Senator the Hon Mathias Cormann
Minister for Finance
Special Minister of State
MICHAEL BRISSENDEN: The International Monetary Fund is ramping up the pressure on global economies to boost growth, warning that recovery from the global financial crisis remains too slow. It coincides with warnings from the Reserve Bank that the surging Australian Dollar could threaten the recovery in non-mining sectors here in Australia. The state of the global economy will make formulating the Federal Budget even more difficult. And the Budget as we know is now less than a month away. For more I am joined live in our Sydney studio by the Finance Minister Mathias Cormann. Senator Cormann good morning.
MATHIAS CORMANN: Good morning.
MICHAEL BRISSENDEN: So the Reserve Bank Governor Glenn Stevens yesterday warning that the strong dollar could derail the nation’s economy. Firstly do you agree? Is the dollar too strong?
MATHIAS CORMANN: The Reserve Bank has got a particular job which it does independently. That is an important feature of our system. Another important feature of our system is that the value of the Australian Dollar is set by the market. We have a floating exchange rate. That has been an important part of helping the Australian economy adjust from resource investment and construction driven growth to broader drivers of economic activity and growth.
MICHAEL BRISSENDEN: Sure, but it is not as low as plenty want it though, is it?
MATHIAS CORMANN: It is a very important feature of our system that the value of the Australian Dollar is set by the market. What we have seen in recent months and recent years, as the price we were able to achieve in global markets for our key commodity exports has fallen quite strongly, that has had an effect on the value of the Australian Dollar, which has come down. This has immediately helped to make other parts of the economy more competitive. The Government is working to complement that through strong economic reform seeking to make our economy as a whole more competitive internationally, more innovative, more productive. That is a plan that we continue to roll out.
MICHAEL BRISSENDEN: Okay. We will get to Government reform policies shortly. But the IMF says the global economy is fragile as we heard. Clearly that is going to have a big impact on any Budget considerations and forecastings?
MATHIAS CORMANN: The Australian economy is an open trading economy. A stronger global economy is good for us and a weaker global economy presents challenges for us. That is true. Either way, the work that we have to do is ensure that the Australian economy is in the strongest possible position to deal with global economic headwinds, if and as they occur, and also to be in the strongest possible position to take advantage of opportunities coming our way. The good news is that we are here at the heart of the Asia Pacific where most of the global economic growth will be generated for years and decades to come. This part of the world does grow more strongly than the rest of the world. So there is opportunity for us as well as challenge. The job of the Australian Government is to back Australians to be the most successful they can be as we are working through this current transition.
MICHAEL BRISSENDEN: Okay, but you have been butting heads with State leaders over the last week or so about what direction to take to do that. I note today that there are reports out that the States are once again rebuffing the Federal Government on an offer to reform their tax systems in exchange for a share of income tax, a set share of income tax. Will you continue to push the States to overhaul their systems, their tax systems?
MATHIAS CORMANN: We will continue to push and to work hard to strengthen growth and to create more jobs. A part of that is to ensure we make our tax system more growth friendly. A part of that is to improve the working of our Federation. Just because everyone doesn’t say yes we go along with you on day one, doesn’t mean that we stop. We need to persist. Every single day, we will continue to focus on strengthening growth, creating more jobs and making sure that people across Australia have the best possible opportunity to get ahead, in the context of, as you say, some ongoing global economic challenges.
MICHAEL BRISSENDEN: The States to have a different view about how the Federation is going to work don’t they?
MATHIAS CORMANN: This is an ongoing process. I don’t think that these matters are ever resolved in one go. This is an ongoing process, but the governments, the Federal Government’s focus and commitment is very clear. We will continue to deliver reforms which strengthen growth and create more jobs. The engagement with the States along those lines will continue.
MICHAEL BRISSENDEN: The rhetoric is clear in strengthening the economy and making more jobs, but the messaging does seem to be mixed. Do you concede that this has been confusing for voters? There hasn’t really been an economic platform that has been articulated properly for voters since the Turnbull Government, since Malcolm Turnbull took the reins, and that is starting to be reflected in the polls.
MATHIAS CORMANN: I don’t agree that there hasn’t been a clear narrative. The very clear narrative is that the Australian economy is an economy in transition from resource investment and construction driven growth to broader drivers of economic activity and growth. That brings with it some challenges and we have got to ensure that the Australian economy is the most competitive, the most innovative and the most productive we possibly can be, to ensure we can seize the opportunities coming our way and to ensure we are in the strongest possible position to deal with the challenges coming our way. Everything that we do seeks to support that effort and that objective.
MICHAEL BRISSENDEN: There is a perception abroad isn’t there, that the Government has become wishy-washy? Even one of your own MPs, I note Capricornia MP Michelle Landry, saying that the Government is looking wishy-washy and voters are getting tired of a lack of direction from the Government. Whether you like it or not that’s the way people are interpreting it.
MATHIAS CORMANN: I am not a commentator. I am a player on the field. I am getting up every day to do the best I can as part of the economic team of the Government to put Australia on the strongest possible economic and fiscal foundation for the future. That is what everyone in our team from the Prime Minister and the Treasurer down is doing. It will be up to others to judge. Ultimately it will be up to the Australian people to judge at the next election who they trust with continuing to take Australia successfully through this transition from resource investment driven growth to broader drivers of economic activity and growth.
MICHAEL BRISSENDEN: You are not a commentator, you have said that many times, but what do you say though... interrupted
MATHIAS CORMANN: I am consistent.
MICHAEL BRISSENDEN: Yes you are on that one. What do you say to business who is also expressing concerns about this?
MATHIAS CORMANN:Our focus is very clearly on implementing economic reforms to strengthen growth and to create more jobs. We have been doing that across a whole range of areas. We have been delivering policy reforms to make our tax system more growth friendly, we have been delivering the deregulation agenda... interrupted
MICHAEL BRISSENDEN: The problem is that business doesn’t seem to think that is what’s happening.
MATHIAS CORMANN: Business and they are entitled to this, they want us to work even harder and to do even more and we will. As I say, every day we do the best we can to strengthen growth and create more jobs.
MICHAEL BRISSENDEN: Will the Budget fix this view that the Government is drifting on all of this?
MATHIAS CORMANN: The Budget will be the next instalment of our economic plan. It will be a four year forward plan that will identify all of the things that we intend to do over the next four years.
MICHAEL BRISSENDEN: Do you think the public are looking for more than just another instalment? I think there is a view out that the public actually want something a bit more concrete than that.
MATHIAS CORMANN: I think the public wants the Government to provide good and stable government. I think the public wants the Government to back the Australian people to be the most successful we can be. I think that the public wants the Government to continue to implement a plan for stronger growth and more jobs and to repair the Budget. That is exactly what we are doing.
MICHAEL BRISSENDEN: But do the polls suggest that the public perhaps doesn’t agree with you?
MATHIAS CORMANN: Every day we have got to do the best we can and that’s what we are doing.
MICHAEL BRISSENDEN: Okay. Mathias Cormann thanks very much for joining us.
MATHIAS CORMANN: Always good to talk to you.