Transcripts → 2019


Sky News – AM Agenda

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


Date: Friday, 8 March 2019

Australian economy, Labor’s plan to increase the humanitarian intake, WA EPA carbon neutral guidelines

KIERAN GILBERT: Let’s go to the Finance Minister and Leader of the Government in the Senate Mathias Cormann. It must be frustrating to have some of your Coalition colleagues speculating on leadership. You are just two months out from the election. 

MATHIAS CORMANN: We are focussed on putting our best foot forward. We have a very strong track record when it comes to turning the situation around with the economy that we inherited from Labor. When we came into Government in 2013 the economy was weakening, unemployment was rising, the Budget position was rapidly deteriorating. Today the economy is stronger, employment growth is much stronger, the unemployment rate is well below where it was and is expected to fall further and the Budget position is stronger and improving, so that we can now ensure that the funding for all of the essential services Australians rely on is on a more sustainable foundation and trajectory for the future. We are focused on the job at hand, making sure that the economy is as strong as possible, making sure that Australians have the best possible opportunity to get ahead, making sure the Government can fund all of the essential services Australians rely on. 

LAURA JAYES: The GDP figures were out this week as you point out and I do want to get to them. I just want to ask you this final question about Malcolm Turnbull. He argues and he has said publicly now on the record that he was dumped as leader because some of his enemies within the party simply were afraid he was going to win. Do you follow that logic?

MATHIAS CORMANN: This is now ancient history. Everything that had to be said in relation to this was said in relation to this last year. We have a responsibility to give it everything to have the opportunity to continue to serve the Australian people with our agenda to make the economy stronger, create more jobs, make sure Australia is safe and secure. We have the responsibility to give ourselves the best possible opportunity to be successful at the next election. That is what we are all focused on. 

KIERAN GILBERT: When you look, let’s get to the economic figures and the broader issues about the flat wages growth in there, the consumer sentiment down and so on. But Bill Shorten’s message this week would resonate wouldn’t it with a lot of people, when he says he is talking about a living wage and boosting incomes for the lowest paid. What is your reaction to that? And is it something that you think the Government needs to respond in terms of tax cuts, or whatever else, because as I say, it is an agenda that will resonate with a lot of people.

MATHIAS CORMANN: Bill Shorten’s agenda will make the economy weaker, it will make all Australians poorer. That is because $200 billion in higher taxes will lead to less investment, lower growth, fewer jobs, higher unemployment and on the back of higher unemployment and less competition for workers, lower wages. Imposing higher wages by government mandate rather than on the back of a strengthening economy would lead to higher unemployment because businesses would hire fewer people, as the government imposes higher costs on employment. What we have shown over the last five and a half years is that our agenda of lower taxes, of facilitating better access for exporting businesses to key markets around the world, of investing in infrastructure … interrupted

KIERAN GILBERT: But wages aren’t moving are they? There is a disconnect.

MATHIAS CORMANN: Firstly, you are wrong. Wages growth has been picking up. Secondly the fact that wages growth, in the context of low inflation has been lower than previously has helped to ensure that the unemployment rate goes down to five per cent. The alternative would have been to have stronger wages growth and higher unemployment which would have been very disruptive for many families around Australia, which would have harmed many families … interrupted

LAURA JAYES: Minister is what you are saying …

MATHIAS CORMANN: If I may, this is actually an important point, this is an incredibly important point. The whole reason why it would be important to have flexibility in the labour market, the whole point, it is important to ensure that wages can adjust in the context of economic conditions is to avoid massive spikes in unemployment, which are incredibly disruptive. That is a deliberate design feature of our economic architecture. If what Bill Shorten is saying is that he wants to mandate, through a government mandate, a particular wage level then he will force more Australians onto unemployment queues. He will harm many families around Australia who will find it hard to pay their mortgage and pay for their cost of living expenses.  

LAURA JAYES: 0.4 per cent wages growth in recent times, as you say it’s in line with inflation, but a deliberate design in the economy. Are you saying perversely that it is low wages, slow wages growth has actually allowed us to keep the unemployment level as low as it is?

MATHIAS CORMANN: That is self-evident. In the context of lower global growth, when we came into Government we were dealing with massive falls in our terms of trade. The economy was going through a massive transition from a mining investment construction driven boom to broader drivers of growth… interrupted

LAURA JAYES: Yeah, but is it a trade off Minister…

MATHIAS CORMANN: If I may… interrupted

LAURA JAYES: But is it a trade off…

MATHIAS CORMANN: You asked me a question … interrupted

LAURA JAYES: Yeah, but is it a trade off, I just want to…

MATHIAS CORMANN: I am actually answering it.


MATHIAS CORMANN: I am literally answering your question. If in the context of lower global growth, if in the context of a transition in the economy, wages had continued to grow at the same rate as it did during the strong growth, during the Howard era, the cost of employment would have gone up significantly in the context of a difficult economic environment, more people would have got unemployed and the fact that wages growth, in the context of lower inflation was more subdued over a period, has helped to ensure that the unemployment rate continued to go down to five per cent as it is now. But wages growth has picked up, as the economy continues to grow, as employment growth continues to strengthen. Remember, in the 2017-18, the last financial year for which we have a Final Budget Outcome, instead of 1.5 per cent or 200,000 new jobs, we secured 2.7 per cent employment growth or 350,000 new jobs. That meant that the unemployment rate goes down, it meant that there is more competition for workers as the excess supply in the labour market goes down and it also means that you have the ingredient, the key ingredient for stronger wages growth. Fundamentally, if we want to sustainably secure stronger wages growth without driving the unemployment rate up, we can only do that on the back of stronger economic growth and on the back of stronger productivity growth and on the back of stronger competition for workers.

KIERAN GILBERT: This figure in the Australian today, about the humanitarian intake that Labor wants to increase it to 32,000 refugees a year and then the Prime Minister is quoted in The Australian today saying it will cost an additional $6 billion to the economy. Labor says this is a lie and it is over-inflated this figure. Is this an accurate number done by your Department?

MATHIAS CORMANN: It is an accurate number. It is a Finance costing made using the normal costings convention that applies to all Budget measures. I can confirm that Labor’s proposal to increase the Government funded refugee intake from 17,750 to 27,000 would cost an additional $6.2 billion over the next decade. Labor’s response today just shows why they made such a mess of the Budget in their last period in Government. Anthony Albanese on your program did not seem to care what the cost was. What Labor is relying on is a costing that was made by the Parliamentary Budget Office in the context of the 2016-17 Budget, when their proposal literally only kicked in over one year over a four year estimates period. We are now three years down the track. Their proposal to increase the refugee intake would incur costs over the full four years of the 2019-20 forward estimates period. There is another three years in the medium term costing. We absolutely stand by the fact that at a time when Labor is opposing our $3.9 billion Drought Future Fund, which is designed to support drought affected communities, to drought proof their communities, at the same time Bill Shorten is proposing to spend an additional $6.2 billion to further increase what is already a very generous refugee intake. What we are saying to Bill Shorten, these are completely misplaced priorities, this is not in touch with what the Australian people want their Government to do. The Australian people want their Government to support drought stricken farmers with our $3.9 billion drought future fund. Bill Shorten has got this one wrong. We absolutely stand by those costings.

LAURA JAYES: Okay, the $6 billion figure, what is the biggest cost within that? Does it assume that these new refugees in the humanitarian intake will be relying on welfare and that they won’t be contributing to the economy at all? 

MATHIAS CORMANN: There are a whole range of expenses that come with an increased intake of government funded refugee places. There are the health, education and welfare expenses, that is certainly a very large component. This is done using the normal costings methodology, based on the expert advice from relevant departments right across Government. If you look at the Finance costing and compare it to the Parliamentary Budget Office costing, it is actually quite similar except that Labor has not updated their costing for three years. Clearly, there is a difference between a measure that takes effect just for one year over a four year period or that takes effect over the full four years of a four year forward estimates period. For Labor to say that they do not need to update their costing when something is running over four years compared to just over one year is just ridiculous. Again, this is why Labor made such a mess of their Budget, they do not know what the cost is of what they are proposing to do, they do not know what the …interrupted

KIERAN GILBERT: Finance Minister I want to ask you one more last question because we are almost out of time, but I want to ask you about the WA environmental watchdog, which has said that emissions intensive projects in WA need to be carbon neutral. This is not a rule of the Government though. The WA Government says this is no their law, this is just a recommendation. Are these concerns over done in relation to this ruling or directive is probably a better way to put it from the WA environmental body? 

MATHIAS CORMANN: It is a ruling. It is a crazy ruling. It is a ruling that would harm the economy and cost jobs here in WA and would do nothing for the environment, in fact it would hurt the environment to the extent that it would make it harder for West Australian LNG to help reduce emissions around the world. If the State Labor government here in Western Australia is fair dinkum and truly is of the view that this is not a good idea, they should say so very clearly and they should legislate against it. We have had some weasel words, but we certainly have not had a sufficiently clear statement from the State government here in Western Australia to say that they are opposed to this. That is what we need. 

LAURA JAYES: Mathias Cormann, as always we thank you so much for your time, live from Perth this morning, appreciate it.

MATHIAS CORMANN: Always good to talk to you.