Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Sunday, 9 August 2020
DAVID SPEERS: Mathias Cormann, welcome to the program.
MATHIAS CORMANN: Good to be here.
DAVID SPEERS: Now, Treasury is saying that we're looking at a more severe downturn, higher unemployment as well with the update from Treasury this week. Will you still wind back the rate of JobKeeper and JobSeeker at the end of next month?
MATHIAS CORMANN: That is the current intention. We do need to transition out of this historically unprecedented crisis level fiscal support and get the economy into the new normal in an appropriately phased transition. At the moment, our transition is phased to the end of March. That is from the end of September to the end of March. Based on what we currently know that is certainly the intention.
DAVID SPEERS: But is the step down too soon, given Melbourne is in unprecedented lockdown. That's due to end mid-September. But we don't know whether everything will be opened back up at that point. And yet, the payments are going to come down. There's going to be more people unemployed by then than there are right now. And they're going to lose about 300 bucks a fortnight.
MATHIAS CORMANN: What we have demonstrated through this period is that we are prepared to make decisions in the context of an evolving situation based on the information that comes before us. But right now, as you say, the current JobKeeper arrangement at the $1,500 level continues until the end of September. The lockdown as it currently stands finishes sometime before that. So it is going to be important to … interrupted
DAVID SPEERS: How much flexibility is there, is what I'm getting to? How much are you willing to be flexible on this?
MATHIAS CORMANN: I just would point to our track record. We have been flexible in the past when it comes to what has been a rapidly evolving and fluid situation. We have responded to things as they have emerged. But, moving forward, our intention is to transition the economy and to transition the fiscal policy settings back to the new normal by the end of March. But depending on what happens, we don’t know what we don’t know. We can speculate, but it might well be that things will be better than anticipated. Earlier in March when we expected the worst, we thought that the JobKeeper program would cost us $130 billion. By the middle of May to the middle of June, the easing of restrictions in the economy was able to happen faster than anticipated originally and the costs came down. There will be swings and roundabouts … interrupted
DAVID SPEERS: So you've got room to move there. I'm wondering what will drive the decision on this. If the situation is still as bad as it is right now, or not much better, will you look at keeping the rates where they are for JobKeeper and JobSeeker?
MATHIAS CORMANN: I am just not going to speculate. The policy settings are as they are. But as we have demonstrated in the past, if things change and if the facts change, we will reassess what may or may not be appropriate at the time.
DAVID SPEERS: Can I ask you, a couple of weeks ago, Treasury forecast gross debt would be $852 billion, or 45per cent of GDP by the end of this financial year. Given what's happened this week, what are those forecasts for debt now?
MATHIAS CORMANN: We provided the updated debt forecast in the July economic and fiscal outlook. That was a proper economic and fiscal update. The next update to those numbers will be in the Budget on 6 October. There is always a lot of movement in both directions between budgets and budget updates. Yes there have been additional decisions to spend more money on JobKeeper. But there has also been the situation in relation to the iron ore price. The iron ore price continues to run above US$100, which is above the trajectory that we would expect the iron ore price to be on. There are always swings and roundabouts. Some things go up and some go down. All of that gets reconciled in an orderly fashion in Budgets or Budget updates. The next update is on 6 October.
DAVID SPEERS: When it comes to debt though, are there any red lines and limits as far as how high you're willing to let it go? Or will you spend whatever is required?
MATHIAS CORMANN: We will make sensible decisions considering all of the information in front of us. I would just point out that our debt position on an international basis continues to be manageable. We were confirmed, even after the July economic and fiscal outlook information came out, including on debt, we were confirmed as a AAA rated economy. We will continue to make the decisions that need to be made, sensible decisions. We are very mindful of the fiscal context. But we are focused on supporting Australians through this crisis, doing what needs to be done to respond to the health challenge and to the economic and jobs challenge.
DAVID SPEERS: About six weeks ago, the Prime Minister stood alongside Guy Sebastian at Rooty Hill to announce Showstarter. This is one of the Government’s programs. $250 million in funding for the arts. Why has none of that money being spent?
MATHIAS CORMANN: A lot money has been spent into the arts sector. About $100 million a month goes into the … interrupted
DAVID SPEERS: From this program?
MATHIAS CORMANN: With any program that involves grants spending, there are some administrative processes that have to be followed in order to ensure that funding is allocated in the right and appropriate way. But it would be wrong to suggest that no support has gone into the arts sector. Significant amounts of funding have gone into the arts sector, as they have gone into the economy as a whole. But the Minister for the Arts, Paul Fletcher, will ensure that that funding hits the ground as quickly as possible having followed all of the proper processes.
DAVID SPEERS: According to a departmental official, they're still waiting for ministerial approval and money might not flow until November. Do you think that the PM should have pointed that out at the time?
MATHIAS CORMANN: I understand that the department provided relevant paperwork towards the end of this past week. The Minister no doubt will act very swiftly.
DAVID SPEERS: A couple of other things. There have been promising developments when it comes to vaccines with what's happening overseas and indeed, here in Australia as well. The Prime Minister says whoever finds a vaccine should share it with the world. Other countries are entering supply deals with the top pharmaceutical companies. Is that something Australia is going to do? Or will we just rely on their goodwill?
MATHIAS CORMANN: No, we are very focused on this. Greg Hunt has done a lot of work in this space. The National Cabinet has endorsed the procurement framework for a possible vaccine at the National Cabinet meeting on Friday. There is more than 160-odd candidates globally. There are about 26 human trials. We are very focused on making sure that Australians get access to any safe and effective vaccine that becomes available through a combination of direct procurement, or manufacturing under licence here in Australia. So there is a lot of work going on in this space. As soon as there is a proven safe and effective vaccine available, we will do everything we can to ensure that Australians get access to it.
DAVID SPEERS: Let me ask you about your home state. Should Western Australia's border be closed or not?
MATHIAS CORMANN: We support, given what has been happening in Victoria and given where the country is at, we support the current state border arrangements, including here in Western Australia.
DAVID SPEERS: OK, but you have been arguing for a while now, and I'll quote you here that these are unnecessary and unavoidable harms for little or no public health upside. Have you changed your view?
MATHIAS CORMANN: We have changed our view as the position has evolved. I would just point out that Premier Mark McGowan in March, when Lisa Harvey as the state leader of the Liberal party, first suggested state border closures at a time when there was daily growth in infection rate of 25 to 35 per cent, Mark McGowan ridiculed the idea. The Deputy Premier Roger Cook suggested that it could not be done because it was unconstitutional. A few weeks later, they put these state border closures in place that remain in place today. So I am not saying that in a way to be critical. I am just pointing out that this has been an evolving situation. People's assessments have changed. In an ordinary course of events, all of us would want the state borders to be unnecessary. But given what has been happening, clearly that is an important feature to manage the risk there.
DAVID SPEERS: The Premier is now saying that it might remain shut until mid next year. What do you make of that?
MATHIAS CORMANN: That is not quite what he said. What he said is that he could not put a date on when the borders would be able to open again. It might be before the end of the year. It might be by the middle of next year. He said that he cannot put a date on it and that's certainly right. I am sure that the Premier, like everyone would want those state borders to be able to come down at the earliest opportunity. But we just do not know.
DAVID SPEERS: Can I just turn to the budget preparations and this will be your final Budget. You're leaving politics before the end of the year, and indeed, this may be your final appearance on this program, too. Are there any, after seven budgets...
MATHIAS CORMANN: I am happy to be back.
DAVID SPEERS: Okay. Are there any particular reforms in your final budget that you'd like to achieve?
MATHIAS CORMANN: In this final budget, I will do what I have done in every single budget. I will work as part of a team to make sure that we put Australia on the strongest possible economic and fiscal foundation and trajectory for the future. Clearly the challenge right now is how to most appropriately manage the transition out of this unprecedented period of crisis level fiscal support into a sensible new normal arrangement, where businesses around Australia have the best possible opportunity to be successful into the future, so that they can start hiring more Australians again. We will be focusing on the next instalment of our five year plan for the strongest possible economic and jobs recovery on the other side of this crisis. Across the board, whether that is … interrupted
DAVID SPEERS: I wonder if there's any particular reform you will champion. You for many years championed the company tax cut. We've done plenty of interviews about that over the years. Is that something that you still believe in?
MATHIAS CORMANN: I tell you what I will champion. I will champion policies to ensure that all Australians today and into the future have the best possible opportunity to get ahead. That more jobs can be created. I understand that nine out of ten jobs across our economy are generated by the private sector. So with my colleagues, I will continue to focus on everything and anything we can do to make it easier for businesses to survive, to be viable, to be profitable, to be successful into the future… interrupted
DAVID SPEERS: Including a company tax cut?
MATHIAS CORMANN: …so that they can hire more Australians. That will include a focus on the appropriate tax policy settings. It will include ensuring that we continue to invest in productivity enhancing infrastructure, deregulation, our free trade agenda to ensure that exporting businesses have the best possible access to markets. Making sure that businesses have access to affordable energy supplies. Right across the board, we will be making sure that businesses have… interrupted
DAVID SPEERS: But a company tax cut is on the list?
MATHIAS CORMANN: What is on that list when it comes to tax is to ensure that the tax policy settings give businesses the confidence to invest in their future success and their future growth, so they can hire more Australians moving forward.
DAVID SPEERS: Well, if indeed, this is your final appearance on the program, we thank you for all the interviews over the years, particularly those early starts from Perth. Mathias Cormann, thank you.
MATHIAS CORMANN: I have always very much enjoyed it. Thank you very much.