Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 17 July 2020
PETER STEFANOVIC: We’re going to get to Perth now because joining us live is Finance Minister Mathias Cormann. Minister good to see you. Thanks very much for joining us.
MATHIAS CORMANN: Good morning.
PETER STEFANOVIC: First of all the unemployment rate yesterday 7.4 per cent. How much worse does it get?
MATHIAS CORMANN: The unemployment rate is less than what we feared it would be when we first went into this crisis. Back in March Treasury was advising us to expect an official unemployment rate of about 10 per cent by the end of June. On the back of the easing of restrictions throughout the latter part of May and June, 280,000 people went back into the labour market, workforce participation went up. 210,000 jobs were restored. Hours worked went up. Underemployment went down. So things in June were certainly heading in the right direction. If you look at the number of people receiving unemployment benefits that stabilised. In fact it was slightly lower than at the end of May. This is a tough period. We are dealing with the economic consequences of a global pandemic, but compared to what it could have been and compared to what it is like in other parts of the world, we continue to show an incredible resilience.
PETER STEFANOVIC: Isn’t it a bit misleading though when you are talking about these extra jobs that have come online, that includes people who have only picked up a couple of hours work right?
MATHIAS CORMANN: It is true. Many of these jobs are part-time jobs. This is the way the data has always been presented. You have to compare apples with apples. We are not sugar coating this. Of course this continues to be a tough period. We continue to deal with the economic impact of a global pandemic, which has had devastating impacts around the world, which has had a very negative impact on the economy and jobs here in Australia. Nobody is shying away from this. But if you compare what is happening here with what is happening in other parts of the world, if you compare what is happening here with what we feared might happen earlier this year, then we are in a comparatively better position. But yes, there is still a long way to go.
PETER STEFANOVIC: What sort of a jump are you expecting next month when those Melbourne figures are going to be included after its lockdown?
MATHIAS CORMANN: It will have a negative impact. No question. That is why it is so important to remain on top of the virus where case numbers are very low and to get on top of the virus as soon as we can in those areas where there are localised outbreaks. We have to do everything we can to deal with the health threat in order to get ourselves back on track as best we can economically.
PETER STEFANOVIC: Okay you have got your economic report that is due out next week. Are you expecting government debt to hit $1 trillion?
MATHIAS CORMANN: We are going to provide the update on 23 July in an orderly fashion as we always do when we provide these sorts of economic and fiscal updates. Everybody knows that we had to incur significant additional expenditure on the back of the COVID pandemic. About $50 billion additional expenditure as a result of decisions in the 2019-20 financial year, which comes on top of the economic parameter variations - the drop in revenue and the increase in expenditure as a result of what is happening in the economy. We are dealing with a very serious fiscal hit. But as a result of the work that we have done over the last six or so years we did go into this crisis in a stronger fiscal and economic position than we otherwise would have.
PETER STEFANOVIC: Do you expect though that government debt will go beyond $1 trillion?
MATHIAS CORMANN: Again, I am not going to provide our economic and fiscal update for you today. But we will be doing that in an orderly fashion on Thursday. So it’s not much longer to go.
PETER STEFANOVIC: Okay, the Prime Minister has flagged looking at extending industrial relations exemptions to employers who will no longer use JobKeeper. Is that something that you are pushing for as well?
MATHIAS CORMANN: We have to ensure that we give business the confidence to invest and to hire more Australians as soon as possible. So whatever we can do to make it easier for business to hire more people is something that we should all be committed to. Nine out of ten jobs across Australia are in the private sector. They depend on the future success and profitability and viability of private sector businesses. So we need to ensure that those businesses have the best possible opportunity to survive and to thrive, so that more jobs can be created as soon as possible.
PETER STEFANOVIC: So that means that the unions are going to have to stay flexible right? And what happens if they aren’t?
MATHIAS CORMANN: I have to say through this crisis, employer groups and unions have done a great job in coming together in the national interest and in the public interest. Everybody understands the economic challenges we are facing. This is not the time for everyone to go back into their corner and fight partisan battles. This is a time when, as Australians, we all have to come together as we have and need to continue to come together in order to put ourselves into the best possible position to get through this in the best possible way.
PETER STEFANOVIC: When it comes to JobKeeper extensions, and we have talked about this before, it is going to be something different, it will be a new kind of policy. Does that mean businesses will have to be means tested again to qualify?
MATHIAS CORMANN: The initial JobKeeper program was put in place for six months. It comes to an end at the end of September. Any businesses that qualified at the beginning because of their drop in turnover at that point remained eligible all the way through that initial six month period. The truth is that a lot has changed during this period. A number of businesses have seen strong recoveries. Other businesses continue to be seriously challenged. The support beyond the end of September will have to be on the basis of assessed need. Businesses that have recovered or are recovering, clearly will not need the sort of support that has been in place over the last few months on an ongoing basis, but other businesses will. It will come down to making sure that we properly assess the need and identify and target the support into those areas where that support is needed.
PETER STEFANOVIC: Okay Minister, tax breaks coming for Hollywood. Is it fair in the current climate?
MATHIAS CORMANN: It is a very important measure to boost jobs. One of the hardest hit sectors in our economy has been the arts, entertainment and events sector. This is not just actors, this is carpenters, lighting technicians and special effects experts, you name it, crews. This is an industry which has been very heavily hit. There is an opportunity for Australia, given how comparatively well we have performed in terms of suppressing the virus. There is an opportunity here for us to attract significant business and to generate significant jobs in a sector of the economy that has been very heavily hit. We have been providing this sort of targeted support into sectors of the economy that have been badly impacted like the aviation sector and the arts, entertainment and events sectors is another such sector, as well as the tourism sector of course.
PETER STEFANOVIC: What is the modelling on it? Just for example, how many more films are you expecting to be made here because of these extra incentives, bearing in mind there were already incentives in place?
MATHIAS CORMANN: This is something that will be rolled out over the next seven years. We would expect that this will help attract significant blockbuster movie activity into Australia. Paul Fletcher, the Minister for Communications and the Arts, who has led the charge in putting this package together is working his way through all of these things at the moment to make sure we get the biggest bang for our back in relation to this initiative. But this has worked very well in the past. We have no reason to believe that this will not work into the future, particularly given the comparatively good position Australia is in when compared to other locations from a health point of view.
PETER STEFANOVIC: Okay just finally on a lighter note, the grand final, if it is not going to be held in Victoria this year, Minister would you be happy for it to be held in Brisbane? Of course you would.
MATHIAS CORMANN: We all want to see Melbourne and Victoria get on top of the virus as soon as possible. But if the grand final cannot be held in Melbourne, the only alternative location, surely should be Optus Stadium here in Perth. It is clearly the next best stadium in terms of numbers of spectators and ambiance. There is no question, if it is not Melbourne it should be in Perth …interrupted
PETER STEFANOVIC: Despite Queensland doing all of the heavy lifting to keep the season alive?
MATHIAS CORMANN: And that is why they should share the love. They can do all of the work now. We are there to provide our fantastic stadium for an exciting grand final here in Perth.
PETER STEFANOVIC: Share the love, Mathias Cormann says. Finance Minister, appreciate your time this morning. Thanks for joining us.
MATHIAS CORMANN: Always good to talk to you.