Senator the Hon. Mathias Cormann
Minister for Finance
Special Minister of State
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 8 November 2019
KIERAN GILBERT: Let’s turn our attention now to the other stories this week. The big one was the drought announcement from the Federal Government. The Finance Minister and Leader of the Government in the Senate Mathias Cormann joins us, as he does every Friday. Minister, thanks so much for your time. In terms of the way the drought support is given, can you explain to us how the loan arrangements work and then if farmers are facing the same situation in a couple of years, can those loans be restructured to ensure that interest is not paid on those particular facilities?
MATHIAS CORMANN: We have made the decisions on the basis that we have announced yesterday, the Prime Minister announced yesterday. So there will be an opportunity to access loans that are interest free for the first two years and then interest only for the subsequent three years. It is designed to help farmers in those drought affected communities transition through what is hopefully a temporary challenge. Help farmers restock, help farmers rebuild, help them deal with some of the costs that they are facing in what is a very difficult circumstance obviously.
KIERAN GILBERT: And it’s more than just the farms though. This package is about the ecosystem of the towns and the regions, isn’t it? That’s the structure of the plan.
MATHIAS CORMANN: Yes. The package recognises that many businesses in those drought affected areas servicing the agriculture sector are equally affected and so, yes, it does expand the opportunity for that support through this transitional period to those businesses that are providing products and services to the farm sector.
KIERAN GILBERT: Labor’s criticised the response, saying that not enough is done in direct and immediate support to farmers. What’s your response to that?
MATHIAS CORMANN: Look we are obviously engaging with community stakeholders in those drought affected areas. We have been working with the National Farmers Federation and we have designed a package that we believe hits the mark. It is now more than $1 billion in direct support into those drought affected communities. We have previously announced that we would be expanding the farm household allowance scheme, which of course provides direct support to eligible farmers in drought affected areas. That is legislation that will be dealt with in the Senate next week. But look, the Labor Party, as a matter of course whatever we do will jump up and down. We will just continue to work with all of those drought affected communities doing the absolute best we can to help support them through this difficult period.
KIERAN GILBERT: Let’s move onto the other story of the day, and we’ll hear from Anthony Albanese a bit later. From your perspective, there was one component of this review I wanted to put to you in relation to Weatherill and Emerson saying that qualitative research indicated that voters gleaned from the Budget that both parties were offering tax cuts, but the Budget was broadly fair and it largely inoculated the Government from Labor’s attack that the Coalition was making big cuts to services. Do you think, in hindsight, did the Budget get that sort of political credit that was due given that sort of impact? Because Labor had invested so much in those attacks, but they fell flat largely according to the review because of the success of the Budget.
MATHIAS CORMANN: The 2019-20 Budget was our sixth Budget. It built on all of the hard work that we had done in our previous Budget to turn the Budget mess that we had inherited from Labor around to a build a stronger economy, create more jobs and better opportunity for Australians today and into the future to get ahead. I think that Australians recognised that our sixth Budget, and our pre-election Budget in this context, obviously had put Australia on the right path forward. That we were supporting growth, supporting opportunity, supporting aspiration, supporting Australians and we were doing so in a way that was fiscally responsible and sustainable. Whereas if you looked at the alternative Labor was prosecuting a high taxing, anti-business, politics of envy, class warfare agenda which Australians understood would weaken the economy, cost jobs and leave them all worse off. To that extent, I don’t think the review tells us anything that we didn’t know, or that we didn’t say before the election. It’s just that Craig Emerson and Jay Weatherill now recognise that our criticism before the election of the Labor agenda was justified.
KIERAN GILBERT: We spoke at length throughout the election campaign from Liberal campaign headquarters many times and one thing that I think you very much, the rest of the Liberal campaign, had was clarity in terms of message, the simplicity. Was that something that you and your colleagues had discussed to say keep it simple, keep it targeted and keep it sharp, the message?
MATHIAS CORMANN: We knew for some time in the lead up to the election that this was going to be a very important choice between two very starkly different choices. We were pursuing a pro-growth, pro-opportunity, pro-aspiration agenda where senior leaders in the Labor Party didn’t even seem to appreciate that aspiration was something that was important to Australians. We were clearly pursuing a pro-growth, lower taxes, pro-opportunity agenda designed to create the best possible opportunity for Australians today and into the future to get ahead. The alternative was a high taxing, anti-business, politics of envy, class warfare agenda which demonstrably would have weakened the economy, put jobs at risk and left families around Australia worse off. I think Australians understood that choice and in the context of global economic headwinds coming our way and some of the challenges that we were already facing, I think people were very suspicious about what Labor was proposing and they understood that it was the worst possible time to pursue $387 billion in higher taxes. The Labor Party misjudged and, obviously they now realise, that while they were targeting supposedly the top end of town, it was the low income, aspirational Australians who turned against them and who came our way in droves.
KIERAN GILBERT: Now, in terms of that aspirational class that you have targeted over a number of years now, the Australian Financial Review as saying that you left the door open to bringing forward income tax cuts through your comments at the AFR CFO conference. How open is that door in terms of your prospect of bringing forward tax cuts?
MATHIAS CORMANN: Well I just made the obvious and always accurate point that our commitment is that we will always err on the side of lower taxes where that is fiscally sensible and appropriate. When we consider our Budgets or Budget updates, we do always have a number of competing objectives. We are committed to provide the necessary funding to guarantee the essential services Australians rely on. We are committed to ensure that Government lives within its means. But taxes, while they should be as high as necessary also should be as low as possible. Whenever we are in a position where all of the necessary funding for the essential services has been fully provided and the Budget is in a healthy fiscal position, then of course where there is opportunity, we will always err on the side of providing further tax relief. That is our track record and that is what we would intend to do in the future. But I would not interpret this as giving any indication of things to come in the half-yearly Budget update, which is just an update. Obviously, it is in the context and in the lead up to Budgets that you make the more substantial decisions about the future.
KIERAN GILBERT: Were you surprised that the retail figures were so soft this week given the tax cuts, given the rate cuts?
MATHIAS CORMANN: We believe that, generally, things are heading in the right direction. We have now legislated more than $300 billion in income tax relief, $21 billion of which has been put back into the bank accounts of hardworking Australians since the middle of July… interrupted
KIERAN GILBERT: So people are paying down debt do you think?
MATHIAS CORMANN: There is actually nothing wrong with people paying down debt or increasing their savings. All of that helps to boost the strength of the economy into the future as it will help to lift the confidence of individual Australians to spend more into the future. Reducing your level of debt exposure or increasing your level of savings actually does help strengthen your personal financial position and helps to put you in a better position to consume more into the future. We are quietly optimistic about where we are heading. We share the optimism that has been expressed now on a number of occasions by the Reserve Bank governor who has said that he expects economic growth to gradually strengthen and has been talking about a return to trend growth within 12 months. Obviously, we will be providing specific updates about our economic growth outlook and related matters in our half-yearly Budget update in the middle of December.
KIERAN GILBERT: And the Senate sits next week. Finally, on the timetable, there’s no mention on the legislation timetable, there is no mention of the Medivac repeal or the Ensuring Integrity legislation. Can you explain why that is? Because I would have thought that repeal is something certainly high on your agenda given recent stories in relation to one particular individual who was going to be brought to Australia under that framework.
MATHIAS CORMANN: Firstly, next week we do have a number of very important pieces of legislation on the agenda. We have the substantial bill dealing with energy market misconduct, colloquially referred to as the big stick legislation, which is listed early on in the week. We also have the expansion of the farm household allowance arrangements, which is an important part of our response to the drought. We have legislation to protect children from sexual exploitation and abuse, better protection from sexual exploitation and abuse. Of course, you are right, the Medivac legislation was an incredibly reckless and irresponsible piece of legislation supported by Labor and we will seek to abolish it as fast as possible. We continue to work with relevant crossbench senators in order to ensure that can be done as efficiently as possible and as soon as… interrupted
KIERAN GILBERT: So you don’t have the numbers yet?
MATHIAS CORMANN: I wouldn’t describe it that way, but we will be moving on that legislation as soon as we practically can.
KIERAN GILBERT: Okay, so if Jacqui Lambie said she’d support it this week, you might bring it on?
MATHIAS CORMANN: I will let you run the commentary, but what I would say to you is that we will continue to work with the crossbench to secure the passage of that legislation as soon as possible. We do have a lot of other very important legislation on in the Senate next week.
KIERAN GILBERT: Minister, we’ll see you next week. We’ll talk to you then. Thanks for that.