Senator the Hon. Mathias Cormann
Minister for Finance
Special Minister of State
Leader of the Government in the Senate
Senator for Western Australia
Date: Sunday, 27 October 2019
DAVID SPEERS: As you saw there the first home buys guarantee promised just before the election by the Government when the housing market was in a slight downturn. The details of the scheme are being announced today as the market really springs back to life, particularly in the two big markets, Sydney and Melbourne anyway. This housing market rebound is one of the few bright spots in the economy right now. The drought, falling productivity, a lack of business investment well they are all weighing on the economy. The Government though is confident we will see better results in the next set of economic growth figures in December. Joining me now is the Finance Minister, Mathias Cormann. Thanks very much for joining me this morning Minister, appreciate it. Let’s start just with the announced details today on the first home buyers guarantee scheme. Is it still just limited to 10,000 new buyers? And how will they be chosen?
MATHIAS CORMANN: Yes it will be 10,000. We will provide up to 10,000 loan guarantees every year over the next few years. The National Housing Finance and Investment Corporation will be managing that process. What we are announcing today is the investment mandate for the National Housing Finance and Investment Corporation, which puts in place the price caps across the various states. Ultimately the scheme will be driven by demand, up to 10,000 guarantees a year.
DAVID SPEERS: But is that first in best dressed, or is there a certain number for Sydney, for Melbourne, for Perth, for Brisbane and so on.
MATHIAS CORMANN: There are no specific numbers of guarantees per jurisdiction. It will be on a first in best dressed basis. The price caps are calibrated to take into account median house prices and conditions in respective markets and they are set with reference to the thresholds for concessional arrangements for stamp duty in various States.
DAVID SPEERS: If these buyers no longer need to take out mortgage insurance that can save them roughly $10,000 so I am sure it will be attractive for some. But that means they have a bit more in their pocket. They can bid more for the house they want. Could this push up prices in this market?
MATHIAS CORMANN: We do not believe so. We think it is carefully calibrated. That is one of the things that we will assess once the scheme has been in place for a while. In the end, it is very specifically targeted. It is available for first home buyers, who buy their principal place of residence and pay off the principal and interest with an income for singles of up to $125,000, for couples of up to $200,000. It is for a part of the property market, it is really focused on first home buyers to help them buy a modest first home.
DAVID SPEERS: Let’s turn to some wider economic matters. On Friday the Bureau of Statistics released its annual insights into the economy. It confirmed that last financial year we saw the smallest increase in household wealth in ten years, the softest economic growth since the global financial crisis and the first fall in labour productivity since 2010-11. Are you confident things have improved since last financial year?
MATHIAS CORMANN: If you look at the first two quarters of 2019 they were somewhat better than the last two quarters of 2018. As the Governor of the Reserve Bank also points out, he expects a gradual strengthening of economic growth moving forward, with a return to trend growth within twelve months. We have been facing a series of pretty significant global economic headwinds. Everybody knows what they are. From trade tensions to things like Brexit and the uncertainty from Brexit. They are weighing on global economic… interrupted
DAVID SPEERS: But not just global headwinds.
MATHIAS CORMANN: If I might just finish my sentence. So we are facing a series of global headwinds. But domestically we have been dealing with the impact on the economy of a significant flood earlier in the year and the continuing significant drought in large parts of Australia. If you look at the upside though, more than 1.4 million new jobs created. The unemployment rate at 5.2 per cent, relatively low. Record workforce participation. Our economy continues to grow. Since the June quarter we have had further cuts in interest rates, we have had our income tax cuts coming into effect, we continue to roll out our significant infrastructure investment program. We are rolling out the plan that we took to the last election we promised to the Australian people we would implement.
DAVID SPEERS: Okay but one of those elements, a fall in productivity. That can’t be blamed on global headwinds. What is the Government’s plan to do something about productivity?
MATHIAS CORMANN: We are focusing on that across the board. Investment in productivity enhancing infrastructure. We are progressing and agenda in the skills space. The Attorney General and Minister for Industrial Relations Christian Porter is going through a consultation process to explore reforms in the industrial relations space. Also we have to continue to assess opportunities to attract additional capital investment to make sure that businesses across Australia are in the best possible position to attract additional capital investment. Ultimately that is a very important part of boosting productivity moving forward. And the whole deregulation agenda, the deregulation piece will continue to be pursued with renewed vigour. Ben Morton as the Assistant Minister with specific responsibility for this space will be continuing to push that along.
DAVID SPEERS: But a lot of those things do take a long time. If you are only exploring changes in industrial relations, that could take quite some time to lead to change in the workplace. What about on the tax front? Are you willing to take up any of the suggestions from New South Wales, the Coalition Government there really wants another look at Federal State relations and broadening the base of the GST.
MATHIAS CORMANN: No. We are not looking at the broadening of the base of the GST. We assessed that pretty carefully a few years ago and made a conscious decision not to pursue it because the analysis showed that there was a negligible effect if any upside from that whatsoever. In between Budgets we continue to assess all of the economic information in front of us. All of the data and all of the options to make further decisions to make Australia more internationally competitive. That is what we will do in the lead up the Budget next year on the second Tuesday in May. In the meantime we will be implementing the Budget which we took to the last election, which is not that long ago, which included significant reductions in personal income tax and which also included further measures to lower the tax burden on business, helping them be more successful and more profitable into the future so they can hire more Australians and pay them better wages over time.
DAVID SPEERS: Coming back to that earlier question though, you are confident we will see a better growth figure in December?
MATHIAS CORMANN: We are cautiously optimistic about the outlook. In the June quarter not only did we have a whole series of headwinds internationally and domestically we also had an election. In Australia, federal elections at the best of times have a negative impact on growth. On this occasion most people expected a change of government. A change of government to a high taxing government at that. And still we grew by half a per cent in the context of negative growth in other economies around the world like Germany, South Korea, the UK, Singapore were shrinking…interrupted
DAVID SPEERS: So if it comes in at half a per cent or worse again will you need to stimulate?
MATHIAS CORMANN: Firstly, I am not going to mention any arbitrary figures now. What I am saying is that we believe our plan is working. We will stick to our plan. Our Budget is a pro-growth Budget. We had more than $300 billion worth of income tax relief. $21 plus billion of which has gone back into the economy over the last three months or so. We will continue to roll out our productivity enhancing infrastructure investment program. We will not be pushed by some hyperventilating Opposition commentators into pursuing Labor policy. That is just not going to happen. We will do what we promised the Australian people we would…interrupted
DAVID SPEERS: I’m just asking if you don’t get the growth that you’re expecting to get, you’re going to have to do something, right?
MATHIAS CORMANN: We are quietly confident our plan is working and will continue to work. Like the Governor of the Reserve Bank has said, we expect growth to gradually strengthen and return to trend growth over the year. An important part of making sure that happens is to ensure that the Government calmly and sensibly continues to implement its plan and that we continue to provide certainty and stability to business and to the Australian people. The level of hyperventilating commentary from people like Jim Chalmers and the like is not helping the economy in any way shape or form … interrupted
DAVID SPEERS: Let’s leave him out of it. But to pick up what you just said there, you do expect a return to trend growth this year? That’s what you just said?
MATHIAS CORMANN: I have just pointed to comments from the Reserve Bank Governor that he said and we agree with him, that economic growth is expected to gradually strengthen and return to trend growth within 12 months.
DAVID SPEERS: Okay, so by this time next year we’ll be back at roughly 3 per cent growth?
MATHIAS CORMANN: The expectation is a return to trend growth within 12 months. Don’t take my word for it. That is what the independent Reserve Bank Governor, a week or two ago, pointed out.
DAVID SPEERS: Okay, but I am keen to hear what you think as well as one of those with your hands on the purse strings.
MATHIAS CORMANN: We will be updating our economic forecast in our half-yearly Budget update in the middle of December. That is when you will find out precisely what, having assessed and considered all of the information, what the Government’s view is. In the meantime, I can again point you to what the independent Reserve Bank Governor said as recently as last week.
DAVID SPEERS: Okay, just turn to the drought. The Nationals clearly don’t think enough is being done. Is there, can I just clarify, is there a plan for a further $1.3 billion in Commonwealth and State funding. Is that the Government’s policy?
MATHIAS CORMANN: As the drought continues and the impact on significant parts of Australia continues to worsen of course the Government will continue to assess what else and what more we can do to support families, to support communities and to further build drought resilience … interrupted
DAVID SPEERS: But right now, is it Government policy now?
MATHIAS CORMANN: If I may finish one sentence. We continue to go through an orderly process. We work with the Nationals Farmers Federation. We listen to all of the stakeholders putting forward their suggestions. I have read the reports that you are referring to. We will continue to assess ideas and suggestions through an orderly process. We make judgements once we have gone through that. Relevant announcements of the Government’s additional support measures will be made when these decisions have been made.
DAVID SPEERS: Alright, so this is just an idea at the moment being looked at. Can I just ask you about it because Barnaby Joyce has articulated, the way he is explaining it is a big cash grants made to local communities. The mayor, the State MP and the Federal MP will then decide how it’s spent. Is that a sensible way to spend taxpayers’ money?
MATHIAS CORMANN: I am not going to provide a running commentary now on decisions that have not yet been made. We have in the past provided grants to local governments in drought-affected areas. We have in the past provided additional support to families impacted by the drought. We will do as we always do. We will consider all of the information in front of us about the continuing worsening impact of the drought across large parts of Australia and we will make judgements on how best to respond. The National Farmers Federation and others have put forward suggestions. We will assess all of those and then make judgements in the appropriate way.
DAVID SPEERS: But you’re kind of the expert in this field, Finance Minister, as to what’s a good and bad way to spend taxpayers’ money. You’ve been pretty critical about how Labor fritted way money and so on. Would this be a sensible way to spend more than a billion dollars of taxpayers’ money?
MATHIAS CORMANN: I will not have a hypothetical conversation about decisions that have not been made. I will do as I always do. I will participate in the conversation inside the expenditure review committee and I am very confident that the decisions that we make will be very sensible decisions on how we can build on the support we have already provided to families and communities in drought-affected areas.
DAVID SPEERS: How are you getting on with the Nats at the moment, Mathias Cormann?
MATHIAS CORMANN: Good. Very good. We are a very strong, united, effective coalition. In the Senate, we get a lot of work done together. We have got a very good relationship.
DAVID SPEERS: What did you make of the criticism behind closed doors admittedly, but from apparently Barnaby Joyce and Darren Chester about you being too cosy with One Nation?
MATHIAS CORMANN: I have answered questions about this on Sky before. I was a bit surprised, because in relation to the dairy issue which apparently triggered that conversation according to reports. One Nation did approach us in the Senate with a view that we should re-regulate the dairy industry and we said no to that. But in the course of that week, it became apparent that in relation to our election commitment, the Nationals-initiated election commitment to put in place a diary code of conduct, that there were some administrative bureaucratic bottlenecks that were holding up the delivery of that. I helped Bridget, as the Minister responsible, the Nationals Minister responsible to accelerate implementation of a Nationals policy … interrupted
DAVID SPEERS: Did any Nationals raise their concerns with you directly?
MATHIAS CORMANN: No.
DAVID SPEERS: Did anyone… no? Okay.
MATHIAS CORMANN: Sorry, sorry I should correct. I did have a question about what had happened from a Cabinet colleague and answered that question. As far as I am concerned, I think that explanation satisfied things.
DAVID SPEERS: A final one. The Energy Minister Angus Taylor, he was being asked a lot about the letter that he wrote to Sydney Lord Mayor Clover Moore in Parliament during the week. He’s admitted he did send a document that had the wrong figures in it about her council’s travel bill. The figures we know were way out. He hasn’t explained though where that dodgy set of figures came from. Do you think that needs to be answered?
MATHIAS CORMANN: I completely reject that proposition. He has clearly explained that the document was accessed on a public site. The most recent statement I have seen from Angus Taylor, he made the point that there was still various, according to his statement, several different versions of that same document available publicly at that time. I am not aware of the ins and outs of this. I do not know …interrupted
DAVID SPEERS: But all with the correct figures. We don’t know where the dodgy figures came from.
MATHIAS CORMANN: All I can do is refer you to the statements by Angus Taylor, who made very clear that the document was accessed publicly from publicly available websites. I was not there. it’s probably best to pursue these questions with Angus.
DAVID SPEERS: Alright, Finance Minister and Government Senate Leader, Mathias Cormann, thanks very much for joining me this morning.
MATHIAS CORMANN: Always good to talk to you.