Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 6 March 2020
JANINE PERRETT: Today the Government agreed to provide half a billion dollars for the States to help with the health costs of the coronavirus. Meanwhile other government Ministers were meeting with tourism and travel industry reps to see what kind of support they can give to that sector which is at the front line of the crisis. We haven’t heard the total cost of that one yet. Meanwhile, many other industries including retail have had their hands out for support. One of the people that has to juggle all these demands and still keep the Budget on track is Finance Minister Mathias Cormann. He took time out from crunching the numbers in the crisis ahead of that critical stimulus package to be announced next week. Senator Cormann thanks for your time tonight.
MATHIAS CORMANN: Good to be here.
JANINE PERRETT: The Government is obviously looking after the physical health of the nation, but you have also got to worry about financial health. How is it looking at the moment because the recent economic figures have shown we were looking very weak even before this crisis started.
MATHIAS CORMANN: That is not quite right. The economy was strengthening in the December quarter. If you look at the year through to December, 2.2 per cent growth compared to 1.8 per cent through the year to the end of the September quarter. If you compare Australia’s performance in terms of economic growth to the performance of developed nations all around the world, we are doing very, very well. Employment growth was about three times as high as it was when we came into Government and about twice the rate across the OECD. But right now we are dealing with an economic shock in the form of the increasing spread of the coronavirus internationally and likely into Australia over the next coming weeks and months.
JANINE PERRETT:Given all that’s happened, our obsession with the surplus seems to be over. At the moment, the emphasis seems to be on keeping Australia out of a recession. Is that your thought?
MATHIAS CORMANN: We are certainly focused on making sure that the Australian economy continues to grow, that businesses remains in business and that people across Australia keep their jobs. That is why we are currently considering very carefully, a well targeted, proportionate and responsible but scalable stimulus package. This is going to be a temporary challenge that we are facing. There will be a strong recovery on the other side. We have to make sure that we are in the best possible position to deal with the challenging period ahead of us, but also that we have the strongest possible recovery from the downside risks that we are facing on the other side.
JANINE PERRETT: Okay, you say it will be targeted and you mentioned the Budget. So, there is a report this morning, obviously in the midst of all of this we have got a Budget in May, so you have got to try and work that out. It was alluded to in the AFR this morning that the expenditure review committee has warned Ministers and senior bureaucrats to avoid any spending commitments which aren’t related to coronavirus or bushfire recovery. Is that correct?
MATHIAS CORMANN: We are preparing the Budget for the second Tuesday in May. As we always do, we review all of the economic information and all of the data in front of us, all of the proposals in terms of opportunities to adjust policy settings, to strengthen economic growth, to ensure our nation is safe and secure and to support community cohesion. But responding to the coronavirus thread right now is an imminent, very high economic and fiscal priority. Of course it is. The Australian people… interrupted
JANINE PERRETT: But have Ministers and bureaucrats been told to avoid spending commitments that aren’t related to the current crisis or bushfires?
MATHIAS CORMANN: No, that is not right in those terms. But what I would say is that of course the response to the coronavirus right now is absolutely the highest priority, which is why we will be releasing our response package to prepare Australia economically and fiscally in the next week or so, well before the Budget. But there will be a Budget. In the Budget will be measures across the board, but in a way that is affordable and sustainable over the medium to long term.
JANINE PERRETT: Well just on that, just finally on the stimulus, as I said you have got retailers like Gerry Harvey saying they want the money, it goes straight back to the stores. You’ve ruled out a cash splash like Labor Rudd-Gillard years. You’ve emphasised it will be targeted at business but given how many industries are being hit, how do you prioritise? How do you work out who gets the support and how?
MATHIAS CORMANN: These are the conversations we can have once we have made all of the relevant judgements and we are in a position to announce what we will be putting in place. Clearly, our objective is to develop a package which is proportionate, which is appropriately targeted, responsible and scalable so that we have the opportunities to increase or reduce the level of response as required.
JANINE PERRETT: That’s what I was going to ask you. So you’re leaving it open that if it gets better, that’s terrific, but if it were to get worse you are leaving some money in the bank so you can try again if need be?
MATHIAS CORMANN: Let’s just make this point right up from. The reason we are able to respond the way we are is because of the hard yards that we have gone through over the last six and a half years repairing the Budget. The Budget is in a much stronger position than when we came into Government. We are now in a stronger position to deal with the challenges in front of us because of it. Certainly, the measures that we are developing are designed to be scalable so that we are able to dial them up or down depending on the way all of this develops. There is a lot of uncertainty around the way the coronavirus is going to impact on our economy, on our Budget moving forward. There are certain things we know, but in the end, we do not quite know how long and to what extent this is going to impact. So there will be a need to be able to scale this up or down as required.
JANINE PERRETT: Okay, two quick ones. The banks are being smashed on the stock market today, they followed the Government advice and passed on the full rate cut. We haven’t got much left. I think an increase to the bank levy, there were rumours about that, that’s been ruled out. How confident are you the banks are in a good position at the moment and are you working with them to make sure everything’s fine?
MATHIAS CORMANN: Australia does have strong banks. Yes, we are working with them. It was the right thing for the banks to do to pass the cut in the official cash rate on in full. In these sorts of moments of imminent crisis and threat, we have had companies like Qantas step up and support Australians in getting Australians back from China to Australia. We were very pleased to see that the banks also stepped up with their very speedy response to the decision by the RBA to lower the official cash rate.
JANINE PERRETT: Okay, final question. We’re in the midst of the sports rorts affair, there’s been criticism on the bushfire payments not getting to small business. This Government seems to be very good on the marketing, not so great on the delivery. Will it be better this time for the coronavirus crisis?
MATHIAS CORMANN: Janine, you are better than using some Labor party spin, surely. We are working very hard to deal with some pretty challenging circumstances. We are doing the best we can every single day to make the right decisions for Australians. That is what we are doing in relation to the coronavirus. That is what we are doing in relation to every other issue.
JANINE PERRETT: Would you say you’re alert but not alarmed at the moment? How worried are you just generally as the Finance Minister?
MATHIAS CORMANN: We are focused. We are focused on doing what needs to be done in order to put Australia and Australians in the best possible position, not just over the next few months as we are facing a significant public health and economic challenge, but also over the medium to long term.
JANINE PERRETT: Mathias Cormann, thank you very much for your time tonight, I know you’re busy.
MATHIAS CORMANN: Always good to talk to you, Janine.