Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 3 June 2020
PATRICIA KARVELAS: It is official the coronavirus shut down and the bushfires have ended Australia’s record 29 years of uninterrupted growth. GDP for the March quarter fell 0.3 per cent which is a better result than economists had predicted. But the Treasurer Josh Frydenberg confirmed that the June quarter contraction will be much worse and that Australia is already in recession.
JOSH FRYDENBERG: What we were facing was an economist's version of Armageddon. We have avoided the economic fate and the health fate of other nations because of the measures, Andrew, that we have taken as a nation. The June quarter, the economic impact will be severe. Far more severe than what we have seen today. That's what Treasury's advice to me is.
PATRICIA KARVELAS: But it is not all bad news, Australia’s results stand in stark contrast to G7 and ASEAN nations who have experienced much bigger falls in GDP. For more on this, I am joined by the Finance Minister Mathias Cormann. Mathias Cormann, welcome.
MATHIAS CORMANN: Good evening. Good to be back.
PATRICIA KARVELAS: This is a good outcome compared to what was forecast. But it is also the end of 29 years of economic growth. That is really significant isn’t it? This is a moment for the country.
MATHIAS CORMANN: This is significant. But everybody knows what the reasons are for it. We are dealing with a one in one hundred year crisis event. The way the coronavirus has hit us and hit economies all around the world clearly was always going to be devastating. In all of the circumstances, Australia is performing comparatively well. A 0.3 per cent contraction in the March quarter, compared to a 1.8 per cent contraction in that quarter across all OECD countries. A contraction of 5.3 per cent in the economies of France and Italy for example just to name a few. China, a 9.8 per cent contraction. Canada, a 2.1 per cent contraction, just in that one quarter. It is clearly a disappointing day. But we know why we are here. We went into this in a stronger position because of the reforms of the last six or seven years. We are in a good position to do it again, to get us back to that strong position that we have been in in the past.
PATRICIA KARVELAS: The Treasurer says the June quarter contraction will be much worse than March. What sort of numbers are you expecting? Could it be as much as eight per cent?
MATHIAS CORMANN: We will be providing the update in the same way as the updates for the March quarter were provided today. The updates for the national accounts for the June quarter will be provided in early September in the usual way. We were one of the first countries to close our borders to non-Australians coming back from China and subsequently Iran, Italy, Korea and then the rest of the world. Subsequent to that, throughout the June quarter we have been dealing with severe restrictions and shut downs in large parts of our economy. We have been coming out of it sooner than we had feared. We are starting to ease those restrictions at a rate earlier and faster than we thought we would be able to at the end of March. So it is not as bad as it could have been, but it is still going to be bad. The June quarter is going to be the quarter that is most severely impacted by all of this coronavirus crisis.
PATRICIA KARVELAS: You and the Treasurer will announce the results of the review of JobKeeper and JobSeeker in late July. Are you expecting minor adjustments or is this a major overhaul?
MATHIAS CORMANN: The economy is in much better shape today than we had feared it would be at the end of March. We always said that when we put the JobKeeper program out there that there would be a review about half way through. Treasury is currently conducting that review. I cannot speculate on what the adjustments are likely to be, because I do not know what the findings and the recommendations from the Treasury are going to be just yet. We will make sensible decisions to ensure that we can continue to transition the economy successfully through this period to a strong economic recovery on the other side. We are going to be very considered, very deliberate in the same way as we have been so far. We have been pursuing a war on two fronts, on the health front fighting to defeat the virus. We are winning the fight against the virus. On the economic front, the mission was to stabilise and support the economy, to build a bridge to the other side. We are now focused on how we can ensure that the transition to the recovery is as smooth and as fast and as strong as it possibly can be.
PATRICIA KARVELAS: I spoke to Jim Chalmers earlier and he made it clear that you can’t have this support end at the end of September. I made the point to him that the Government is keeping on the table extending it. He said there’s no guarantee. Is there a guarantee that there will be support for those industries that are just not able to keep going on their own?
MATHIAS CORMANN: There is a guarantee that we will continue to make considered decisions based on facilitating the strongest possible economic recovery on the other side …interrupted
PATRICIA KARVELAS: But what does that mean? Translate that for my listeners.
MATHIAS CORMANN: What that means is that we will consider the economic data as it continues to evolve. We will consider the advice from Treasury and other agencies across government. We will make decisions as appropriate. It would not help our economic future for me to start speculating in the absence of that data, in the absence of that advice, in the absence of that information. It is all nice and well for the Shadow Treasurer to gleefully respond to the numbers today and to make all sorts of assessments without information. He can try and get ahead of himself. The truth is, we have to continue to make judgements on a considered basis following an orderly, methodical process and once the information is in front of us and not before.
PATRICIA KARVELAS: He’s also said that you’re now delaying that update on the numbers by a month. Why the delay?
MATHIAS CORMANN: Because it is the right thing to do … interrupted
PATRICIA KARVELAS: Why is right to delay?
MATHIAS CORMANN: If I may. I was just about to answer that question. We are going through a review of the JobKeeper program, as you have just asked me questions about. That is going to clearly be quite significant in terms of making sure that we get the transition from JobKeeper back to business as usual, businesses paying their own way, paying the wages of their employees out of their revenues rather than on the back of a substantial wage subsidy from Government. These are very important decisions. We are due to make those decisions over the next four weeks. If we were to provide an economic and fiscal update before that work has been completed, we would not be presenting a truthful picture to the Australian people. We think it is in the national interest, we think it is in the interest of businesses across Australia and Australians working for their businesses for them to know what our intentions are in relation to JobKeeper and JobSeeker and other related matters as soon as possible. We think that that should be reflected in the updated figures. Given the closeness of those decisions, we believe it is the responsible thing to do to delay the economic update by four weeks so that we can provide the most accurate picture possible in the circumstances.
PATRICIA KARVELAS: Just briefly, I know that you’re going to be announcing a stimulus package in relation to the housing and construction industry. Will that include new investment for social housing?
MATHIAS CORMANN: I will let the Minister for Housing and the Treasurer make that announcement when they are ready to do so. I am not on your program here tonight in a position to make announcements in relation to policy measures that are yet to be announced.
PATRICIA KARVELAS: Okay, but is that in the Government’s consideration? Is that in the mix? You have confirmed other parts, renovations, money, is that in the mix?
MATHIAS CORMANN: The Government’s consideration is to ensure that we provide appropriate supports to sectors of the economy that need that support and when decisions are made, they will be announced and no doubt there will be some announcements soon in relation to the support that we believe is required for the housing and construction sector.
PATRICIA KARVELAS: Minister, thanks for joining us.
MATHIAS CORMANN: Always good to talk to you.