Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 31 March 2020
GARETH PARKER: The Finance Minister is Mathias Cormann. Minister thank you for your patience. I appreciate it.
MATHIAS CORMANN: Good morning. Good morning to your listeners.
GARETH PARKER: I have already said that I think that this is the package that saves the country’s bacon. Should employers who have fired workers in the last two or three weeks ago and re-hire them?
MATHIAS CORMANN: That is what we hope overwhelmingly they will do. The feedback that we have been getting from businesses around Australia is that businesses were very, very keen to hold on to their employees. But if there is no activity, because to protect people’s health decisions had to be made to close certain sectors of the economy down, then it is very hard for businesses to maintain one hundred per cent of their costs when their revenue has dropped dramatically or even reduced to zero. We understood the situation business were in. We did ensure that those Australians who lost their job would have access to income support. But we do believe that where we can, it is desirable to keep people connected to their business, so that on the other side the business together with their employees can bounce back strongly and be part of the strong recovery.
GARETH PARKER: The appeal here seems to me to be the business owners to say look, if you are able to carry on trading, great, terrific, keep doing what you can do. If you are not able to please don’t sack your workers, instead get in touch with the ATO and let the Australian Government support your workers through you for the next six months.
MATHIAS CORMANN: Indeed. For any business that has stood down a worker, or even made workers redundant since 1 March, for businesses with a turnover of less than $1 billion where the revenue has dropped off by 30 per cent or more, they should contact the ATO. Their employees will be able to access a payment of $1500 a fortnight, which is higher than they would be getting under income support through the welfare system.
GARETH PARKER: How many businesses have registered so far? Its less than twenty-four hours.
MATHIAS CORMANN: We have passed 120,000 and the numbers keep climbing. It was about 60,000 last night. By nine o’clock this morning it had gone to 120,000.
GARETH PARKER: That is pretty incredible.
MATHIAS CORMANN: The feedback has been overwhelmingly positive. It is really heartening to see the spirit with which businesses are taking this on and taking this up.
GARETH PARKER: Okay. There has been a blizzard of announcements across three packages here. And the detail is or can be overwhelming. But it seems to me that the intention here is to try and cover a number of different contingencies. It is not about one measure. It is about a whole host of measures working together.
MATHIAS CORMANN: Yes, but it was also dealing with the most urgent priorities initially. There is an element where this, and the Premier is right I just heard the last parts of his interview, this has been a rapidly evolving situation and necessarily as the health challenge and the economic impact continued to evolve, our response had to evolve. The first package was designed as a stimulus when we had a certain view of what the impact would be. It was very clear within days that it would be worse, much worse because of the decisions that we would have to make to protect people’s health and save lives. We knew that there would be a much more drastic impact on the economy. So we had to in the first instance substantially boost the safety net, which is where the package in relation to the income support payments, the JobSeeker payments came in. We had to get that in place. We always knew that we would have to do something more to support as many businesses as possible to remain in business, and for as many Australians as possible to remain in jobs, so they could be supported through this period and still be in those jobs on the other side. This is what we announced yesterday. All the way through, there is a whole plethora of issues from tenancies to arrangements with the banks and loans. There are all sorts, a plethora of issues along the way we have had to address. The threat of potential foreign investors seeking to take advantage of the situation we are finding ourselves in. There is a whole range of issues along the way that we have had to address on the way through.
GARETH PARKER: It seems to me that businesses, some of them, even if they are in shut down or close to it, if their employees go on to this payment, there may be capacity while they are in hibernation mode to actually do some constructive things and perhaps work on the business. Do it by Skype or do it by Zoom, or whatever, maybe it is one day a week or a few hours a week, whilst employees are home looking after their families, then at least they have got the income support behind them, it might be an opportunity for business to take a pause and take a breath and see how they can do things better.
MATHIAS CORMANN: Absolutely. This is a forced pause where for those businesses who are in hibernation they can do a lot of planning and thinking about how they can maximise the strength of the recovery for themselves on the other side. But also on the training front, hopefully there will be an opportunity to think about the skill base of their employees, how skills can be further enhanced to better serve the needs of the business on the other side. So yes, we should all take this, we have no choice, this is imposed on us through an external event that is beyond our control, but we have to try and make the best of it. The Federal Government and State Governments around Australia are working together extremely well. We are working very well with the State Government here in Western Australia. But in the end, there is a period here where we have no choice but to take a break to a degree. Support is there. Let’s just get ourselves in the best possible position for a strong recovery on the other side.
GARETH PARKER: It is incredibly expensive. $130 billion on top of the other measures announced. Its $300 billion, about 16 per cent of GDP in total, on measures announced thus far. How do we pay for it?
MATHIAS CORMANN: Firstly, it will be more expensive for us over the medium to long term if we did not do this. The second point is that over the last six years we have worked very hard to repair our Budget. We always said that the reason we worked to repair the Budget and get ourselves into a better fiscal position was so that we could deal with any headwinds and challenges, external challenges that come our way and to ensure that we are more resilient. We never expected anything of this magnitude. But the relatively good news is that Australia did go into this challenge in a comparatively stronger economic and fiscal position. So we are able to do this. We are able to afford this, which puts us in better position than others. Yes, we are going to have to pay it back on the other side. But we will be able to pay it back from a stronger position having protected the economy, having protected jobs and kept as many businesses alive as possible through this period than would otherwise have been the case if we did not provide the sort of support that we have put into the economy over recent weeks.
GARETH PARKER: Another important fact is that for people on pensions or other support payments. That first of those two $750 payments are starting to hit their bank accounts from today.
MATHIAS CORMANN: That is exactly right. Over the next two weeks all welfare recipients should be getting that $750 payment. That should happen over the next few weeks. By the end of April, the COVID-19 supplement payment will be going to all those job seekers and eligible JobSeeker payment recipients. That will then be an ongoing fortnightly payment. The JobKeeper payment will be made back to 1 March as of the first week of May.
GARETH PARKER: Can I just test one thing with you? As people know, I speak with your colleague and friend Christian Porter on this program each Wednesday.
MATHIAS CORMANN: Yep.
GARETH PARKER: For the last two weeks I have put to him, could a package like this to save not just people’s income but people’s jobs be considered. The answer was, well, it’s difficult and we’d rather do it through the delivery mechanism that is Centrelink. Clearly the Government has changed its mind. I applaud the Government for changing its mind. It’s also been reported that Christian has been in daily contact with Sally McManus from ACTU. I thought it was brilliant that Christian appointed Greg Combet as a workplace adviser. Can you give us some insight, have those individuals and those discussions contributed to where the Government has landed on this package?
MATHIAS CORMANN: This is a time for everyone to pull together. We are all in this together and we have to be pragmatic in coming up with the best possible solutions. The second point I should make is we are using the existing delivery mechanisms. We are not starting a new architecture from scratch. We have two delivery mechanisms essentially at a federal level. One is the social services system and the other is the tax system. We are using the social services system for JobSeeker payments and the tax system for the JobKeeper payments. We have kept with that principle. What we have learned from past experiences is that where you try to set up completely new systems and architecture, you make mistakes, particularly under time pressure. Given the size of the logistical challenge, the absolute volume, making payments for six million people at the level that is on the table here, it is a significant logistical exercise. On the way through, yes, through Christian we have consulted closely with Sally McManus as the head of the ACTU. Greg Combet is advising Christian because there are a whole range of Fair Work Act-related implications where it is going to be very important to have the union movement and workers generally on board with what we are seeking to do. We have to give business the flexibility to manage their workforce through this period on a temporary basis as best they can, supported by this JobKeeper payment. We have been very grateful with the way the union movement has engaged with us in relation to these matters. There is always a level of positive creative tension if I may say in relation to specific issues. That is appropriate because you have to properly test what you are planning to do. We will continue to go through that process. Fundamentally, the point is that at a time like this, this should never be about politics. Politics should never get in the way. This should be an occasion and this is an occasion where the country has to pull together because we want to ensure that all Australians have the best possible opportunity to be successful on the other side.
GARETH PARKER: I think no one has a monopoly on good ideas at a moment like this.
MATHIAS CORMANN: That is true.
GARETH PARKER: There are lots of specific questions that people have about their individual circumstances. We obviously can’t go through all those now. If they have those, what’s the best way they can get answers to those?
MATHIAS CORMANN: If they want to ring the office of their local Member of Parliament, any local Member of Parliament will be able to assist them. Any local federal Member of Parliament and again, on either side of politics. Whoever your local member is, ring their office and I am sure they can support you.
GARETH PARKER: That’s their job. And just briefly, we are being asked this question, the $1,500 payments that are going out either through the JobSeeker and the JobKeeper, are they subject to income tax?
MATHIAS CORMANN: The JobSeeker payment single is just over $1,100. The JobKeeper payment is $1,500 a fortnight. Yes, that is taxable in the usual way. It’s about $192 in tax or a $1,308 net payment. Anyone who is employed who earns $1,500 a fortnight now is taxed now. The tax would be on precisely the same basis.
GARETH PARKER: So the arrangements don’t change. Senator, I very much appreciate your time. You’ve been generous with it. Thank you.
MATHIAS CORMANN: Always good to talk to you. Talk soon.