Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 16 October 2019
QUESTION: First for us Minister, how concerning do you consider the downgrade?
MATHIAS CORMANN: We have said for some time that the world and indeed Australia were facing global economic headwinds. Everybody can see what is causing them. We have planned in our Budget for the global economic headwinds that we knew were coming. So this is not entirely surprising. The IMF is very clear what in their view is causing the downgrade in the global economic growth outlook. In the international context, we have to say that the Australian economy continues to perform comparatively well. We have a growth outlook, even in the IMF revised outlook, that is higher than any of the G7 nations other than the United States. We are now in our twenty-ninth year of continuous economic growth. We have record workforce participation. The lowest welfare dependency in three decades. We continue to be a AAA rated economy. Our Budget has returned to balance. We are on track to deliver the surplus in 2019-20. We are facing challenges, but we have the plan to deal with them.
QUESTION: Minister, you mentioned that we have got higher growth than the G7 other than the US. We are not actually in the G7 though. How does our growth compare to for example our neighbour New Zealand or the G20?
MATHIAS CORMANN: The G7 are a credible benchmark because they are highly developed economies. Australia, we are in our twenty-ninth year of continuous growth. That is unprecedented in the developed world. We have always understood that there were challenges. That is why we said to the Australian people at the last election that this was the worst possible time to inflict Labor’s high taxing agenda on the Australian economy, which we argued would have made our economy weaker, it would have pushed unemployment up and led to lower wages over time. The Australian people agreed with our judgement.
QUESTION: Minister, but Australian growth tipped to be growth lower than Spain, and lower than Greece it is not exactly a good outlook for Australia is it?
MATHIAS CORMANN: You have to look at the history. Greece’s economy for example is about twenty-three per cent smaller now than it was at the GFC. Whereas Australia’s economy is thirty-three per cent larger. Greece has got an unemployment rate of 19.3 per cent. Where we have an unemployment rate of 5.3 per cent. Greece has got a gross government debt just under two hundred per cent of GDP. If you look at the Australian economic and fiscal performance on an international context, we have got a strong track record. We are optimistic about the outlook.
QUESTION: It must be concerning though that the downgrade is double the global downgrade?
MATHIAS CORMANN: Again, Australia is globally focused, which means it is also a globally exposed trading economy. When there are downgrades in global growth, that has a significant impact on us. On top of that, we continue to feel the impact of the floods in North Queensland earlier in the year and the continued impact of a very severe drought across large parts of Australia. But we are working through all of these challenges. We are working to a plan. That plan, as is always the case is updated on two occasions every year. The next update will be the half yearly Budget update in December and we will have the Budget in May. That is the normal course of events.
QUESTION: Minister, doesn’t this tell us that Labor’s push all along of the need to stimulate the economy is right?
MATHIAS CORMANN: No. It tells us that their push for higher spending funded by higher taxes is wrong. What people forget is that the Government does not have any money of its own. The Government only has the money that it takes out of the pockets of the Australian people and Australian businesses. Taking more money out of the pockets of Australians, hard-working Australians and Australian businesses would weaken the economy. That is the core argument that we put to the Australian people at the last election. That this is not the time to take more money out of the economy because it would make the economy weaker. It would make job creation harder. It would push up unemployment. It would lead to lower wages over time. The Australian people agreed with our assessment. They agreed with our plan for lower taxes and a stronger economy on the back of our plan to build a stronger economy.
QUESTION: Minister, if the tax cuts don’t work as well as you had hoped, if interest rates don’t work, or doesn’t work as well as you hoped, would you consider a Rudd-style stimulus.
MATHIAS CORMANN: We would never consider a Rudd-style stimulus. What the Rudd government did was terribly reckless. The Australian people are still paying for his reckless spending sprees. He spent more than $1 billion putting pink batts into peoples’ roofs only to then spend another $1 billion to take them out again. He spent billions of dollars on school halls, that the schools that had them inflicted on them by and large did not need. We are working to a sensible plan to deal with the challenges that we are facing. Everybody knows the challenges in the global economy and what is causing them. Everybody knows that Australia is a globally focused trading economy and that what happens in the world economy matters to us. We need to continue to ensure that we are in the strongest possible position to deal with the headwinds but also to maximise opportunities that are in front of us for the future. Australia is performing well.