Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
ANNELISE NEILSEN: We are going to be covering a lot of topics in federal politics. So let’s go live to Finance Minister Mathias Cormann who joins us live from Perth, Western Australia. Mathias, thank you for your time. This is something where we have seen a lot of discussion around drought recently and the $100 million will be welcome by a number of farmers. How has this been costed for if it wasn’t part of the last Budget allocation?
MATHIAS CORMANN: We are always looking at ways to provide appropriate support to our drought affected communities. This latest announcement comes on top of about $7 billion worth of support that we are already providing to drought affected communities. All of that gets reconciled in our half yearly Budget update later this year.
ANNELISE NEILSEN: So will this impact the potential budget surplus if it has not been costed for?
MATHIAS CORMANN: It has been costed. Any announcement of additional spending is costed. In between Budgets and Budget updates, there are decisions made all the time. They get reconciled at the relevant Budget update. The next Budget update is the half yearly Budget update, the Mid-Year Economic and Fiscal Outlook, which will be delivered in the middle of December.
ANNELISE NEILSEN: So where has the money come from then? Is it just a general fund or?
MATHIAS CORMANN: What we have done over the last six years having inherited from the Labor party a rapidly deteriorating Budget position, with deficits as far as the eye could see and a forward trajectory with increasing gross and net debt. We have turned that situation around. The Budget in 2018-19 has returned to balance. We recently released our Final Budget Outcome which demonstrated that compared to the Budget forecast of a $14.5 billion deficit, we had a $13.8 billion improvement to the Budget bottom line. Getting to a deficit of just $690 million. The 2019-20 Budget is projected to be in surplus. We are projected to be in surplus all the way over the forward estimates and over the medium term. In between any Budget and Budget update, the decisions to allocate more funding to high priority areas, wherever that is possible we seek to offset that with spending reductions in other parts of the Budget.
ANNELISE NEILSEN: Now if we turn to these comments made by former treasurer Peter Costello, he said that the focus on the economy shouldn’t be on a future rate cut or infrastructure as the Government has been saying, but on structural reform. Do you agree?
MATHIAS CORMANN: We need to make sure that we get all of the decisions right. Monetary policy has been important. There have been two cuts in the official cash rate in June and July. That is a matter for the independent judgement of the Reserve Bank. The Government has been very aware of the headwinds that we have been facing. Global economic headwinds and some of the downside risks in the domestic economy following the impact of floods and drought. So we delivered in April a pro-growth Budget with further income tax relief, with further investment in infrastructure. I have read the comments that Peter Costello has made. I do not think he is criticising the infrastructure investment pipeline that we have put forward in the Budget. I read him to say that we should resist any calls to further ramp that up. We believe that we have got the balance right with our pro-growth agenda which is reflected in our Budget. But we always continue to monitor the data, the information in front of us. We will continue to make judgements about what is in the best interest of keeping the economy strong, building a stronger economy, creating more jobs and making sure that Australians have the best possible opportunity to get ahead.
ANNELISE NEILSEN: What he said is that the Government should undertake reforms that would lift wages. Do you agree?
MATHIAS CORMANN: We are absolutely committed to productivity improvements and to reforms that drive stronger productivity growth. Of course. That is something that the Government has been focused on for some time. We will continue to focus on that. Our deregulation agenda is part of that. Our infrastructure investment program is part of that. Tax cuts are part of that. Our skills agenda is part of that. So across the board of course we are focused on improving our productivity growth moving forward. Wages growth will come from continued strong employment growth with bringing the employment rate down over time so there is more competition for workers and productivity improvements, because in the end sustainable wages growth will come from sustainable stronger economic growth. That is absolutely what we are focused on.
ANNELISE NEILSEN: Now if we turn to this recommendation for an inquiry into the jobs taken by former Ministers Christopher Pyne and Julie Bishop. Do you think that there is still a case to answer? Clearly this Parliamentary committee thinks so.
MATHIAS CORMANN: This is a Labor led inquiry. It was a partisan exercise. There is absolutely no evidence at all that Christopher Pyne or Julie Bishop have breached Ministerial standards. In fact both of them are very clear that they have complied with their requirements. The requirements of the Ministerial Standards. Martin Parkinson who independently conducted an inquiry on behalf of the Prime Minister has confirmed that there was no breach of Ministerial Standards. This is just a partisan political exercise. This is just a side show.
ANNELISE NEILSEN: It has concluded that on the evidence he’s seen that there is no evidence of a breach of the Ministerial Standards. But that doesn’t mean that there isn’t. In particular, when they do start actually performing these roles. Especially with Christopher Pyne who is working in a defence space, having been the Defence Minister.
MATHIAS CORMANN: The Ministerial Standards do not preclude you from operating in an area that you have experience in. They preclude you from lobbying for eighteen months in relation to your portfolio responsibilities and they also prelude you from using information that is not publicly available. That is quite an important distinction, one that clearly the Labor Party in their desperation to make partisan political points seek to ignore. The truth of the matter is that the inquiry did not find any evidence of any breach. This is just a partisan exercise with no substance.
ANNELISE NIELSEN: When it comes to the Prime Minister’s trip to the United States, it was quite successful by all accounts. This overarching issue though about China really has stolen the headlines and whether China is a developing country, as the Prime minister said. What’s your opinion? Is China a developing country?
MATHIAS CORMANN: I think that the Prime Minister made the point that China these days is a much more developed economy than it was when the ‘special rights’ provisions were put in place for China as a developing economy in the early to mid-90s. Back in 1990 China represented about two per cent of global GDP. By 2018 that had increased to 16 per cent. China is now the second biggest economy in the world. China became the largest goods exporter in 2008, 2009 thereabouts and the biggest trading nation in 2013. China has had a magnificent economic growth experience in the last three decades. It has been a great achievement. It has been very beneficial for countries all around the world, including and in particular Australia. China today is a very different country, a much more significant economy. It is a global power today compared to where China was in the early 90s. It is important, as the Prime Minister has indicated and as has been the long-standing position of the Government, that the multilateral trading architecture, the global trading architecture reflects economic circumstances from 2019 onwards and not an outdated framework from the early 90s.
ANNELISE NIELSEN: Having experienced rapid growth doesn’t necessarily mean that you are developed. There is still hundreds of millions of Chinese people living in poverty and without access to normal standards of living. Do you think it’s reasonable that the World Trade Organisation should be treating them as developed?
MATHIAS CORMANN: I think that there is a conversation to be had, and that is all that we are saying, to reform our global trading architecture to ensure it better accounts for the changed global economic circumstances. When we have got an economy going from two per cent of world GDP to 16 per cent of world GDP, of course it makes it a much more significant player. That has been good for China. It has been good for people in China. It has been good for Australia. It has been good for countries all around the world. The growth in China is overwhelmingly a positive experience, but it also does bring with it additional responsibilities. When you are an economy of that size in the global context you do have a different level of responsibility that comes with that.
ANNELISE NIELSEN: What do you make of Labor’s criticism that Scott Morrison shouldn’t have made those comments when he was in United States, that it was deliberately provocative to be standing alongside the US taking aim at China?
MATHIAS CORMANN: It was ridiculous and ignorant. Any proposition that you can go to the US or to China without talking about the US-China relationship, without talking about global trade dynamics is just naive. And indeed, we had senior Labor shadows talking about the same topic, one of them from China. We should be able to talk very candidly and constructively about what is in front of us and some of the issues that need to be resolved. The Australian position is very clear. We would like to see the trade tensions between the US and China resolved as soon as possible. They are having a negative effect on global growth. There are some legitimate issues to be resolved. We would like them to be worked through as soon as possible. We believe that is in our interest as a trading nation and we believe that is in the interest of trading nations all around the world, including and in particular the US and China incidentally.
ANNELISE NIELSEN: And just finally Mathias Cormann, big grand final tomorrow. Are you backing either side?
MATHIAS CORMANN: Given that West Coast is no longer part of the equation, I have to go for the other Western team. I am going to go with GWS tomorrow.
ANNELISE NIELSEN: Oh, controversial pick. Finance Minister Mathias Cormann thank you for your time.
MATHIAS CORMANN: Always good to talk to you.