Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 4 September 2019
MICHAEL ROWLAND: Now for more on today's looming big economic news. Figures out later this morning are widely expected to show Australia's weakest rate of growth in possibly a decade. The Finance Minister Mathias Cormann joins us now. He is in Sydney. Minister, good morning. So according to a lot of economists you are expecting to record the weakest growth rate in a decade, possibly longer. This is, of course happening on the Government's watch. What is going so horribly wrong?
MATHIAS CORMANN: Let’s see what the results are when they are announced later today. But as we have said quite clearly during the election campaign, the Australian economy is not immune from the global economic headwinds that are causing issues for economies all around the world. The fundamentals for the Australian economy remain strong and as the Reserve Bank governor also said yesterday, we do expect growth to strengthen moving forward. But this is a period where we have escalating trade tensions, where obviously that has an impact on global growth, which has an impact on Australia. Domestically we've been dealing with things like floods and drought and the June quarter was also, of course, the quarter where we had an election. We've been planning for all of these things. That is why we have been pursuing an agenda for growth with lower income taxes, with more increased investment in infrastructure, an ambitious deregulation agenda, an ambitious free trade agenda. All things designed to make our economy more resilient and stronger in the face of increasing global economic headwinds. I should say, our economy continues to grow. We are in our 28th year of continuous growth. The most recent employment data shows that employment growth is running at 2.6 per cent, well above the long-term trend of 1.8 per cent. We remain one of only 10 AAA-rated economies around the world. The budget is coming back to surplus this financial year. So we continue to make the decisions that need to be made to put Australia on the strongest possible foundation and trajectory for the future.
MICHAEL ROWLAND: But still the latest figures and, of course, the growth figures today are backward looking indicator. But let’s talk about some latest figures. Yesterday confirmation retail sales fell in July. Job ads according to the ANZ Bank fell by nearly 3 per cent in August. Private dwelling approvals falling for 16 months. It's not exactly a picture of an economy in great health, is it?
MATHIAS CORMANN: It is an economy that is in stronger shape than it would have been if the Australian people had elected a government at the last election that would have increased taxes instead of reducing them, as we have. Since 1 July, obviously we have legislated our personal income tax relief. About $14 billion in income tax relief has been handed back to the Australian people over the last two months. We have had two reductions to the tune of 50 basis points in the official cash rate in June and July. That obviously is having a beneficial impact across the economy as we speak. And we are rolling out our ambitious infrastructure investment program. We have planned for the challenges that Australia is facing that we knew were coming. We are making sure that Australia is in the strongest possible position in the face of those challenges and we are in a stronger position than we would have been if after the last election, instead of reducing taxes, a government had been elected that increased taxes.
MICHAEL ROWLAND: But you're the Government. It's hypothetical. We’re now talking about what the Government should be doing. You talked about the tax cuts, they began to wash through the economy in the middle of July, but as the retail figures showed, people generally weren't spending that money. That money is not going through the economy. People understandably are using those tax cuts to pay down household debt. Morgan Stanley, the investment bank, says looking through the end of this year, those tax cuts won't have a market impact on spending. You're in a bit of strife if those cuts aren't being used as you intend them to be.
MATHIAS CORMANN: I think you're getting way ahead of yourself. Obviously, tax cuts that started to be paid out into the bank accounts of Australians from the middle of July, obviously would not have had as much of an impact as you seem to think they should have had in the July data... Interrupted…
MICHAEL ROWLAND: Excuse me for the interruption. Your Treasurer Josh Frydenberg was urging, begging people to get on to the Tax Office on July 1 to spend that money.
MATHIAS CORMANN: And I look forward to having the conversation about the September quarter national accounts data, which of course will be released in early December before we release the half-yearly budget updates, providing an update in terms of the economic and fiscal outlook for Australia. I think you will find that when we have that conversation about the third quarter for 2019, I think you'll find that the economy will, economic growth will start to strengthen again and that we will have a more positive outlook into the future.
MICHAEL ROWLAND: Okay, just before you go, Minister, the other big story we're covering this morning is the Federal Court case on the Tamil family poised to be deported to Sri Lanka. Do you have any sympathy for that family?
MATHIAS CORMANN: Well, 1,500 illegal arrivals from Sri Lanka who arrived in the same circumstances as the two Sri Lankans who arrived here illegally by boat have been sent back to Sri Lanka. This is a case that has been comprehensively assessed by government, but also of course by the courts, all the way up to the High Court. And at every step on the way, those assessments have confirmed that they do not qualify to come to Australia as asylum seekers and that is why they should be treated in precisely the same way as everybody else who has been assessed consistent with our laws in those circumstances. This is about making sure that we do not send a signal to people smugglers that are out there waiting to see a weakening in the resolve of the Australian Government in protecting our borders and our Government will remain absolutely committed to ensuring that we do not go back to the absolute tragedy where 1,200 people died at sea because people smugglers were given the incentive to put people on leaky boats and send them to Australia. We will not be doing that.
MICHAEL ROWLAND: But the question was - do you have any sympathy for the family? We’re talking about two young kids, both born here born in Australia?
MATHIAS CORMANN: Of course I might have sympathy, but that is not the point. The point here is, that we have to apply the law, the law of the land and we have to make sure that we focus on the broader national interest. That is what Peter Dutton is doing and that is what the Prime Minister again made very clear earlier this week that our Government will be doing.
MICHAEL ROWLAND: Okay, there's no scope as far as you see it for the Minister to use ministerial discretion, as he did with the au pairs?
MATHIAS CORMANN: This is a case that has been going since 2012. This is a case that has been going since 2012. It has gone through very comprehensive assessments by government and by the courts. They have taken advantage of every possible avenue to have their cases reviewed through the courts and at every step, the courts have confirmed that they are not validly here in Australia, that they do not have a valid claim to asylum and that is why in the same way as 1,500 Sri Lankans arrivals here in Australia before them, the decision has been made that they have to go back.
MICHAEL ROWLAND: Okay, Mathias Cormann, thank you for joining us. Look forward to our chat on those September growth figures as well.
MATHIAS CORMANN: Looking forward to it.