Transcripts → 2020


Sky News - Afternoon Agenda

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

KIERAN GILBERT: Let’s bring is the Finance Minister Mathias Cormann. What do you make of this development? Obviously Josh Frydenberg being cautious in this circumstance and understandably given the environment we all live in right now.

MATHIAS CORMANN: As you have just indicated, Josh is doing the right thing out of an abundance of caution. I am quietly confident he will be okay, but he is doing the right thing.

KIERAN GILBERT: When you look at the statement, there’s been criticism already that it doesn’t have enough detail. Why wasn’t the deficit included?

MATHIAS CORMANN: We shifted the Budget to October and we have said we would have an economic statement in June because right now we are not in a position to provide credible forecasting with a sufficient degree of certainty. That is the whole reason why the Budget was shifted. That is the reason why we have flagged that we would have an economic statement, providing an economic and fiscal update in June after the March quarter National Accounts have been released. We have provided a lot of information, of course, but this, as you know, has been a rapidly evolving situation as we went into the crisis and has been rapidly evolving all that time. As Finance Minister I do provide an update every month in relation to the state of the books, as compared to the most recent update. I have released towards the end of April a monthly update to the end of March. That showed that the deficit was a bit over $9 billion worse than was anticipated on the MYEFO profile to the end of March. I will be releasing another monthly financial statement providing an update to the end of April by the end of this month and then in June we will have a more comprehensive economic and fiscal outlook once we are in a position to do so.

KIERAN GILBERT: We are talking deficits this year and next of upwards of $100 billion, aren’t we?

MATHIAS CORMANN: I am not going to put a number on it. The most recent update we had was the half-yearly Budget update in December. That predicted a surplus for 2019-20. Since that time, the monthly financial statements that I have released so far show that there has been a deterioration, which is entirely expected. To the end of March, that deterioration, incidentally, is exclusively on the revenue side. Revenue was some $11 billion less than was anticipated at the half-yearly Budget update and payments were actually below what was anticipated – $1.4 billion or thereabouts below what was anticipated at MYEFO. We expect that that will worsen now in the months of April, May and June and we will be providing updates in the usual way.

KIERAN GILBERT: It is important that people understand just how bad it is though in an economic and fiscal sense, isn’t it? Because with reform being crucial, the RBA says it, the RBA down basically saying the Government can’t have a business as usual approach, you need to undertake some big reform. To do that you need a consensus. People have to get it as to how bad it is in a fiscal sense, don’t they?

MATHIAS CORMANN: We haven’t had a business as usual approach. The fiscal support package that we have put in place to support the economy, to support business, to support working Australians is historically unprecedented in terms of its scale. We do believe that that is what was required and that is why we acted so swiftly. If you compare the Australian position, both in terms of the health context and our comparative success in fighting this virus, defeating this virus, and also in an economic sense, we are in a comparatively stronger position than many other countries around the world where the health consequences have been more devastating and where the economic consequences and the job losses have been more devastating.

KIERAN GILBERT: One of the big factors in us getting through the Global Financial Crisis pretty much unscathed was China and exports to China. Right now, this is under threat, isn’t it, with the barley exports, threats of tariffs yesterday, today four meatworks, four abattoirs targeted. The Government says it’s technical complaints, but really it is because of tension between the two nations.

MATHIAS CORMANN: No I think that you are getting way ahead of yourself here. Firstly, China will continue to be our most important trading partner and, indeed, we have a comprehensive strategic partnership with China. From time to time, there are issues on which we disagree and we have got to work through those constructively and that is what we always set out to do. In relation to barley, what China is doing is pursuing a process under the World Trade Organisation rules, which was initiated some 18 months ago, well before the coronavirus crisis and well before more recent developments that people are now speculating on. The timetable was always such that this was going to come to a head at this point in time and we are working through the process, which is available to all nations that are part of the WTO framework.

KIERAN GILBERT: It seems like a bit more than a coincidence though, the fact that this is all coming to a head now. It looks like this is a deliberate shot across the bow in a trade sense by the Chinese Communist Party.

MATHIAS CORMANN: I don’t accept that. It is a process that started some 18 months ago. At any one point in time, there are anti-dumping assessments on behalf of Australia into other countries and indeed by other countries in relation to Australia. As far as we are concerned, we don’t believe that there is any dumping. We don’t believe that there are any subsidies at play here that in any way breach any rules and that is what Simon Birmingham, as our Trade Minister, will represent in his representations through this process.

KIERAN GILBERT: You as Finance Minister but also the most senior Liberal from WA, obviously you have a big interest in ensuring this relationship remains on an even keel. This is a Facebook post from Andrew Hastie, one of your WA colleagues, who says in this post, he’s calling it a petition, he says we cannot remain silent about the threat posed by the Chinese Communist Party. He’s had over 8,000 people sign this petition apparently. What do you say to that sort of post from one of your WA colleagues? Is that going to cause more difficulty when it comes to dealing with China?

MATHIAS CORMANN: I have been asked about this previously, in fact some weeks ago. The West Australian newspaper asked me the same question and I will say to you what I said to them some time ago. We need to approach our relationship with China in a very considered fashion. It is an important relationship. It is an important economic relationship, but we also have a comprehensive strategic partnership and as I said, from time to time we will have disagreements on issues and we have to work through those constructively. Australia will always be guided by our national interest in these considerations. In relation to the most recent issue that has caused a level of debate, we believe, from an Australian point of view, that it is entirely unremarkable that given what has happened with the coronavirus and the impact it has had around the world on people’s health, on economies and jobs around the world, we think it is entirely unremarkable that when the dust has settled, at the appropriate time, that there should be an independent inquiry to ensure that we better protect the world from something like this happening again or make sure that we can better respond to something like this in the future.

KIERAN GILBERT: And just finally, in the short-term are you confident that the Government can calm things down a bit between Australia and Beijing?

MATHIAS CORMANN: We are always working to ensure we have the best possible relationship with China and all countries around the world. We are not setting out to gratuitously generate conflict, but we will stand up for what in our assessment is in our national interest in relation to specific issues. Where there are differences of opinion or differences of view, and it is entirely legitimate that different countries will have different perspectives on specific issues, we will seek to work those through constructively.

KIERAN GILBERT: Finance Minister Mathias Cormann, as always, thanks. Appreciate your time.

MATHIAS CORMANN: Always good to talk to you.