Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 2 September 2020
ALLISON LANDGON: It is D-Day for the Australian economy with the full impact of the COVID pandemic on the nation's finances to be laid bare. Finance Minister Matthias Cormann joins us now from Canberra. Thank you for your time this morning.
MATHIAS CORMANN: Good morning
ALLISON LANDGON: We know Australia officially goes into recession today. Just how bad is it?
MATHIAS CORMANN: The precise numbers will be released later today, but we do expect a severe contraction in the June quarter. To put that into context, in the United Kingdom in the June quarter they experienced a contraction of more than 20 per cent, just in that one quarter. Across OECD countries it is just under 10 per cent on average in terms of the contraction in that one quarter. Economies around the world have been hit very hard by the impact of the coronavirus pandemic.
ALLISON LANDGON: So it is bad and could have been worse. But you look at it, we have got stocks are down, house prices are down, plenty of people are still out of work. We are not where we hoped to be by September are we?
MATHIAS CORMANN: We were heading in the right direction through June and early July. Jobs were being restored in the economy across wide sections of the economy. Across the country we were on the path back. But then the outbreak in Victoria happened and that did set us back, that did have a severe negative impact on the economy in the September quarter. But look, we have to just keep at it. Getting ourselves on to a pathway out of the crisis situation into the new normal as soon as we can.
ALLISON LANDGON: What is that pathway? We know JobKeeper changes passed in Canberra yesterday. Less money but the scheme is extended until March. What happens if things are not back to normal by then?
MATHIAS CORMANN: At the end of March 2021 we will have provided historically unprecedented crisis level support to businesses, more than $100 billion worth of subsidies to business to pay for the wages of their employees and we do have to get ourselves back to whatever the normal is at that point in time. The truth is, we will have to continue to live with the virus in the absence of a vaccine. We are going to have to find ways to minimise the risk of infections and outbreaks to the greatest extent possible, so we can maximise the level of economic activity to the greatest extent possible in a way that is COVID-safe.
ALLISON LANDGON: We had Innes Willox on the show earlier who heads up the industry group. He has described March as being a bloodbath.
MATHIAS CORMANN: This is a global pandemic with unprecedented implications for the global economy and here in Australia. Yes, things are tough in Australia, but on a comparative basis, we are in a much better position than many other countries all around the world.
ALLISON LANDGON: Now, you had some wealthy bosses are still getting their bonuses while using JobKeeper to pay their staff. You have got other companies recording record profits while us, the taxpayers, cover their wage cost. It is outrageous. A lot of people are angry about this this morning. Can you do anything about it?
MATHIAS CORMANN: We had to put JobKeeper support into the economy very fast. There was a very simple test and it related to a drop in turnover of either 30 per cent for businesses with less than $1 billion or a 50 percent drop in turnover for businesses with a turnover of more than $1 billion. We kept it simple for a reason, because we wanted to support working families around Australia through this difficult transition. In the end, we have never required any businesses to cut the wages of their employees, but individual businesses and individual business leaders are accountable to their shareholders as to how they conduct their affairs.
ALLISON LANDGON: It is taking the Mickey when they are getting bonuses. The Prime Minister has a border hotspot plan to put to National Cabinet on Friday to free up travel and trade between the states. What is the point? The Premiers don't listen to him, anyway?
MATHIAS CORMANN: Well, the Premiers will have to listen. We do want the National Cabinet to get back to where they were a few months ago, working together cooperatively for the benefit of Australians. Yes, we need to remain on top of the health situation. We need to continue to protect people's health, but we also need to find the appropriate pathway out of the economic crisis that this has generated. We need to find ways to open up the economy to the greatest extent possible in a way that is COVID-safe.
ALLISON LANDGON: Are you OK this morning? Because your state of WA didn't get the AFL Grand Final, it went to Queensland?
MATHIAS CORMANN: Look, I would have loved to have seen it come to WA. I think we have the greatest stadium after the MCG. But look, it is not my decision, it is a decision for the AFL and I respect their decision.
ALLISON LANDGON: OK. I tell you what, you are going to miss this, aren't you, when you leave politics?
MATHIAS CORMANN: Look...interrupted
ALLISON LANDGON: That is a no. That's what I read in that. Nah.
MATHIAS CORMANN: I enjoy it. I am sure that there are other things that I can do.
ALLISON LANDGON: I am sure. We look forward to seeing what. Mathias thanks for joining us this morning. We appreciate it.
MATHIAS CORMANN: Thank you.