Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 12 May 2020
OLIVER PETERSON: First today, the Government was meant to be handing down the Federal Budget. That was until the coronavirus pandemic and instead, we have some very sobering economic news. GDP is set to fall by 10 per cent over the June quarter. That would be the equivalent of shutting down South Australia, the Northern Territory, Tasmania and the ACT for the entire quarter. The Treasurer Josh Frydenberg has been floored by a coughing fit in Parliament. Now he has since been tested for COVID-19. The Finance Minister Mathias Cormann is live right now from Canberra. Good afternoon.
MATHIAS CORMANN: Good afternoon.
OLIVER PETERSON: How is the Treasurer?
MATHIAS CORMANN: I have spoken to him about an hour ago and he was sounding fit and well, but out of an abundance of caution he has left the Parliament to be tested based on advice he received and he is now self-isolating pending the test results coming back.
OLIVER PETERSON: Alright, so has he turned up to Parliament though because your Government, you’re telling everybody to stay home if you are feeling a little ill. It is not a great look for the Government to have the Treasurer having a coughing fit in the Parliament.
MATHIAS CORMANN: He wasn’t feeling ill. Perhaps a little overworked, because it has been a pretty intensive period, but he wasn’t feeling ill. Sometimes when you give speeches and you get something into the wrong throat that can happen. On advice and out of an abundance of caution he is doing the right thing. He immediately left the Parliament. He got himself tested and he is now awaiting the results of that test in self-isolation.
OLIVER PETERSON: Minister, onto the finances. The picture is dire. When your Government delivers the Budget now in October, will it be the worst deficit in history?
MATHIAS CORMANN: I am not going to provide an update today. We shifted the Budget to October because in the circumstances and the extreme levels of uncertainty as this situation has evolved, we have delayed and deferred the Budget to October for a reason. We are not in a position to make credible forecasts right now. We are providing regular updates on the state of the Budget and the most recent update that I have provided as Finance Minister, you have referenced the monthly financial statement to the end of March, shows that up until that time revenue was down $11.3 billion compared to what we expected at the half-yearly Budget update and the bottom line was $9.9 billion worse than anticipated. Incidentally, we were also spending less to the end of March than what we had anticipated. So spending was actually down. That will change through April, May and June as the effect of our various measures starts to ramp up. Because of what has been happening in the economy, because of the rapidly evolving situation, we need to really wait until the dust settles somewhat and we have the data certainly from the March quarter Nationals Accounts in order to inform our next economic update in June.
OLIVER PETERSON: Alright. The last update was a surplus, so surely the deficit is going to be above $100 billion. You’re spending $130 billion on JobKeeper alone and that is obviously before all the other stimulus measures that have been announced.
MATHIAS CORMANN: The $130 billion goes over two financial years – 2019-2020, 2020-21. It goes over a six-month period that traverses two financial years. I take your point. We have made significant commitments in order to support the economy, support business, support Australians to remain in their job where that was possible and provide enhanced safety net support where people, as a result of this coronavirus crisis, lost their job. This does come at a significant cost, though we have made all of these measures temporary measures. They will not impose ongoing, structural burdens on the Budget. As you say, we were on track to get back to surplus this financial year having been in balance last financial year. So we did go into this crisis in a comparatively stronger position than we would have if we hadn’t worked to repair the Budget over the first six years in government.
OLIVER PETERSON: A third of food and accommodation jobs are gone, a quarter of the arts jobs are gone, $320 billion is the closest figure so far spent on these support packages. The Treasurer today said there is no money tree, Mathias Cormann. Do we need to start to, as a society, as West Australians, as Australians, do we need to now also entertain the idea that it is going to be pretty bad and we may have to be forced to do some of the heavy lifting ourselves through taxation?
MATHIAS CORMANN: No, we will not be increasing the tax burden on the economy. That would be precisely the worst thing to do. It would actually harm our prospects of a strong economic recovery on the other side. We will pursue our general approach of lower taxes, smaller government, encouraging and incentivising businesses to invest, to take risks, to have a go, so that more successful businesses will be able to hire more West Australians on the other side. That is the proven way to strengthen the economy and to lift living standards. If we were to impose additional burdens on the economy right now, we would actually be making it harder for business to get back up on their feet after the challenges that they have been facing.
OLIVER PETERSON: So we are just going to have to really get a handle on the fact we will be living with deficit and debt for many, many decades to come?
MATHIAS CORMANN: No, I completely disagree with that. The way to repair the Budget the right way is by generating more revenue on the back of stronger economic growth, helping businesses be more successful by getting better access to markets around the world, by helping them improve their productivity, by investing in skills development, by investing in productivity enhancing infrastructure and so on and so on. While keeping taxes low, stronger economic growth will generate stronger revenue flows for government, which in turn will help us repair the Budget as we have proven in the past.
OLIVER PETERSON: Speaking of accessing markets and regarding Chinese trade. First barley, now meat. $2 billion loss for Australia. This is obviously the last thing your government wants right now and battling Aussie farmers who have been through years of drought, is this just a get square from China, Mathias Cormann? Is it a retaliation because we want an independent inquiry into the origins of COVID-19?
MATHIAS CORMANN: No, these things are completely unrelated. I know that the media wants to get to this narrative, but this is a false reading of the tealeaves. Focusing on barley for the moment, this process under World Trade Organisation rules was initiated some 18 months ago, long before anybody had ever heard of COVID-19. These anti-dumping processes happen in the ordinary course of events in all directions. All countries that are part of the World Trade Organisation, if they feel that something is happening that is in breach of the rules, can pursue those. Australia pursues them from time to time. Other countries pursue them against Australia from time to time. We are very confident in relation to our position on this. There is no inappropriate subsidy that is taking place here. There is no dumping going on by Australian farmers into China. So we will continue to engage with that process which is the ordinary process that would happen in the ordinary course of events in relation to every other country.
OLIVER PETERSON: Alright, then what about China’s decisions with the abattoirs today? Is that not related at all, Mathias Cormann?
MATHIAS CORMANN: We are working our way through this at the moment. Again, there are some specific issues at play. The Trade Minister Simon Birmingham is working his way through that with his counterpart and I am sure he will be providing updates at the appropriate time.
OLIVER PETERSON: Alright. We saw some of our big iron ore stocks down today. It is not just a shot across the bow from China at all here. How does the Government resolve its relationship with China and do you still stand by, does the Government still stand by its comments that it wants an independent inquiry into the origins of COVID-19?
MATHIAS CORMANN: Of course. It is an entirely unremarkable proposition. If you look at the impact that COVID-19 has had on the health and the economy and jobs all around the world, if you look at the number of people who have died, who have lost their jobs, who have been severely impacted, it is entirely unremarkable in these sorts of circumstances that at the appropriate time, we have an inquiry to assess what happened and to get to the bottom of how we can prevent something like this from happening in the future and if it does happen, to ensure that we are in a better position, that the world is in a better position, to respond to it in the future. That is in our interest, but it is in the interest of people all around the world, including the people of China.
OLIVER PETERSON: Finance Minister Mathias Cormann, we appreciate your time this afternoon on Perth Live. Thank you very much.
MATHIAS CORMANN: Always good to talk to you.