Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Thursday, 12 March 2020
JESSICA STRUTT: As you may have heard the Prime Minister Scott Morrison revealed details earlier today. A $17.6 billion economic stimulus package in response to coronavirus, amid fears Australia could slip into recession. The package includes tax relief for small business, one off cash payments for welfare recipients and money to help keep apprentices in work. More than six million welfare recipients, that includes pensioners, veterans, families, job seekers, they are going to get a one off cash payment of $750 from the end of this month, from the end of March. The Prime Minister saying the biggest beneficiaries will be pensioners. To provide further details on the package I am joined now by the Federal Finance Minister Mathias Cormann. Good evening Minister.
MATHIAS CORMANN: Good evening.
JESSICA STRUTT: Can you confirm for us that the much touted surplus is now off the table?
MATHIAS CORMANN: Yes. I have made that point throughout the day. Given the amount of money that we are investing into supporting the economy and business and individual Australians through the transition through this coronavirus crisis, people can do the maths. The forecast surplus was $5 billion. We already were facing some pressure on the revenue side given the economic impact of the coronavirus. On top of this a $17.6 billion package, most of which is going to be allocated in this financial year, obviously makes the delivery of a surplus this year impossible.
JESSICA STRUTT: Now Minister the bulk of the payments, $4.8 billion is this one off payment. How can you have confidence those welfare recipients receiving this payment are going to go out and I suppose splash the cash and stimulate economic activity as you intend?
MATHIAS CORMANN: Our expectation is that most if not all of that money will hit that economy pretty well immediately. We will be starting to make those payments from the end of March. Ninety per cent of all payments will be received by those eligible by the middle of April. Our expectation is that most, if not all of that money will be spent in the economy over the June quarter.
JESSICA STRUTT: Why is that expectation there Minister?
MATHIAS CORMANN: Based on experience … interrupted
JESSICA STRUTT: Yeah, but are we working do you think though Minister, in very different circumstances. People are anxious. We have got economic uncertainty. There is disruptions to people’s lives. Events and social gatherings are being cancelled. Doesn’t it make it far more likely that people will squirrel this money away or pay off debt?
MATHIAS CORMANN: Based on the advice that we have. This payment, these $4.8 billion worth of income support payments to people at the welfare end of the spectrum is very specifically targeted to those that are most vulnerable to this impact of the coronavirus when it comes to the economic impact. Our expectation is that this will be hitting the economy very quickly. But we will be monitoring that. We will be able to have that conversation after the event. If our expectation is wrong, we will be adjusting settings as appropriate.
JESSICA STRUTT: Nineteen minutes past four. You are with Jess Strutt on Drive. Joined right now by the Federal Finance Minister, Mathias Cormann, who is talking through further details on the stimulus package announced this morning by the Federal Government. $17.6 billion in response to coronavirus. I am wondering as well the Government, will it be following the US President Donald Trump’s lead and suspending all travel from European countries to Australia for the next thirty days, Minister?
MATHIAS CORMANN: That is not the advice that we have in front of us. We act on the advice of our medical experts. The Commonwealth Chief Medical Officer chairs a regular meeting of State and Territory chief medical officers and we take our advice from them. They have met today and considered the decision in the US. We have received advice that at this point that is not the course of action that is recommended. We do have border security measures in place vis-à-vis China, Iran, Italy and South Korea. But at this point in time we are not proposing to expand that. But, we will continue to monitor the situation.
JESSICA STRUTT: We just had a call, and we had some this morning as well, Minister Mathias Cormann, from sole traders concerned about, basically feeling like they’ve missed out under this stimulus package. What do they get?
MATHIAS CORMANN: They have not missed out. The sole traders, the same as every other business are eligible to take advantage of the instant asset write off. We are seriously boosting the capacity to immediately deduct the cost of any investment into the future growth of their business of up to $150,000 by 30 June 2020. They also are benefitting from our measures to boost demand in the economy, given that they operate in the economy. So the $4.8 billion worth of payments supporting demand will ultimately benefit them. Furthermore, for those that are affected to the point where they do need specific support, all Australians, subject to income and asset test considerations, if they are in a circumstance where they need support, can access support through the welfare system. We have waived the waiting period to access the welfare system for people in that circumstance. So any sole trader that is doing it tough and does need income support, they are able to access income support the way every other Australian can, subject to of course relevant eligibility criteria based on income, assets and also residency requirements.
JESSICA STRUTT: Federal Finance Minister Mathias Cormann with me. You are with Jess Strutt on the Drive program this afternoon. Casual workers who contract COVID-19 or have to isolate will be eligible for Newstart welfare payment while out of work and the wait time for that access has been waived, but these people will face an asset test. What assets does that include and wouldn’t that mean many are not eligible, Minister?
MATHIAS CORMANN: It is the same asset test that applies to everybody else who is accessing the welfare system. When it comes to casual workers, and we have heard what the unions have had to say, but casual workers receive higher pay in return for not accessing or not receiving some of the additional benefits like sick leave and the like that permanent employees access. We are not proposing at this point in time to fundamentally change the industrial relations system. Many people make choices on how they seek to be employed. Many people decide that they prefer the flexibility and the higher rates of pay that you can secure as a casual worker. But by the same token, that means that you don’t have the same sick leave and other arrangements that permanent employees have in place. Having said that, we have made sure that for those casual employees who do need to isolate or who do face particular challenges that they are able to access the welfare system, subject to the usual arrangements, the usual income asset test and residency test requirements that apply to every other Australian.
JESSICA STRUTT: Minister, how confident are you this package, this stimulus package will help avoid Australia sliding into recession?
MATHIAS CORMANN: It is a very substantial package. It is well-targeted, but it is substantial. It is temporary, but it represents just under one per cent of GDP. It is scalable. If the information that comes through as the situation continues to evolve shows that more needs to be done, we will do more. But at this point in time, to the end of June we certainly believe that this is targeted and calibrated at the appropriate level.
JESSICA STRUTT: And Minister, just finally, wriggle room there for further assistance, new packages, further packages if you see this one not stimulating the economy in the way you’d hoped?
MATHIAS CORMANN: As I just said, it is a very significant package but it is scalable. We are able to dial it up if that is required. If it is required, that is absolutely what we will do.
JESSICA STRUTT: Minister Mathias Cormann, thanks very much for your time.