Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 3 April 2019
HAIDI LUN: Well the Australian Government has vowed sweeping tax relief in it its last pre-election Budget. Earlier Finance Minister Mathias Cormann told me that the Budget is based on reasonable assumptions
MATHIAS CORMANN: Our Budget is based on cautious, realistic and credible assumptions. If you look at our performance against Budget over the last three financial years, what you will see is that we have materially outperformed our Budget forecasts, because those Budgets also were based on realistic assumptions. What has happened in the Australian economy is that employment growth has been running above long term trend, the unemployment rate has got a four in front of it and the expectation is that in the context of stronger employment growth and lower unemployment, as excess supply in the labour market continues to reduce, then wages growth will pick up and that is reflected in our Budget forecasts.
HAIDI LUN: There are lots of concerns, not just in Australia but really with a number of developed economies though, that the Philips Curve is not working because of structural reasons, that you are seeing very robust, tight labour markets everywhere from the US to Australia to Japan, but in none of those places is that filtering through to wage growth. Just hours before the Budget was released we heard from the RBA Governor, he expressed the same concerns over household wealth, the property market, as well as high debt and low wages. Is there a disconnect between what policy makers at the Reserve Bank are thinking and what the Government is thinking?
MATHIAS CORMANN: Not at all. Our forecasting assumptions are actually consistent with what the central bank here in Australia is saying. The truth is, every year for the last few years journalists, commentators, analysts have asked these sorts of questions and every year we have said that our forecasting assumptions are credible, they are realistic, they are cautions and the proof is in the pudding. We have been judged on our performance. Every Final Budget Outcome since 2016-17 has been better than forecast and in 2018-19, this current financial year, we are tracking ahead of the forecasts when the Budget was delivered last year. When it comes to underlying cash balance, which is materially better than what was forecast last year.
HAIDI LUN: Minister, one of the biggest concerns for voters as well as the Reserve Bank, is the impact on the property market on how household spending and the ability of voters to be able to go out and consume. Given that the tax cuts that are pledged in this Budget will take years to roll out. Is there a more immediate way that we can look at this Budget as helping voters and helping the economy?
MATHIAS CORMANN: Well our plan for income tax relief is part of a broader national economic plan. It is not just a cash hand out. It is part of a national economic plan to make the economy stronger, to ensure hardworking families in Australia have the right incentive and encouragement to work hard and it builds on the $144 billion worth of income tax relief that we announced in last year’s Budget and subsequently legislated. This is the next instalment.
HAIDI LUN: The Australian Finance Minister speaking to me earlier.