ABC Radio National - Drive

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia


Date: Tuesday, 6 February 2018

The Senate, Australian economy, Batman by-election, Senator Molan

PATRICIA KARVELAS: The Australian stock market took a nosedive today, the knock on effects of huge losses on the Dow Jones overnight. Mathias Cormann is the Minister for Finance and the Leader of the Government in the Senate. Mathias Cormann welcome to the program.

MATHIAS CORMANN: Good to be here. Happy New Year.

PATRICIA KARVELAS: Happy New Year to you too, we can say that in February I hope. The High Court has made a ruling this afternoon that clears the way for Steven Martin to replace Jacqui Lambie in the Senate. What do you know about Mr Martin and how he might affect the Government’s agenda, particularly in the business tax cuts space?

MATHIAS CORMANN: I only know what I have read about him in the newspaper. He clearly has been involved in his local community for some time. We all look forward to welcoming him in the Senate and from the Government’s point of view, as we do with all non-Government Senators, we will work with him constructively,in good faith and with a view of advancing Australia’s public interest.

PATRICIA KARVELAS: One scenario is that Steven Martin will immediately resign allowing Jacqui Lambie to re-enter Parliament. What would your reaction be to that?

MATHIAS CORMANN: I am not going to speculate on these matters. I mean these are clearly not matters for me, these are matters for the Jacqui Lambie Network. The High Court having confirmed that Steve Martin is the new Senator, is eligible to be elected Senator and would be the new Senator, that is now a matter for him and Jacquie Lambie. I am not going to speculate.

PATRICIA KARVELAS: He is a Councillor and was ruled by the High Court to be eligible to sit. What do you make of that ruling because that really clarifies this grey area in the Constitution, doesn’t it?

MATHIAS CORMANN: The High Court is the arbiter of these things and we 100 per cent accept and respect their ruling. That is as you say a very clear determination of how the Constitution is to be interpreted on this point.

PATRICIA KARVELAS: I want to move to another issue, the Greens have accused the Government of dragging its heels when it comes to setting the date for the Batman by-election. Are you dragging your heels? 

MATHIAS CORMANN: No. The Greens are getting a bit hysterical when it comes to the Batman by-election. There are certain processes to be followed. The Greens know about this. In the first instance it is actually a matter for the Speaker and I am sure that the appropriate arrangements will be made at the appropriate time.

PATRICIA KARVELAS: Okay, the Speaker is obviously linked to the Government, you would have an idea, you are also now Special Minister of State. Can you give me any indication of when we will know when the by-election is on?

MATHIAS CORMANN: Well no, I do not have an indication. The first instance and the Speaker does act independently as the most senior officer in the House of Representatives in relation to these matters. I mean the Speaker has to make relevant determinations and then the process will follow. Ultimately, the Australian Electoral Commission, as is also appropriate, will conduct the by-election professionally, but most importantly independently from any interference of any political party.

PATRICIA KARVELAS: So has the Government delayed setting the date for political gain to hurt Labor? That is what Richard Di Natale says.

MATHIAS CORMANN: That is crazy, I am not going get myself involved in this sort of commentary. I have already answered your question previously. The answer is an emphatic no. 

PATRICIA KARVELAS: Do you accept though that people do need clarity around this by-election obviously with uncertainty of that particular seat, those people deserve a representative.

MATHIAS CORMANN: The people of Batman will have a representative very soon. If Labor and the Greens were so concerned about this, it was not us that delayed the inevitable decision by David Feeney to resign as the Member for Batman given that he was a dual citizen. In the same way that it is not our decision for Susan Lamb to delay her inevitable resignation. Susan Lamb, the same as David Feeney, is a dual citizen today. She is a British citizen according to her own lawyer, as well as an Australian citizen. So she sits in breach of the Constitution in the House of Representatives today. If David Feeney had made the right decision earlier, the same way as John Alexander did, this by-election could have happened much sooner and the people of Batman would have had proper representation much sooner. 

PATRICIA KARVELAS: $60 billion in value has been wiped off the stock market. What is your message to investors?

MATHIAS CORMANN: I am not a commentator on the stock market. There are a lot of people out there that are commentators on the stock market. Our job is to ensure that the economic fundamentals in our economy are sound and they are. Our economy continues to grow, it is now into its 27th year of continuous growth. We have had very strong employment growth over the last 12 months, more than 400,000 new jobs created. There is from time to time volatility in the stock market and people make their own decisions in relation to their investment choices in that context.

PATRICIA KARVELAS: Just on wages, what modelling is the Government relying on when you say that cutting company taxes will increase wages?

MATHIAS CORMANN: It is just plain logic and there is of course a lot of historic evidence in relation to this. If you want to achieve higher wages, you need to ensure that the businesses that employ people have the opportunity to be successful and profitable into the future. Future pay rises will be funded by more successful and more profitable, more productive businesses. If a business is less successful, less profitable, it will be able to higher fewer people and it will only be able to pay them less. If you are a more successful, more profitable business and you are competing with other businesses for a shrinking surplus labour supply, if you are competing with more and more other successful businesses for workers in the Australian workforce, then obviously you will have to end up paying more. That is the way the market operates, it is basic supply and demand. More businesses competing for fewer unemployed workers….interrupted. 

PATRICIA KARVELAS: Okay but you are giving us the economic theory around it, but can you tell us how much the enterprise tax package will lift wages?

MATHIAS CORMANN: It is not just economic theory, it is economic practice and it is the evidence in the marketplace over many, many years. Our forecast when it comes to wage increases are reflected in the Budget papers. We have updated that at the half yearly Budget update. Over the most recent 12 month period, the national accounts show that wages increased by 2 per cent, which is slightly above inflation. Our expectation is that that will increase to 3 per cent and that is in the context of us implementing our full national economic plan as reflected in the Budget. 

PATRICIA KARVELAS: If you are just tuning in, Mathias Cormann the Finance Minister is my guest. CBA Chief Economist Michael Blythe says Australia should follow the Japanese model of linking tax cuts to guarantees from companies that dividends will flow into higher wages. Wouldn’t that be a better approach to give the public a sense that there is a positive economic consequence for them, that people who are wages earners will get a benefit from this?

MATHIAS CORMANN: We do not support that sort of Government intervention in the Australian market that way. We happen to believe and history around the world shows that the best way of making sure that everyone has the best possible opportunity to get ahead and be able to get a job and a better job and a better paid job is by supporting the free market, free enterprise, encouraging people to stretch themselves, reward for effort. If you end up intervening in the market that way as a Government, the risk is that Governments get these decisions wrong, that you make bad decisions and that you end up increasing the level of unemployment. In Australia what has happened in recent years, as we went through a difficult economic transition on the back of lower global growth, on the back of lower global prices for our key commodity exports, flexibility in the labour market has meant that people have kept their jobs. The unemployment rate did not go up as it has when we previously faced these circumstances. But yes, wage increases have been less than what they have been in periods of strong growth in the past.

PATRICIA KARVELAS: Yeah sure, but…interrupted.

MATHIAS CORMANN: Looking forward , as growth continues, as more jobs are created, as the excess in the labour market continues to reduce and profitable businesses compete for fewer workers available, wages will increase. As certain as night follows day. That is the way it has always happened. Anybody who argues against that argues against the existence of mountains in Switzerland.

PATRICIA KARVELAS: I am going to ask you a final set of questions around something that I think has been a huge issue and I know that you guys have been really arguing about it a lot in the Senate today. Why won’t Senator Jim Molan apologise for sharing videos from an anti-Muslim group Britain First on his Facebook page? 

MATHIAS CORMANN: Firstly, given some of the comments from Senator Cameron in the Senate today I do not think we have any lectures to take from the Labor party on some of these matters.

PATRICIA KARVELAS: I am not giving you a lecture from the Labor Party. I am asking why he will not apologise. Full stop. No link to the Labor party. Just full stop.

MATHIAS CORMANN: The Coalition strongly supports the great multicultural success story that the Australian nation is. Australia is a great country. We have people here who come from all corners of the world, from all sorts of backgrounds, choosing to make Australian their home and making a contribution. We are one of the most successful, if not the most successful multicultural nation in the world. Senator Jim Molan has explained himself very clearly. He has stated on the public record that this particular organisation is an appalling organisation. He does not endorse them in any way. He has actually removed those posts, which he says were never intended to be seen as supporting what they stand for. 

PATRICIA KARVELAS: But the President of the United States, Donald Trump apologised for sharing Britain First posts on social media. If that is good enough for the President of the United States why not Jim Molan?

MATHIAS CORMANN: Again, I am not a commentator. Jim Molan has made very clear that he considers that Britain First is an appalling organisation. He has made it very clear that he does not endorse in any way shape or form what they stand for. He has taken down those posts. He has explained himself. I am not going to speak for Senator Molan. I suggest you get him on your program and ask him these questions directly. 

PATRICIA KARVELAS: I am not asking you to speak for him, but the Government has been defending him all day.

MATHIAS CORMANN: The Government has pointed to his outstanding record of service in the Australian Defence Force.

PATRICIA KARVELAS: But can’t someone have, look honestly, can’t someone have an outstanding record of service but still have done the wrong thing? I mean, why refer to someone’s service to defend this action, which clearly is problematic. Even Donald Trump apologised for the same thing.

MATHIAS CORMANN: Patricia you just said the Government has been defending him all day. I have corrected you in saying that we have pointed to his outstanding record of public service as one of the most senior leaders in our military during a very active period of involvement by our military including in overseas action. I am not defending anything. Our position as a Government is very clear, we are strongly and unequivocally supportive of the great achievements of multicultural Australia. We absolutely support everything that multicultural Australia stands for, so I am not quite sure what you are trying to suggest here. 

PATRICIA KARVELAS: Just finally, there is a new voting block which no doubt you are across, Senator Cory Bernardi, David Leyonhjelm and Fraser Anning, who I am about to speak to have formed a voting bloc in the Senate. They obviously felt a little under loved and thought they should get together. Was the Government not giving them enough attention? 

MATHIAS CORMANN: We give every Crossbench Senator a lot of attention and I am sure that that will not surprise you. Given that we only have 30 out of 76 possible seats in the Senate, we need nine non-Government Senators to support any legislation that we put forward. If Labor and the Greens are opposed, that means that we need to convince nine of the Crossbench Senators in the Senate to support our legislation and all of them very much are engaged with us. We engage with all of them but there are now three groupings of three... interrupted. 

PATRICIA KARVELAS: Does that make your life harder?

MATHIAS CORMANN: I do not believe so at all. We have a very good relationship with Senator Leyonhjelm, with Senator Bernardi and with Senator Anning and I would expect that to continue.

PATRICIA KARVELAS: Mathias Cormann thanks so much for your time.

MATHIAS CORMANN: Always good to talk to you.