confidence of the party room. That if we did not resolve the matter properly and with certainty, appropriate certainty, that week that the position of the Government would become irretrievable. That remains my judgement. It would have been weak if I had ran away from dealing with this issue. This issue had to be dealt with in the interests of the country, the Government and the Liberal party. We dealt with it. The Australian people at the election clearly endorsed the judgements that we made.

FRAN KELLY: Mathias Cormann thank you very much for joining us on RN Breakfast.

MATHIAS CORMANN: Always good to talk to you.