Senator the Hon Mathias Cormann
Minister for Finance
TICKY FULLERTON: Well the Abbott Government is celebrating its second anniversary. But the corks aren’t popping over a sluggish economy and tepid growth. The man in charge of spruiking the economy is Finance Minister Mathias Cormann and he joins me from our Parliament House studio now. Minister, welcome.
MATHIAS CORMANN: Good to be here.
TICKY FULLERTON: Can I go to the G20 first. The Government’s target of an additional two per cent global growth last year drew some scepticism at the time. Now we’ve got the IMF having lowered growth forecasts. Was it ever a credible figure?
MATHIAS CORMANN: It’s not just the Government’s target, it is a target that we put forward when we held the presidency of the G20. It is a target that was embraced and adopted by all G20 countries and of course ...interrupted
TICKY FULLERTON: Nevertheless, it was the Treasurer’s, it was very much the Treasurer’s move pushing it forward wasn’t it?
MATHIAS CORMANN: And it was a very important move if I may say so. It has focussed the minds of governments around the world, representing 85 per cent of the world’s economy, the leaders and Finance Ministers of G20 countries around the world on the need to plan for stronger growth and more jobs. By putting that target in place, by focussing the governments minds on the necessary reforms to achieve two per cent growth above business as usual by 2018. Much more has been done than would have been done otherwise. As the IMF and the OECD and others also have made clear, we all remain committed to strengthening growth and achieving that two per cent growth above business as usual by 2018.
TICKY FULLERTON: Well, I’m just wondering how achievable is it and whether we should keep talking about this. For example, the global infrastructure initiatives that have been put in place, I mean we’re looking at now very, very fragile markets in emerging economies.
MATHIAS CORMANN: We should keep talking about what we need to do to strengthen growth, create more jobs and create better opportunity, of course we should. We should talk about the aspiration, as well as the specific plans and activities that are being put in place by countries around the world to get there. Of course we should keep talking about it.
TICKY FULLERTON: Alright, well there is a new pledge of course from our latest finance minister meetings and that’s to stop the currency wars. Now if US rates do rise, perhaps even this month and capital still drains from China, what confidence is there that currency wars won’t continue?
MATHIAS CORMANN: I’m not going to provide a commentary on currency wars. I’m the Finance Minister looking after the expenditure side of the Budget and micro-economic reform. I’ll leave commentators and analysts to run ...interrupted
TICKY FULLERTON: But clearly currency wars make a great deal of difference to running an economy like Australia’s?
MATHIAS CORMANN: Australia is a trading nation. What is important for Australia’s future success is that our economy is as competitive as possible. That the cost of doing business is as low as possible. That our productivity is as high as possible. The Government, in the area where we have the policy levers, where we have control, we are doing everything we can to be the most competitive, the most productive as possible internationally, so that we can continue to strengthen growth into the future.
TICKY FULLERTON: Well indeed, the G20 also made the point that more heavy lifting has to be done by Governments rather than the central banks. I’m just wondering now that growth is also trending lower in Australia the return to surplus must be ever more, further away?
MATHIAS CORMANN: The growth rate for 2014-15 is broadly in line with what we anticipated at Budget time. To the extent that you are concerned about an impact on the fiscal position of the Budget, I certainly would not support that proposition. The Australian economy continues to grow at a time when we are facing the biggest fall in our terms of trade in about fifty years. When other commodity based economies like Canada and Brazil are in recession, Australia continues to grow. Yes, our growth in the last quarter was slightly weaker than we would have liked, but it is certainly much stronger than what it would have been if we had not taken some of the decisions that we took over the last two years to shed some of the lead that Labor put into our saddle bag over their six years in government. The reason we got rid of the carbon tax is because it was making Australia business less competitive internationally....interrupted
TICKY FULLERTON: Well there are certainly other economists, for example Paul Krugman and others, who see us as also headed for a recession and looking at the transition of the economy, when a company like CSL, our largest biotech company, makes the decision to spend half a billion dollars in Switzerland building a plant, rather than here, that must depress you?
MATHIAS CORMANN: If you look at what is actually happening in the market, since September 2013 when we came into Government, more than 335,000 new jobs have been created. If you look at the national accounts and you look at the unemployment data to the end of the 2014-15 financial year, you will see that the unemployment rate was lower than what had been anticipated in Labor’s last Budget. The Reserve Bank Governor recently said very clearly that the unemployment rate, moving forward, is forecast to be lower than what had been anticipated due to stronger labour market conditions. The job advertisements, a good lead indicator, the job advertisements data shows that job advertisements are about 9 per cent higher than what they were this time last year. So we are quite optimistic about the economic outlook moving forward …interrupted
TICKY FULLERTON: But as a place to do business Minister, in terms of the reform agenda, we’ve now had this national economic summit where really parties agreed that changes did need to be made to super. People are now becoming more open to looking at the GST, there just seems to be a weakness in political leadership to drive some of these changes through.
MATHIAS CORMANN: I don’t agree with that characterisation at all. The Government has a clear, long-term economic plan for stronger growth and more jobs. It is focused on bringing down the cost of doing business and making Australia more competitive internationally. We have already done a lot on that front. Scrapping the carbon tax, scrapping the mining tax, reducing red tape costs for business by about $2 billion a year, rolling out record infrastructure investment across Australia in productivity enhancing infrastructure. The next part of our reform agenda is to legislate the historic and very important Australia-China Free Trade Agreement, which will give Australian business better access to that key market. It will help Australian exporters, in particular in services and agricultural and fisheries products, get better access to that market. Yes, we are also focused on the need for future tax reform. On top of tax cuts for small business we want to pursue broader tax reform to make our tax system more competitive internationally, but this is all part of a broader, long term plan.
TICKY FULLERTON: Alright Minister thank you very much for talking with us.
MATHIAS CORMANN: Always good to talk to you.