Transcripts → 2020


Bloomberg - Daybreak Asia

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


Date: Wednesday, 13 May 2020

Economic update, Australia’s relationship with China

HAIDI STROUD-WATTS: The country’s Treasurer has outlined what he calls a sobering outlook for the economy. This was on a day that he had hoped to deliver Australia’s first Budget surplus in over a decade. But it a day when China appeared to ratchet up trade tensions with an export ban for Australian meat processors. Australian Finance Minister Mathias Cormann joins us now from Canberra. Minister great to have you on Daybreak Asia again. Are you increasingly concerned about this war of words now spilling over to a war of trade between Canberra and Beijing? The timing of this on the back of the threat of tariffs on barley exports from Australia, and on the back of what the Chinese Ambassador said just a couple of weeks ago in terms of a potential boycott of Australian beef and other products. Is it just too coincidental to ignore?

MATHIAS CORMANN: We have a very important bilateral relationship with China. It is a relationship which benefits both of us. In particular in an economic sense. In relation to barley which you mentioned, this is a process that started some eighteen months ago under the World Trade Organisation framework. Countries all around the world that are members of that organisation are able to pursue investigations into issues where they believe that there are some breaches of relevant trade rules. We do not believe there have been any breaches. We are engaging in that process in the appropriate way. We do not believe there has been any dumping or any inappropriate subsidies. We are working our way through that in an appropriate fashion. In relation to beef, again there is an allegation of some technical breaches and we are working our way through that. In the end, in any relationship, from time to time there will be disagreements on certain issues. We pursue those constructively and pragmatically with a view to resolve them in the most sensible fashion possible.

HAIDI STROUD-WATTS: Has there been a misstep in the diplomatic statecraft if you will, for Canberra to so loudly and publicly call for the investigation into the origins of the coronavirus, because of lots of countries have called for that investigation as well. But it seems like China is really targeting Australia in terms of the punishment of this.

MATHIAS CORMANN: Our proposition that there should be, at the right time, an independent inquiry into what happened and how we responded is entirely unremarkable. Given the extent of the crisis globally, the number of people who have died, the number of people who have lost their jobs, the number of people who have had their lives disrupted the way it has been, of course there should be an independent inquiry into what happened to ensure that we minimise the risk of it happening again and also into how we responded, to ensure that if it does happen again that any future response is better than what it was this time round. That is in the interest of people in Australia. That is in the interest of people all around the world, including we would argue, the people of China.

SHERY AHN: Minister, is Australia ready to veer its economic dependence away from China if the relationship deteriorates from here?

MATHIAS CORMANN: Our focus is on getting the best possible access to markets all around the world for Australian products and services. China will continue to be a very important market for us as we are a market for China. We are an important supplier for China. But we are always focused on getting the best possible access to countries all around the world to make sure that we can sell as many Australian products and services where ever we can.

SHERY AHN: Minister, let’s turn to the Australian economy because the central bank has anchored the cost of government borrowing it seems, with rates on or near zero. So what is the Government prepared to do now, or plans to focus on that it couldn’t have done before?

MATHIAS CORMANN: Our next Budget will be delivered in October. We have deferred the Budget from May to October because of the level of uncertainty in the economy making it near impossible to provide credible forecasts and projections that we would need to make in the context of a Budget. We have focused initially on the crisis response in the context of the COVID-19 crisis. Saving lives by slowing and supressing the spread of the virus. We are winning the fight against the virus. We have provided a crisis response in terms of providing support to the economy, to business, to working Australians, to keep as many of them in jobs as possible and provide enhanced welfare support to those who lost their jobs. The task now is to maximise the strength of the recovery on the other side. But before that we are now going through a process of a phased easing of restrictions, monitoring that it is safe for us to continue to gradually ease restrictions and that we don’t have any new large outbreaks that are not able to be responded to swiftly. We certainly want to avoid a second wave, which would require us to go backwards in terms of the easing of economic restrictions. In the Budget we will be putting forward our next instalment of our national economic plan to maximise the strength of the recovery moving forward. The Australian economic fundamentals were strong prior to this crisis. Our economy was strengthening, employment growth was strong, the unemployment rate was low, we had high participation rates, the lowest welfare dependency in more than thirty years before this crisis hit. So it is now a matter of working ourselves back into the strongest possible position.

HAIDI STROUD-WATTS: Minister, there has been pressure from the backbench to roll back or scale back the JobKeeper program. Will you be ruling that out as a possibility? And if you don’t do you think that puts at risk this nascent or fragile economic recovery?

MATHIAS CORMANN: We will stick to the plan. We are six weeks into a six month program. The JobKeeper program will be in place for six months. There was capacity depending on how long the coronavirus crisis lasted in terms of its economic impact to potentially extend that if required. We are right now getting on top on things on the health front. But we also always flagged that there would be a review mid-way through that six month period to assess that the program was working as intended. Treasury will be conducting that review and once that review has been completed, will present its findings to the Government. I cannot pre-empt where I sit now, what these findings may or may not be. But we will consider them at the appropriate time.

HAIDI STROUD-WATTS: Minister are you concerned about the danger of moving too quickly? We heard from Dr. Fauci overnight in the US saying that it could not foresee a public health disaster but set the economy and the economic reopening back if things were to move too quickly. Is that a danger for Australia?

MATHIAS CORMANN: A very large part of our continent now essentially has not had any community transmission for a number of weeks now. A number of jurisdictions have got no active cases. The number of active cases around Australia is quite low. The new cases that do arrive overwhelmingly, certainly large parts of Australia are Australians who returned from overseas, who are appropriately quarantined. We have put measures in place to manage the health risk, like increased testing, the COVIDSafe app, which allows us to efficiently trace the contacts of anyone who is infected to help us manage that risk, and also a capacity to respond more quickly and more effectively to localised outbreaks. So we are putting measures in place to manage the health risk, to minimise the risk of a second wave, so that we can reopen the economy, hopefully by early July in a phased approach in a way that is COVID-safe.

SHERY AHN: Finance Minister Mathias Cormann, thank you very much for joining us again from Canberra.

MATHIAS CORMANN: Always good to talk to you.