Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Sunday, 4 October 2020
KIERAN GILBERT: Welcome back to the program, with me now is the Finance Minister Mathias Cormann. Minister thanks so much for your time. We will get to the Budget in a moment, there is one big story around the world and this is Donald Trump and the COVID diagnosis. We had the UK Prime Minister and now the US President, it is a reminder of just how potent this thing is.
MATHIAS CORMANN: It’s a dangerous virus, no question. We wish President Trump and his wife Melania a full and speedy recovery. It does show that there is nobody that is beyond the reach of this virus.
KIERAN GILBERT: It also creates a bit of uncertainty or a lot of uncertainty doesn’t it, ahead of the US Election, not just political but economic and for the global markets?
MATHIAS CORMANN: It has clearly added another dimension to this pre-election period. Let’s hope that President Trump has a full and speedy recovery.
KIERAN GILBERT: And as I said one month out though, what do you think the implications would be for the global markets, will it just add volatility?
MATHIAS CORMANN: Over time these things will sort themselves out. Right now it does create a level of uncertainty into the US. The US being the most important economic and political power in the world, when the President of the United States is ill that is something that the markets will be very focused on.
KIERAN GILBERT: My colleague Andrew Clennell on the Budget now, if we turn our attention to that, he reported today that the low income offset will be extended. Is the focus on low income earners basically the logic is because they are going to spend more dollars?
MATHIAS CORMANN: There is always pre-Budget speculation. I am not going to add to the pre-Budget speculation. The Budget will be on Tuesday, so there is not much longer to go. Let me just make the general point, our focus so far this year has been on cushioning the blow in terms of the economic hit of the coronavirus pandemic and we have been focusing on the recovery. The Budget is all about maximising the strength of the recovery, helping to create as many new jobs as possible, having restored as many new jobs as possible along the way. We are focusing right across the board on how we can best achieve that, including by providing support to individual Australians and providing support to businesses around Australia to invest in their future growth and success so they can hire more Australians again.
KIERAN GILBERT: We hear this term aggregate demand, basically it is to put more dollars in people’s pockets?
MATHIAS CORMANN: This has been our focus as a Government all the way through, to ensure that Australians can get to keep more of their own money, their hard earned money, to spend in the economy. This has never been more important than during this period as we seek to recover from this crisis.
KIERAN GILBERT: The one announcement that was confirmed today I believe is the apprenticeship commitment, to pay 50/50, the incomes of new apprentices. Can you explain that to us?
MATHIAS CORMANN: It is a $1.2 billion program to support up to 100,000 new apprentices. Any business around Australia in any industry that takes on an apprentice from 5 October over the next year, will be able to access this wage subsidy. 50 per cent of the wages of that apprentice, of any new apprentice hired between 5 October and the end of September next year will be able to receive half of the wage for that apprentice subsidised by the Government. This is something that we hope will boost the number of new apprentices in the economy at a very important time.
KIERAN GILBERT: This is just making up for last ground though because under the Coalition according to the National Centre for Vocational Education research there are a 140,000 fewer apprentices now than there were when you took office?
MATHIAS CORMANN: The number of apprentices started falling quite dramatically under Labor during the period of the Rudd-Gillard Governments. We have taken various steps during our period in Government to support the take up of apprentices and this is a very significant measure now, subsidising 50 per cent of the wage of a new apprentice, up to 100,000 new apprentices. A very exciting initiative I believe.
KIERAN GILBERT: But it just making up lost ground, 400,000 plus apprentices at the end of September 2013, March this year, there were 270,000. 400,000 to 270,000, it is a big drop.
MATHIAS CORMANN: We have already started to turn that situation around and this will build on this further.
KIERAN GILBERT: So explain the thinking though in terms of will this say to a chippie or a plumber we are going to pay half the wage, does that necessarily mean that they are going to have the wherewithal to pay the over half?
MATHIAS CORMANN: Clearly if you only have to pay half it makes it easier to take on a new apprentice compared to a situation where you have to pay 100 per cent. We want to make it as easy as possible for businesses to take on new apprentices. By saying to a business that might be considering taking on an apprentice that we are prepared to take up half the cost of that apprentices for the initial 12 months period, that is a substantial help for any businesses that is considering doing this.
KIERAN GILBERT: Infrastructure is going to be a big focus as well on Tuesday obviously. Are the States doing enough on that front?
MATHIAS CORMANN: I am reading that the State Government in Western Australia is planning to deliver a surplus Budget later this week. I would say that States around Australia including my own home State of Western Australia could do more to support Australians, to support business, to support jobs to ensure that we all together maximise the strength of the economic and jobs recovery moving forward.
KIERAN GILBERT: Would you tell the Premier that it is really not a time for a surplus, is it? It’s not.
MATHIAS CORMANN: It is a time to make sure that governments at all levels step up to support the economy, to support the economic recovery, to support jobs.
KIERAN GILBERT: But when you weigh up the Budget, at the moment you are saying it’s going to be a jobs Budget as opposed to debt or deficit being the priority. How important is it that there is enough Government or public stimulus right now, given how weak the private sector is?
MATHIAS CORMANN: Employment growth in the private sector and incentivising employment growth in the private sector by encouraging businesses to invest in their future growth and success is going to be an important part, is the most important part, of the economic and jobs recovery story. That is what we all have to focus on. Jobs recovery in itself will help to repair the Budget. As more people get back into employment, as more new jobs are created and as more Australians pay income tax, revenue for Government increases and expenditure on welfare payments reduces, because as the unemployment rate goes down, as fewer Australians are on unemployment benefits the payments reduce. So that in itself helps to facilitate Budget repair. That has been an important part of the Budget repair story over the last six years too on the back of more than 1.5 million new jobs that were created before this crisis hit.
KIERAN GILBERT: On infrastructure has it come to a point where you’ve got to say to the States you have to use it or lose it essentially in terms of Federal funding?
MATHIAS CORMANN: There will be some details in relation to all of these things in the Budget on Tuesday. I will leave it to the Treasurer to explain the specifics. But the general principle is that where we make funding available to build important productivity enhancing, economy growing infrastructure we want the States to get on with it. If the States are not able or are not willing to get on with it, then we will seek to work with States that are. If some States are not prepared to get cracking then we will be working with those States that are.
KIERAN GILBERT: You talk about getting cracking, it is also about the State borders. And Mark McGowan the Premier in your home State, you accused him of economic protectionism at the end of last week, in terms of his remarks. Can you explain your thinking on that?
MATHIAS CORMANN: He was suggesting that the reason West Australians were prevented from going into South Australia or the Northern Territory was because they shouldn’t spend their money there. They should spend their money in Western Australia. In South Australia, or in the Northern Territory there has not been a locally acquired case of community transmission of coronavirus for months on end… interrupted
KIERAN GILBERT: So it wasn’t on health advice?
MATHIAS CORMANN: … so clearly there is no public health ground to prevent West Australians to exercise their freedoms to travel into those jurisdictions if they want and to spend their money in those jurisdictions if they want. So it seemed to be an economic protectionist argument. I guess the point is this, economic protectionism makes economies weaker, makes Australians, makes people, poorer. Australia is a trading nation. Western Australia is the ultimate trading State in a trading nation. Being committed to open markets and free trade has made us the prosperous nation that we are. It has helped us go into this crisis in a position of strength. Not only is economic protectionism bad for the economy and bad for people’s living standards. It is also explicitly prohibited in our Constitution in that trade and movement of people across States has to be absolutely free, consistent with our Constitution.
KIERAN GILBERT: WA’s tourism industry also said they are losing hundreds of millions of dollars directly contradicting that.
MATHIAS CORMANN: All of the feedback that I have had consistently from tourism operators in Western Australia, is that the money spent by interstate visitors is significantly higher than the money spent by West Australians visiting tourist attractions…interrupted
KIERAN GILBERT: But he doesn’t see that.
MATHIAS CORMANN: The history, the global history for a long time shows that protectionism makes people poorer, open trade makes people richer. In our Constitution a key feature is that there should not be protectionism between individual States…interrupted
KIERAN GILBERT: But the Premier doesn’t seem deterred because he still very popular.
MATHIAS CORMANN: These things develop over a period. In the context of a health crisis, we have all been supportive of taking strong measures to protect people’s health. When there are public health grounds, of course there is a justification for the sorts of measures that the State Government has taken, including State border closures. But in relations to jurisdictions like the Northern Territory or South Australia in particular, there is no justification. I have said repeatedly now, if zero active cases and zero locally acquired community transmission for months on end is not enough to allow West Australians to enjoy their freedoms as Australians citizens, then what is going to be enough?
KIERAN GILBERT: So do you think in that context that Clive Palmer will win the High Court case because from what you are saying you believe that the McGowan position in breach of the Constitution?
MATHIAS CORMANN: I am not a commentator on what may or may not be decided by the High Court, but the statement that the Premier made last week, that he was intent on keeping West Australians locked into Western Australia on economic grounds rather than on health grounds on the face of it seemed to me to be inconsistent with explicit provisions in the Constitution.
KIERAN GILBERT: Minister appreciate it, thanks.
MATHIAS CORMANN: Always good to talk to you.