Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 2 September 2020
MICHAEL ROWLAND: Yesterday, Parliament passed an extension to the JobKeeper program but the wage subsidy will fall by $300 per fortnight from the end of this month and an estimated one and a half million workers will no longer qualify for the payment. And as the domestic economy struggles, farmers have been dealt yet another blow with China now suspending barley shipments from Australia's largest grain exporter.
We're joined now by Finance Minister Mathias Cormann. Good morning to you.
MATHIAS CORMANN: Good morning.
MICHAEL ROWLAND: Market forecast centres on a June quarter GDP drop of anywhere between five and seven per cent. Is this the worst it is going to get?
MATHIAS CORMANN: Look we do expect a severe contraction in this quarter. We also know what has caused it. Economies around the world have been hit very hard by a global coronavirus pandemic and if you compare our likely situation with what is happening in the UK, where they experienced a contraction of more than 20 per cent just in the June quarter. Across OECD countries the average is for a contraction of about 10 per cent, just below 10 per cent over the June quarter. This is been a terrible period. The global coronavirus pandemic has had a very heavy impact on economies all around the world including here in Australia.
MICHAEL ROWLAND: Is this the bottom, though, for Australia or can we expect future quarters to be even worse as this pandemic continues?
MATHIAS CORMANN: Towards the end of June and into July, we were certainly on the right path. In June, 280,000 jobs were restored in the economy. Hours worked went up, underemployment went down. The number of people employed went up again. In July, there was a similar picture, but then we had the outbreak in Victoria, which was a serious setback in terms of the economic recovery. We are working as hard as we can to get our economy into the new normal as soon as possible. We do have to get on to that pathway to the strongest possible recovery on the other side as soon as possible.
MICHAEL ROWLAND: OK. JobKeeper has now been extended until March. Would the Government look at another way of helping stimulate the economy, that is bringing forward those scheduled 2022 tax cuts to this year's Budget?
MATHIAS CORMANN: The Budget will be on 6 October. We are carefully considering how we can most appropriately and most effectively support the strength of the economic and jobs recovery…interrupted
MICHAEL ROWLAND: Are faster tax cuts in the frame?
MATHIAS CORMANN: We have already flagged, without going into specific measures, we already flagged that we would look at ways we can strengthen the recovery by lowering the tax burden as appropriate. We want to provide confidence and encouragement to businesses to invest in their future growth and success, so they start hiring more Australians again. We need businesses around Australia to invest in their future growth so that viable, profitable businesses can pay for the wages of their employees out of their income rather than on the basis of taxpayer-funded support.
MICHAEL ROWLAND: Can you give us anymore clarity this morning, Minister, on the latest Chinese move against Australian barley?
MATHIAS CORMANN: We are obviously aware that the decision has been made by Chinese authorities. We respect the fact that China, like all other countries around the world, like Australia, has got quarantine inspection arrangements and we will work with that process. I just hasten to say, CBH is a highly regarded company in my home state of Western Australia. Highly regarded in terms of the quality of the grain products it exports all around the world. We will work to get to the bottom of this and identify the facts and make representations as appropriate, but in the end, there is a global market for wheat and for barley and if we have less opportunity to export our high-quality grain into China, there will be more opportunity for people in other parts of the world to benefit from our high-quality grain exports.
MICHAEL ROWLAND: It's been revealed in Federal Parliament that companies, often very big companies receiving that taxpayer-funded JobKeeper subsidy at the same time paying their executives very large bonuses. Is that right?
MATHIAS CORMANN: Well, the JobKeeper program has been put in place in the way that was very simple, very straightforward and very efficient. The most important test on whether or not a company qualifies for JobKeeper is whether they experience a drop in turnover of 30 per cent or 50 per cent, depending on their level of turnover. If that is the case, then they are able to access a wage subsidy towards the wages of their employees...interrupted
MICHAEL ROWLAND: That wasn't the question. And speaking of tests, do executives getting these bonuses from companies receiving JobKeeper pass the pub test?
MATHIAS CORMANN: Well, in the end that is a question for those companies…interrupted
MICHAEL ROWLAND: Do you think it is right? Do you think it is right for these companies to be doing this?
MATHIAS CORMANN: I am just not going to provide commentary on this. We provided a program which was deliberately simple and which was rolled out very quickly at large scale, but individual businesses have to justify their actions to their shareholders and to the community.
MICHAEL ROWLAND: Your former boss, Tony Abbott, as you would be aware made that speech in London overnight, where he said and I am quoting him "Governments need to consider uncomfortable questions about the number of deaths they are prepared to live with." What do you make of that sort of approach?
MATHIAS CORMANN: Look, Tony, a distinguished former Prime Minister, but these days obviously not taking direct responsibility for the affairs of our nation. He's providing commentary. We are focused on doing the right thing by all Australians. We are fighting this virus on two fronts, the health front and the economic front. We are fighting to protect people's health, to save lives, as well as to save livelihoods. We are doing that to the best of our ability. There is no script, or play book, on how this is best done…interrupted
MICHAEL ROWLAND: You don't have a view? Lots of other people do this morning. Tony Abbott essentially saying, well, it's potentially OK to sacrifice older lives, these people in nursing homes were going to die anyway, to protect the livelihoods of younger Australians. What do you think of that sort of overarching approach?
MATHIAS CORMANN: I disagree with that overarching approach. It is not the approach of the Australian Government. The Australian Government working with State and Territory Governments has been totally committed to suppressing the spread of this virus, to protect people's health as well as to protect people's livelihoods. It is true that we have to find our way into the new normal and into the strongest possible recovery as soon as possible, but we have to do so in a way that is COVID-safe. We cannot do it sacrificing the health and the lives of any of our fellow Australians. We have to minimise the risk of further outbreaks and further infections to the largest extent possible, but we also have to maximise the strength of the recovery in a way that is COVID-safe.
MICHAEL ROWLAND: Out of time. Mathias Cormann, thanks so much for joining us this morning.
MATHIAS CORMANN: Always good to talk to you.