Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 26 July 2019
KEIRAN GILBERT: Let’s get some reaction to those comments from the Finance Minister and Leader of the Government in the Senate, Mathias Cormann, who joins us from Perth. Minister thanks very much for your time. Do you think that Governor Lowe’s comments will help foster certainty among investors and the business community?
MATHIAS CORMANN: It was another very good speech by Governor Lowe. What he pointed out is that the economy is growing and that the fundamentals in the Australian economy are strong. But yes, we are dealing with the impact of global growth which continues to be more subdued and with some of the downside risks in the Australian domestic economy following on from having to deal with the impact of both drought and floods. But we have a AAA rated economy. We have record employment growth, a record number of Australians in jobs, with 1.4 million new jobs created over our period in government. We continue to work very hard to put the Australian economy on the strongest possible foundation and trajectory for the future.
KEIRAN GILBERT: And even though rates are at records lows, there is still room to move as the Governor pointed out.
MATHIAS CORMANN: Lower interest rates combined with our $300 billion plus in income tax relief which we have legislated over the last two years, as well as our record investment in infrastructure and skills, all together will continue to put the Australian economy on the best possible foundation and trajectory for the future.
KEIRAN GILBERT: Do you feel that some of the assessments, the outlook for our economy but internationally as well, are too pessimistic? Is there a window here where for example there is a deal between China and the United States on trade, that global growth could actually surprise on the upside?
MATHIAS CORMANN: We always have to put ourselves in the best possible position to be as resilient as possible to deal with headwinds, but also be in the best possible position to seize opportunities as they come our way. That is what we are doing. That is how Australia has secured a position where we have had twenty-eight years of continuous economic expansion. Our Government is very focussed on continuing to build on that. Yes, in the global economy, there are things that will happen that are beyond our control, on the upside and on the downside. We have to put ourselves in the best possible position as an open trading economy, as a globally focused open trading economy to make the best of whatever scenario we have to deal with.
KEIRAN GILBERT: I guess that pragmatism is on show next week with the Trade Minister in Beijing for the Regional Comprehensive Economic Partnership. That trade group which includes China. I guess it was seen as a rival to the US involvement in the Trans Pacific Partnership when Obama was in. Of course Donald Trump pulled out of that. But this RCEP as it is known, how important is that for our nation in terms of trading in the region and beyond?
MATHIAS CORMANN: It is very important. It is a long-standing process that has been underway for some time. It is all about getting better access to key markets in our region for Australia’s exporting businesses. It is about getting access for our products and services into markets in our neighbourhood. It is also about getting the best possible value for our consumers here in Australia in terms of products and services that can be sourced from all those countries that are part of the RCEP process.
KEIRAN GILBERT: And do you think that this will be well received in Beijing as well because we’ve had a bit of a turbulent relationship with China in recent years. Is this part of getting it back on an even keel so to speak?
MATHIAS CORMANN: We have a very important economic relationship with China. China is our biggest trading partner. We do have a free trade agreement with China. This is just another step, another important piece in what is overall a very important economic relationship.
KEIRAN GILBERT: Let’s turn our attention to this tech giant review done by the ACCC. The Government, as I understand it, is going to delay its formal response to the end of the year. Is that right?
MATHIAS CORMANN: The Treasurer and the Minister for Communications will be releasing the ACCC report later today. They will have some more to say about this. The Government will respond in due course to what is a report to Government, not a report from the Government. This is a review that has taken place over about eighteen months into the impact of technological change on competition in the media and advertising sectors. Search engines, social media platforms, digital content aggregators. There are a range of issues there. The information asymmetry between those operators and advertisers and consumers but also the impact in terms of content providers through traditional media and the like. There are a lot of complex issues that were assessed by the ACCC over an eighteen months or so period. The Government will now take its time to properly respond to that report.
KEIRAN GILBERT: I guess one of the complexities here is the fact that this is all a world-leading analysis in many respects. Because, there aren’t many other jurisdictions that have done this, that have provided this sort of scrutiny into the tech giants and what is seen as anti-competitive behaviour in part.
MATHIAS CORMANN: This has been an exercise about assessing the facts ultimately helping to inform judgements about what is sensible and desirable moving forward. There is no doubt that technological change, that the developments around search engines social media reform and digital content aggregators have had a significant impact on competition in traditional media and advertising markets. It is a matter of now forming judgements based on a thorough and comprehensive analysis of where things are at as to what would be an appropriate response in a policy sense moving forward. As I say, the Treasurer and the Communications Minister will have some more to say about that later today.
KEIRAN GILBERT: But just in broad terms, I guess the focus is trying to basically level the playing field. You’ve referred to some of the traditional news outlets, this one of course, among others, the mainstream media that have to grapple with the news dissemination by these tech giants.
MATHIAS CORMANN: There is no doubt these technological changes over the last decade or so have had a significant impact on competition in the media and advertising markets. This report by the ACCC has thoroughly reviewed all of that. Now we will have to make some judgments on what might be sensible, appropriate and desirable ways to address some of those issues.
KEIRAN GILBERT: You were very frank yesterday in the Senate in rejecting your colleague Senator Bragg’s suggestions on superannuation. You did it publicly and more privately as well as you pointed out in the Senate. Is this healthy for a Liberal party to be having these discussions or would you prefer to see a bit more discipline after your recent election win?
MATHIAS CORMANN: There is absolutely no issue with discipline. Senator Bragg, Andrew Bragg, gave his first speech in the Senate yesterday. It is entirely appropriate for a new Senator or a new Member of the House of Representatives in their first speech to express their personal views on the issues that are important to them in a policy sense. There is absolutely no issue with that whatsoever. But from the Government’s point of view, it is also important that we are clear to the Australian people on what our position is as a Government. We made very clear statements in relation to superannuation policy settings in the lead up to the last election. We are always focused on making sure that the policy setting help protect people’s superannuation savings, help to ensure that net returns for Australians saving for their retirement and in retirement can be maximised. That is why there is a review process to ensure that the system is as competitive and as transparent and as efficient as possible, and that the original purpose of compulsory superannuation is still properly maintained in the way that makes sense in the public interest. But the Government has been very clear in terms of what we will and will not do in this space. But that does not mean individual members of parliament are not entitled to their personal views.
KEIRAN GILBERT: In terms of the idea of having an opt-in situation for low income earners, is the problem fundamentally with that idea that you would then have basically a two tiered system in terms of superannuation?
MATHIAS CORMANN: Well no, the problem is that you would end up with less money in retirement and a lower standard of living in retirement than you could and would have otherwise. That policy judgement has been made some time ago. We have always got to focus on making sure that Australians saving for their retirement get the best possible deal. That the system is as efficient and as competitive as possible, fees are as low as possible, the net investment returns can be maximised and that people’s savings are secure. There is always a conversation to be had to ensure that the policy settings are right to ensure all of that. But the fundamental question in relation to voluntary or compulsory superannuation has been settled in Australia some time ago. It is not one that will be reopened by the Government.
KEIRAN GILBERT: When you look at the review of retirement policies, can you give our viewers a sense of what issues the Government is hoping to explore in terms of that review? What are the areas where you think there might be some improvement?
MATHIAS CORMANN: I have just gone through quite a number of those in my answer to your previous questions. It is essentially about making sure that the settings are still fit for purpose, they are still focused on what the original objective actually was meant to be, that the system is as efficient and as competitive as possible, that people get the best possible deal, that their net investment returns are maximised and that compulsory super which we do have in Australia delivers the appropriate and right outcome for Australians saving for their retirement.
KEIRAN GILBERT: I guess one of the areas though that advocates in this space but elsewhere have been saying is that the Newstart allowance is too low and for particularly, if you look at people nearing retirement, they are on half the welfare payment than what they would be from the aged pension. Is this something that will also be considered as part of the review?
MATHIAS CORMANN: Newstart allowance is not a retirement income. Not having a job, being out of work is tough. Yes, there is support provided and Newstart allowance is indexed twice a year. But our response to the difficulties faced by Australians without a job is to get more Australians into work. More than 1.4 million jobs have been created on our watch. Newstart allowance gets increase twice a year. 99 per cent of Australians on Newstart allowance get other welfare payments and allowances, rental assistance, parenting payments, energy supplements. You name it. 99 per cent of people on Newstart allowance get payments other than Newstart allowance. Two thirds on Newstart allowance are on it for less than a year. It is a transitional payment. It is something that is not designed to be an ongoing income support payment over the very long term.
KEIRAN GILBERT: But the fact is, you said two thirds are on it for that period of time, I think it’s about a year roughly. But there is a third who are long-term unemployed. That’s obviously a very tough way to try and live on that payment.
MATHIAS CORMANN: They don’t just live on that payment is my point. 99 per cent of Australians receiving Newstart allowance, and I think you can safely assume just about everyone who is on it for more than a year will be receiving other welfare payments on top of Newstart allowance. Payments are indexed twice a year. In the end the objective has to be to get more Australians back into work.
KEIRAN GILBERT: Minister, as always, we appreciate your time. See you next week.
MATHIAS CORMANN: Good to talk to you.