Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
FIONA ELLIS-JONES: As we have been hearing the Federal politicians are back in Canberra today for a two week sitting which will see the attention divided between economic issues and same sex marriage. For a Government view on Parliament’s return we are joined now by the Finance Minister Mathias Cormann. He is speaking to Marius Benson.
MARIUS BENSON: Mathias Cormann, Good morning.
MATHIAS CORMANN: Good morning, Marius.
MARIUS BENSON: Can I begin with some remarks by Scott Morrison, the Treasurer, to the Fin Review in Washington. The Treasurer’s says that monetary policy has exhausted its effectiveness, or put another way he is saying that more rate cuts are pointless. Do you agree with that?
MATHIAS CORMANN: The Treasurer was just echoing statements that were made by Philip Lowe, the new Governor of the Reserve Bank on the limitations of interest rate cuts and monetary policy. There are better ways to stimulate the economy than an interest rate of zero. That is essentially the Treasurer echoing the comments that were made by the new Governor of the Reserve Bank and he is right.
MARIUS BENSON: So he is right? You agree that there is no point in more cuts to interest rates?
MATHIAS CORMANN: These decisions are made independently by the Reserve Bank. That is their job. But as the Treasurer was indicating, he was echoing the comments made by the Reserve Bank.
MARIUS BENSON: Can I just clarify, when you say he was right you agree that more interest rate cuts are pointless?
MATHIAS CORMANN: I accept that the Reserve Bank has got the expertise to make these sort of assessments. They will continue to make these sorts of judgments independently moving forward.
MARIUS BENSON: The Treasurer also makes the point that Government policies have to do the heavy lifting to boost incomes and lift living standards. You’re now in your second term, the second term of those policies, incomes and living standards have not been lifted. Wages increases are at historic lows.
MATHIAS CORMANN: Our economy, as we said in the lead up to the election, our economy is an economy in transition. It is true that we have had to face a whole series of global economic headwinds and we had to work our way through the implications of significant falls for global prices for our key commodity exports. Having said all that, at 3.3 per cent annual growth, our growth is stronger than what it was when we came into Government. It is certainly stronger than any of the G7 economies in the world. But there is clearly more work to be done. We have to continue to ... interrupted
MARIUS BENSON: But could a wage earner reasonably say well I am glad the economy is great, but my pay packet is not great. What’s wrong with this mob?
MATHIAS CORMANN: Clearly, as we are going through this transition, the most important focus is to ensure that the unemployment rate doesn’t rise. The employment growth has been stronger than anticipated. The unemployment rate is lower than where it was expected to be. It is at 5.6 per cent as we speak. But we are keen to see increases in living standards. We are of course focused on helping people across Australia have the best possible opportunity to get ahead. That is one of the reasons why it is so important to legislate the Ten Year Enterprise Tax Plan, because a more competitive corporate tax rate is a proven way to boost investment, boost productivity, and over time increase real wages. If we want ... interrupted
MARIUS BENSON: Can you estimate when real wages might increase?
MATHIAS CORMANN: These are matters that work their way through the economy. But the key focus here is, in order ... intferrupted
MARIUS BENSON: But you are the Finance Minister. Can you give wage earners any indication of when their wages might go up?
MATHIAS CORMANN: The indication that I am giving wage earners across Australia is that our first priority is to keep the economy strong to ensure that people have the best possible opportunity to keep their job or get a better job. When it comes to wages they are set in the economy. In order to boost salaries we have got to boost productivity. One of the best ways to boost productivity is through a more competitive business tax rate.
MARIUS BENSON: Debt, there is a warning from Standard & Poors on foreign debt hitting extreme, and that increase in debt is going up on your watch. You came in two elections ago promising to deal with the debt and deficit disaster, and the gradient of the increase in debt has not been flattened by your administration.
MATHIAS CORMANN: That is wrong. Debt today ... interrupted
MARIUS BENSON: I am just looking at the graph on the front page of The Australian today, 2013 to now. Pretty steep.
MATHIAS CORMANN: Debt is lower than what it would have been if we had not made the decisions to change policy settings from what we inherited from Labor. The spending growth trajectory and as such the deficits and debt growth trajectory that we inherited would have been worse if we had not made the decision to implement savings of about $220 billion worth in net terms to 2026-27. We understand that there is significant challenge. The previous Labor government inherited a situation of no Government net debt, a strong surplus and indeed money at the bank. We ... interrupted
MARIUS BENSON: Yes, but Labor was so long ago, you have been there two sessions. Can I move on to same sex marriage, because...
MATHIAS CORMANN: Labor was actually not that long ago, I have got to tell you. It was ... interrupted
MARIUS BENSON: It was two elections ago.
MATHIAS CORMANN: It was three years ago and ... interrupted
MARIUS BENSON: Will you keep blaming them through the second term?
MATHIAS CORMANN: We are working our way still dealing with the messes that they have created on the fiscal front.
MARIUS BENSON: Same sex marriage, Labor is obviously going to block it in the Senate with the crossbench. If the Senate, when the Senate blocks the plebiscite is that it as far as the Government is concerned with same sex marriage? Is it off the agenda until Labor wins Government?
MATHIAS CORMANN: I don’t accept the premise of your question. I ... interrupted
MARIUS BENSON: Labor will block it in the Senate.
MATHIAS CORMANN: How do you know that?
MARIUS BENSON: I pay attention to politics. Bill Shorten has said that he finds nobody in favour of it. Everybody knows, Tony Burke said it yesterday he expects it to be blocked. Tony Burke is quite well informed. It will be blocked. When it is blocked in the Senate, is that it for the Government?
MATHIAS CORMANN: We went to the election making a promise that we would put this question to the Australian people.... interrupted
MARIUS BENSON: Yeah, I understand that, but just narrowly on that question, is that it, is there no a plan B when the plebiscite is blocked?
MATHIAS CORMANN: Our plan is to put a plebiscite to the Parliament. Our plan is to put this question to the Australian people. That is our plan. That is what we took to the election and we deliver on our election commitments. It is a matter for Bill Shorten and the caucus to decide tomorrow. I believe this is a question that is being discussed by the Labor caucus tomorrow. It is a matter for them to decide whether they want the Australian people to have the opportunity to pass judgment on this.
MARIUS BENSON: Just quickly, S Kidman, it looks like Gina Rinehart has put in a bid. It’s two thirds Gina Rinehart and one third a Chinese share. Does that look like an attractive offer?
MATHIAS CORMANN: There is a process involved here. I think it will be great if we can keep this very significant asset in majority Australian hands. There is a process to go through. I would just let this play out.
MARIUS BENSON: Mathias Cormann, thank you very much.
MATHIAS CORMANN: Always good to talk to you.