Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 7 October 2020
RAY HADLEY: The Finance Minister, Mathias Cormann, has been there for seven Budgets I think, but this is his last one. He is not retiring from life, he is retiring from politics at the end of the year. Finance Minister Cormann, good morning.
MATHIAS CORMANN: Good morning Ray. Good morning to your listeners.
RAY HADLEY: Are you happy this is your last Budget?
MATHIAS CORMANN: Well look I am happy that in our first six Budgets we worked very hard to repair the Budget, which meant that we were in a position earlier this year to respond effectively to the Coronavirus pandemic, to cushion the blow on the economy and jobs, and now we are in the position to do what needed to be done to maximise the strength of the jobs recovery moving forward.
RAY HADLEY: I heard someone say this morning this criticism of how much debt we are in and they are talking about $213 billion for 2020-21 and then raising debt ceiling to $1.1 trillion. But I heard one commentator ask the Prime Minister whether we should have borrowed more money? It seems a rather ridiculous proposition. Is it that ridiculous to suggest you could have gone further?
MATHIAS CORMANN: We always try to make sensible decisions and proportionate decisions and that is what we have sought to do here. It is true that the deficit at 11 per cent of GDP this financial year is very high by Australian standards and the debt position moving forward is high by Australian standards, but the question is what was the alternative? And furthermore, if you compare the Australian position to the position of just about any other comparable advanced economy around the world, we are in a much stronger position. That is because of the work that was done in the lead up to this period. Our Government net debt position will peak at about 44 per cent as the share of GDP, that is significantly better than the US, the UK, most of Europe, Japan and so on. So look you never want to spend more than is necessary but in the context of the sort of crisis that we were facing this year, it was incumbent on Government to step up and do the right thing.
RAY HADLEY: All the figures you talk about are predicated, I hope and I think, on someone solving the problem of the virus. What happens if they don’t solve the problem of the virus? Do we go back to square one and start all over again?
MATHIAS CORMANN: Well no, under no circumstances can we go back to square one. We were hit by an unexpected crisis event earlier this year. So it was appropriate to pause and give ourselves the time to put all of the systems and tools in place to manage and minimise the risk of further spread to the greatest extent possible, so that we could reopen the economy to the greatest extent possible. A vaccine would be the ultimate resolution and that is certainly what we are all hoping for and working towards helping to facilitate. But even in the absence of a vaccine, we’ve got to ensure that through the systems put in place, the testing, the tracing, the rapid responses to any outbreaks, the COVID safe work practices across workplaces around Australia, that we can absolutely minimise the risk of any further outbreaks to the greatest extent possible, so that we can get back as close as possible to business as usual.
RAY HADLEY: Look, I think most people would be applauding the fact you are looking at unemployment and re-employing people and this package for employing 100,000 new apprentices and trainees, the figure has been mentioned this morning, about a million jobs being created and obviously once jobs are created, once people come off JobSeeker as opposed to JobKeeper, because JobKeeper they still have a job technically, they will be able to spend that money as opposed to spending the Government’s money, they will spend the money they earn.
MATHIAS CORMANN: That is precisely right. You know what else happens, the more people you get back into work and off the unemployment queues, the more income tax the Government is able to collect. Not because of higher taxes but because of more people contributing to the public purse and the fewer we have to pay on income support through our welfare system. So stronger growth and stronger job creation helps to repair the Budget in itself. And that is going to be an important part of the equation moving forward.
RAY HADLEY: Now something for your successor to deal with along with the Treasurer, JobSeeker has just been reduced and it came back to about $850 a fortnight from $1,100, but originally, of course, the $550 mark. There is no forecast when that will be reduced and is there a reason it is not forecast as opposed to JobKeeper being stopped in March of next year?
MATHIAS CORMANN: Well as you say the JobSeeker payments continue to be higher than what they were before this crisis, about $250 higher. We have also said to people on JobSeeker payments that they can earn more without losing any JobSeeker support. Instead of $105 a fortnight people are now able to earn $300 a fortnight before losing any JobSeeker support. The reason we are holding off before we make final judgements in relation to the ongoing level of JobSeeker payments, we want to have more data out of the economy in terms of the recovery before we make that final judgment. The feedback that we have been getting, perhaps anecdotally, and we want to see it play out, some of the feedback we have been getting is that businesses have been struggling to get job seekers into taking on a job because the initial JobSeeker payment was so high. There were certain distortions created in the economy. That is obviously undesirable on an ongoing basis so it is going to be important to calibrate the JobSeeker payment on an ongoing basis at the right level. High enough to provide appropriate income support but also not so high that it provides disincentives to get back into work.
RAY HADLEY: It’s interesting you say that because that’s what I get from employers all the time. They say look it’s very hard to get people, and I’m not targeting young people but that is what they suggest, off their backsides into work at 8:00am and staying here to 4:00pm. If they can sit at home and get $850 a fortnight. I mean you know because in many respects those who may be employed at a lower level don’t earn much more than that by actually turning up for 35 or 40 hours a week. So it’s a problem that has to be dealt with. Now one of things I wanted to talk to you about and it hasn’t got a lot of coverage. Workers will no longer be left with multiple super accounts, no fee gauging and this is one which has impacted on a whole range of people that talk to me about it. Where they go from one job to another, they end up with three super accounts and they can’t keep track of them and in the end when five years down the track there’s nothing left because the fees have taken all the money they have accumulated in that period.
MATHIAS CORMANN: Well exactly, we worked on this for some time. We want to ensure that we stop the creation of unintended multiple super accounts. If you have unintended multiple accounts you get superannuation fees, but also insurance premiums that are paid which are completely, in many circumstances, completely and utterly unnecessary and reduce the level of income and savings available for retirement. So this is one of a series of measures that is really designed to empower people to take better control of their retirement savings but also to reduce the risk that their savings are eroded by unnecessary fees.
RAY HADLEY: And one that will I think appeal to health funds, which I don’t think is such a bad idea. Young Australians obviously living with Mum and Dad, previously in circumstances that I have seen they get to 24 and they have got to go on their own health insurance cover that is extended now until they are 31 under certain circumstances, which you know helps everyone I think.
MATHIAS CORMANN: Yes, indeed. In the end, it is in everyone’s interest to have as many younger Australians in health insurance as possible. Because at the younger age people perhaps do not perceive the value of health insurance as much as when you are at an older age and you are more likely to need access to a hospital or to a relevant health care service but in order to keep the system sustainable over the long haul, it is important that people really make a lifetime commitment to private health cover. So by giving younger Australians the opportunity to remain attached to their parent’s cover for longer, it increases the likelihood that they will continue to be covered throughout their whole lifetime.
RAY HADLEY: Ok, just one final thing. I’m older than you but one of the hardest decisions…interrupted
MATHIAS CORMANN: Barely.
RAY HADLEY: …Anyone makes is, thanks for the complement, it’s not right, but one of the hardest decisions in life is to actually pull the pin at the stage where you make the decision and it’s not made for you. You’ve made that decision, you were very popular across all politics. People in the Labor Party have great affection for you. You are a much respected figure. But you have decided, probably at the height of your career, you want to move on, that the decision obviously is predicated around family, I would imagine. But I think what you have done is tougher decision than staying. I think going is much tougher than staying and you have made that decision.
MATHIAS CORMANN: Well Ray look, I have done this job as Finance Minister for longer than anybody else in Australia’s history. I have done it from Perth. I have done it with a young family. I have put my heart and soul into this job. I love this job, it has been a great opportunity to contribute, but I genuinely believe I have given this everything I’ve got and that it is time for someone else to have a go. I am retiring from this job, I am not retiring from any job but I do look forward to finding something to do that facilitates a better family life balance moving forward.
RAY HADLEY: Good on you. Well said and a good decision thanks for what you have done for the country and good luck into 2021.
MATHIAS CORMANN: Thank you so much Ray.