Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 21 July 2020
KARL STEFANOVIC: Well the future of Australia’s JobKeeper lifeline is set to be announced today with the program to be extended until March.
ALLISON LANGDON: Finance Minister, Mathias Cormann joins us now from Canberra. Minister, thank you for your time.
MATHIAS CORMANN: Good Morning.
ALLISON LANGDON: So JobKeeper will stay, but worth less and tougher to get?
MATHIAS CORMANN: We will reapply the turnover test to make sure that businesses who receive JobKeeper still actually require that level of support. When we put the program in place initially in March, any business that qualified at the outset remained eligible for the full six month period. We do think it is important to reapply that turnover test to ensure that given everything that has happened over the last six months, that those businesses still qualify and still need the support.
KARL STEFANOVIC: Okay, there has been a huge lift in bankruptcies. We know that. Treasury says JobKeeper in its current form would leave Australia with zombie businesses and jobs. How worried are you about that?
MATHIAS CORMANN: Certainly, when you put this sort of fiscal support in place it does create distortions. At the outset, given the need for macroeconomic and fiscal support into the economy, to keep businesses alive through an initial transition, to keep employees connected to their employers, we took that into account and we accepted that that was going to be one of the consequences. But as you go forward, certainly the longer you keep these elevated levels of taxpayer funded supports in place, the distortions become worse, which is why we are starting to lower the payment from the end of September onwards, as part of an effort to wean the economy, wean business off this sort of support. We expect that fewer businesses will require this support in this next six month period as well.
KARL STEFANOVIC: Really?
ALLISON LANGDON: Well, I mean continue.
KARL STEFANOVIC: No, I was surprised, because I would have thought that in the next six months, that businesses are going to need it just as much?
MATHIAS CORMANN: Well actually, what has been happening in the economy, a lot of businesses have recovered compared to what was happening at the end of March and through April, on the back of the easing of restrictions in the economy in large parts of Australia. We are dealing with a localised outbreak in Victoria and parts of New South Wales, which is having an impact in those areas, but in the country overall, certainly the situation is not as bad as we had feared, and the experiences of different businesses is not the same. Some businesses have recovered, other businesses continue to very much feel the pain as they are on the front line of the economic impact of this crisis and they will continue to be able to receive this support.
ALLISON LANGDON: As you said, we are now seeing more outbreaks in New South Wales. If it was to join Melbourne in a lockdown, just how disastrous would that be for the country economically?
MATHIAS CORMANN: Well look, it is a negative for the economy. We would much rather if there weren’t those localised outbreaks, but we always knew that there could and would be outbreaks. The key is going to be to get on top of them as swiftly as possible. We have to make sure that all around Australia people continue to act consistent with the health advice
KARL STEFANOVIC: Isn’t it a little bit of a worry and look I am no expert, and you are, but haven't you made a rod for your own back in the sense that it could well be JobKeeper in these businesses, even in the regional areas, that is helping to support local spending and local businesses and once you eliminate that or reduce that, don't you run the risk of therefore deflating those individual economies?
MATHIAS CORMANN: We cannot possibly keep this temporary crisis level, historically unprecedented crisis level spending going on an ongoing basis. It was always the case that we would have to make a sensible transition out of this crisis level support and we are trying to do that in the most responsible, sensible way possible by continuing to provide support to those businesses who genuinely need it. Clearly the objective ought to be that businesses eventually, viable businesses, pay for the income of their employees out of their business income. That is where we want to get back to. Viable businesses paying for the wages of their employees out of their income.
ALLISON LANGDON: What about JobSeeker? You will not keep it at current levels?
MATHIAS CORMANN: Up until the end of September, the current rate of the enhanced JobSeeker payments will continue and we will extend it at a lower rate for a period beyond that. In terms of the ongoing arrangements, that will be a matter for the Budget.
ALLISON LANGDON: Will it stay above $700 as being reported today, per fortnight?
MATHIAS CORMANN: I will leave the Prime Minister and the Treasurer to announce the specifics. But we will keep the $550 COVID supplement, which effectively doubles the JobSeeker rate in place until the end of September. We will extend for a period the enhanced JobSeeker arrangements, though at a lower rate and in terms of the ongoing JobSeeker payment arrangements, that will be a matter for the Budget.
KARL STEFANOVIC: Mathias, you must be going to miss all of this, we are going to miss you. You are one of the few people in Parliament who is actually good.
MATHIAS CORMANN: Thank you, Karl. I love this job. I have given it my best. But you know what, I have done this job longer than anybody else and I think halfway through this term is an appropriate time to manage an orderly transition.
KARL STEFANOVIC: If we do not speak to you before you get to the chopper, you have done a terrific job and we appreciate your time.
MATHIAS CORMANN: I am sure I will be back one more time.
KARL STEFANOVIC: I love it.
ALLISON LANGDON: Thank you Minister.
KARL STEFANOVIC: Thanks Mathias Cormann.
MATHIAS CORMANN: Good to talk to you.