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Transcript of interview with Fran Kelly: ABC Radio National: 25 October 2013: repeal of mining tax; sale of Medibank



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TRANSCRIPTION: PROOF COPY E & OE

DATE: 25/10/13

TITLE: Transcript of Interview - ABC Radio National

TOPIC: Repeal of Mining Tax, Sale of Medibank

FRAN KELLY: The Finance Minister, Mathias Cormann, joins us now very early from Perth - for which we thank him.

Minister, thank you very much for joining us at this hour.

MATHIAS CORMANN: Good morning, Fran.

FRAN KELLY: Why are you scrapping the Schoolkids Bonus as part of the repeal of the mining tax? Chris Bowen says the Schoolkids Bonus is not even funded by the mining tax.

MATHIAS CORMANN: We've inherited a budget in a mess from the Labor Party. This financial year alone we went from a promised surplus to an eighteen-billion-dollar deficit at budget time, to a thirty-billion-dollar deficit at the election and it's still deteriorating.

We were very clear and very explicit in the lead-up to the election that should we be successful, that the Schoolkids Bonus would go. Essentially right now, if we were to persist with the Schoolkids Bonus, we would continue to borrow money to give it away. We would continue to borrow money that we haven't got to give it away.

The Labor Party in relation to their failed mining tax had a whole series of promises attached to it that weren't funded. But at various times, they've scrapped things, they replaced them with other things.

If you go through the whole sequence of promises that they've attached to the mining tax over time, you'll find that the Schoolkids Bonus replaced one of the previous promises attached to the mining tax that they didn't proceed with at some point in time.

FRAN KELLY: But you are accepting that when you say scrapping the bonus - the mining tax will save thirteen-billion dollars, that actually the Schoolkids Bonus was not funded by the mining tax.

MATHIAS CORMANN: Well, we don't accept that. The Schoolkids Bonus replaced some other promise that Labor attached to the mining tax initially, and as such it is a measure that replaced the previous measure that was attached to the mining tax...

FRAN KELLY: Okay.

MATHIAS CORMANN: It was essentially a substitution.

FRAN KELLY: The Government's abolishing the mining tax because it failed to raise: the substantial revenue predicted by Labor, which it certainly did, well below forecast, so tax revenue from the tax so far. The latest forecast though, which came out just before the election, did put the revenue from the mining tax at four billion dollars over the forward estimates.

Now, it's nothing like Labor promised, but nevertheless it's a decent sum, and since that calculation, the iron ore price has risen again. It's back up to, I think, a hundred-and-thirty-three dollars a tonne today.

Considering the budget trouble we're in, why would you turn your back on a revenue stream like that?

MATHIAS CORMANN: The mining tax is a bad tax. It raised ninety-five per cent less than originally forecast. When Wayne Swan first announced the MRRT, he said it would raise four billion dollars in year one. Of course it raised two-hundred-million dollars we were told and...

FRAN KELLY: Sure, but looking forward, it's forecast to raise four billion over the forward estimates. That's what Treasury's forecast.

MATHIAS CORMANN: Well, what the Government wanted us to believe is that even though it's raised ninety-five per cent less than forecast in year one, that somehow over the forward estimates, it would increase by about a thousand per cent again. We don't believe that.

Furthermore, you've got to understand that this is a very complex, highly distorting, highly inefficient tax which is costly to administer for the ATO, which is costly to comply with for the mining industry. It is tying up an important industry for Australia in massive and costly red tape. It is holding back our economy. It is holding back our capacity to create more jobs. It is a tax which is bad for the economy, bad for jobs, bad for investments. We are committed to a stronger growth and more jobs. Stronger growth will help us to raise more revenue for Government in the future, as well as all of the other benefits that come with it.

FRAN KELLY: You want to scrap the tax, the mining tax, from 1 July. The Greens will oppose it; they've been clear on that. Labor's not yet publicly said what it'll do. There's no certainty - absolutely no certainty you'll get this through the current Senate that is there.

Have you spoken to members of the new Senate yet? Clive Palmer, for instance, is on the record saying he wants the tax abolished.

MATHIAS CORMANN: Well, we will be putting our mining tax repeal package and our carbon tax repeal legislation to the current Parliament, including the current Senate. If the Labor Party cared about our economy, if the Labor Party cared about jobs, if the Labor Party cared about repairing the budget mess they've left behind, they would support our carbon tax repeal and our mining tax repeal legislation.

We're not making any assumptions about what may or may not happen in this Parliament. We will put the legislation forward. We will make our case. And if the Labor Party had any interests in the national interest, they would support our legislation.

FRAN KELLY: It's twelve past eight on Breakfast. We're joined by the Finance Minister, Mathias Cormann.

Minister, Medibank Private, you've commissioned a scoping study now into the privatisation or the sale of Medibank Private. How much do you hope to raise from selling it?

MATHIAS CORMANN: Well, look, I mean, we're not getting ahead of ourselves. We are committed to the sale of Medibank Private because it's a commercial business that is operating in a well-functioning, highly competitive market with thirty-four health funds.

There is no compelling policy reason for the Government to continue to own a private health fund, in particular given that the Government is the regulator of the health insurance market, to also be one of the largest market participants actually puts us into a position of conflict. Now...

FRAN KELLY: Well, just on that, the compelling-no-compelling policy reasons, the reason that's always been given - offered most prominently in the past, is that a Government-owned insurer in that pool does help keep downward pressure on premium increases and they say Medibank Private has done that. It's had the lowest of the premium rises over the last number of years.

MATHIAS CORMANN: Well that's just not true. The ownership of Medibank has got absolutely no relevance to the level of premiums. Because, Medibank, like any other health funds, operates in a

highly competitive market. So Medibank, whether in public or private ownership, would have to be mindful of the level of premiums if they want to remain competitive moving forward...

FRAN KELLY: But it has had the lowest of the premium increases.

MATHIAS CORMANN: Well, I think, you'll find there's ups and downs and swings and roundabouts from year to year. And secondly, the level of premiums and premium changes are highly regulated.

Medibank Private whether in public ownership or in private ownership, would continue to have to comply with all of the regulatory requirements in terms of premium change. Their premium-change proposals would continue to be scrutinised by the Private Health Insurers Administration Council in the exact same way.

There's absolutely no difference compared to who actually owns the corporation, the company Medibank Private.

FRAN KELLY: The last time Medibank Private was valued - which I think was under a scoping study under - the previous Coalition Finance Minister, Nick Minchin, is, if my memory is correct, it was valued at more than four billion dollars.

Senate estimates heard in October last year that in the previous three years, the Federal Government received a one billion dollar dividend in taxes from Medibank Private. Does it make economic sense to sell it and forsake that regular revenue stream? I mean, short-term gain for long-term loss?

MATHIAS CORMANN: Well, firstly, I think, you're just supporting my previous argument. The Federal Government under Labor as the only shareholder took in fact one-point-four-billion dollars out of Medibank since the Labor Party made them into a for-profit company in 1 July 2009. That includes six-hundred-million dollars in special dividends.

The Labor Party whenever they were desperate for more cash - which was often - they went after government owned companies like Medibank and asked them for special dividends. Now, there's a limit to how often you can get special dividends out of the capital reserves of a company like Medibank. Capital reserves which were accumulated by members of Medibank on the back of their contributions.

Now, so what we're saying it is actually better for Medibank members, if they're no longer exposed to a Government in Canberra which in the future, if the Labor Party ever was in Government again, would go after them for special dividends whenever they're short of cash, because that actually puts upward pressure on premiums.

FRAN KELLY: There's also suggestion from the Treasurer now that Medibank Private could do the job of the new Disability Care Australia, that's a statutory body established to oversee and administer the national disability insurance scheme.

Would it be appropriate to hand that task, massive task, to a private entity? That's like handing Medicare to a private health insurance operator to administer, isn't it?

MATHIAS CORMANN: Well, again, let's not get ahead of ourselves. But Medibank Private does provide a whole series of services to Government. For example, Medibank Private provides some health services for our defence forces. They provide various health-related telephone lines - help services.

So, I mean, if at some point in the future another area of Government wants to essentially tender out some services, then Medibank, like any other company or any other provider that has got the capability of providing that service, has got the capacity to tender for that, whether they…

FRAN KELLY: But is the Government signalling it's looking at unwinding the statutory body that's currently in place to administer Disability Care Australia?

MATHIAS CORMANN: Not at all. I mean, I have seen the speculation in the paper. I've seen the comments from the Treasurer. Obviously this sort of area is in the area of responsibility of my colleague, Senator Mitch Fifield. I'm personally not aware of what he is or what he is not planning in that regard.

But if there are aspects of that particular area of policy that ultimately might be contracted to a, you know, private service provider, the same as there are aspects of the immigration portfolio and the defence portfolio, or a whole range of other portfolios service delivery areas, or aspects of service delivery, are contracted to not-for-profit or to private service providers, then Medibank, like they have done in the past, would be able to tender for those services in the future. There is absolutely no difference, whether they are in public hands or in private hands, in terms of their capacity to do that.

FRAN KELLY: We're speaking with Federal Finance Minister Mathias Cormann. Minister, directly within your portfolio responsibilities is the matter of parliamentary expenses. It's your department that administers that. Your colleague in Western Australia, Don Randall, has now given a public explanation of sorts for his taxpayer funded trip to Cairns, where he owns an investment property. And there was a question mark over the electoral business there.

He says he flew from Perth to Cairns in his capacity as Shadow Parliamentary Secretary for Local Government. No other detail around that. In your view as the Finance Minister, is that enough explanation?

MATHIAS CORMANN: Well, I put the question the other way. Do you think that the Government should be asking members of the current opposition to detail the meetings they're having, with whom, and what about, before a judgment is made on whether a particular meeting falls within or outside official business? I mean,…

FRAN KELLY: It's complex, isn't it, because without more details it's difficult to judge what's bona fide and not, and yet clearly there are some expense claims made that are outside the guidelines and that's why people are paying back.

MATHIAS CORMANN: And as Members of Parliament we've obviously got a job to do. It involves travel from time to time and, let me assure you, as somebody who travels way too much, it is not one of the better parts of my job.

But, the point I'm just making to you, I mean, we as Members of Parliament are asked to certify that our claims are related to official business, to electorate business, or so on. And I'm not sure that it would be practicable, both in terms of managing the compliance side of it on the public service end, nor desirable on the side of the Opposition. And I'd be interested in the Opposition's point of view on this.

I don't think it would be practicable for people to be required to provide great details about who they meet with in relation to what, for a public servant then to second-guess whether or not a particular meeting falls within or outside the scope of official business. I mean, in Opposition you have all sorts of meetings in relation to all sorts of matters in order to pursue your responsibilities.

FRAN KELLY: Minister, thank you very much for joining us and I really do appreciate you getting up so early to do this interview with us this morning.

MATHIAS CORMANN: No worries. Have a good day.

FRAN KELLY: Finance Minister Mathias Cormann joining us from Perth. It's very early in Perth.

ENDS