Sky News Business – Perrett Report

Senator the Hon Mathias Cormann
Minister for Finance






Economy, MYEFO

JANINE PERRETT: Welcome back. Well it’s a new PM, a new look Cabinet, but some faces stay the same. One key one was Finance Minister, Senator Mathias Cormann. He joins me now from our Perth studio. Welcome back to your show and welcome back to your same Ministry. 

MATHIAS CORMANN: Good to be back.

JANINE PERRETT: Now how are you feeling? Are you glad you escaped all the changes? Are you happy in the old job?

MATHIAS CORMANN: I love the job I’m doing. I continue to do it to the best of my ability. There is an important job to be done to put Australia on the strongest possible economic and fiscal foundation for the future, to ensure we are in the best possible position to take advantage of the opportunities that are coming our way as part of the Asia Pacific and to be in the most resilient position possible in the face of challenges in the global economy that we do have to deal with from time to time. 

JANINE PERRETT: Okay. Well I want to look forward tonight, but we do have to ask the obvious question. Up until last Monday, you were prosecuting the case for the previous government. That’s the one that Malcolm Turnbull said quite clearly was on the wrong economic path. He has come in with what he wants is a whole new narrative and a whole new way to sell it. Given you are in the same job and you were selling the previous economic narrative, how do you change from today?

MATHIAS CORMANN: Everybody knows how I voted last Monday. I was very open and transparent about that. Malcolm Turnbull knew how I voted. But by the same token, the Party made a decision on Monday to make Malcolm Turnbull our leader and to make him our new Prime Minister and as such he has my full and unequivocal support. I feel privileged that he has asked me to serve in his Cabinet and to continue to serve as Minister for Finance. That is a vote of confidence by our Prime Minister in the job that I have been doing and in the job that he would like me to do moving forward. 

JANINE PERRETT: Was there anything about the way the economic path we were on, the way you were selling it that warranted the criticism or the dramatic change of leadership in your opinion?

MATHIAS CORMANN: Malcolm Turnbull pointed out that in his opinion we could and should be doing better to explain the economic challenges that we’re facing as a nation, to explain better the opportunities in front of us and to explain better what we’re doing about it, the reasons for our reform agenda, why we’re making certain decisions. I certainly agree, we can always do better. As for my own personal contribution to that effort, I have always given it my best. I will continue to give it my best. As I said, I feel privileged that the Prime Minister has decided to entrust me to continue in this role. 

JANINE PERRETT: Is it that the message is going to be sold differently or is what you’re selling going to be different? How is what you’re talking about now going to be different to how it was last week?

MATHIAS CORMANN: I think you’ll find that there will be a great level of continuity. The Government over the last two years in which both Malcolm Turnbull and Scott Morrison, the new Treasurer were both senior members, the previous government did a lot of good work. The previous government did make a lot of progress over the past two years. But we are now in a new era and we’ve got to be building further on the progress that we have made over the last two years to ensure we are getting ourselves in the best possible position for the future. 

JANINE PERRETT: Everybody is talking about the new narrative. Is the new narrative meant to be less negative? Less of the doom, debt, disaster talk, which was already changing? Is it about innovation and the new economy? I mean, what would you say is the new narrative of the new Government?

MATHIAS CORMANN: If you look at it holistically since we came into Government, we did inherit a very challenging situation from the previous Labor government, with the economy weakening, rising unemployment and the Budget position rapidly deteriorating. Our focus as a Government has been, since September 2013 on strengthening growth, creating more jobs and on getting the Budget position back under control. We have made some significant progress. We were able to shed a lot of the lead that Labor had put into our saddle bag. Our focus as a Government, over the past two years and moving forward, has been on making our economy more competitive internationally, on improving our productivity and yes on using innovation as a driver for stronger growth into the future. There will be a very determined effort to explain the exciting opportunities in front of us, but also to explain what it is that we are doing and why on the economic front.  

JANINE PERRETT: I can already see one change. You’ve gone a whole, I think five minutes, without mentioning the mining tax or the carbon tax. So is this the way, we’re stopping looking back at the no’s and looking forward on what we might do?

MATHIAS CORMANN: When I talked about shedding the lead that Labor had put in our saddle bag, the mining tax and the carbon tax are two big examples. 


MATHIAS CORMANN: You can laugh about it, but this is a very serious point. We are a trading nation. We are an export focused nation. It is very important for us as an economy to be internationally competitive. When Labor put burdens into our economy like the carbon tax and the mining tax, which slowed us down, which made it harder for us to be successful, then these were bad decisions by the previous Labor government which we have already corrected. Moving forward there is much more work to be done to get us into the best possible position for the future. 

JANINE PERRETT: Ok let’s look forward. There is a lot of speculation around markets today and in the commentariat saying that you might bring forward MYEFO, which is traditionally out in December and it’s a bit of a stocktake of where we’re at, but this might be brought forward to October and there might even be a mini-Budget. Do you see any merit in that, to sort of recalibrate?

MATHIAS CORMANN: That speculation is wrong. It must be coming from people who don’t really appreciate what is involved in putting together a Budget update in an orderly fashion. The MYEFO, the Mid-Year Economic and Fiscal Outlook, the half yearly Budget update, will come out in December as planned. The reason we are putting it out in December is because we want to have access to the national accounts data for the third quarter, so that we have the most current economic information analysis and information to underpin our forecasts available. I don’t really know where that speculation comes from. I have been having a number of conversations with the Treasurer and I have been having a number of conversations with the Prime Minister and our position is very clear. Our half yearly Budget update will happen in December as planned. There is a lot of work to be done between now and then, to ensure that we have got everything in the right place at the right time. 

JANINE PERRETT: So MYEFO on track for December, and are you also ruling out any mini-Budget before then? 

MATHIAS CORMANN: The description of a mini-Budget is a description that comes from commentators. We are going to have an update on our Budget, on our 2015-16 Budget in December, that is the Mid-Year Economic and Fiscal Outlook. Whether people want to describe that as a mini-Budget or as a half yearly Budget update, which is what it is, that is a matter for the commentators. Our next Budget document, our next Budget report, our next update on the state of the Budget and on our plans moving forward will be the Mid-Year Economic and Fiscal Outlook in December.  

JANINE PERRETT: What’s your feeling at the moment as Finance Minister on how we’re travelling? There was a feeling that the economy had been stagnating, that was one of the reasons given for the need for a change in leadership. Did you get the feeling that we were in a rut?

MATHIAS CORMANN: I don’t believe that the economy is stagnating. I don’t believe the Prime Minister or the Treasurer think the economy is stagnating. To the contrary, the Prime Minister, the Treasurer, myself, we’re all optimistic about the future and about what lies ahead for the Australian economy. If you look at things from a glass half full perspective, you have to observe that the Australian economy continues to grow. We are in our 25th year of continuous growth. That is despite the biggest falls in our terms of trade in about 50 years. That is despite significant falls in the prices that we are able to achieve for our key commodities on global markets. So when other commodity based economies like Brazil and Canada are in recession, the Australian economy continues to grow, which is an indicator that the Australian economy is quite resilient. We have been doing some good work in recent years in getting some of that lead out of our saddle bag and getting ourselves in a more competitive position. But there is more work to be done into the future. We want to strengthen growth and create more jobs moving forward. In particular, on the back of a serious focus on the opportunities for innovation. 

JANINE PERRETT: Well you certainly sound quite positive there but we saw a rather negative report from the NAB this morning claiming quote, we’re toast our economy. Do you think that sounded too negative?

MATHIAS CORMANN: If that is what they are saying, I haven’t seen that report, but that certainly sounds excessively negative and doesn’t sound in line with the economic data and the information that I am privy to. One of the missing ingredients out of our economic story in Australia in recent times has been related to confidence. If you look at what has been happening to consumer and business confidence in recent days on the back of the recent change in leadership, then I think that is a very promising indicator of what might lie ahead.

JANINE PERRETT: Yes, now that is a very key point. I said in my editorial, it is all very well for them to say that confidence is up. We saw this in 2013 when your Government was elected, but business actually never came to the party. They never put their hands in their pocket. They spend their money reinvesting in paying out in dividends. Are you hoping this time business will actually put their money where their mouth is and start investing in the economy?

MATHIAS CORMANN: You have got to look at the global economic conditions at the time. There was significant upheaval on the back of significantly lower prices for our key commodities. The price for iron ore went from a high of $180 a tonne to in the $50s now. The price for coal fell and the price for a series of other key commodities is much lower than what it has been. In that sort of context, that does work its way through the economy. That does have an impact on the economy, that does have an impact on confidence and that does have an impact on the decisions that people make in terms of investment. Where we are at now and don’t take my word for it, the Governor of the Reserve Bank himself has also indicated that the economy is in much better shape than what you would think from just reading the newspapers. Over time the reality does work its way through into the public consciousness. The change in leadership last week seems to have triggered a significant boost in confidence, that over time I am sure will play out in the economy as a whole.

JANINE PERRETT: Okay, you talked about global factors, what was your opinion on the Fed decision not to do lift-off, to hold off on lifting interest rates, which sort of gave an indication they are a bit worried about China. How concerned are you about US conditions, China, all the things that have made them hold off?

MATHIAS CORMANN: Look I am not a commentator even on the decisions of our own Reserve Bank, let alone the Reserve Bank of the US. So I am going to leave that to the economic analysts and the forecasters. My job is to focus on the policy areas that we have direct control over. As far as I am concerned that relates in particular and principally to Government expenditure. My job is to continue to focus on getting spending growth under control and to ensure that Government spending is as efficient and as effective as possible. As part of the broader economic team we are focused on the policies that will help make our economy more competitive, more productive, more innovative so that we can strengthen growth into the future so that we are in the best possible position to take advantage of the opportunities in the Asia Pacific. The exciting thing Janine is that we live in the part of the world where most of the economic growth in the world will be generated over the next few decades. There will be lots of opportunity but we do need to be match fit. We do need to ensure that we are in the best possible position to take advantage of those opportunities.

JANINE PERRETT: And just very quickly because we have run out of time, can you some up your opinion on the new Treasurer you will be working with?

MATHIAS CORMANN: I have got a very good personal relationship, I have got a very good working relationship with Scott Morrison. I have worked with him very closely in his two previous roles in the Abbott Government, as Immigration Minister and as Social Services Minister when he was looking after more than a third of our Budget. I very much look forward to working with him very closely in his new role.

JANINE PERRETT: Thank you very much for your time tonight Senator the Hon Mathias Cormann.

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth