Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Monday, 25 May 2020
QUESTION: Minister, $60 billion is a hell of a miscalculation. How did this come about and when were you made aware, and what was your reaction?
MATHIAS CORMANN: Firstly, it was an estimate at a time when the outlook in terms of the health crisis and the economic impact of that health crisis was significantly more negative than what it has turned out to be. The health situation we are in now is much better than anticipated. Hence the economic impact is also less severe than what was anticipated. Hence the cost of a program to support the community through this transition is less than what was anticipated. An estimate is an estimate. We now have better information in terms of how this is tracking. People have to remember this was a rapidly evolving situation. At some point there we were experiencing more than twenty per cent growth in infection rates every day. We have now had a long period of infection rates well under one per cent. It is a very different situation now. The reason we shifted the Budget to October is because of the significant uncertainty making forecasting of relevant programs, across the relevant programs and parameters, very difficult. That is what happened here. Combined of course with a reporting error from the ATO. It brought us to this situation. I was briefed by the Treasurer shortly after he was briefed towards the end of last week.
QUESTION: So the $130 billion is now $70 billion.
MATHIAS CORMANN: That is the revised estimate.
QUESTION: Yeah. So the $60 billion, how much of that has already been borrowed? And is there effectively to be spent?
MATHIAS CORMANN: It does not work like that. The Australian Office of Financial Management conducts its borrowing program on a continuous basis. They do not borrow all the money up front for the next few years. That is not the way it works. They work on a more consistent and a more regular basis. Incidentally, the $130 billion was not a target. It was not a ceiling. It was an initial estimate. It is an estimate that has now been adjusted down. That is good news. That is good news in terms of our fiscal outlook in to the future.
QUESTION: So is there any flexibility at all to taper some of those payments. Obviously there is the review in June. But there is some uncertainty as to whether that means none of that $60 billion will be spent. Or will some of that $60 billion be reallocated to adjustments?
MATHIAS CORMANN: There is no money to be reallocated. This is a program which has certain design features, which is a demand driven program. The cost of that program, the anticipated cost of that program has been adjusted. There is no target or ceiling of how much ought to the spent. It was how much was required in the context of the program as it had been designed.
QUESTION: So the $130 billion line is now a $70 billion line?
MATHIAS CORMANN: Indeed.
QUESTION: Minister, just putting the $60 billion difference to one side completely. There is talk about, even from yourself, from the Treasurer about increased assistance for the tourism sector for example. Would that be a change to JobKeeper or would that be a separate package. Can I just tease out the details of what you are thinking about?
MATHIAS CORMANN: We have been providing support to various sectors in the economy that are particularly severely impacted, including the tourism sector. When it comes to JobKeeper, there is a review which is due to be conducted in June, halfway through what is a six month program. That will still take place. The Treasurer has already made clear there are not going to be any wholesale changes to the program. If there are sensible adjustments that can be made at the edges then that is the whole purpose of that review. But in terms of individual sectors in the economy, we will continue to make judgements as we have as to what is appropriate.
QUESTION: But for individual sectors, would that support most likely be through JobKeeper or be a separate distinct industry assistance package?
MATHIAS CORMANN: We have been doing both. JobKeeper is an economy-wide program, which is not sector specific. It is an economy-wide program. But beyond that, in relation to those sectors that have been particularly severely impacted, like the aviation sector, like the tourism sector, we have made decisions in relation to specific support for those areas. We will continue to make judgements as appropriate in relation to these matters.
QUESTION: Could you see other sectors that would be in line to receive support, if the Government is considering providing additional support to?
MATHIAS CORMANN: I am not going to speculate. We have as a Government assessed which sectors were in need of particular support. The aviation sector comes to mind as one example. We will continue to make judgements to what degree sector-wide, sector-specific support might be justified.
QUESTION: Just on another issue if we can.
MATHIAS CORMANN: Yes, sure.
QUESTION: Bushfire relief, $2 billion has been committed to the bushfire recovery after those blazes through December, January and February. On the South Coast of New South Wales some people are still living in tents and caravans. How is that allowed to occur when there is so much money to be spent?
MATHIAS CORMANN: $2 billion was allocated for over two calendar years. By the end of June, about half of that will be spent. Significant amounts of support have already been provided. Bushfire crises at the level of intensity and severity as has occurred comes with very challenging consequences. Affected communities are still working their way through that. The Federal Government working closely with relevant State governments, is working as fast as we can to provide the appropriate and necessary support. But in some of those communities, practically, it will unavoidably take time to work through some of those issues.