Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 18 March 2020
KIERAN GILBERT: Joining me now is the Finance Minister and Leader of the Government in the Senate Mathias Cormann. I want to start Minister with this information that Labor gave me earlier, Jason Clare, that Coles had 36,000 job applications yesterday alone. Normally they have, 800 is their average per day. Obviously there is greater demand. We have seen that through the buying in the supermarkets. Coles is apparently putting on at least 5,000 staff. But still, 36,000, that’s extraordinary demand isn’t it?
MATHIAS CORMANN: We do expect that there will be lots of people across Australia that would be looking for a new job, because they were impacted by the coronavirus. The good news is that some sectors of the economy will be positively impacted, if you can describe that as good news, whereas other sectors of the economy will be very severely negatively impacted. To the extent that we will be able match up people who lose their job as a result of the coronavirus with employers who have experience and are experiencing peaks in demand for labour that will be the first priority. There will be a limit to that. The key is going to be, and what we are working on at the moment, is to ensure that we can provide the appropriate level of income support to those Australians who over a temporary period, as a result of no fault of their own and because of the impact of the coronavirus, will be losing their job.
KIERAN GILBERT: At 36,000, it’s a lot of demand though isn’t it? Does that give us a very real-time example of how much of an impact this virus is having?
MATHIAS CORMANN: Clearly, there is a very significant demand for labour from businesses like Coles and Woolworths given the demand for their products. I am not surprised that people who are looking for work are offering their services. In the current environment you would expect that there would be more people than usual offering their services in the circumstances.
KIERAN GILBERT: The Prime Minster spoke about cushioning the economy, about a gear change that we’ve had with these greater social restrictions, the sporting events without crowds. It’s life like none of us have seen before. How do businesses survive?
MATHIAS CORMANN: This is unprecedented in terms of its magnitude and its impact. There is no question. All we can say is we need to make the best possible decisions to get ourselves through this transition. We have to hang together and really just work as hard as we can to get ourselves through the next four to six to nine months. But we also need to remind ourselves every day that on the other side, there will be a strong recovery. We will be bouncing back. We have to make sure that we are in the best possible position to bounce back as strongly as possible.
KIERAN GILBERT: When the Prime Minister uses that language about cushioning the nation, cushioning the economy, is it almost a concession that we will have a recession here?
MATHIAS CORMANN: I am not going to speculate about that term. But the challenge in front of us is very severe. The challenge in front of us is very severe and it is, as the Prime Minister said, it is about putting the best possible safety net in place in place to ensure that we do cushion the economy and provide the best possible cushion that we can afford to soften the blow for those Australians who will be impacted by what is happening over the next few months.
KIERAN GILBERT: Because as you said, there will be a bounce back. We know that, or a snap back as the Prime Minister puts it. We need to have industries and businesses to be there to snap back.
MATHIAS CORMANN: That is exactly right. These are all of the issues that we are working our way through at the moment. We want to ensure that to the best of our ability that we maintain the full extent of our productive capacity, that the businesses that are able to be maintained over that period, even in the absence of activity, are being maintained. That employees, to the best extent possible, remain connected to those businesses and that there is the capacity to bounce back strongly on the other side.
KIERAN GILBERT: We are hearing that there will be a second economic package. Is it fair to say it will be bigger than the first given how fast this is changing, how difficult things are?
MATHIAS CORMANN: I am not going to put a number on it here today. It will be a significant package. It is very clear that this has been a very rapidly evolving situation. The extent of the economic impact has been accelerating significantly including and in particular, because of the decisions that countries like Australia and many others have made in terms of international travel, controls at their borders and decisions that many countries have made around deliberately restricting activity domestically. Because of the decisions that countries around the world have made for very good public health reasons in an attempt to slow down the spread of the virus to save lives, there will be an inevitable economic impact. We have just got to work our way through all of that in the best possible way.
KIERAN GILBERT: How soon will we see that second package?
MATHIAS CORMANN: The Parliament is due to resume next Monday. That is the day that we would propose for the Parliament to legislate the stimulus package. We are working as fast as we can. We want to make sure that we dot all of the I’s and cross all of the T’s. But it is going to have to be announced sometime between now and when the Parliament comes back early next week. We do want to ensure that the Opposition and others have appropriate time to review all of the relevant information. So there will be an announcement in the next few days.
KIERAN GILBERT: We saw the aviation industry support measures. Is it more of that sort of thing in terms of industry support. Those industries that are really going to be on the edge. Or is it more about payments to families again or is it a mixture of both?
MATHIAS CORMANN: Essentially, where we are now and I made that point yesterday, we expect businesses to close and Australians to lose their jobs. We want to try and help keep as many businesses as possible in business. We want to keep as many Australians as possible in jobs. But for those where that can’t be done, we need to ensure that we can provide appropriate levels of transitional support. We are currently making judgements on how that is best done through a suite of measures. There are essentially three areas. We want to maximise the chances of businesses to stay in business and people to remain in their jobs. We want to provide the appropriate levels of support to people who do lose their job. We also want to ensure that we position ourselves in the strongest possible way for a strong recovery on the other side. That is really the objective of what we are trying to achieve.
KIERAN GILBERT: Just on that third point. It’s very clear what you’re talking about with the first two, save industries that are on the edge and to help people in transition. But the third one, what sort of argument do you have in terms of positioning the economy, the business community in the best way possible?
MATHIAS CORMANN: In the first package we did make a series of announcements there. For example the significantly boosted instant asset write off with investments of up to $150,000 for businesses with a turnover of up to $500 million. We do hope that people take that opportunity up by the end of June. Accelerated depreciation opportunities and the like. This is all about investing in the recovery on the other side. To the extent that we can use this period to make additional training efforts and the like. All of these things that you can do to ensure that we can hit the ground running on the other side.
KIERAN GILBERT: And the RBA plays a big part in that as well. They’ve got a statement tomorrow afternoon which will be watched very closely.
MATHIAS CORMANN: The RBA, which makes its decisions independently, has clearly taken action and will continue to take action as it sees fit. It is very important for monetary policy and fiscal policy at a time like this to very much work in concert, and it is.
KIERAN GILBERT: When it comes to the unconventional monetary policy, does that fit in? As you say, you’ll work in concert fiscal policy and monetary policy. Is that the sort of medium to longer term thing that also is important?
MATHIAS CORMANN: I leave the judgements to the RBA. But there are a whole range of things they are clearly doing to underpin the economy to provide additional supports to business through the activities that they are pursuing with the banking sector and the like. This is all very important. It is all heading in the same direction. The Government and the Reserve Bank are very much kicking in the same direction.
KIERAN GILBERT: What do you make of the markets right now? Every day it is a rollercoaster. What is your view on that and for investors, how should they manage it?
MATHIAS CORMANN: I am not going to provide investment advice. Clearly, the markets have been volatile for some time. I would expect markets to remain volatile. I am not a commentator on the markets. The markets go up and down. But right now it is clear that the markets are finding it very hard to price the risk of this event. The context of that, the context that all of us are grappling with is that there is uncertainly around the time this will take, the intensity, the level of impact. There is a whole range of things that inevitably are quite uncertain and I think market volatility is a reflection of that.
KIERAN GILBERT: The cash payments of $750, they were to people on welfare, Newstart, some pensioners as well and also family payment recipients. They go out on the 31 March. Can you expedite that because that’s three weeks after the announcements were made?
MATHIAS CORMANN: It requires legislation. We can’t make those payments without the legislation passing. We would hope and we expect that will happen in a bipartisan fashion on Monday. The next payment run after that is essentially when it happens. That is a pretty fast turnaround I have to say for this sort of measure. We are nearly at the end of the March quarter and we are going into the June quarter. We will need this level of support out there during the June quarter we believe.
KIERAN GILBERT: And finally, I’ll ask you this not as Finance Minister but as a dad. What about the schools situation? There’s uncertainty. The Prime Minister, and I totally get what he’s saying in terms of supporting the evidence that’s with him, and the Premier of New South Wales and others very strong today saying look, we’re taking the advice but there is this counterargument that’s going on that they should be shut. How do you react to that?
MATHIAS CORMANN: I have two young girls – a four-year-old and a seven-year-old – and based on all of the advice that I have seen, I am extremely happy that they are at school. I am very lucky, we are very lucky, the school is doing a great job where my kids go to school. They are making clearly sensible judgements on what not to do in terms of events and big gatherings and the like. All of the advice that I have seen makes it very clear that school is the best place for kids to be right now. Look at Singapore. Singapore has been very, very effective in slowing down the spread of the coronavirus. They have not closed their schools. We believe it is absolutely the right decision. It is the right decision from a public health point of view. The economic implications and the disruption in terms of workforce across our healthcare system would be even more significant if we were not to keep our schools open. Most importantly, it is actually the right place for our kids to be.
KIERAN GILBERT: Yeah, they’re not susceptible in the way the older cohort are, that’s for sure. Minister, as always I appreciate your time. Thanks.
MATHIAS CORMANN: Always good to be here.