Mathias Cormann, constitutional monarchist, Jesuit trained, gave his maiden speech in 2007. In accord with the times, the speech referred to clean energy and the challenges of climate change. There was nothing about coal. But Cormann seemingly changed his views or was unable to propagate them. He now accommodates the passions of his conservative colleagues who praise fossil fuels and who continue to believe in lower taxes and ever smaller governments.
Cormann is the longest serving federal finance minister, having been appointed to that portfolio in September 2013. His grip on the conservative wing of the Western Australian Liberal Party helped ensure his place in cabinet under three prime ministers: Tony Abbott, Malcolm Turnbull and Scott Morrison. Cormann's longevity means he has had a more sustained influence on the shape of the federal government than any predecessor.
Cormann has now announced his decision to retire from the parliament at the end of the month. His gaze has returned to Europe, to be the Secretary-General of the OECD, that Paris-based organisation established to help governments understand the science of economics and of society.
The question is, are Cormann's beliefs consistent with the body he wishes to join? Or are they discordant, ill-fitting and ill-suited.
We can judge Cormann's fitness for the OECD by seeing how his work as finance minister sits with the research findings and advisings of the OECD.
Cormann will learn that contracting out is not always a solution, it is often the problem.
One of Cormann's constant themes is the need to repair the budget. He lamented the state of the federal budget in one of his earliest ministerial speeches. He compared the "bad and rapidly deteriorating budget position" inherited in 2013 by the Abbott government with that bequeathed in 2007 to the Rudd government. It was not a balanced speech. He failed to identify the root cause of these perceived budget problems, the Global Financial Crisis. And he failed to point out that the Rudd government's fiscal response had saved Australia, almost uniquely, from falling into a deep recession.
The 2014-15 budget, Cormann's first as finance minister, can fairly be said to have failed. The highlight, abolition of a carbon price, was pure ideology. It ran counter to all that the OECD espouses and it continues to bedevil Australia's response to global warming. And several major budget measures centred on making government smaller and cheaper, including a Medicare co-payment, failed to pass the Senate.
Cormann's last budget, the October budget addressing the COVID-19 fiscal crisis can also be judged a failure: in contrast to the government's earlier responses to COVID-19, the budget is too ideological and too parsimonious. It places the government's hope, and a little of its money, on the private sector rising to meet demand that is severely scarred by COVID-19.
But fiscal meanness is not Cormann's only attribute. Cormann will struggle to understand OECD findings that increasing inequality of income and wealth leads to lower growth; that cutting government spending does not mean higher growth; that cutting taxation does not deliver higher living standards; that countries with bigger governments have happier populations. Cormann will learn that contracting out is not always a solution, it is often the problem, and that selling government assets is often more expensive than keeping them.
Australia will survive Cormann's departure from the finance portfolio. But Cormann might not survive the OECD.
- Tony Harris is a former senior Commonwealth officer who served several finance ministers.