Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 25 September 2020
PETER STEFANOVIC: Joining me now is the Finance Minister Mathias Cormann. Minister good to see you, thanks for joining us.
MATHIAS CORMANN: Good to be here.
PETER STEFANOVIC: The banks have been unshackled, we do want finance to flow, but will this encourage bad lending?
MATHIAS CORMANN: No. The problem that we have experienced in recent times is that it became too hard, too costly and too complex for Australians who can afford to take out a loan to get a loan. As we want to encourage the strongest possible economic recovery post COVID, the appropriate flow of credit into the community and into business is going to be a very important part of that equation. The regulatory burden just went too high in the wake of the global financial crisis and the way it has developed ever since. This is a correction. We have to ensure that there are appropriate consumer protections in place for those vulnerable consumers that need that protection. But we also have to ensure that those Australians and those businesses who require access and are able to deal with access responsibly to borrowings can get that access so that they can invest in their new home or invest in their business.
PETER STEFANOVIC: But when money is already so tight, don’t people run the risk of falling into a debt trap?
MATHIAS CORMANN: Clearly people have to make those judgements. But what we are seeing now is that those Australians who clearly have a high number of assets, who have a capacity to pay, are finding it increasingly difficult to get a loan because the banks have become incredibly risk adverse and incredibly conservative in the context of what they perceive to be the requirements imposed on them through the responsible lending obligations. It is important to get the balance right. It is important to keep strong consumer protections in place, for example in relation to those small account credit contracts, consumer leases and the like. But when it comes to lending overall, when it comes to lending to small business, when it comes to mortgages to invest in residential homes, we have to make sure that we get a better balance.
PETER STEFANOVIC: The JobSeeker supplement is being wound back today Minister, can you provide any guarantee that it won’t go any lower come Budget time?
MATHIAS CORMANN: The Budget will be delivered on 6 October. I will leave the announcements to then. We have extended the JobSeeker arrangements, including the coronavirus supplement, to the end of December. That will be the setting until the end of December. We will make further judgements, as we have indicated, on the ongoing arrangements once we have access to more data by the end of the year.
PETER STEFANOVIC: Can you at least concede that the previous level was too low?
MATHIAS CORMANN: We have effectively doubled the JobSeeker payments for a temporary period. It was always designed to be a temporary period …interrupted
PETER STEFANOVIC: Which comes back today.
MATHIAS CORMANN: And as of today, what we have also done, we have increased what is called the income free area. That is the amount of money a job seeker is allowed to earn through work before they lose any of their JobSeeker payments. We have increased that from $105 to $300 a fortnight. So there is a capacity for job seekers to continue to receive their JobSeeker payment, to continue to receive the coronavirus supplement, and also to earn more money through work before they lose any of those payments.
PETER STEFANOVIC: JobKeeper meanwhile, it is going to be wound back next week. How much are you expecting that to affect the jobless rate?
MATHIAS CORMANN: JobKeeper is a wage subsidy that goes to the business. Many businesses across the economy have recovered. The unemployment rate has come down. In fact it is well below where we feared it would be. It is entirely appropriate for businesses to start paying an increased share of the wages of their employees out of their income as they transition towards paying the full cost of the wages of their employees out of their income. This is part of an orderly transition. The JobKeeper payments at the $1,500 a fortnight level were always there for a temporary six month period. We are now progressively phasing that down between now and the end of March. Businesses that recover, and many businesses are in that position, of course would be expected to pay an increasing proportion of the wages of their employees out of their income.
PETER STEFANOVIC: The Treasurer says that there can be no Budget deficit repair until the jobless figures drops below six per cent. How long will that take?
MATHIAS CORMANN: I do not think that that is quite what he said. I think you are verballing him there. What we have said is that our first priority is going to be on the economic and jobs recovery. That is important. As the economy and job numbers recover, that in itself will help with Budget repair, because on the back of stronger growth and lower unemployment, more people in work, more people paying income tax and fewer people relying on income support through our welfare system, that in itself will help us to repair the Budget. What the Treasurer has said, quite rightly, is that as we want to maximise the strength of that recovery and the strength of the jobs recovery, we do not want to increase the tax burden and we do not want to pursue austerity measures. But we want to repair the Budget as soon as possible on the back of stronger growth, more jobs and controlling expenditure when that is appropriate to do so.
PETER STEFANOVIC: But as for a surplus, what we are we looking, five, ten years away?
MATHIAS CORMANN: Again, the Budget will be released on 6 October. All of those specifics will be announced in the Budget.
PETER STEFANOVIC: Minister, claims this morning that the Government is about to spend $4.5 billion to buy 29 American made Apache choppers. Is that true?
MATHIAS CORMANN: I saw that story running this morning, so I sought advice. My advice is that there is a procurement process underway and that no decision has been made. The procurement process is underway, that happens at arm’s length from our level of Government. It is something that happens through the Defence portfolio. I will just leave the procurement process to take its course.
PETER STEFANOVIC: There would have to be an official tender process though wouldn’t there be for something like this?
MATHIAS CORMANN: Indeed.
PETER STEFANOVIC: So the critics have said and I know it is outside of our portfolio, I get that, but critics have said that the aluminum frame, which could corrode quite easily in our conditions, is too big for our hangers. Would you have concerns about all of that? Do you think they are warranted?
MATHIAS CORMANN: I think that this is a premature question because it is based on an assumption that a decision has been made, when I have just told you that no decision has been made. Processes are ongoing …interrupted
PETER STEFANOVIC: But conversations are being had about it.
MATHIAS CORMANN: There is a procurement process underway. What I suspect is happening here is that some people are seeking to pursue the procurement process through the media. The procurement process I am very confident is assessing all of the various relevant factors before a final decision is made. A final decision has not as yet been made.
PETER STEFANOVIC: Okay, still with the ADF of sorts, Steven Miles that Deputy Premier of Queensland, he’s accused the Treasurer of lying and using the ADF as a bargaining chip to pressure the States to open the borders. What is your view on that?
MATHIAS CORMANN: The Treasurer was absolutely right. The Deputy Premier in Queensland was wrong. In the end it is the States that want to impose State borders. It is a matter for the States, if that is what they want to do, and if that is what they think is warranted, then that is a matter for the States to ensure that they have the means and tools in place to manage those borders that they are imposing. But as far as the ADF is concerned, they have provided extraordinary support to the States to ensure that they can appropriately manage their quarantine arrangements as appropriate. Clearly, as many of the State Labor governments have pointed out to us, and as the Federal Leader of the Labor party has pointed out to us, we need to prioritise quarantine arrangements. That is precisely what we are doing.
PETER STEFANOVIC: But are there enough members of the ADF to do both? To man the border and also man hotel quarantine?
MATHIAS CORMANN: Australia is not designed to have State borders on an ongoing basis. If State and Territory governments want to maintain borders, or if State governments rather want to maintain borders then the prime responsibility to ensure that they can manage those State border closures which they are insisting on is a matter for them.
PETER STEFANOVIC: Finance Minister Mathias Cormann, busy couple of weeks ahead for you. Thank you for your time this morning. We will talk to you again soon.