Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
PATRICIA KARVELAS: The final Budget numbers of the last financial year are in and they have given the Morrison Government a reason to celebrate. The $14.5 billion deficit forecast in May last year is now just $690 million, meaning the Budget has effectively broken even. Revenue from unusually high iron ore prices and a $4.6 billion underspend in the National Disability Insurance Scheme have both delivered unexpected windfalls. But with household consumption still weak, and figures out today showing an increase in unemployment, will the good times be short lived? Mathias Cormann, is the Finance Minister. Mathias Cormann welcome to the program.
MATHIAS CORMANN: Good to be back.
PATRICIA KARVELAS: The primary drivers of the Budget result, the underspend on the NDIS and high iron ore prices are both temporary. So is this better than expected result perhaps a one off?
MATHIAS CORMANN: That is not quite right. We have had significant increases in personal income tax revenue on the back of stronger employment growth than anticipated. More than $5.6 billion in higher personal income tax revenue. That is a significant part of the $13.8 billion improvement. That is because we have been able to create significantly more jobs than was anticipated at Budget time on the back of our plan to build a stronger economy. In terms of the iron ore price, it is well below what it was when we came into Government. Yes we have been more careful than Labor used to be in terms of our forecasting assumptions, which is why we are able to perform on the upside rather than having to chase revenue down as Labor used to have to do.
PATRICIA KARVELAS: The Government objects to the idea that the underspend in the National Disability Insurance Scheme was deliberate. But do you acknowledge though, that it has been a key factor in the Budget effectively breaking even?
MATHIAS CORMANN: It is one of the estimates variations. But what I would just point out is that over the last twelve months, expenditure on the NDIS has more doubled. We would like to see the NDIS being implemented as fast as possible. But that relies also on the cooperation of the States and Territories. Some of the States have been coming on board more slowly than we would have liked. Also the provider market that provides the services for people with a disability has also got to develop considerably. We have been able to increase the number of participants in the NDIS, thirty thousand to three hundred thousand in just three years. We will increase it by another two hundred thousand over the next twelve to eighteen months.
PATRICIA KARVELAS: So, ultimately, unemployment is also climbing steadily. Household consumption is weak and wages are relatively flat. Doesn’t that suggest that additional economic stimulus may be needed as the Reserve Bank has suggested?
MATHIAS CORMANN: Firstly, in the last month, employment has continued to grow by 35,000 additional jobs… interrupted
PATRICIA KARVELAS: But unemployment is up today.
MATHIAS CORMANN: If I may. Employment has actually continued to grow. Employment growth over the last 12 months was running at 2.5 per cent, well above the 1.9 per cent long-term average. The participation rate was at record high. We have a pro-growth budget, which will continue to provide stimulus to the economy consistent with the policy approach taken the Reserve Bank. As the Reserve Bank Governor said consistently in recent weeks and months, the expectation is for economic growth to gradually strengthen on the back of lower interest rates, income tax cuts, continued high investment in infrastructure, a pickup in the resources sector and a more competitive exchange rate.
PATRICIA KARVELAS: The US-China trade war is having a significant negative impact on the global economy. A number of major economies are in recession. What will Scott Morrison’s message to US President Donald Trump be when they meet?
MATHIAS CORMANN: Our message has been consistent all the way through. Australia is an open trading economy. It is in our interests and we believe it is in the interest of the US and China and of the whole world, for the issues to be resolved as swiftly as possible. We were quite encouraged by the level of conversations that have been taking place at a very high level. We would like to see them brought to a conclusion as swiftly as possible, so that there can be a new sustainable accommodation between the US and China in terms of these trade issues, so there can be certainty for businesses and exporting businesses in particular all around the world.
PATRICIA KARVELAS: I have to ask you because of your key role in the Senate, what did your Government agree to make One Nation leader Pauline Hanson the deputy chair of the parliamentary inquiry into the family court?
MATHIAS CORMANN: This is a select committee that was initiated in the Senate and also supported in the House of Representatives. It is an issue that many people feel strongly about and have a diversity of views on. We believe it is an important issue. We believe it is appropriate that from across the spectrum that people who are represented in the Parliament can participate.
PATRICIA KARVELAS: And the comments she’s made around domestic violence and women fabricating domestic violence. What do you make of those comments?
MATHIAS CORMANN: I disagree with them. I think she should not have made them. In the end, I cannot speak for her. She speaks for herself. There are a lot of people on committees who have different views to mine. I disagree with a lot of views of the Labor party in relation to a whole series of issues. The Labor party, the Greens, crossbench Senators, Senator Rex Patrick, they all participate on committees. They all have deputy chair positions on various committees. That is just the normal Parliamentary process at work.
PATRICIA KARVELAS: Thank you so much for joining us.
MATHIAS CORMANN: Always good to talk to you.