Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 7 October 2020
SPENCE DENNY: Federal Finance Minister Mathias Cormann. Good morning to you.
MATHIAS CORMANN: Good morning.
SPENCE DENNY: In your last term you have announced that you will be stepping down from politics at the end of your term here. Did you ever anticipate that you would hand down a big spending Budget like this?
MATHIAS CORMANN: Well no I didn’t. But by the same token, I have always said in our first six Budgets and in the context of our first six years in Government, that the reason why we needed to strengthen the economy and repair the Budget was to ensure that Australia was in as strong and resilient a position as possible, to deal with any global economic headwinds coming our way. Now nobody expected the sort of massive storm that has come our way, out of nowhere, this year. But you know what, we were well prepared. We were in a stronger position than just about any other country around the world to provide the appropriate crisis response in terms of supporting our health system, in terms of cushioning the blow on the economy and on jobs and now in terms of providing the necessary support to maximise the strength of the economic and jobs recovery.
SPENCE DENNY: This is obviously a big spending Budget. How dependent is our financial situation on finding a vaccine for COVID-19?
MATHIAS CORMANN: Finding a vaccine is an important factor, but even in the absence of finding a vaccine, clearly we are continuing to ensure that we can maximise the strength of the recovery. In the absence of a vaccine there are a whole range of other measures in place to ensure that our economy can reopen and recover in a way that is COVID safe – from social distancing to proper COVID safe work practices around the country and the like. So a vaccine will be a significant boost if and when that happens. Our assumption is that it will happen by the end of the next calendar year. But there is no perfect certainty around any of this in the current context as there never is when you put a Budget together.
SPENCE DENNY: So what becomes of the $1.7 billion allocated to buying doses of the vaccine if one isn’t developed?
MATHIAS CORMANN: Well we are giving ourselves and we are giving Australia and Australians the best opportunity to get speedy, timely access to a safe and effective and mass-distributed vaccine as soon as possible. Because of course, if and when there is a safe and effective vaccine available, we want Australians to have the benefit of that at the earliest opportunity. That is what we are investing in as part of the global community. There are a number of very promising candidates in the field. The best available expert advice in front of us is that it is realistic to assume that there will be a safe and effective vaccine next year.
SPENCE DENNY: The two by $250 payment for pensioners – is that it for pensioners in the Budget?
MATHIAS CORMANN: Well clearly pensioners as much as anyone around Australia want to see Australia get out of the COVID recession and this Budget…interrupted
SPENCE DENNY: So with respect Mathias Cormann the answer is yes, that’s it for pensioners in the Budget.
MATHIAS CORMANN: Well this is an additional measure that we provided in terms of an additional cash payment. There is a whole range of other things that we are doing for our country that I believe are important for pensioners.
SPENCE DENNY: What about the tax relief that had been brought forward. Given it is being backdated, how logistically will that work? Will be it amortised over the period left in the financial year? Will there be a lump sum? How will it work?
MATHIAS CORMANN: It is very straightforward. As soon as there is an indication of bipartisan support for our proposal to bring forward income tax relief, which is geared at the lower and middle income end, then the Tax Office administratively will adjust the income tax withholding rates through the fortnightly pay. That will be able to happen within weeks. And the ATO obviously makes an assessment of what the likely income tax liability now will be, the lower income tax liability will be, and they will adjust how much tax is withheld from your income every fortnight consistent with that.
SPENCE DENNY: But I guess the question was if it is being backdated to the start of the financial year is that then amortised over the year? Or will there be a bigger lump in the tax return next year?
MATHIAS CORMANN: Well it is precisely as I have just said. So the Tax Office will know what the expected tax liability is and they will make a judgement on what the revised withholding tax should be from here to the end of the financial year. Now, again there will be like a buffer, and at the end of any income tax year, for any income taxpayer, there is a reconciliation through the tax return and depending on whether you have paid too much or too little you will get a refund or you will have to make an additional payment. But essentially there will be an adjustment from here to the end of the financial year that is proportionate to what your remaining tax liability is now expected to be.
SPENCE DENNY: Ok. All right. Now what about private health? A few questions about private health. Now adult children can be on their parents’ health cover until they’re 31. So, what are the implications for that? I mean what if you had an adult child already claiming the rebate who hasn’t turned 31, can they drop that? Go back on to their parents’ private health and then pick it up when they are 31? How will that work?
MATHIAS CORMANN: I will let the Health Minister go through all of the specific ins and outs of all of this. But what we are trying to do here is to ensure that as many Australians as possible have continued cover through private health insurance, so that they can access privately funded health care if and as required. And we understand that younger Australians perhaps don’t perceive the same level of value than older Australians. But it is very important for the system as a whole that we have Australians of all ages that are covered through the private health system. In terms of the specifics I will let Greg Hunt go through all of that.
SPENCE DENNY: I know we have only got you for a short time longer but can you understand how people over 35 might be feeling aggrieved given that the JobMaker Payment is for employees under that. And if you are over 50 getting a job is going to be increasingly difficult because they will be going elsewhere?
MATHIAS CORMANN: Well there are a whole range of support measures that are available across the board, including of course the opportunities to retrain and the subsidies and the payments available to retrain in the context of having to change jobs because of the pandemic. But let me say, young Australians were disproportionately impacted by the job losses as a result of the COVID pandemic. Young Australians who either had just got into work or were about to go into the labour market were particularly severely impacted and it is very important to the economy, and it is very important for Australians of all ages, that young Australians do not get disconnected from the labour market by being on JobSeeker support, on welfare support, over an extended period. That has been the experience of previous recessions and that is what we are seeking to avoid in this COVID recession. Because in the end Australians of all ages benefit from the strongest possible economic and jobs recovery. Part of that equation has to be that we get as many young Australians back into the workforce as soon as possible.
SPENCE DENNY: And just finally if we can, what’s in here for self-funded retirees?
MATHIAS CORMANN: Well again self-funded retirees have a direct stake in the strength of the economy. We are providing massive incentives for businesses to invest in their future growth and success which will boost their value and which will boost the investment of self-funded retirees, the value of the investment of self-funded retirees through their self-managed super funds and other.
SPENCE DENNY: Okay so you see the benefit for self-funded retirees being a potential pick up in the performance of super funds?
MATHIAS CORMANN: Well not just if the economy grows the value of the investments of self-funded retirees will grow and that is, of course, something that self-funded retirees would want to see happen.
SPENCE DENNY: Mathias Cormann, Finance Minister, thank you for joining us this morning. Mathias Cormann joining us here on ABC Radio Adelaide.