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Interview: Mathias Cormann, Finance Minister -

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TONY JONES, PRESENTER: Finance Minister Mathias Cormann, a Liberal Senator for Western Australia, joined us just a short time ago.

Mathias Cormann, thanks for being there.

MATHIAS CORMANN, FINANCE MINISTER: Good evening. Good to be here.

TONY JONES: Now, the Labor candidate for Cowan, Dr Anne Aly, has today accused your colleague Michael Keenan of a despicable smear for claiming she intervened in the trial of a radical Islamist preacher to have his jail term reduced. Is this a sign of how critical Cowan has become to the election in WA?

MATHIAS CORMANN: Well every seat in Western Australia is obviously critical for us and we are not taking anything for granted and we're working very hard to win a majority - to win majority support in all of the seats in Western Australia that we can possibly win. Now in relation to the Labor candidate, you've got to remember she was previously a Greens candidate and she's one of more than 50 Labor members and candidates around Australia that has come out in open defiance against our strong border protection policies, she has come out in open defiance against Bill Shorten's assertion that he supports our strong border protection policies, and indeed, she did intervene in the trial of that particular extremist and, you know, he has been able to obtain a lower sentence as a result of her intervention.

TONY JONES: But how do you turn a federally-funded Islamic deradicalisation expert who's on an extremist hit list into someone who's soft on terrorism?

MATHIAS CORMANN: Well, I mean, she, by her own statements, has come out against our strong border protection policies. For example, her history is as a candidate for the Greens and she's one of a number of Greens - formerly Greens candidates, incidentally, that have infiltrated the Labor Party. There is another former Greens candidate of course running in the seat of Swan, also in Western Australia. And what you've seen in this campaign is Labor moving more and more towards the Greens, which one of the consequences of that is that our border protection policies under Labor will undoubtedly be weaker than what they have been under the Coalition.

TONY JONES: OK, but this is - your government actually gave Dr Aly funding to do this work. She's being attacked now - or is she being attacked now simply because she's become a political threat in that seat?

MATHIAS CORMANN: Well, a question was raised and she was invited to explain herself and that is obviously - that is a normal part of the democratic process.

TONY JONES: OK. Some communities in WA have really been suffering since the downturn in the mining sector. The State Government's on the nose. How is this disaffection going to be translated, do you think, in the electoral result in WA?

MATHIAS CORMANN: Well, Western Australia more than any other part of Australia needs the Turnbull Government to continue to implement our plan for jobs and growth. I mean, Western Australia as a state economy has been the most successful state economy in Australia for much of the past decade. Now, you're right, Western Australia's very much on the frontline of our national economy in transition and that is because ...

TONY JONES: And the State Government's on the nose as well. I think I'm right about that too.

MATHIAS CORMANN: Well, the Barnett Government is a very good government. They've been in government though for eight years and obviously this is a federal election, it's not a state election and people in WA can very well make the difference between a state and a federal election. At the federal level, the choice is a choice between Malcolm Turnbull and Bill Shorten. It's a choice between a team with a plan for economy, a plan for jobs and growth, a plan to secure a successful transition from record resource investment-driven growth to broader drivers in a more diversified economy. And indeed, Bill Shorten, who doesn't have a plan for the economy, who just has a plan for bigger deficits, higher taxes, which would actually make it harder for Western Australia to be successful in the future. And indeed, the only thing that is left for Bill Shorten to do in this campaign is to run what he knows to be a dishonest and desperate scare campaign.

TONY JONES: We'll come back to that. Do you think this is gonna be one of those elections where the country is watching what happens in WA to get a result?

MATHIAS CORMANN: Well I'll be watching, obviously, what is happening ...

TONY JONES: I'm talking about whether the country is watching because that will mean it's a very tight election, obviously.

MATHIAS CORMANN: Well, right now, the Turnbull team is working very hard right across Australia, including in WA, to win the trust and confidence of a majority of people in a majority of seats and ...

TONY JONES: Sure, but do you think this is gonna be one of those unique elections where we as a country watch what's happening in WA and get a result as to who's gonna be in government from that state?

MATHIAS CORMANN: Well, this is - all of the published polls certainly indicate that this is a very close election. Federal elections are always very close. It means that every single vote matters and it means that every single vote matters in Western Australia, as it does in every other part of Australia and so that is why our message to people right around Australia is, "Your vote matters and if you want a team, a stable government to continue to implement the plan for stronger growth and more jobs, support your Liberal-National Party candidates and other representatives in the Senate."

TONY JONES: OK, we're clearly not gonna get an exact answer to that one. Now Mathias Cormann, let's talk about some of the broader economic challenges you face if you are returned to government, especially on the big-ticket funding items. First, the NDIS. Now when it's fully operational in 2019-'20 it's gonna cost $22 billion a year. Half of that has to come from the Commonwealth Government. You've already admitted there's going to be a significant shortfall. How big with the shortfall be? How big is that now?

MATHIAS CORMANN: Well, obviously the budget trajectory is there for all to see. It includes a provision for the NDIS and it's projected - I mean, we're projected to return to surplus by 2021 and indeed to remain in surplus over the medium term all the way to '26-'27 and that is taking into account the commitment to the NDIS. And in the most recent budget, I mean, we've made a series of saving decisions in the social services space where we have directed those savings into a fund designed specifically to ensure that funding for the NDIS can structurally be put on a sustainable foundation for the future.

TONY JONES: That's right and that is just about half of - or a bit more than half, isn't it? So isn't there a $5 billion gap that you still have to find the money for?

MATHIAS CORMANN: Well, you're certainly right that we did not - that the situation that we inherited was an unaffordable and unsustainable spending growth trajectory from the previous government across a range of areas. We've been working very hard over the last three years to ensure that spending growth is on a sustainable and affordable foundation for the future and all of the spending commitments that we are making in this campaign, indeed all of the spending commitments that we've made over the past two-and-a-half years have been paid for by savings in other parts of the budget. They're all guaranteed within the budget.

TONY JONES: Sure, sure, sure. But is there a $5 billion gap that still exists that you're going to have to make up? That's $5 billion a year that you're going to have to make up some time before the NDIS comes online.

MATHIAS CORMANN: Well that is not quite right because as I've just indicated to you, based on the policy decisions of the Government, based on the economic parameters as they currently stand, ticked off independently by the secretaries of Treasury and Finance, what you can see in our budget papers is that we're projected to return to surplus by 2020-'21 and to remain in surplus for the whole period.

TONY JONES: Sure, but the $5 billion was your figure. You cited that figure. That was the missing money. Have you already got it back?

MATHIAS CORMANN: Well, we've made decisions since we came into government which have improved the budget bottom line overall. We've made savings decisions all up to the tune of about $144 billion since we came in government that have actually been implemented. The budget position as a result of policy decisions of the Government have improved by about $10 billion over the current forward estimates ...

TONY JONES: Did you find that extra $5 billion? That's what I'm saying. Because you're the one that said there was a missing $5 billion. Did you find it?

MATHIAS CORMANN: And I've already answered that question.

TONY JONES: I'm not sure that you have.

MATHIAS CORMANN: Well I very directly have answered that question. The NDIS cost over the short-term, that is, over the forward estimates and over the medium term, is reflected in all of the costings included in our budget bottom line and our budget is projected to be in surplus from 2021 onwards all the way over the medium term. So yes, we have obviously made the necessary decisions to ensure that the NDIS can be sustainably funded over the medium to long-term.

TONY JONES: So does that mean you've already factored in the increasing education costs that the NSW Premier Mike Baird - health costs, I should say, and education for that matter, but particularly health, that the Premier Mike Baird says, "Health is the biggest challenge facing the state and the nation"? There was a stopgap funding that was given that would last till 2020 for the health challenge, but after 2020, Mike Baird says it gets much, much worse. Is that factored in to your (inaudible)?

MATHIAS CORMANN: Well I don't agree with your characterisation.

TONY JONES: Mike Baird's characterisation.

MATHIAS CORMANN: What we inherited when we came into government in 2013 was an unfunded pie-in-the-sky, unaffordable spending growth trajectory, promises on the never, never. And, I mean, Colin Barnett, who was around the table at the time when Julia Gillard was making these unfunded spending promises, said that nobody around the table actually believed that those promises were real. And what we've done in government is we've made decisions on a affordable, sustainable spending growth trajectory in health and in education which is guaranteed within the budget. That is reflected in our budget papers. And you're right: in this most recent budget we've made an additional allocation both in health and in education, an additional $2.9 billion for state hospitals, an additional $1.2 billion for schools and that is guaranteed within our budget because we've paid for it with savings in other parts of the budget.

TONY JONES: And Mike Baird says from 2020, at exactly the time you're meant to come into surplus, that this is gonna get much, much worse, that the states will need more money. Will you be - I mean, looking at - well, just one second.

MATHIAS CORMANN: No, I would note that the State Government of NSW actually has a very big surplus.

TONY JONES: Yes, that's my point. Will you be expecting the states to pick up the missing health funding that they say is necessary?

MATHIAS CORMANN: Well federal funding for state hospitals will continue to grow year-on-year over the four-year forward estimates period and over the medium term and federal funding for state schools will continue to grow. And what I would just point out here is that Labor has had a lot to stay about hospital funding and how supposedly there was $57 billion cut from state hospitals. I know that Labor has not promised to restore that pie-in-the-sky, unaffordable spending promise that was never funded which Julia Gillard made when she was in government.

TONY JONES: OK. On Medicare you've ruled out any privatisation - any privatisation, including of the payment system now. You've also taken Medicare co-payments off the table. Is the co-payments thing also a never, ever situation? Will the co-payments never, ever come back?

MATHIAS CORMANN: Well we've made very clear that we no longer wanted to pursue co-payments, so yes, I mean, that is not part of our policies. But what I would say, it's quite interesting, Bill Shorten describing co-payments as privatisation when the person that actually tried to introduce co-payments for GP services in the first instance was none other than Bob Hawke, who indeed lost his Labor leadership over it to Paul Keating. And here you've got Bill Shorten getting Bob Hawke to come out and campaign on a completely misleading, deceptive and dishonest Medicare privatisation scare campaign.

TONY JONES: Alright. Final question: Labor's rhetoric against the same-sex plebiscite - same-sex marriage plebiscite has been ramping up in recent days. What would the Government do if the legislation for the plebiscite is actually blocked in the Senate, which seems now conceivable?

MATHIAS CORMANN: Well, I don't believe that'll happen. We're going to this election seeking a mandate for a plebiscite, should we be successful, to resolve this issue in relation to same-sex marriage, you know, on a more permanent basis once and for all. And if we are successful at this election, we would expect to be able to pass that legislation through the Parliament.

TONY JONES: But if you can't, if for example the Greens, Labor and a number of independents said no, what would you do?

MATHIAS CORMANN: Well I don't accept that that is what will happen. I'm very confident that if we win at this election seeking a mandate for a plebiscite in relation to this issue, that the Parliament will support that plebiscite to go ahead.

TONY JONES: Mathias Cormann, we'll have to leave you there. Thanks very much for coming in to join us.

MATHIAS CORMANN: Always good to talk to you