Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 4 September 2020
PETER STEFANOVIC: The Prime Minister will work on ways to bypass Queensland border closure when national cabinet meets later on today. He wants exemptions for medical, compassionate and agricultural reasons and will call on the Premier Annastacia Palaszczuk to embrace common sense and compassionate approach. Business groups, senior Federal Ministers and the New South Wales Premier are also pressuring Ms Palaszczuk to open up, claiming her stance is hurting the national economy. The WA Premier Mark McGowan has already confirmed he will not put a timeframe on opening his border after a phone call with Mr Morrison. Let’s bring in the Finance Minister now, Mathias Cormann. Minister, good to see you. Thanks so much for joining us.
MATHIAS CORMANN: Good morning.
PETER STEFANOVIC: What do you think the definition of a hot spot should be?
MATHIAS CORMANN: I will leave that to the national cabinet this morning. But there needs to be a definition. There needs to be some objective criteria on the pathway out. We cannot have this open ended arrangement where State borders are going to be closed for months, and who knows in some people’s minds, years on end. We are all hoping for a vaccine, a safe and effective, proven vaccine. As soon as we can secure that, that will be great. But in the absence of a vaccine there has to be a predictable pathway out giving people certainty and hope about the future. This indiscriminate, arbitrary, political decision making around keeping borders closed without any particular specific objective reasons is entirely unreasonable. It imposes excessive harm on people. State border closures as a tool to protect people’s health are of course appropriate. But it has got be based on objective medical advice not on politically based decision making.
PETER STEFANOVIC: What is the point of declaring a hot spot though, if Premiers including the WA Premier as we have just said as well as the Queensland Premier, what is the point of a hot spot if they do not adopt it?
MATHIAS CORMANN: What is the point of state border closures if there is no risk against which the population needs to be protected? In the end, you cannot have arbitrary decision making, imposing deliberate harm on the economy, on jobs, on families in terms of their capacity to catch up with each other for no or very little public health upside. There has to be a reason for it. There has to be a context and an objective criteria which determines when those State border restrictions can be eased. It is not a matter of saying let’s open those State borders now to everyone. But it is a matter of saying State border closures are appropriate in these circumstances, but as soon as we get ourselves into this position, where State borders can be open in a way that is COVID-safe then that will be done as soon as possible. At the moment, some Premiers are not prepared to explain themselves to the community on that. That creates a lot of uncertainty and anxiety across large sections of the Australian community.
PETER STEFANOVIC: Well Queensland says that they are not going to open up the border with NSW until there are twenty-eight days without community transition of the virus. Is that even possible?
MATHIAS CORMANN: Again, I am not going into the specific conversations that will take place at national cabinet today. But the approach here needs to be proportionate. It needs to be practical. It needs to be common-sensical. At the moment, there is a lot of arbitrary, politically-driven decision making that is imposing disproportionate harm on our economy and jobs and on people’s livelihoods for no or very little public health upside. It is just very disappointing to see that politics seems to be driving a lot of this.
PETER STEFANOVIC: Now I did say community transition there. I meant to say community transmission. Of course.
MATHIAS CORMANN: I got what you meant.
PETER STEFANOVIC: Minister, pretty sobering details this week. New figures that came out when it comes to us being in a recession for the first time in thirty years. Business is crying out for a plan. What is your plan?
MATHIAS CORMANN: We have been working to a plan all the way through. The plan in the first phase, we had to get on top of the virus as swiftly as we could. We had to make sure our health system was in a position to deal with any inflow of patients. We did that. We provided crisis level support into the economy to help save as many businesses as possible and help keep as many employees connected to their employers as possible. We are now working on a sensible transition. All the way through we provided incentives to businesses to invest in their future growth and success through the tax system. We are focused on our deregulation agenda. We are focused on our skills and training agenda. We are focused on bringing down the cost of electricity to help businesses be more successful into the future. We are focused on giving businesses better access to key markets around the world to sell Australian products and services. In the end, I will tell you what our plan is. Our plan is to restore as many jobs as possible, as soon as possible, to create new jobs. The way you achieve that is by helping businesses be the most successful they can be. Nine out of ten working Australians work for a private sector business. We are absolutely, totally focused on making sure that businesses have the best possible opportunity to be successful. So they invest in their future growth and success and can create more jobs. That is why across the whole policy gamut, across the whole of the Government we are doing everything we can to create the conditions for businesses to start growing again.
PETER STEFANOVIC: But a lot of those conditions, a lot of what you have said there, I mean it is going to take time for that to be able to see some benefits. So what is the immediate plan? What are you going to do to try and see results as fast as possible?
MATHIAS CORMANN: I just told you what we have done immediately. We have provided massive immediate decisions putting more than $300 billion of stimulus and support into the Australian economy, 16 per cent of GDP. We are working both on the short term, the transitional and the medium to long term response at the same time. We can chew gum and walk at the same time. In the Budget we will have our next instalment of our five year plan for the strongest possible economic and jobs recovery. That goes across all of the policy levers. We have been doing this all the way through. We have been doing this in the first six years of Government, which is why we went into this crisis in a stronger fiscal and economic position than many other countries around the world and more strongly than we would have if we had not done all that work. We have provided a massive crisis response. We are working sensibly on transitioning ourselves into the new normal. We are working on the longer term plan to maximise the strength of the economy.
PETER STEFANOVIC: Okay, well tax cuts, stage two and stage three tax cuts, first of all, will they be brought forward to next year?
MATHIAS CORMANN: You know that the Budget will be delivered on 6 October. I am not going to talk you through specific measures…interrupted
PETER STEFANOVIC: Just give me a little bit Minister, just give me a little bit.
MATHIAS CORMANN: We have already said, we are clearly considering what we can do in the tax space. We are clearly considering what we can sensibly do in terms of bringing forward personal income tax relief for working families. We are also looking very carefully at what we can do to provide further incentives through the tax system to businesses to invest in their future growth and success.
PETER STEFANOVIC: I tell you what, you are an economic conservative, given the amount of money you are throwing at the problem at the moment, it makes what Labor did during the GFC a bit of an economic entrée doesn’t it?
MATHIAS CORMANN: At a time of crisis, and this is a real crisis if you look at the economic hit all around the world. In the UK, 20 per cent contraction in GDP in the June quarter. In Australia, seven per cent contraction. At a time of crisis of course it is important for governments to step up without hesitation. But it is also important for governments when they are not in a crisis context, as we were before this crisis, to do everything we can to put ourselves in the strongest, most resilient position when it comes to fiscal policy settings. We did that. We repaired our Budget over six years. We got the Budget back into balance in 2018-19. We were on track for a surplus this financial year and moving forward all the way through the medium term. That has stood us in good stead. I, as an economic conservative, I absolutely have no hesitation to step up if and as required in the context of a real crisis. These are the moments when governments do have to step up.
PETER STEFANOVIC: Well realistically though, how long can the giveaways last for?
MATHIAS CORMANN: That is the whole point. When you are hit with an unexpected crisis, you do have to take some drastic measures to pause and support people as appropriate. But you then also need to transition yourself out of what is an unsustainable level of spending as swiftly as you can to get yourself into the new normal and onto the base from which you can grow again without these sorts of distortions created by excessive fiscal stimulus, if it is provided on an ongoing basis. We do have to phase out of this crisis level support back into the new normal. We have to let the economy adjust. We need to let businesses adjust to the new conditions. We have to find out which businesses have a viable and profitable future and which ones do not so that we can ensure that people are working in real jobs, in the most productive jobs for the economy possible.
PETER STEFANOVIC: Just finally Minister, Tony Abbott is causing a bit of a stir over in the UK. He is being called homophobic. He is being called sexist. He has been called a misogynist, including from Nicola Sturgeon overseas at the moment. I am just wondering what you make of their criticisms of him?
MATHIAS CORMANN: Tony Abbott is a distinguished former Prime Minister who provided great service to Australia. Throughout a political career where you are engaged in the battle of ideas, that can be willing from time to time in a domestic context. In the end, the decisions in the UK on who they appoint into what position are entirely a matter for them. But from where I sit, Tony Abbott is clearly a giant of Australian politics, who has made a great contribution over a long time. Not everybody will agree with him. But people are entitled to their views. That is the way things work in a democracy.
PETER STEFANOVIC: Okay, Mathias Cormann, as always thanks for your time today. Appreciate it, we will talk to you again soon.
MATHIAS CORMANN: Always good to talk to you.