18 August 2014
Transcript - #2014022, 2014

Interview with Fran Kelly, ABC Radio National

SUBJECTS: Budget, GP co-payment, RET, FOFA

FRAN KELLY:

Mathias Cormann is the Finance Minister. Mathias Cormann, welcome to RN Breakfast.

MATHIAS CORMANN:

Good morning.

FRAN KELLY:

Yesterday you and the Prime Minister both spoke hopefully in the same terms of getting the Budget through with an adjustment here and an adjustment there was the quote. What adjustments are you willing to make?

MATHIAS CORMANN:

The important point here is that the Government remains absolutely determined to fix the Budget and to deal with the debt and deficit disaster that the Labor party left behind. We would expect that all of our Budget measures fundamentally will go through the Senate as delivered in the Budget in May.

FRAN KELLY:

Well hang on, that doesn’t quite fit with adjustments here and adjustments there if you want all of the Budget measures to go through as they were delivered in the Budget in May. Are you not prepared to compromise?

MATHIAS CORMANN:

Well it does. If you listen very carefully to what I just said, we expect fundamentally all of the Budget measures to go through the way they were delivered. That is because the Budget we delivered in May is the only alternative on the table if we want to protect our living standards and build opportunity and prosperity for the future. But of course we are realists, we do know that the Liberal and National Parties only have 33 Senators in the Australian Senate. We need six crossbench Senators or others to join in with us to pass legislation through the Senate and that is why we have been having conversations for a little while now with crossbench Senators in particular. It was always obvious that there would have to be an adjustment here and an adjustment there if we wanted to get some of those Budget measures through the Parliament.

FRAN KELLY:

Okay, so I think what we are trying to work out is what you mean when you say fundamentally in the same way they were delivered and what an adjustment means. We know from talking to the crossbenchers ourselves and you have been speaking to them privately, that most of them, in fact all of them support scrapping the mining tax but they want it removed and separated from some of the spending measures that they want to keep. Some of them very keen to keep the School Kids Bonus. Can the School Kids Bonus be made more accountable and therefore more acceptable in your view? Could it be means tested? Would those kinds of changes with a new name make that change palatable for the Government? 

MATHIAS CORMANN:

The first thing you’ve got to say is that we have always been very clear that we would get rid of both the mining tax as well as the unfunded promises that Labor recklessly and irresponsibly attached to it...interrupted

FRAN KELLY:

Yes you have. But the crossbench doesn’t agree with you there.

MATHIAS CORMANN:

Well let’s just see. You have to remember that the mining tax repeal Bill went to the new Senate once. The previous Government had to put a whole series of measures to the Parliament on several occasions before they got them through. But look, we are having conversations with key crossbench Senators and hopefully we will be able to get an agreement on repealing the mining tax while making sure that we stay on track when it comes to repairing the Budget. The truth though is that the Budget just can’t afford to keep more than $10 billion in unfunded promises that Labor attached to their failed mining tax. In particular because it is an expense that continues to grow over time if it were left in place.

FRAN KELLY:

That’s right, so you can’t afford to lose that whole $10 billion, but can you afford to compromise to lose some of it? Would you consider for instance changing the School Kids Bonus into some other kind of payment still linked to school costs but more accountable and a lesser hit to the Budget?

MATHIAS CORMANN:

Look, I am not going to go into specifics on your program today because obviously our conversations are ongoing. As we have said...interrupted

FRAN KELLY:

But we have all had plenty of conversations now with the crossbenchers and the audience has been hearing the crossbench Senators talk about what they want. Let’s go to one of the other measures. There is general agreement on the crossbenches that the $7 co-payment for the GP is not going to fly. You’re not going to get that through. Are adjustments being considered there?

MATHIAS CORMANN:

Let’s just wait and see what will and what won’t go through. People shouldn’t make assumptions that necessarily those positions don’t change. You have got to remember the Labor party initially when we announced the Budget Repair Levy said they would never be a party to this deficit reduction levy and when it came to the Parliament, they quietly voted for it. The conversations we are having are not just about making changes, they are also about explaining very carefully why it is that we’re putting forward certain proposals. When it comes to the co-payment, what we are focused on is on making sure that affordable and timely access to high quality health care will continue to be sustainable over the medium to long term. The $7 co-payment does present a price signal, but the important point here is that when it comes to pensioners and other concession card holders, under our proposal for a co-payment, they will not pay, no pensioner will pay any more than $70 a year for unlimited access to medical services. These are the sorts of things that we are talking through with all relevant crossbench Senators as we speak.

FRAN KELLY:

With respect Minister though, it sounds like, I mean of course the crossbenchers understand that by now. You have been making that point since Budget night. Everybody knows there is a $70 limit. It hasn’t convinced most on the crossbench that a co-payment is going to be a good thing. And certainly many of them want certain groups exempted from the co-payment including pensioners, including older Australians who might be in nursing homes. The AMA wants the poor exempted, the chronically ill, some Indigenous Australians. Will you say now that although you may, you hope to keep some kind of price signal, you will have exemptions? Will you reassure the community that some people will be exempted from this co-payment?

MATHIAS CORMANN:

I am not going to say that today. The Budget measure that we put forward in May was the Budget measure that in our judgment was required to ensure that affordable and timely access to high quality health care remains affordable for the taxpayer over the medium to long term. Now the important point to remember here is, and it seems to have been lost in the debate a bit, this is a measure that we are proposing to come into effect from 1 July 2015. There is still a lot of time for the Government to engage with the crossbench to explain what it is that we are doing and why and if there is an adjustment here or an adjustment there, that will help facilitate passage of legislation, of course we will consider that.That is why you are having these sorts of conversations. But as far as the Government is concerned, this is an important reform if we are committed to making sure that low and middle income earners and that everyone across Australia can continue to have affordable and timely access to high quality healthcare in the medium to long term.

FRAN KELLY:

Alright, let me ask you more broadly because it sounds like the Government is entertaining some compromises. Do you accept that any compromise will hit your Budget bottom line and therefore there might be a blowout in the number of years it takes to get to surplus?

MATHIAS CORMANN:

The important point here is that if you spend more in one area obviously you have to make more savings in the other. That is the inevitable truth and that is something that does not seem to have dawned on Bill Shorten. The question for Bill Shorten really is, does he still believe that we need to get the Budget back into surplus and if he does and if he doesn’t like our plan, what is his plan to get the Budget back into surplus? We’ve heard a lot of politics from Mr Shorten. He has put a lot of politics ahead of the national interest, but we certainly haven’t heard an alternative plan on how he would get the Budget back into surplus after Labor left such a mess behind back in September.

FRAN KELLY:

Minister a couple of quick issues to get through, before you do, Joe Hockey’s comments last week, which he has apologised for now, about the poor don’t drive cars or don’t drive as far as the rich. Did you, when the Treasurer was putting that line out as a justification for the increase in petrol excise, did you ring the Treasurer and point out to him that petrol excise is a regressive tax. In other words, you know the poor might spend less in dollar terms but as a proportion of their weekly Budget they spend more. Did you point that out to him?

MATHIAS CORMANN:

I’m not going to talk to you about conversations I have with the Treasurer. But let me make this point, the Treasurer is doing an outstanding job. He is putting his heart and soul into repairing the Budget in order to put Australia on a stronger foundation for the future. None of us are robots, we are human beings and we make mistakes from time to time. And as you’ve indicated, with the benefit of hindsight, the Treasurer has said last Friday that clearly he didn’t choose his words very wisely last week.

FRAN KELLY:

It’s a quarter to eight on Breakfast, our guest this morning is the Finance Minister, Mathias Cormann. Minister, another big adjustment apparently on your radar, according to the Australian Financial Review this morning, is the plan to scrap the Renewable Energy Target altogether. Can you confirm that that is your preferred position to scrap the RET? Or the Government is considering that?

MATHIAS CORMANN:

No, I cannot confirm that. Our position is to keep the Renewable Energy Target in place. There is a review underway. Once that review has reported to the Government, as inevitably is the case, the Government will consider any recommendations and provide a response in due course.

FRAN KELLY:

There is new research out today, which shows that if the Government did wind back the RET or scrap it, it would mean big windfalls, dollar windfalls for coal generators, no real savings for consumers and of course a rise in carbon emissions. The Government wouldn’t want to make a policy change that would do that, would they?

MATHIAS CORMANN:

There is a lot of ‘ifs’ in your question there, it’s really  ... interrupted

FRAN KELLY:

No, not really this is research.

MATHIAS CORMANN:

... if this, if that. As I’ve just indicated in answer to your previous question, the Government remains committed to the Renewable Energy Target. That is our policy. We are currently waiting for the results of a review, which is underway and we’ll make decisions once that is received in an orderly and methodical fashion.

FRAN KELLY:

And Minister on another issue, also within your portfolio, talking about the financial planning sector, we’re hearing of more problems arising now. The Macquarie Group is in the sights of the corporate regulator. At what point do you say enough is enough? And for instance move quickly and I put the emphasis there on quickly, to make some changes to at least the training that financial advisers have to do, because they don’t have to have a university degree, we now know that many of these people advising people on what to do with their life savings have an eight day diploma. Will you move immediately to sure up the minimum entry standard for training for financial advisers?

MATHIAS CORMANN:

Firstly, a lot of work has been done in recent years to lift educational, professional and ethical standards across the financial advice industry. Clearly... interrupted

FRAN KELLY:

Not enough obviously.

MATHIAS CORMANN:

Clearly there is more work to be done. I am engaged in conversations with all stakeholders in the financial advice industry on how we can sensibly continue to lift educational, professional and ethical standards further. There is an inquiry currently underway by the Parliamentary Joint Committee on Corporations and Financial Services, which is looking at this exact point. We are very much looking forward to the recommendations that come out of that inquiry.

FRAN KELLY:

Mathias Cormann thank you very much for joining us.

MATHIAS CORMANN:

Always good to talk to you.

FRAN KELLY:

Mathias Cormann is the Finance Minister.