Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Sunday, 22 March 2020
KIERAN GILBERT: Let’s go live to Mathias Cormann. Minster, you heard what Andrew said there from someone in Government. People still have this she’ll be right mentality. How do we break that in the face of this crisis?
MATHIAS CORMANN: We just have to continue to provide those consistent messages. People should listen to the warnings from authorities and they should listen to the very clear directions in relation to how to minimise the risk and how to continue to slow down the spread of this virus.
KIERAN GILBERT: We’ll get to the trajectory of the numbers and so on a bit later, but first let’s go straight to this second economic package. Can you explain what’s happening in terms of small and medium sized business and what’s the Government’s thinking?
MATHIAS CORMANN: What we are trying to do is to keep as many businesses in business through this difficult period as best they can as possible and for those businesses who can’t keep operating, for them to go into a state of hibernation over the next six months that they can come out of at the other end rather than to completely fail. That is why we have scaled up the level of cash flow support. In the initial package, it was a minimum payment of $2,000 up to $25,000 at 50 per cent the rate of withholding tax paid for their employees. We have increased that to $20,000 as a minimum payment and $100,000 at a rate of 100 per cent of the withholding tax paid for their employees. What it is designed to do is to support employing businesses with a turnover of up to $50 million. That is really all about helping as many businesses as possible who employ Australians to survive so they can continue to employ those Australians and where that can’t happen, to keep them in a state of hibernation over the period until we get to the bounce back on the other side that we know will be coming.
KIERAN GILBERT: And in terms of underwriting some of the loans for small and medium sized businesses, tell us about that and also the argument that if you’re providing support for loans, why would businesses who feel in trouble already and in the face of a crisis want to take on more debt anyway?
MATHIAS CORMANN: We are proposing to guarantee 50 per cent of the small and medium sized business loans up to, so this is a $40 billion loan book, 50 per cent of it guaranteed by the Commonwealth and this is for loans written in a six-month period from 1 April up to $250,000. No repayments at all for six months. It complements the measures that the ABA has announced in terms of the banks providing repayment relief over the next six-month period for existing loans. This is to help small business get access to working capital. Again, to help keep people employed and to ensure that they are in the best possible position to take advantage of the strong recovery on the other side. What we are essentially looking to do is to find as many different sensible ways to help business get access to that capital to stay in business.
KIERAN GILBERT: One of the other ways that Boris Johnson has looked at is a wage guarantee for employees in a situation like you’ve said in businesses that have gone into hibernation during this crisis. Why doesn’t the Government go in the direction of a wage guarantee, say 75-80 per cent of the wage, as Mr Johnson has in the UK?
MATHIAS CORMANN: We will be making some significant announcements later today when the Prime Minister and the Treasurer stand up at about 11 o'clock Eastern Time. They will be making some significant announcements when it comes to the level of income support provided by Government to those Australians who lose their job as a result of the impact of the coronavirus on the economy and also those people that remain unemployed and find it impossible to get a new job because of the economic impact of the coronavirus. We will be making some substantial announcements on that front and we believe that we have got the most appropriate way in an Australian context to provide appropriate levels of income support to Australians that are impacted by this virus in terms of their jobs.
KIERAN GILBERT: That’s the income support in the context of those that might be unlucky to fall on unemployed periods of time, but what the Johnson scenario is is an 80 per cent guarantee of wages to the business to keep those employees on the books basically during that period of hibernation. Why does the Government not look to that model as opposed to this other wage subsidy model of $100,000 paid through BAS Statements?
MATHIAS CORMANN: We have made judgements on what is most appropriate in an Australian context and these judgements are being announced today. We don’t think that in an Australian context that is the best way forward. We are providing substantial support to employing small and medium sized businesses in the form of the cash flow support. We will be providing substantial support to those Australians who are losing their jobs as a result of the impact of the coronavirus and that is not just by way of income support payments. There are some other measures that will be in the package today that is being announced. It is essentially making sure that we maintain as much fiscal firepower as possible to continue to scale up the response if and as required. The package so far represents just under 10 per cent as a share of GDP. That is one of the most substantial stimulus packages, safety net packages in the world in terms of its proportion to the size of the economy. We do believe that we may need to do more and we will continue to monitor the way the situation evolves, but right now, a $189 billion package, 9.7 per cent as a share of GDP, it is a very, very substantial package. It is designed to support business through this challenging period or to at least support remaining in hibernation rather than to completely fail, but nevertheless, we do need to keep some shot in the locker for what might be required a few months from now.
KIERAN GILBERT: As we’ve heard already today, Andrew reporting earlier in the program that there is a third phase being flagged to us by the Government to prepare for that. In the context of a third phase, would the Government look at something like, as again the British Government is doing according to The Financial Times sources, they’re looking at taking equity stakes in airlines, including British Airways, to help prevent them from falling over. Is that something you’d look at doing down the track in terms of those airlines, industries so heavily affected?
MATHIAS CORMANN: That is not something we are looking at. We are today announcing the second package. That is a very, very substantial package. We will continue to monitor all of the data and all of the information that comes through in terms of the way the economic impact of the coronavirus continues to play out and we will continue to respond in the best possible way to help our economy transition through this period, to build that bridge as the Prime Minster and the RBA governor have both said to the strong recovery on the other side.
KIERAN GILBERT: Indeed, and as you said, it’s not something you’re looking at at the moment, but it’s something that might be possible given the effective shutdown of industries like the airlines. Is it something you’d be open to down the track?
MATHIAS CORMANN: I am not going to speculate. It is not something we are looking at, it is not something that we are planning to do. I am not going to start speculating on what may or may not happen down the track.
KIERAN GILBERT: Should Australians be working from home as much as practical right now?
MATHIAS CORMANN: For those Australians where that can easily be done, yes of course. But there are lots of jobs where that is not easily done. First of all, of course all of these awesome and amazing workers across our health system. In many jobs you don’t have much choice but to be on location. But where you can, work from home and where you can minimise the level of contact that you have with your fellow Australians, well yes, that is clearly something that is advisable.
KIERAN GILBERT: Some of those images we saw this week like the Bondi Beach image, it was hard to imagine the lack of awareness among so many Australians. Are more draconian measures inevitable?
MATHIAS CORMANN: Again, we will continue to act on the expert medical advice. We do receive advice from the chief medical officers from around Australia and indeed the Commonwealth. As this continues to evolve and as they update their advice to us, we will continue to take decisive action as appropriate. Australians do have a very high level of awareness when it comes to the coronavirus. I do believe that there is a high level of anxiety in relation to how this will play out over the next few months, appropriately so. But yes, as we said at the beginning of the show, people do need to heed the advice from authorities. They do need to act consistent with the directions provided for their own safety.
KIERAN GILBERT: Minister, there are now 1,073 cases across the nation and climbing. Is the Government confident it can start bending back that trajectory, that rise? Is that the advice you’re receiving? Is it still possible?
MATHIAS CORMANN: What we are seeking to do is to slow down the spread of the virus to save lives, because we want to see as much as possible a more consistent flow of patients into our health system so that those most vulnerable can receive the appropriate levels of care. We don’t believe that we can stop the virus from spreading, but we certainly can continue to try and slow it down. That is where we need the help and the support of all Australians. It is not just about their own safety, as important as that is, it is also about the safety of their loved ones, in particular those in the most vulnerable segments of the population. That is why it is so important for Australians to heed the advice and help us slow down the spread of the virus. We won’t be able to stop it. The number of infections will continue to grow, but we need it to grow at a sufficiently slow rate to ensure that our health system can deal with cases coming through in the least bad possible way.
KIERAN GILBERT: And is part of that more shutdowns or lock downs to go to a further extent, like we’ve seen Tasmania, Northern Territory shutting their borders? Is it time for more isolated and localised shutdowns like suburbs or regions, hotspots in some of the worst affected areas?
MATHIAS CORMANN: Again, if the advice comes through that that is what is required because of a particular area where there is a particular challenge or particular issue, then of course we would act on that advice. Under the relevant biosecurity-related laws, there are some extensive powers for the Health Minister to take action and direct action. Certainly, if the advice comes through that that is required, we won’t hesitate.
KIERAN GILBERT: Can you understand why already some schools are reporting 25 to 50 per cent absentee rates? It looks like a lot of parents, families taking matters into their own hands in this regard. Is that something you welcome or should they stick with the official advice?
MATHIAS CORMANN: I have said on your show before, we respect the right of parents to make their own judgements in relation to their kids. As far as the Government is concerned and based on all of the advice in front of us, we want schools to remain open and we want parents to have the option of sending their kids to schools. For all sorts of reasons, schools are the best place for the kids to be and it is also best for kids to be at school in a public health sense because having all of these kids spread across the community and exposing right across the community is not actually a better, healthier way for them or for the community. The economic impact on top of that would be quite devastating if we had to close our schools too early.
KIERAN GILBERT: Minister, let’s finish off on hopefully a more positive tone. It is a scary time, an uncertain time, but what’s the latest advice you have on breakthroughs, potential medical breakthroughs among our researchers? We have some of the best in the world and there are a number that have been reporting, lately they’ve been making some progress in terms of cures, not just vaccines, but cures as well which would be obviously a big step forward in terms of reducing the death rate in this.
MATHIAS CORMANN: When it comes to vaccines, generally to get a safe vaccine takes a relatively long period. Certainly, in terms of cure and treatment, that is where the most immediate challenge is. The Government is supporting trials in relation to both cures and vaccines, including one trial through the University of Queensland. There are some studies overseas that have been very encouraging around the use of hydroxychloroquine which is a longstanding drug used for malaria treatment. There are some studies overseas that seem to indicate that this could be something that could work in a treatment sense. We are supporting a trial to test that and that is probably the most encouraging example that I am aware of through the discussions that I have been involved in.
KIERAN GILBERT: Let’s hope that that development continues and that progress continues on that front. Mathias Cormann, as always, I appreciate your time. Thanks so much.
MATHIAS CORMANN: Always good to talk to you.