Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 10 March 2020
ANNELISE NIELSEN: Earlier this morning we spoke with the Finance Minister Mathias Cormann about the potential impact of stimulus, what exactly that would look like, and whether the cash payments that people have been discussing are likely to eventuate. This is our discussion from earlier this morning.
Mathias Cormann, thank you for your time. Last week you said you weren’t going to engage in any kind of reckless cash splash like the Rudd-Gillard governments to deal with this crisis. Is that something the Government’s revised now? Will we be seeing cheques in the mail to deal with the coronavirus.
MATHIAS CORMANN: We will not be pursuing a reckless Rudd-Gillard style cash splash with money spent on pink batts, putting pink batts in to roofs and with money spent taking those pink batts out of roofs, with overpriced school halls and cheques to dead people. We most definitely will not be doing that. As I have said, and as the Prime Minister and the Treasurer have said consistently for some time now, we will be announcing a fiscal stimulus package which will focus on helping business stay in business, which will focus on keeping Australians employed and which will provide targeted, responsible, proportionate support as appropriate, and in a way that is scalable. I can absolutely confirm there will not be an indiscriminate cash splash in the form as pursued by the Rudd-Gillard governments some years ago.
ANNELISE NIELSEN: What about payments to pensioners, to people on Newstart, one off cash payments? Is that on the cards?
MATHIAS CORMANN: What I said on Friday when I was asked about that particular question, was that I am not going to go through a shopping list of potential measures and provide commentary. We are considering a wide range of potential measures to support business, to support Australians to remain employed and to provide appropriate targeted support to vulnerable Australians. What form that precisely will take is still subject to final decisions. We expect relevant announcements later in the week.
ANNELISE NIELSEN: How will this compare to the stimulus for the Global Financial Crisis? This is a very different beast if you are stimulating the economy by giving people money, if they are staying home they are not going to be able to go out and spend it. Doesn’t that just kind of make it like a Netflix subsidy?
MATHIAS CORMANN: This is a very significant economic shock caused by an external event beyond our control. The truth of the matter is that the Australian economy was in comparatively good shape, in particular compared to other developed economies around the world. In the twelve months to the end of December 2019 growth had strengthened to 2.2 per cent, employment growth remained above trend and was three times higher than when we came into government and about twice the rate across the OECD. But we are facing a very significant public health challenge. We are facing a significant economic challenge. We are thinking very carefully about how we can support business and Australians through this period because we do know that on the other side, there will be a strong recovery. We want to ensure that we put Australia in the best possible position to take advantage and maximise the strength of that recovery on the other side.
ANNELISE NIELSEN: So Wall Street plunged seven per cent overnight. It’s the first 15-minute trading halt that they’ve been forced to do in over two decades. What’s your message to Australian investors who would be very concerned, including a lot of people with investments in their superannuation?
MATHIAS CORMANN: Our focus is on the economic fundamentals and on market fundamentals. It is not unusual in the circumstances for there to be market volatility. We do not provide market commentary on a day to day basis. The key here is to focus on the fundamentals. There is no question that there will be a recovery after we have gone through what, unquestionably, is going to be a very challenging period. On the other side, there will be great opportunity for Australians to get ahead.
ANNELISE NIELSEN: How can you defend the structural integrity of the Australian economy at the same time you’re looking at raising the debt ceiling beyond that $600 billion mark? We’ve got record low interest rates, which isn’t giving you much wriggle room either with that debt the Government is taking on. Is this not a time to be considering a more prudent approach to the debt level?
MATHIAS CORMANN: We are pursuing a prudent approach. We are going into this challenging period in a much stronger position as a result of the significant budget repair effort that we have undertaken over the last six and a half years than we would have otherwise. If we had not repaired the budget mess we inherited from our predecessors, we would be going into this challenging period in a much weaker position. Gross debt remains below 30 per cent. It was projected in the half yearly budget update to reduce by about half to less than 15 per cent over the medium term. Now with the economic and fiscal implications of the spread of the coronavirus, there will be adjustments to these forecasts and projections which will be reconciled in our Budget on the second Tuesday in May. But our balance sheet is in a much stronger position than it would have been if we had not done the hard yards over the last six and a half years to put our budget on a stronger, more sustainable trajectory for the future. and if we had not returned the budget to balance in the last financial year.
ANNELISE NIELSEN: Mathias Cormann, thank you for your time.
MATHIAS CORMANN: Always good to talk to you.