Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Monday, 25 May 2020
FRAN KELLY: The Morrison Government is staring down calls to expand the emergency JobKeeper allowance after extraordinary revelations that the scheme will cost $60 billion less than first thought. The Government is blaming the dramatic downward revision on what it’s calling a health miracle, which led to the Treasury forecast being too pessimistic. And it’s also the bungle of course by about 1,000 businesses which grossly overestimated the number of employees they believed would be eligible for the wage subsidy because they misunderstood the question. In a moment Shadow Treasurer Jim Chalmers, but first the Finance Minister Mathias Cormann is in our Parliament House studios. Mathias Cormann, welcome back to breakfast.
MATHIAS CORMANN: Good morning. Good to be back.
FRAN KELLY: 600,000 workers lost their jobs in April, many of them not eligible for JobKeeper. If these huge miscalculations hadn’t been made, couldn’t more support have been given to those people who are now unemployed?
MATHIAS CORMANN: We are giving appropriate levels of support to those that are unemployed. 1.6 million are receiving JobSeeker and we have effectively doubled the JobSeeker payment by making a $550 a fortnight COVID supplement payment. The JobKeeper program is working as intended, but it is true that when we designed the program when it was originally announced, the situation was much more severe on the health front. The outlook was much more negative and nobody could have foreseen at the time when we announced the program that we would be in the position we are in on the health front as we speak today.
FRAN KELLY: Okay. You say it’s working as foreseen, but if you knew back in March that the scheme would cost $70 billion, not $130 billion as first estimated, would you have closed it off to all these other workers? Workers in the arts and entertainment industry, the airport staff, the casuals who have missed out because they have worked 11 months, not 12 months, university academics. Hundreds of thousands of people who could have been paid JobKeeper. All those foreign students, for instance, if the forecast had not been so wrong.
MATHIAS CORMANN: Again, we have gone through these things in the past… interrupted
FRAN KELLY: Yeah, but it’s because you said you had a ceiling.
MATHIAS CORMANN: No. We decided what was an appropriate program with appropriate design features to provide support through the JobKeeper program. Going through some of the examples you have mentioned in turn, foreign students, as I have indicated to you before, any foreigner who is here on a temporary visa is expected to be able to support themselves while in Australia either through work or through their savings and if not through work or savings we have also facilitated early access to their superannuation. If they can’t support themselves, they are expected to return back home. In relation to the airport workers, I assume that you are referring there to a company that is owned by a foreign government. It is true that we do not provide JobKeeper support to workers who work for a foreign government-owned company and a company that has had many, many, many years of profitability incidentally. There are reasons for the decisions that we have made… interrupted
FRAN KELLY: Yes, but so have our banks had many, many years of profitability, but if they applied for JobKeeper they’d still get it. Given that we’re not at the ceiling, what was the thinking then for the arts and entertainment sector to be not covered in the massive way that they have missed out?
MATHIAS CORMANN: They are covered. I don’t accept this proposition that you are putting… interrupted
FRAN KELLY: Hundreds of thousands of them are not eligible for JobKeeper.
MATHIAS CORMANN: That must mean because they can’t demonstrate that they have had relevant falls in their revenue… interrupted
FRAN KELLY: But you know they have because it’s all stopped.
MATHIAS CORMANN: Any taxpayer has a capacity to demonstrate whether they have had a drop in their revenue and if they are not able to demonstrate that, then they have to provide an explanation as to why that is the case. This blanket proposition that artists are not able to participate is just not true. To the extent that they are sole traders, of course, if their revenue drops on the same basis as any other Australian in similar circumstances in other industries, of course they would be able to participate. I reject this proposition that the initial estimate taken at a different time in a rapidly evolving situation that that was somehow a ceiling or a cap or a target. It is none of these things. It was an early estimate. The reason we have shifted the timing of the Budget to October is because of the significant uncertainty that was in place at a time when the infection rates were increasing by more than 20 per cent on a daily basis. That is the context that we were looking at at the time. We did not know when we designed and announced the program what the intensity, the length and the depth of the health crisis would be and consequently what the intensity and the depth of the economic impact would be. Now we are in a better position than we thought. That is something that we should welcome. We are in a better position. That means that there are fewer people infected, there is very low numbers of active cases in the Australian community now, there is a very low number of infection rates and the economic impact is less than what was feared. That is good news. Because the economic impact is less than what was feared, it also means that the cost is less than what was feared. It is still an extremely expensive program. $70 billion is a lot of money… interrupted
FRAN KELLY: Sure, of course it is. No one is saying it’s not, but the Prime Minister has said when people kept pushing for other sectors that we don’t have a money tree.
MATHIAS CORMANN: And that is still true.
FRAN KELLY: We have known for some weeks now, thankfully, that the health epidemic here has not played out as we once feared, which is great news. When did you as Finance Minister start thinking that might mean we have a massive underspend on JobKeeper? When did you start thinking that perhaps six and a half million Australians would not be covered by JobKeeper?
MATHIAS CORMANN: The first time I found out is when I was briefed by the Treasurer, who had just been briefed by Treasury… interrupted
FRAN KELLY: But did you have a suspicion?
MATHIAS CORMANN: No I did not have a suspicion because the data that was being reported back to us through the ATO appeared consistent with what was the Treasury estimate and it was only once the ATO corrected the error that was made in reporting that we had clear data to indicate that the take-up was somewhat lower than initially anticipated.
FRAN KELLY: Okay. Let’s go to Treasury forecasts. Treasury sticks by its forecast of 10 per cent unemployment, but doesn’t that fact you got the number of workers who would need JobKeeper wrong by three million people show it doesn’t really have a clear idea of what’s happening on the jobs front?
MATHIAS CORMANN: I think that is a bit unfair to Treasury… interrupted
FRAN KELLY: It’s not pejorative, it just seems obvious to me…
MATHIAS CORMANN: If I may. You put a proposition, so if I may respond to it. I think that every reasonable person in Australia would be able to see that there was a rapidly evolving situation. There was a significant degree of uncertainty as to the intensity, the depth and the length of the period that we would be suffering the health and related economic consequences from this pandemic. As it turns out, we are in a much better position in Australia on a health front than we feared we would be. We are in a much better position than many countries all around the world and hence, the economic impact in Australia is not as bad as what it has been in other parts of the world. Estimates are estimates. Forecasts are forecasts. They always get adjusted when you get access to better information… interrupted
FRAN KELLY: I understand, but you have to expect this is a major adjustment. So I am just asking you, are you as the Finance Minister completely confident that three million fewer employees who are not receiving JobKeeper still have their jobs? That their workplaces didn’t need JobKeeper because the pandemic didn’t gut their revenues by 30 per cent or could it be that their employers weren’t able or prepared to wear the cost of the allowance of the five weeks until the money started to flow so they just sacked people, which means there could be more people on the dole queues.
MATHIAS CORMANN: I am confident that the JobKeeper program is working as intended. For those Australians who sadly have lost their job in these circumstances we do have significantly enhanced JobSeeker support available. We have effectively doubled the level of JobSeeker payment through this period as part of our enhanced safety net.
FRAN KELLY: Some economists are urging the Government to keep spending this money. I know the Prime Minister said it’s not free money and you made the point this is just debt, so why would we go further into debt than we have to. But some economists are suggesting that if you don’t keep spending this money or some of it, you’re not going to get the stimulus into the economy you have been banking on. Presumably, that lack of $60 billion might affect a few other forecasts of recovery – GDP, jobs growth, for instance.
MATHIAS CORMANN: There is no such thing as free money. We want the economy to grow as strongly as possible as soon as possible, but also to grow sustainably over the medium to long term. We shouldn’t be spending more than we have to and certainly we should try and keep the level of debt to the lowest amount possible in all of the circumstances because, ultimately, it will impose burdens into the future. That debt will have to be paid back and so from that point of view, of course we should spend as much as we need to, but as little as we have to in the circumstances to keep the deficit that we will be incurring to a minimum.
FRAN KELLY: Mathias Cormann, thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.