Senator the Hon Mathias Cormann
Minister for Finance
Date: Thursday, 3 September 2015
SANDI ALOISI: Let’s go straight to one of the top political stories this morning. The Abbott Government has insisted through a series of recent scandals that it won’t be distracted from the main game of jobs and growth. Yesterday those issues were in the political spotlight, but the news was not good for the Government with growth stalling. For a Government view on those economic figures, we’re joined by the Finance Minister, Mathias Cormann. He’s speaking to Marius Benson.
MARIUS BENSON: Mathias Cormann, good morning.
MATHIAS CORMANN: Good morning, Marius.
MARIUS BENSON: The headlines make sobering reading for the Government today. The Australian, 'Economy stuck in the slow lane'. The Sydney Morning Herald, 'Economy stumbles'. The Financial Review, 'Economy hits the brakes'. Would you argue with those assessments?
MATHIAS CORMANN: The Australian economy continues to grow, despite the biggest fall in our terms of trade in fifty years. While other commodity based economies like Canada and Brazil are in recession, we continue to grow.
MARIUS BENSON: But the growth is 0.2 per cent and it wouldn’t be there, it wouldn’t be in the positive territory at all, except for the Government. It seems a little ironic. You’re always talking about smaller government and getting Government out of the way. It’s the Government that is keeping the economy positive.
MATHIAS CORMANN: We are pursuing smaller government. We are in a stronger position than we would have been if we hadn’t got rid of the carbon tax and the mining tax, which reduces the size of Government. If we hadn’t reduced taxes for small business. If we hadn’t reduced red tape costs for business by about $2 billion a year. If we hadn’t started to roll out our record investment in productivity enhancing infrastructure. If we hadn’t pursued some of the tax cut initiatives in the most recent Budget, which incidentally also reduced the size of Government. What we are also doing is pursue a very ambitious free trade agenda, which helps business get better access to key markets in our region and helps them be more successful and employ more Australians. We are implementing our plan for stronger growth and more jobs. That means that we are in a stronger position than we would have been. It means that we have been able to work our way through this significant transition with record falls in our terms of trade better than other commodity based economies in the world.
MARIUS BENSON: But your plans for stronger growth has delivered weaker growth.
MATHIAS CORMANN: It is stronger growth than we would have had if we hadn’t taken all of the actions that we’ve taken ...interrupted
MARIUS BENSON: But isn’t that a fairly weak argument, Minister, when you say it would have been worse if we hadn’t done what have done, even though it’s pretty grim in the outcome?
MATHIAS CORMANN: That is a critically important argument. We are in a stronger position than we would have been if we hadn’t got rid of some of these job destroying, anti-investment, anti-growth policies of the previous government. We are in a stronger position than comparable economies in other parts of the world. Yes, we are dealing with some geo-economical challenges. Yes, we are dealing with some external headwinds, but we are focussed on making sure that the Australian economy is in the strongest possible position to deal with those challenges. That we are as resilient as possible. That is why we are focused on improving our international competitiveness. That is why we are focused on improving productivity and reducing the cost of doing business. All of these external challenges that we are currently facing mean that we need to work even harder to implement our plan for stronger growth and more jobs.
MARIUS BENSON: But this is not what you promised when you were elected. You said that there would be a shot of adrenalin in the economy. That business would boom and that the growth for one thing would increase. In fact you’ve delivered the opposite and you’re delivering it with reasons that you’ve failed to deliver what you promised.
MATHIAS CORMANN: I completely reject that characterisation. What we promised was that we would put Australia on a stronger, more prosperous foundation for the future. That we would put Australia on a stronger economic and fiscal foundation for the future. That is exactly what we’re doing. We are making sure that Australia is in the most resilient position possible, to deal with external challenges. That we are in the best possible position to take advantage of future opportunities coming our way. The truth is, we are very optimistic about the outlook moving forward. We are in the part of the world, the Asia Pacific, which will generate most of the global economic growth in the decades ahead. It is important to ensure that Australia is in the strongest possible position to take advantage of opportunities coming our way down the track. But in the meantime, we are facing challenges, we are going through a transition, we are confronted with the biggest fall in our terms of trade in fifty years and we are working our way through that as a country. We are in a better position than other similar economies around the world. We are certainly in a better position that we would have been if we hadn’t done the things that we have done.
MARIUS BENSON: But Australians are worse off. If you asked people now if they are better off than when you were elected, the answer statistically would be no, because real net disposable income per capita, the measure of personal wellbeing economically is worse now than when you came to power.
MATHIAS CORMANN: That is actually factually incorrect. Wages growth as all of the indicators show, wages growth is running ahead of inflation, which as a matter of fact means that disposable income for wage earners is increasing. Yes, wages growth is low by historical standards, but inflation is low by historical standards. Wages growth is tracking more strongly ... interrupted
MARIUS BENSON: But all the statistics on real net disposable income per capita, say that we’re worse off now, statistically than when you came to power and in earlier years.
MATHIAS CORMANN: We inherited, when we came into Government, a weakening economy, rising unemployment and a Budget position that was rapidly deteriorating. If we were ...interrupted
MARIUS BENSON: But you can’t say that it is still Labor’s fault.
MATHIAS CORMANN: Can I perhaps finish my answer? We inherited a weakening economy, rising unemployment and a Budget position that was rapidly deteriorating. We worked hard to turn that situation around. We are now in a stronger position than we would have been. Is there more work to be done? Yes, there is. We are focused on doing everything we can to keep getting Australia on a stronger economic and fiscal position for the medium to long term.
MARIUS BENSON: Mathias Cormann, thank you very much.
MATHIAS CORMANN: Always good to talk to you.