Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
TOM CONNELL: We have had a couple of weeks now some pretty good economic indicators, broadly speaking for the Government. We had GDP figures last week and also the unemployment rate coming down to 5.4 per cent yesterday. The lowest in some six years. Joining me now is the Finance Minister Mathias Cormann, for more on this. Of course a regular here on the program, AM Agenda, each Friday. Thanks for your time today, Minister. Let’s start on the unemployment figures, it was obviously boosted by these part-time jobs. One of the things that is going on that is some concern, underemployment, people not getting enough hours, people not being able to work enough hours. What do you put that down to?
MATHIAS CORMANN: By any measure on the back of stronger economic growth we have been able to deliver significantly more jobs than were delivered over the period of the previous government. Over the last calendar year, more than 400,000 new jobs were created, most of them, overwhelmingly, full time jobs. From month to month the numbers will vary, but by any measure with an unemployment rate of 5.4 per cent, you have to remember that Chris Bowen as Shadow Treasurer once said that the measure of our economic success or failure would be whether we can keep the unemployment rate below 6.25 per cent. Well we have well and truly achieved that. But we are still waiting for his confirmation that he believes that we are managing the economy and jobs better than they did.
TOM CONNELL: One of the issues with that figure though, is that you could be in a job if you have got one hour’s work. So that underemployment figure, which I am sure you would prefer to be a bit lower, what do you put that down to being stubbornly high for?
MATHIAS CORMANN: You are looking at a figure in isolation. Overwhelming over the last year, most of the jobs created in the economy were full time jobs. From month to month you are going to have some variability in those figures. But you have to look at the numbers over the past year. What you can see is that over seventy per cent of the jobs created were full time jobs. Of course we always want to create more jobs. That is why we want to continue to implement the remaining parts of our plan for a stronger economy and more jobs. That is why we call on the Senate next week to vote in support of income tax relief for hard working Australians. That is why we call on the Senate to vote in support of our business tax cuts in full.
TOM CONNELL: And I do want to get to that in just a moment Finance Minister. I do genuinely want to get to that in a minute but just on that underemployment, you don’t see this as an ongoing concern? That Australians, this figure has been pretty stubbornly high, that Australians want more hours work?
MATHIAS CORMANN: The way to address it is by strengthening the economy, by strengthening growth. Our economic agenda is all about delivering stronger growth and more jobs. We are clearly heading in the right direction. Could we do even better? Yes we could. If the Senate passes our national plan for a stronger economy and more jobs in full, there will be more investment, stronger growth, more jobs and higher wages. But if Labor continues to stand in the way of us legislating a globally more competitive business tax rate, then yes the Australian Senate would be holding the Australian economy, jobs and wages back.
TOM CONNELL: Well just on that, because you are going to try to get the company tax and the income tax cuts passed in full. If that fails again, could there be some urgency here, could that be a reason why you would need to go to an earlier rather than a later election.
MATHIAS CORMANN: The election is scheduled for the first half of next year. That is when I expect it will happen. The question in the next fortnight for Bill Shorten is, does he want to continue to fight to protect the competitive advantage of business and workers overseas at the expense of businesses and workers here in Australia. Or does he finally want to focus on doing what is right, doing what is required to ensure that businesses and workers here in Australia, have the best possible opportunity to be successful and get ahead. If we continue to impose higher taxes on business here in Australia, putting them at a disadvantage with businesses in other parts of the world, we would be putting Australian workers here in Australia at a competitive disadvantage. Bill Shorten knows this. He should stand condemned for the fact that he continues to fight to protect the interests of businesses and workers overseas at the expense of businesses and workers in Australia.
TOM CONNELL: And given how important you say this plan is and of course we have got the income tax cuts scheduled to start on July 1, hasn’t been passed, if those plans are both blocked could that be a reason to say, it was scheduled next year, that we might need to go to an election earlier, we need a mandate.
MATHIAS CORMANN: Firstly, this is the first Senate fortnight since Budget week. We have had Senate Estimates in those two weeks in May. So this is actually the first opportunity for the Senate to deal with the personal income tax cuts. We are working to secure the passage of our plan for income tax relief for families in full. We are working with all non-Government Senators in the Senate on the crossbench who are prepared to engage with us. That work is continuing. The same with our efforts to ensure that businesses and workers in Australia are not put at a deliberate, ongoing, disadvantage with businesses and workers in other parts of the world, our efforts to ensure that we have a globally more competitive business tax rate. We continue to work with the Senate crossbench. Our objective is to secure the passage of both those major and very important economic reforms over the next fortnight.
TOM CONNELL: And again, could that urgency ever be used to say, I am sorry to do this to you voters, we need to do this now, the economy is important, we need to go early?
MATHIAS CORMANN: I will let you speculate. That is not what we are planning to do. We are planning to go full term. We are planning to have the election at the normal time in the first half of next year. That is what we are working towards.
TOM CONNELL: Okay, fair enough. We will see what Labor does on this because there has been some interesting reports about what they might do, an income tax cut plan in particular. I want to take you though to the economy more broadly and wage increases. The Reserve Bank Governor Philip Lowe has repeated a call for a wage increase, he says put a three in front of it. It is a pretty strong message to business, do you agree with it?
MATHIAS CORMANN: Wages would be lower if unemployment was higher. If we had not delivered stronger economic growth and stronger employment growth, wages today would be lower. Wages could be higher if the Labor party got out of the way and backed in our business tax cuts in full. If we want stronger wages growth, we need to attract more investment into the growth of businesses across Australia. If we want to have stronger wages growth, we need more businesses across Australia being able to be more successful and more profitable so they can hire more Australians and so that there is stronger competition for workers. The reason wages are not growing more strongly right now is because there is still some excess supply in the labour market. We need to continue to bring that down and we need to continue to create more jobs, that is why we need to continue to attract more investment, so that more businesses can be more successful and more profitable into the future and invest into the future expansion of their businesses.
TOM CONNELL: Alright, well, the Reserve Bank Governor says it is also because of a change in bargaining power of workers. Do you agree with that?
MATHIAS CORMANN: I am not going to provide a running commentary. The statements by the Reserve Bank Governor are there for all to see. The Reserve Bank Governor clearly indicated that tax relief was a very important part of our economic policy reform agenda into the future. The truth is if we … interrupted
TOM CONNELL: He did, he did, you are absolutely right. But I just want to address that comment. It is not so much a running commentary, but a very specific bit of analysis on our current economy and this whole balance, Minister, between workers and between bosses as well. Do you agree at the moment that the bargaining power of workers is too weak or not?
MATHIAS CORMANN: That is because there is excess supply in the labour market. Remember what happened in the past. In the period of the Howard Government, when there was strong economic growth and there was a very low unemployment rate, the bargaining power of workers increased. If we want the bargaining power of workers to increase and we do, what we need to ensure is that we attract more investment into strong growth, into more businesses expanding their business, so they hire more Australians and as more Australians are hired across the economy and competition for workers increases, the bargaining power of workers increases. That is the whole point. Bill Shorten is standing in the way of workers across Australia having better bargaining power for higher wages. Because Bill Shorten is fighting to protect the competitive advantage of businesses and workers in other parts of the world. Bill Shorten is fighting to help businesses in other parts of the world take investment and jobs away from Australia. Bill Shorten is fighting to send investment and jobs away out of Australia by standing in the way of a lower, globally more competitive business tax rate here in Australia. That is what Bill Shorten is doing and he should stand condemned for it.
TOM CONNELL: Okay, Labor is standing in the way in the Senate as well of changes to the English language test for citizenship. Now the shift from the Minister, Alan Tudge is to instead apply this conversational English language test for the first time, not at the citizenship level, but when people are trying to get permanent residency. Do you agree with that approach?
MATHIAS CORMANN: Yes I do. I was asked questions about this yesterday. Australia is an English speaking country. We are a great migrant nation. Migrants have chosen to make Australia their home over the decades, come to Australia from all corners of the world, many from non-English speaking backgrounds. Of course we want all migrants who choose to make Australia their permanent home to have the best chance to lead a successful life here in Australia. Clearly having adequate English language skills is a critically important part of helping to ensure that.
TOM CONNELL: Is there any issue with putting it at the PR level though in terms of discouraging people to come out here?
MATHIAS CORMANN: Not at all. Anyone who comes to Australia, an English speaking country, to make Australia their permanent home should expect that they need to make the necessary effort to learn English. Somebody coming to Australia without an intention to learn adequate English language skills is not putting themselves in the best possible position to make a contribution here in Australia and to lead a successful life here in Australia.
TOM CONNELL: Well no one could accuse you of being a hypocrite there, being multi-lingual. Mathias Cormann thanks as ever for your time.
MATHIAS CORMANN: Always good to talk to you.