Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Australia is on the brink of political and economic upheaval. The Prime Minister recalls for an early election as a new central bank governor is announced. Phillip Lowe will take over the Reserve Bank of Australia in September. This week the bank cut interest rates to an all-time low of 1.75 per cent. The plan is that low rates will help to ward off deflation. And Prime Minister Malcolm Turnbull says he will call for elections to be held on July 2nd. Joining us now from the capital is Mathias Cormann. He is the Australian Finance Minister. Thank you so much for being with us today Minister, we appreciate it.
Good to be here.
Let’s talk about Australia’s economy. You are really feeling the shift of China. So much of Australia’s economy was built around that resource manufacturing surge in China. That has gone away and some people say it’s never going to come back to its peak. How do you retool the Australian economy to deal with that?
We are an economy in transition from resource investment and construction driven growth to broader drivers of growth in a more diversified economy. We are entering into our 26th year of continuous growth. Our economy right now is growing at 3 per cent, which is higher than what is was two years ago. Certainly, it is higher than any of the G7 economies, higher than the United States, higher than the United Kingdom, double the growth rate of Canada. So the Australian economy continues to perform well. Our lower interest rates help through that transition, the lower value of the Australian dollar helps through that transition and the Government’s plan for jobs and growth helps with that transition.
And I know part of it there, a new Budget has come out and there is a focus on trying to cut corporate taxes to spark innovation. Can you get there? Is that enough in order to get the kind of innovation that you’re talking about when you need to make a big shift in economy like that and really diversify?
Our corporate tax rate in Australia at 30 per cent at present is comparatively high by international standards. We have released a plan to bring that down to 25 per cent within the decade, which will bring us back into the middle of the pack of OECD countries. That will add over time 1 per cent to the size of our economy on a permanent basis. That is a very important part of our efforts to continue to successfully transition to a stronger more diversified economy.
We have as I am sure you have heard a fiery election underway here in the US. The leading Republican nominee is talking about getting tough on China, on trade and other trade partners. Are you concerned that we are entering a period where countries are moving away from open trade and trade agreements to a more combative, bilateral, trade tariff type world?
Open trade is very important for the world. Open trade leads to stronger growth on a global level. Australia is an open, trading economy. The more successful the world economy, the more successful we are. So we are very much in favour of more free trade around the world. As far as the election in the United States is concerned, we will leave that to the American people to resolve and to settle.
I’m sure you are very happy to be able to stay neutral and sidestep direct comment on that one. We’ll see if you get away with it next time. Minister thank you so much for joining us. We appreciate it.