Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Sunday, 19 July 2020
KIERAN GILBERT: Joining me live now from Perth is the Finance Minister and Leader of the Government in the Senate, Mathias Cormann. Minister, thanks so much for your time. Your colleague, the Treasurer has confirmed over the weekend that the JobKeeper subsidy will be extended. Can you give our viewers a sense of the Government’s thinking as you head into this next phase of support in the face of the pandemic?
MATHIAS CORMANN: What we have always said is that we would continue to make responsible decisions to provide the appropriate support where that is needed. The situation now is better than what it was at the end of March. The situation now is better than what we feared would be the case now. Once we get to the end of September, it will be a matter of making sure that any ongoing support is appropriately targeted to those businesses who genuinely need it. For those businesses that have recovered, and are able to pay for the wages of their employees out of their income, then that is also something that should be pursued.
KIERAN GILBERT: The Treasurer is using the word scalable. Can you give us an explanation as to what that means in the context of the original package, which understandably had to be done so quickly. There was that flat rate of $1500 done for all workers, regardless of what their previous income was. But how does the tweaking of the scheme, given the time you’ve had, translate?
MATHIAS CORMANN: The JobKeeper program and the enhanced JobSeeker program for that matter are scalable by virtue of the fact that they are demand driven programs. So if demand is higher, then you will end up providing more support at a higher cost. If demand is lower than expected you will end up providing less support at a lower cost. We have seen that play out when the cost estimates for the JobKeeper program varied significantly from the initial estimate to the updated estimate a bit further down the track. That will continue to be the case. But yes, there will be some adjustments to the scheme to make sure it is appropriate for the next phase. The ultimate objective still has to be that we get back into a situation where all businesses are in a position to pay for the wages of their employees out of their income. We will need to get ourselves into a new normal situation with businesses right sizing for the economic context that we are in. But there is now another period ahead for those businesses on the front line that are particularly severely impacted by this coronavirus crisis, for them to receive an additional period of support so that they are in a position to hang on to their employees through this period.
KIERAN GILBERT: And given the dramatic impact on businesses say in Victoria right now, this second shut down, is there capacity to have State by State approaches, or even city by city approaches in terms of JobKeeper?
MATHIAS CORMANN: No. This is a national program. As I have explained it is a demand driven program. In jurisdictions or in areas where the impact is higher, you would expect that more businesses would naturally qualify under the operation of the scheme. This is a scheme, which from the outset was designed to ensure that those businesses who had experienced relevant falls in turnover would qualify to receive that additional support. In those areas where the economic impact is highest, you would expect that the impact on turnovers for businesses would also be highest. As such under the normal and ordinary operation of a demand drive scheme, demand would be higher in those areas that are hardest hit.
KIERAN GILBERT: And it is an opportunity to make it more targeted. I guess most people would think it was reasonable that if the Government were to reduce a payment to an employee who was getting more than they were when in work, that that would make sense. Essentially that if they were getting more under the JobKeeper than they were in their jobs and you were to amend that, that makes a lot of sense.
MATHIAS CORMANN: We have said on the public record before that this was one of the areas that we looked at. When we first designed the scheme back in March, speed was of the essence, simplicity was of the essence. We needed to get the support out into the community, into the economy as swiftly as we could. It was a huge logistical exercise given the numbers involved. So we accepted the fact that the single payment would result in some people getting more than they otherwise would have under their normal working arrangements. Bearing in mind though, that people could only receive JobKeeper from one source. Many part time workers, work part time for a number of different employers. So it is not quite as extreme as what people might have suggested at the time. But nevertheless, we have six months more time, there was capacity for us to have a closer look at how we might be able to tweak those sorts of elements of the program.
KIERAN GILBERT: And is the drop in turnover, that benchmark of thirty per cent, is that something that you would look at as well? Maybe lifting that to fifty per cent to better target support to those businesses most affected by the shut downs?
MATHIAS CORMANN: The specifics of the extension will be part of the announcement later this week. But what I would say is that when the JobKeeper program was first announced and businesses had to demonstrate a drop in turnover of thirty per cent or fifty per cent, depending on their level of turnover, once they were in they were in for the entire six month period. As we get to the end of the six months, towards the end of September, it is going to be important to reassess which businesses still should be receiving this support in order to ensure that the level of fiscal support through JobKeeper is appropriately well targeted to those businesses who continue to need that. In the first six months, irrespective of what happened to your turnover after you initially qualified you were in. But as we go into this next period, there is a need to reassess whether that support is still needed for specific businesses.
KIERAN GILBERT: Yep indeed. And JobSeeker, would you, essentially what is the Government’s thinking on JobSeeker? Is there a general view that you can’t go back to what it was prior to the crisis?
MATHIAS CORMANN: The general view is that over this initial six months we have provided historically unprecedented, crisis level fiscal support, including by effectively doubling the level of JobSeeker payments through the addition of the COVID supplement. That is not an ongoing arrangement. The current enhanced JobSeeker arrangements come to an end at the end of September. We will, the same as with JobKeeper, in a responsible fashion, seek to phase this back into a more situation as normal moving forward. What the specific arrangements are going to be, I will leave that for the announcement with the economic statement later this week.
KIERAN GILBERT: But do you accept the argument of the Business Council of Australia, Deloitte Access Economics, ACOSS, they are all saying you can’t go back to what it was.
MATHIAS CORMANN: We have effectively doubled it for the initial six months period of this crisis. We are making judgements on the most appropriate arrangements into the future. Relevant announcements will be made very soon.
KIERAN GILBERT: How much is the Victorian second shut down costing the national economy?
MATHIAS CORMANN: It is clearly a negative impact on the economy, there is no question. It has a negative impact on confidence. It will have a negative impact on the return of investment into future growth. But we always expected that there could be and would be further localised outbreaks. This virus will be with us for some time. We have to remain vigilant. In those areas where we are on top of the virus, we have to do everything we can to remain on top of the virus. In those areas where we are not, we have to do everything we can to get on top of the virus. That is certainly happening in Victoria and also in relevant parts of New South Wales. This could happen in any part of Australia moving forward. You have to look at the level of growth in infections around the world. The numbers globally are unbelievably large. While all of this is going on, with an incredibly infectious disease, there is clearly much work to be done.
KIERAN GILBERT: You have driven the Government’s agenda in terms of business tax cuts through a large part of your time as the Leader of the Government in the Senate and Finance Minister. Are you listening to calls now for business tax incentives in terms of investment incentives now? That is arguable the best way to prompt short term investment by business.
MATHIAS CORMANN: I have been consistent all the way through. I want to see businesses have the best possible opportunity to survive in the context of this current crisis, to be successful, viable and profitable into the future, so they can hire more Australians and so we can start driving that unemployment rate down again. We want to give businesses the confidence to invest and to hire more Australians. In that context, providing appropriately well targeted tax incentives to encourage businesses to do precisely that is going to be an important part of the tool kit. Nine out of 10 working Australians before we went into this crisis worked for private sector businesses. So the job opportunities, job security, career prospects of nine out of 10 working Australians depend on the future viability and profitability of private sector businesses around Australia. So we do have to ensure that we do everything we can for them to be as successful and as profitable into future as possible.
KIERAN GILBERT: So that is a yes, that is part of the tool kit. Is bringing forward…interrupted
MATHIAS CORMANN: Well it has always been part of the tool kit.
KIERAN GILBERT: No, no, I know, but is bringing forward personal tax cuts part of the tool kit because that is also something that has been called for by business leaders.
MATHIAS CORMANN: I am not going to go through a shopping list of specific measures. In the broad, what I would say is that our instinct always is to keep taxes as low as possible, to ensure that the tax policy settings are such that we encourage effort and that we encourage enterprise and that we encourage people to stretch themselves and have a go, because that ultimately is the best way to lift living standards for everyone. That continues to be our approach. That has been our approach over the last six years. As we work our way out of this crisis and to maximise the strength of our recovery, that will be our approach moving forward. Now what that means in terms of specific measures, that will be part of the Budget on 6 October.
KIERAN GILBERT: What about industrial relations more broadly, the workplace flexibility that was agreed to by the unions at the start of the JobKeeper initiative. What does the Government want in terms of ongoing workplace flexibility as part of this next phase? In that I am talking most specifically about the treatment of awards and the flexibility for employers through this very difficult time.
MATHIAS CORMANN: We want to give employers, we want to give business the confidence to hire more Australians. In that context, having sensible workplace relations arrangements in place is an important part of that equation. Let me say that through this crisis, employer groups and unions have worked together very well in all of the circumstances. I think across Australia, whether it is between political parties or between different sectorial interests in the economy, everybody has sought to pull together to help pull Australia through this crisis. I am hoping, we are hoping that there will be more of this over the next few months as we work on the best possible approaches to maximise the strength of the recovery on the other side, so we can deliver better outcomes for working people around Australia.
KIERAN GILBERT: But in this next phase of JobKeeeper, you will be asking the unions to agree to an extension of this flexibility basically?
MATHIAS CORMANN: In the context of extending JobKeeper, we would like to see an extension of the flexibilities that have been in place in recent months. These are temporary arrangements though. The work that Christian Porter is doing with business groups and with union representatives and others is to find areas where we can have a reform consensus to help ensure that businesses are in the best possible position to hire more Australians over the medium to long term as well.
KIERAN GILBERT: On the Parliamentary schedule, it is not going to return early August. It currently is scheduled to return at the end of August. Was there a way to have Parliament still sit while reducing the risk of MPs from some of the hot spots attending?
MATHIAS CORMANN: All of these things were carefully considered. We acted on medical advice. It would not have been appropriate to essentially exclude Members and Senators from an entire jurisdiction from attending Parliament. You could not have said to Members and Senators out of Victoria, given the elevated level of community transmission in Victoria, please do not attend the Federal Parliament. That would have been quite inappropriate. But in all of the circumstances, to bring Members and Senators from all around Australia, including areas with higher levels of transmission out of Victoria and perhaps New South Wales into one central spot, having them mix for two weeks and then sending them all back out into their respective communities, that clearly would have caused an avoidable and completely unnecessary risk, not just to people in the ACT, while Members and Senators and all of the support staff and so on, came to Canberra, but also to people all around Australia as Members and Senators return to their respective communities. It is quite a unique situation. I have seen people make analogies in terms of people working or being encouraged to go to school or nurses working in hospitals. That is in their local communities without having to move people across large distances from all around Australia into a central spot and then send them out again. There is a pretty unique risk with the convening of the Australian Parliament in one spot in the context of this current pandemic when there are outbreaks like the one in Victoria.
KIERAN GILBERT: And finally, since we last spoke you have confirmed you are wrapping up your Parliamentary career at the end of this year. You are not 50 years of age yet, you speak several languages. You know the position of the OECD, grouping of advanced economies, the Secretary General position is free next year. Is that something, it looks like something you might be well qualified for.
MATHIAS CORMANN: Well thank you Kieran. I am focused one hundred percent on the job at hand. We have an economic statement on 23 July this Thursday. There will be a Budget, there will be a half yearly Budget update. There is a lot of work to be done. At the appropriate time we will turn out mind to what may be next, but right now I am focused on the job I have.
KIERAN GILBERT: Okay, well we will talk to you many times over the next six months that is for sure, Appreciate it this morning. Thanks for joining us early from Perth.
MATHIAS CORMANN: Thank you.