Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 29 January 2019
KIERAN GILBERT: Our top story this morning, the Government’s economic plan, the jobs plan to be announced by the Prime Minister later today in Brisbane. Joining us is one of the senior figures in the Government, the Finance Minister Mathias Cormann, live from Brisbane. Thanks so much for your time. Talk us through the plan, it sounds a lot like a re-run of Tony Abbott’s initiative back in 2013.
MATHIAS CORMANN: It is building on what has been achieved over the last five and a half years and certainly proposing to head in the same direction. You have to remember when Bill Shorten and Chris Bowen were last in Government they left behind a weakening economy, rising unemployment and a rapidly deteriorating Budget position. We have been able to deliver on our plan which has seen the economy grow more strongly, which has seen stronger employment growth, a lower unemployment rate and a stronger and improving Budget position, which has enabled the Government to invest more into health, education, affordable access to important medicines, you name it. What we are saying to the Australian people is that we can today, deliver the next instalment of a plan for stronger growth, more jobs and to ensure that the Government can fund the essential services Australians rely on. Whereas a change back to a high taxing Shorten government would make our economy weaker, would make our country weaker, would lead to higher unemployment and lower wages over time and would again put the Budget on a weaker foundation and trajectory for the future, which will put funding for essential services at risk.
LAURA JAYES: Minister you didn’t mention anything about wages growth, what is your plan?
MATHIAS CORMANN: Wages growth has been picking up. I can tell you wages growth is stronger than it would have been if Labor’s higher and rising unemployment rate had continued. As I say, we inherited an increasing unemployment rate, a deteriorating employment position. When you have less competition for workers because of higher unemployment, wages go down. What has happened under our period in Government is that the economy has strengthened, employment growth has strengthened, competition for workers has strengthened, which is why we have seen wages starting to pick up. But what is important is that we stick to the plan, that we keep heading in the same direction. That we do not go back to the discredited, high taxing Labor way of the past, which we know in the past has delivered a weakening economy, rising unemployment and a rapidly deteriorating Budget position. It would do the same again. Higher taxes means less investment, means lower growth, fewer jobs, higher unemployment, less competition for workers, means lower wages. As a result of our plan, now that the unemployment rate is down to five per cent, now that employment growth continues to perform strongly, we will see stronger wages growth into the future, unless we go back to the failed approach of the past.
KIERAN GILBERT: Do you think Labor would lead to a recession? Would a Shorten government create a recession?
MATHIAS CORMANN: There is no question that a high taxing Shorten government would make our economy weaker, would make our country weaker and would make Australians poorer. That is because higher taxes lead to less investment, lead to lower growth, lead to fewer jobs, higher unemployment and higher unemployment leads to … interrupted
KIERAN GILBERT: Christopher Pyne says it would be a recession. Do you agree with Mr Pyne?
MATHIAS CORMANN: I have answered that question directly. A high taxing Shorten government would make our economy weaker, would make our country weaker, would make Australians poorer. There would be fewer jobs. Australians would earn less and pay more. Pay more in tax, pay more for electricity, you name it. This is what we have had before. When Bill Shorten and Chris Bowen were last in government, they left behind a weakening economy, rising unemployment and a rapidly deteriorating Budget position. Because, when they were last in government, they pursued a reckless, high taxing agenda. They lost control of the Budget to the point where they could no longer afford to list key medicines on the Pharmaceutical Benefits Scheme, even though they had been recommended for listing by the Pharmaceutical Benefits Advisory Council.
LAURA JAYES: Part of your pledge today as I understand it, is paying down $350 billion worth of debt over ten years. How are you going to do this? And isn’t this at odds with your latest fiscal statement in MYEFO. You are sitting on $9.2 billion worth of unannounced sweeteners going into the election. So when does this paying down of the debt actually start?
MATHIAS CORMANN: Firstly, our Budget is projected to return to surplus, consistent with the numbers in MYEFO, in 2019-20. The surplus that we announced for 2019-20 in MYEFO is somewhat stronger than what was announced in last year’s Budget. If you look at the debt reduction trajectory over the medium term, over the ten year period, net debt peaked in the last financial year. It is projected to reduce sharply. The Prime Minister will have more to say about this today. We will have another Budget to deliver on 2 April and that will reveal all of the relevant numbers. The point that I would make is, we inherited from Labor a deteriorating Budget position. Labor did … interrupted
LAURA JAYES: But you have been in government for five years.
MATHIAS CORMANN: Indeed, we inherited a deteriorating trajectory when it comes to spending, debt and deficits. We have turned that situation around. We are now able to get the Budget back into surplus. You need to be in surplus in order to pay down debt. Now that we have got to this point, where we have been able to turn the mess that Labor left behind around, this is not the time to go back to the discredited ways of the past.
KIERAN GILBERT: The National Accounts recently had the growth forecast to be slightly off, as did the MYEFO numbers. You are saying that Labor is going to lead to slower growth, your own numbers suggest that that is where we are heading anyway.
MATHIAS CORMANN: No, that is not quite right. Firstly, the National Accounts show that the economy is performing broadly consistent with our forecasts. And indeed our forecasts are in line with forecasts from the IMF, the OECD, the Reserve Bank and other such institutions. Secondly, whatever the economy is under us, it will be weaker under Labor. The reason being Bill Shorten has already announced more than $200 billion in higher taxes on the economy. Higher taxes on hard working families, higher taxes on retirees, higher taxes on housing, you name it. Higher taxes lead to less investment. Less investment means lower growth. Lower growth means fewer jobs. Fewer jobs necessarily means higher unemployment. Higher unemployment means less competition for workers, which means lower wages for Australian workers. Australians would earn less and they would have to pay more in tax, pay more for electricity. Families around Australia would be worse off which is why we say under a Shorten Labor government, the economy would be weaker, the country would be weaker, Australians would be poorer.
LAURA JAYES: Well Minister you do have a good economic story to tell. The jobs boom, the one million jobs pledged by Tony Abbott in 2013 was achieved. Consequently Prime Minister Turnbull was at the helm at the time. But this was due in large part to population growth and immigration. So does this mean that the Government is dropping any kind of move to cut the overall migration intake?
MATHIAS CORMANN: That is a complete and utter oversimplification of what has delivered the strong growth performance over the last five and a half years. Firstly I would say when we announced the one million new jobs target in the lead up to the 2013 election, Labor essentially dismissed it as unachievable. The second point I would make is that we had a very comprehensive agenda, which was focused on supporting small and family business, investing in infrastructure, supporting our exporting businesses through better and more export agreements with countries around the world so that we could get more of our Australian products and services sold into markets around the world. Red tape reduction, you name it. We had a comprehensive plan. We are building on that plan. The Prime Minister today will announce the next instalment of our plan for a stronger economy. The point that I would make is that the state of the economy, the strength or the weakness of the economy, has a real impact on real people. We cannot take the strength of the economy for granted. The policy choices of the Government do matter. Higher taxes lead to lower growth. We have pursued a lower taxes, smaller government, pro-business, pro-enterprise, pro-Australian workers agenda. When the alternative, Bill Shorten would lead a government which would deliver higher taxes, weaker economic growth, fewer jobs, higher unemployment and lower wages over time.
KIERAN GILBERT: Does the Newspoll suggest that you should have some optimism, just quickly as we wrap up this morning?
MATHIAS CORMANN: What the Newspoll shows is that as we get closer to the election more Australians are tuning in to the competing agendas and what people are realising is that our agenda is delivering stronger growth, more jobs and better opportunities for Australians to get ahead. Whereas the alternative high taxing agenda of Bill Shorten would make the country weaker and would make Australians poorer. So as more people get to understand the impact on their lives of the two competing agendas, we believe that more Australians will decide to support us.
KIERAN GILBERT: Minister, we appreciate your time.