Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
MATHIAS CORMANN: When we came into Government in September 2013, the unemployment rate was on the up and up. The employment growth rate had slowed down to a trickle. Since then, under our Government, implementing our agenda, more than 1.4 million new jobs have been created across the Australian economy.
In the month of July, more than 41,000 new jobs, more than 34,500 new full time jobs, more than 12.9 million Australians in employment, which is an absolute record high. An employment growth rate of 2.6 per cent per year, well above the 1.8 per cent average. That is the long term average. A participation rate of 66.1 per cent. An absolute record high as well.
Things are heading in the right direction. We are facing challenges. Global economic headwinds and some downside risks in the domestic economy. But our plan to build a stronger economy and create more jobs is working. The employment numbers for July 2019 are showing that again.
QUESTION: What is your reaction to the stock market fall and recession warnings out of the US overnight?
MATHIAS CORMANN: I am not a commentator on stock markets. We are focused on the economy and our economic performance. The fundamentals of the Australian economy are strong. Our employment growth is strong. Our employment growth is running at 2.6 per cent which is well above the 1.8 per cent long term average growth on an annual basis. In the month of July another 41,000 new jobs, 34,500 full time jobs. About 77 per cent of new jobs created in the economy in the month of July were full time jobs. The unemployment rate remaining at a low 5.2 per cent. In an Australian context we are very focused on implementing our plan to build a stronger economy and create more jobs. We are very focused on managing the downside risks that we are facing from global economic headwinds and some of the downside risks in the domestic economy. We are heading in the right direction. We will just keep working very hard to implement our plan for a stronger economy and more jobs.
QUESTION: If there is a recession though, what would happen to those who are surviving on Newstart?
MATHIAS CORMANN: We are in our twenty-eighth year of continuous growth. Our economy continues to grow. We have just seen the level of Australians in employment at more than 12.9 million Australians reaching an absolute record high. More than 12.9 million Australians in paid work. That is a record high. 66.1 per cent is our participation rate here in Australia, which has increased by another half a per cent over the last twelve months. An absolute record high. Female participation has also continued to increase to 61 per cent, an equal highest ever. In an Australian context, we continue to make all the decisions that we need to make to put the Australian economy on the strongest possible foundation and trajectory for the future, to ensure that more jobs can be created, to ensure that Australians have the best possible opportunity to get ahead.
QUESTION: If there is a recession though, it is likely that that employment growth will cease. Is there a plan for those on Newstart?
MATHIAS CORMANN: We have a plan to continue to build a stronger economy. Our economy continues to grow. Employment growth is stronger, much stronger than it has been on average over the long term. We are continuing to experience, we are continuing to achieve 2.6 per cent employment growth. With our plan, which has delivered more than $300 billion in personal income tax cuts relief for hard working families, our plan which secures better access to markets around the world for our exporting businesses to sell Australian products and services around the world, our plan with record investment in infrastructure all around Australia, our plan to bring the price of energy down so that our businesses as well as our households can have access to competitively priced and reliable supplies of energy. All of that together is helping to ensure that our economy will continue to be strong into the future and that more jobs will continue to be created into the future.
QUESTION: So can I just confirm then that there is going to be no change to Newstart?
MATHIAS CORMANN: The Newstart allowance increases twice every year. It is indexed twice every year, which has been the arrangement under governments of both political persuasions for a very long time. What I would say is that in the lead up to the last election, Labor took policies to the last election increasing the tax burden on the economy by $387 billion. Even after proposing to increase taxes by $387 billion, they did not allocate one single cent to increasing Newstart allowance over and above the twice yearly increase by CPI. We are making the right decisions in order to ensure that all Australians have the best possible opportunity to get into work. In July, 41,000 new jobs, 34,500 new full time jobs, and more than 12.9 million Australians in paid work by the end of July 2019. The highest number of Australians in paid work ever.
QUESTION: Further to that, job figures today show that more people are entering the workforce like you just said, but with wages not growing quickly do you sense more families are now needing that extra income?
MATHIAS CORMANN: Wages growth actually continues to run above inflation. Wages growth has come in at 2.3 per cent per annum earlier this week. 2.6 per cent in the public sector above the 1.6 per cent CPI. There continues to be wages growth above inflation. We would like to see wages grow more strongly. The way to achieve that is by continuing to create more jobs. As more jobs are created, as excess supply in the labour market continues to deplete, as there is more competition for workers by businesses, wages will grow. We need to continue to ensure that productivity improves, that our economic performance improves, the number of jobs increases. Again, employment growth in Australia right now is running at 2.6 per cent compared to the long-term average of 1.8 per cent on a yearly basis. That is the way that we will see wages grow more strongly into the future. But wages are already growing above inflation at 2.3 per cent and 2.6 per cent respectively in the private and public sectors, above inflation of 1.6 per cent.
QUESTION: In regards to the stock market fall, how much of this is due to the US-China trade war?
MATHIAS CORMANN: Stock markets will go up and down. I am not a commentator on stock markets. We are focused on the fundamentals in the economy. The fundamentals in the Australian economy are sound. Our economy continues to grow. We are a AAA-rated economy. Employment growth continues to run strongly, 2.6 per cent growth on an annual basis compared to 1.8 per cent, which is the long-term average. 12.9 million Australians in paid work. We are heading in the right direction. We are facing some global economic headwinds. We are facing some risks in the global economy and in the domestic economy. We will continue to do everything we can to address them appropriately so that all Australians have the best possible opportunity to get ahead.
QUESTION: There are calls from the Government to abandon its surplus promise for more stimulus and tax cuts. Is this something you would consider?
MATHIAS CORMANN: We will continue to implement our plan for a stronger economy, for more jobs and to ensure that Government lives within its means. 2019-20 is the year when the Budget returns to surplus after more than a decade in deficit. To ensure that the essential services Australians rely on can be guaranteed into the future, over the medium and very long term, we need to ensure that Government lives within its means. We have already delivered more than $300 billion worth of tax relief, legislated through the Parliament. We have already delivered in our Budget a $100 billion record federal infrastructure investment pipeline. We are doing everything we can to ensure that the Australian economy continues to grow and continues to grow more strongly. We are doing everything we can to ensure that more Australians can get a job, get a better job and build a career here in Australia.
QUESTION: Do you want Mr Trump to back down from the trade war?
MATHIAS CORMANN: In relation to global trade matters, of course we would like to see the trade issues between the US and China resolved sensibly. Australia is an open trading economy. What happens in the global economy matters to us. We want to do more business with more countries all around the world. But the issues in relation to trade between the US and China will need to be resolved, hopefully will be resolved sooner rather than later. We are very encouraged by the conversations that have been taking place at a very high level between President Trump and President Xi Jinping. There are legitimate issues to be resolved. There are legitimate issues to be pursued. We hope they will be pursued with a final conclusion sooner rather than later.
QUESTION: The glow of the recent tax cuts seems to be already disappearing. Is there an argument to bring forward the next phase of those cuts?
MATHIAS CORMANN: That is commentary. We have made our decisions based on all of the economic information and data in front of us. We have made judgements on what is in our national interest when it comes to building a stronger economy and creating more jobs. That has included a record $300 billion-plus in personal income tax relief, which will continue to be implemented over the future years because it is a personal income tax relief plan that is phased in over a seven-year period. That will continue to have a positive effect on our economy and on jobs. We will always continue to make judgements about what is in our national interest, what is required to keep the economy strong, but these are judgements that are made in the lead up to Budgets and Budget updates.