Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Sunday, 29 March 2020
DAVID SPEERS: Mathias Cormann, welcome to the program. On this wage subsidy idea, two days ago, you said, we will not look at a UK style system because in an Australian context that just wouldn't work. Is that still your view?
MATHIAS CORMANN: That is right. As I understand it, the UK, while they have made certain announcements, I am not sure that they have actually been able to roll it out. What we are looking at, our first priority was to provide significantly boosted income support to those Australians who have lost their job and we are providing income support double the rate compared to what was in place before. We are working to significantly expand that as part of a third wave of reforms as we flagged, and as I also flagged in that interview that you have just quoted. But we are going to do it in an Australian way. We are going to do it in a way that actually is going to be able to be delivered, using our existing systems and our existing architecture. That was the point that I was making at the time. Just making a broad promise without giving ourselves the capacity to deliver would not be a responsible thing to do. So we are working very hard on further expanding the level of income support through businesses to enable more businesses either to stay in hibernation or to survive through this difficult period ahead for a strong bounce back on the other side.
DAVID SPEERS: Okay, so just to clear this up for us, does that mean subsidising employees’ wages if a business keeps them on their staff?
MATHIAS CORMANN: What it means is providing significantly enhanced income support through business. What form that will take will be announced once all of those decisions have been made. We are currently working our way through this … interrupted
DAVID SPEERS: But with a requirement to keep staff employed?
MATHIAS CORMANN: That would be the intention and that is what we are currently working on. But how that will work in practice, that is what we are working through. Our commitment is to do this through our existing systems, the tax system and the existing welfare system so that we do actually have the capacity to deliver this on a large scale.
DAVID SPEERS: I'm told that the Government is working up this plan as mentioned. That it will cover up to 70 per cent or 80 per cent of wages capped at a certain level. Is that right?
MATHIAS CORMANN: I am not going to go through the specifics until such time as we have made actual final decisions. We intend to make an announcement over the next few days. We are going to provide the best possible support that we sensibly can to support business, to support Australians who are deeply impacted by this current crisis.
DAVID SPEERS: What about the many, many thousands who have lost jobs in the last week or two. Can you back date whatever is coming this week and ensure that they are covered by this as well? Or is it too late for them?
MATHIAS CORMANN: Whatever support we will provide moving forward will be provided in a way that is fair and equitable. But again, it goes to the features of the next announcement that is to be made in the next few days.
DAVID SPEERS: I'm just wondering, there are many as you know, many Australians despairing out there and we saw some of them in the earlier piece who have been queuing up, who are just absolutely terrified of how they're going to support their family. Can you give any sort of assurance this morning that what's coming this week will apply to them?
MATHIAS CORMANN: We are working as fast as we can. We have already made decisions to double the level of income support for job seekers. We are also going to ease the restrictions in terms of partner income to ensure that those with partners at a certain income level are not negatively impacted by the level of income support available to them. So these are all things that we will be putting forward as part of our next package in the next few days.
DAVID SPEERS: Just on the point about the partner income, can you clarify this, what was actually passed by the Parliament on Monday. At the moment, if someone loses their job, but their partner is earning more than $50,000, do they get anything?
MATHIAS CORMANN: $48,000.
DAVID SPEERS: $48,000. Do they get anything?
MATHIAS CORMANN: The current partner income test kicks in, you move out of the system once your partner earns more than $48,000. The Parliament on the Monday gave the Families and Social Services Minister, Anne Ruston, the power to adjust those thresholds and taper rates and a whole range of things by regulation and that is what we will do. We will ease those restrictions on partner income to ensure that more Australians can get the income support they need.
DAVID SPEERS: Up to what income level?
MATHIAS CORMANN: Again, the specifics will be announced in the next few days.
DAVID SPEERS: Okay, what are we talking around the $76,000. I think that that was the upper limit, wasn't it?
MATHIAS CORMANN: Again, the specifics will be announced in the next few days.
DAVID SPEERS: Now, this hibernation plan that you've talked about there, this will be announced in the coming days as part of all of this. Can I just get you to explain what that will mean for small business. Many of them are making very difficult decisions right now as to whether to cut their loss and fold. Because they've still got all of the bills, your insurance premiums, your lease payments and your rent and so on, even though they have got no money coming in. What's the idea here?
MATHIAS CORMANN: Business is facing a perfect storm. Falling revenues, while as you say fixed costs remain. A significant component of fixed costs are the rental obligations that businesses face. We are focused on helping bring down the costs, helping defer costs where that is appropriate. Working with the banks, working with State and Territory governments around some of the things that we can do ourselves in our capacity as landlords for businesses in some of the properties that are owned by government. The idea here is to spread the pain as fairly and as equitably as possible to maximise the chance for as many Australians as possible, as many businesses as possible, to be there on the other side when we expect a very strong recovery.
DAVID SPEERS: Spreading the pain is an interesting phase because it does mean that everyone has to carry the burden here somehow.
MATHIAS CORMANN: That is the reality of it.
DAVID SPEERS: I know the State and Federal Treasurers are meeting today to talk about rental situations. We saw this week, Solomon Lew, the retail billionaire, he's refusing to pay rent to shopping centres on behalf of all of his retail stores. Is that what he should be doing? Is that what tenants should be doing?
MATHIAS CORMANN: I am not going to provide commentary on individual business people. We are looking at this in a systemic way. The truth is as a country, we are facing an incredibly significant challenge. But we are all in this together. We have to make sure that all of us have the best possible chance to be there successful at the other side. That is why we do need to find the best possible way to share the level of pain that we have to incur as fairly and as equitably and as sustainably as possible. That is not easy … interrupted
DAVID SPEERS: No, it's not.
MATHIAS CORMANN: This is a very difficult circumstance.
DAVID SPEERS: It's very complicated. You have also got the situation where a lot of self-funded retirees might have an investment property. That's their income. If the tenant can't be evicted because they're out of work, where does that leave that retiree?
MATHIAS CORMANN: The reality though is in terms of landlords of commercial premises for example, if the business is no longer able to pay the rent, there is limited capacity to attract another tenant right now. So the economic reality is all other things being equal, without some level of concerted effort to spread the pain fairly and equally, left to their own devices, chances are that the landlord will not be able to secure any income over the next few months anyway … interrupted
DAVID SPEERS: What about residential?
MATHIAS CORMANN: Tenancies are regulated at the State level, residential tenancies in particular. But we are working with State and Territory governments through the national cabinet in relation to all of these things. We would want to see certainty for tenants in terms of their accommodation through this period. We want to ensure that the arrangements that are put in place, as I say, are as fair and equitable as possible to all parties, and are sustainable over a six month period.
DAVID SPEERS: A couple of other things. New South Wales and Victoria have signalled they will soon move to stage three restrictions. Just so people have some idea of what this means, can you tell us? Do you know what stage three restrictions involve?
MATHIAS CORMANN: I will let the States of New South Wales and Victoria explain for themselves what they plan to do. I should just say that the national cabinet has been very successful in working in a nationally coordinated fashion. I am very confident that that will continue. It is also true that individual jurisdictions are a bit further down the curve in terms of the spread of this virus. Therefore, it is likely to be justified that individual jurisdictions will calibrate their responses accordingly. We have got to remind ourselves that this is a war on two fronts. Yes, our mission, our health mission is to save lives by slowing down the spread of the virus. We will not be able to stop the spread. But we are committed to slowing the spread to ensure that our hospitals are able to, are in the best possible position to deal with a consistent, constant flow of patients rather than to be completely overwhelmed. But on the economic... …interrupted
DAVID SPEERS: But what do you say to the argument that shutting more down now will help to slow that spread more effectively. You'd be hearing this from some businesses as well?
MATHIAS CORMANN: We are making our judgements based on the medical advice from the Chief Medical Officers from around Australia. We are not going to start gratuitously shutting down businesses because we are under political pressure. In the end, it is a war on two fronts, and shutting the economy down when there is no advice to do so would also have health consequences as well as social, and obvious economic consequences. So we have to continue to make sensible decisions here. We do want to keep as many businesses in business as possible, as many Australians in jobs as possible. Those Australians who lose their job, we want them to be appropriately supported. But we are not going to start closing businesses down just because there is political pressure when the medical advice is that is not required or not advisable.
DAVID SPEERS: Okay, but there is conflicting medical advice on this, as I'm sure you're aware?
MATHIAS CORMANN: In this sort of situation, a lot of people are anxious. This is a crisis. Of course, there are lots of different voices. But we are working with the Chief Medical Officers from around Australia, federal and state, whose job it is to provide this sort of advice to Government. We are trying to make the best possible decisions in what is a very difficult situation. If we were to shut the whole economy down, so when would we open it again? What would be the consequences on the way through? Let's say we shut it down to the point where nobody moves and indeed the virus completely stops and then what? We reopen it and it starts spreading again? These things might seem simple, but they are not that simple. In the end, we do not believe that we can stop the spread. We do want to slow the spread. Australia is part of the same world as everybody else. Arguably, we were more exposed than others to the risk of returning travellers from China. We put border restrictions in place from February 1. Other countries are much further advanced with many more cases, many more deaths than what we have seen here in Australia. So I do believe that our measures so far have been successful in slowing the spread. But yes, we have to continue to make sensible judgements moving forward as well.
DAVID SPEERS: Let me ask you finally, the main message for everyone is stay at home when you can, where you can, to slow the spread. What about the public service? The federal public service a lot of them are still having to turn up to work. They've not been told to work from home if they can. A lot of them are anxious about this. Why is there no directive for federal public servants if they can work from home, work from home?
MATHIAS CORMANN: If they can work from home, they should work from home. But there is a lot of work that needs to be done right now by the federal public service to support the Government's efforts in relation to protecting people's health, providing the necessary support… interrupted
DAVID SPEERS: But those who aren't involved in those sorts of jobs, is your directive for them to work at home if they can?
MATHIAS CORMANN: This is going to be done through in orderly fashion based on the appropriate advice. I am not going to provide a directive through Insiders, as much as you would want me to do so.
DAVID SPEERS: I'm not asking you to do it through the show, necessarily, but through the normal channels Minister, to those very anxious public servants.
MATHIAS CORMANN: There is an Australian Public Service Commission which has responsibilities in this regard. They rely on appropriate advice. Where that can be done, and where it is appropriate, I am sure that will be done.
DAVID SPEERS: Finance Minister Mathias Cormann, thank you for joining us this morning.
MATHIAS CORMANN: Always good to talk to you.