Transcripts → 2019


The Kenny Report

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


Date: Thursday, 7 March 2019

National accounts, Wages, Lower energy prices, 2019 election

PETER GLEESON: Not long ago the Prime Minister spoke as he travels Western Australia on a three-day tour. Mr Morrison is looking to consolidate the Liberal Party’s strong record in WA in the build up to this year’s Federal Election. The PM has been answering questions on the national accounts following yesterday’s GDP figures and joining us now is Finance Minister and WA Senator, Mathias Cormann. Mathias thank you for joining us over there in Perth.

MATHIAS CORMANN: Good to be here.

PETER GLEESON: Those figures yesterday, those figures Mathias, they were not what you were looking for were they?

MATHIAS CORMANN: What the figures show is that our economy continues to grow despite the impact of a significant drought, despite a drop in mining investment and if you look at what is being achieved in Australia, our economy continues to grow faster than any of the G7 economies, with the exception of the United States. What I would say and what we would say is that if we had not implemented our reforms to lower taxes for small and medium sized business, to lower taxes for hardworking families, to give better access for exporting businesses to key markets around the world, then the economy would be weaker today. If Bill Shorten was elected at the next election and was able to pursue his high taxing agenda, $200 billion in higher taxes, there is no question that that would lead to less investment, lower growth, fewer jobs, higher unemployment and on the back of higher unemployment, lower wages for Australian families. Australian families would be poorer and the country would be weaker. 

PETER GLEESON: Minister, I know it is difficult for you to actually comment specifically on monetary policy, but it does appear almost inevitable the way things are going that we are looking at maybe a 0.25 per cent interest rate reduction at some time in 2019.

MATHIAS CORMANN: You are right, I will not comment on monetary policy. That is the job independently of the Reserve Bank, to assess all of the relevant economic data and make judgements as they see fit. What we are focused on is making sure that our policy settings facilitate the strongest possible growth, the strongest possible job creation and if you look at what we have been able to achieve over the last five and half years, having inherited a weakening economy, rising unemployment and a rapidly deteriorating Budget position, the economy is stronger, employment growth has been much stronger, the unemployment rate is lower and projected to fall and our Budget position is stronger and improving. What we would say to the Australian people, this is not the time to take risks and change direction and go back to the discredited Labor ways of the past, particularly in the context of a softening global economy and some of the challenges domestically that we continue to work our way through. This is not the time to go back to a high taxing, anti-business, politics of envy type agenda, which will clearly make it harder for Australia to be successful into the future, would make it harder for us to deal with the global economic headwinds and ultimately, would leave all Australians worse off.

PETER GLEESON: Now business have come out today, have been very critical of some of things that Bill Shorten has said in the last 24 hours, particularly around this living wage proposal that he refers to, in fact, they refer to the fact that a return to last century’s IR system and Government dictated wages hikes won’t deliver gains in living standards. Now that is a pretty strong slap down from business to what Shorten said yesterday. 

MATHIAS CORMANN: That is right. If the Government were to mandate wage increases across the economy, what that will lead to is higher unemployment. The only way to economically, responsibly and sustainably secure a wage increase is on the back of stronger growth, productivity improvements and on the back of increased competition for workers. When we came into Government, as I said, the economy was weakening and unemployment was rising. That meant that after six years of Labor Government and higher taxes under Labor, there was less competition for workers, there was more excess supply in the labour market. When we came into Government, the expectation was that the unemployment rate would head to six per cent and a quarter and higher from 5.7 per cent at the time. Today, we are looking at a five per cent unemployment rate and falling and a record participation rate, a falling level of excess supply in the labour market, increased competition for workers and that is the ingredient which will see wages go up naturally within the economy. If a Government were to mandate increases in wages and hence increase the cost of employing people without facilitating stronger profitability for business, more successful business, then what it will mean is businesses will hire fewer people. As businesses hire fewer people across the economy, unemployment will go up and the effect overall will actually be negative.

PETER GLEESON: Now Jennifer Westacott, the Business boss has come out this morning on ABC Radio and said that she wants a company tax cut introduced or an investment allowance. How important is that in the fiscal narrative from the Coalition right now?

MATHIAS CORMANN: We have reduced the corporate tax rate for businesses with a turnover of up to $50 million a year down to 25 per cent. That is the policy that we were able to legislate through the Senate and that was a very, very important decision. We continue to review our tax policy settings. Our commitment as a Coalition Government is to keep taxes as low as possible. We have imposed a 23.9 per cent tax as a share of GDP cap on ourselves to ensure that the tax burden on the economy does not go past that level and that we do not make ourselves less competitive internationally as a result. That is what we will continue to stick to. Labor on the other hand has already announced more than $200 billion in higher taxes. They will smash that tax as a share of GDP cap out of the park, which inevitably and necessarily will lead to less investment into Australia, which means lower growth, which means less productivity growth, which means fewer jobs, higher unemployment and lower wages on the back of that at the end of the day. If Labor then were to do what they threatened to do and that is to impose Government mandated higher wages, all that will mean is that businesses across Australia, who would be less successful on the back of less investment, would hire fewer people and the unemployment rate would start to go up again, as it did last time when Labor was in Government.

PETER GLEESON: Minister, let us talk about coal. Now it is a four-letter word and the Labor Party does not particularly want to talk about coal, but today we saw six of your colleagues, your National Party colleagues in Queensland come out and write to their Leader and say we want more competition and we actually want coal-fired power stations built in Queensland. They are getting obvious feedback from their constituents that they are fed up with power prices, I referred to the Fisher Report in my intro. Do you agree with these particular rogue National Party MPs that we need a fresh think about energy and power prices in this country?

MATHIAS CORMANN: Firstly, under the Coalition, power prices will be lower than they would be under a Labor Government. You have quite rightly pointed out that a 45 per cent emissions reduction target will necessarily drive up power prices. It would harm the economy, it would send jobs overseas and quite offensively it would send jobs overseas, where for the same amount of economic output in other countries around the world, emissions would actually be higher, so global emissions would be higher as a result of us shifting economic activity from Australia to those other parts of the world. Now, these Nationals MPs, valued colleagues, that you referred to, have been urging the Government to get on with pursuing Government policy in relation to the ‘Big Stick’ legislation for example. We are committed to the ‘Big Stick’ legislation. It is legislation we developed. It is legislation we introduced. It is on the Notice Paper and we would like to see that pass the Parliament, but if Labor will continue to block it and will continue to stand in the way of lower power prices by us addressing bad market behaviour identified by the ACCC of relevant big energy companies, then what we have said is well ultimately, the biggest stick that any Government can get is a mandate at an election from the Australian people. We will say to the Australian people if Labor stops us from addressing bad market behaviour by some of the big energy companies, give us a mandate so that we can pass this legislation as soon as possible on the other side of an election and drive power prices down as fast and as strongly as we possibly can, because ultimately we want to see more affordable, more reliable energy supplies across Australia as soon as possible.

PETER GLEESON: Now you have got the Prime Minister there in WA today and he came out on the front page of the major newspaper there saying that Perth was the key, the absolute key to the Coalition retaining Government. How important is WA? I would have thought, Mathias, that Queensland and Victoria were very important as well, but clearly the Prime Minister believes that WA will be the bellwether State when it comes to this election.

MATHIAS CORMANN: All states are important, but in Western Australia we have performed very well over the last few elections. In particular, at a time when Kevin Rudd was promising to be an economic conservative back in 2007, only to then hit everyone who moved with higher taxes. People in Western Australia saw through that back in 2007. Where we were losing seats elsewhere, we picked up additional seats from Labor here in Western Australia. People in Western Australia understand about the negative impact on the economy and on jobs and on opportunities for them that comes with a high-taxing, anti-business, politics of envy Labor agenda. That is why all throughout the Rudd-Gillard years, West Australians voted very strongly against Labor then. Our message to people here in Western Australia is that Bill Shorten would be even worse. Bill Shorten is not even pretending, as Kevin Rudd was, Bill Shorten is not even pretending to be an economic conservative. He is selling himself as a high-taxing, anti-business, politics of envy, populist, socialist type leader and in Western Australia, where people are fundamentally aspirational, want the best possible opportunity for them and their families to get ahead, to work hard, to pursue opportunities and secure increases in living standards as a result, people are very, very suspicious of any Labor leader who essentially suggests that the answer to everything is a higher tax. We have seen it before, we have seen the negative effect that that has had on our economy before and our message to people in Western Australia is do not risk it. This is not the time to risk it. Given what is happening in the global economy, given what we are dealing with domestically, this is not the time to go back to the discredited Labor ways of the past.

PETER GLEESON: Minister, we have just heard, just news in now that Huawei, the Chinese company, have launched a suit, a legal suit against the US Government. What are the implications for Australia when it comes to that sort of legal suit?

MATHIAS CORMANN: Look, I would not ordinarily comment on any legal processes like that in the ordinary course of events. I am not across the detail, I am not aware what is involved here in any sort of sufficient detail for me to provide informed comment, so I am going to leave that to others to make their observations.

PETER GLEESON: All right, well let us stick with the WA theme. Now one of your colleagues of course, Julie Bishop, the Member for Curtin, has said publicly that if she was the current Prime Minister she would beat Bill Shorten at the next election. Do you agree with her?

MATHIAS CORMANN: Look I saw those comments. Julie Bishop has provided outstanding service to Australia all throughout her parliamentary career, an absolutely amazing parliamentary career over 21 years, including 11 years as Deputy Leader of our Party. I wish Julie all the very best for her future endeavours and you know that is essentially all I have to say in relation to that.

PETER GLEESON: Alright, before we go to a break, Minister, what about the perception that with the exodus of so many of your colleagues and I am talking about very senior colleagues like Steven Ciobo and of course Kelly O’Dwyer and others, you know Christopher Pyne. What about the perception that these are people who are rats deserting a sinking ship?

MATHIAS CORMANN: Well I think that is wrong. If you look at previous elections I think you will find a whole series of very senior people have left Parliament in the lead up to elections in the past. I mean if you compare for example, at the end of the second term of the Howard Government, you had the then-Finance Minister John Fahey retire at that election, you had Michael Woolridge the Health Minister retire at that election, you had Peter Reith, a very senior Cabinet Minister in the Howard Government retire after two terms of the Howard Government, John Moore, who had been the Defence Minister. I mean look, in the lead up, I know that commentators always want to suggest that this is the first time that anything like this has happened, the truth is in the lead up to any election  all of my colleagues consider whether they are up for another three year term. It is much more honourable to make that judgement before the election than to make a judgement after the election and cause a by-election and that is appropriately what a number of colleagues have done, incidentally on both sides of politics and that is what you would expect. These are three-year contracts. At the end of every three years, we get to decide whether we are up for another three years and ultimately, if we put ourselves forward for consideration by the Australian people, the Australian people get to pass judgement on whether or not they are prepared to have us serve for another three years. We are putting the case to the Australian people to seek their support, to seek the support of a majority of people in a majority of seats for the opportunity to serve them for another three years, to make the economy stronger, to make our country stronger, to ensure that families around Australia have the best possible opportunity to get ahead and to protect them from an agenda under Labor, which would make our economy weaker, which would make our country weaker and which would make Australian families poorer.

PETER GLEESON: Minister Mathias Cormann thank you very much for joining us in Perth today.

MATHIAS CORMANN: Always good to talk to you.