Transcripts → 2020


2GB - Money News

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia


Date: Tuesday, 12 May 2020

Economic update

BROOKE CORTE: Today was supposed to be Budget day. But we now know that has been delayed until about October. Instead the Treasurer Josh Frydenberg addressed Parliament and laid bare the catastrophic effect of the coronavirus has had on our economy. Last night on this show, economist Chris Richardson forecasted a deficit of $143 billion this year and $131 billion next year. The Government did not release such figures today. In question time, Labor was honing in on the lack of specifics in the Treasurer’s speech, saying it was a missed opportunity. Mathias Cormann is the Federal Finance Minister and he joins me on Money News now. Good evening Minister.

MATHIAS CORMANN: Good evening.

BROOKE CORTE: Now we are just six weeks out from the end of the financial year roughly. Why didn’t the Government at least provide an update on the projected Budget deficit for this financial year? Surely that would have been possible.

MATHIAS CORMANN: We provide regular updates on the state of the Budget. Every month in fact as Finance Minister I release monthly financial statements. The most recent monthly financial statement goes to the end of March and I released it at the end of April. The next one will be released in a week or two. What that showed was that revenue in the financial year so far is down $11.3 billion compared to what we expected at the half-yearly Budget update. Though spending to the end of March was also down by about $1.4 billion. So the Budget bottom line was about $9.9 billion worse to the end of March, compared to what we expected at the half-yearly Budget update in December. The reason that we shifted the Budget is because we are not in a position, given the rapidly evolving situation, to make credible forecasts about what will happen in the future. That is why we have said we would provide a more detailed economic statement, with an economic and fiscal outlook in June, after the March quarter National Accounts have been released. We have shifted the Budget to October for the precise reason that right now we are not in a position to make credible forecasts in relation to all these sorts of matters.

BROOKE CORTE: But you were able to quantify the economic benefits of lifting the lockdown, like 850,000 people back to work in this three stage plan, GDP increasing by $9.4 billion each month, even down to the specifics of say the contribution of retail to $2.9 billion. But we couldn’t even get a range or an indication of deficit.

MATHIAS CORMANN: We are regularly giving updates on the state of the Budget. Every month I release a monthly financial statement. The most recent monthly financial statement showed that compared to the previous position in December that the Budget bottom line had deteriorated by about $9.9 billion to that point … interrupted

BROOKE CORTE: So is the JobKeeper program, this is the x factor is it?

MATHIAS CORMANN: No. There are a whole range of uncertainties right now that would make it difficult to properly and credibly forecast the expenditures in the context of changing parameters. The whole reason why we have shifted the Budget to October is because of the level of uncertainty in making credible forecasting assumptions that have a direct bearing on the level of expenditure and revenue at this precise point in time.

BROOKE CORTE: And one of your Liberal colleagues, Jason Fallinski, today said he reckons you should phase out the JobKeeper program as early as June. Certainly if JobKeeper was cut short, if it was re-designed maybe with the take-up at the moment isn’t as large as was previously forecast, that would be a huge saving wouldn’t it?

MATHIAS CORMANNL: The take-up is pretty close to what was forecast. We now have reached more than 5.5 million Australians who are receiving support through the JobKeeper program. The estimate at the time of releasing the program was for about six million Australians to access it. We are edging closer and closer to the estimate and people are still coming on board. We always said that this would be a six-month program. We are six weeks into a six-month program. We also said that we would have a review on how it is operating half way through and Treasury will be conducting that review and make recommendations as they see fit at that point in time. We do not have an intention to scrap the program half way through. It is a six-month program.

BROOKE CORTE: Okay, because there needs to be very clear signal for business on that, whether it is a six-month program or it may change in a couple of months because people are making decisions now on that very thing.

MATHIAS CORMANN: It will continue. Let me give you an example. If the review by Treasury were to identify a systemic fraud in a particular way, would you expect us not to take action in relation to that if a review half way through identified that? Of course it is appropriate. With a program that was developed as rapidly as the JobKeeper program for good reason and necessarily so, given the size of it, given the level of expenditure, given the importance of it to the economy, to business and to working Australians, of course we should assess half way through how it is going and what improvements or adjustments might need to be made. We are not going to pre-empt those decisions and there is certainly no suggestion that the program would be scrapped early.

BROOKE CORTE: Okay. The Treasurer has said today there is no money tree, but how do we repay this huge debt that we’re accumulating?

MATHIAS CORMANN: On the back of a strongly growing economy on the other side. What we are working towards is to ensure we can have the strongest possible economic recovery on the other side. In the context of a continuing coronavirus threat, that means that we have got to do things that ensure our economy can be COVID-safe. That is why people should be signing onto the COVIDSafe app so that any infection can be appropriately managed in terms of tracing, in terms of testing and also in terms of rapid response to localised outbreaks so that we can return the economy to normal as much as we possibly can in the circumstances.

BROOKE CORTE: To China now. Yesterday, China threatened to slap a massive tariff on Australian barley and your Government was saying it was not necessarily a sign of the worsening trade war but today China suspended meat imports from at least four Australian abattoirs, which is what China’s Ambassador threatened to do a couple of weeks ago. I know you have said today it’s almost a coincidence, but I don’t think people are buying that.

MATHIAS CORMANN: That is the truth. I know that you might want me to fit into a narrative that seems to be convenient for people who want to talk up a particular perspective, but the truth of the matter is that the process under the World Trade Organisation rules when it comes to barley were initiated some 18 months ago. These are processes that happen all around the world at any one point in time in all different directions. We have at any one point in time these sorts of processes in place where we are pursuing action or others are pursuing action against us to make sure that everything is done consistent with trade rules and that is the case here. We believe that when it comes to barley we have a very strong case. We don’t believe that there are any inappropriate subsidies and we don’t believe there is any dumping of barley into China. We will make that argument. We will be providing the evidence and we will be treating this issue on its merits, the same as we treat any issue on its merits.

BROOKE CORTE: Minister, thank you so much for your time. Mathias Cormann, the Federal Finance Minister. Thanks for joining Money News.

MATHIAS CORMANN: Always good to talk to you.