Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 7 October 2020
LORETTA RYAN: Australia’s economy has taken its biggest hit since the end of World War II. Mathias Cormann is the Federal Finance Minister, here’s why he thinks this Budget is enough to pull Australia out of a recession.
MATHIAS CORMANN: We are providing significant incentives to businesses around Australia to invest in their future growth and success and we are providing a significant boost to aggregate demand by bringing forward substantial income tax relief for low and middle income earners all around Australia. It is a very significant effort to get Australia out of this COVID recession. It is a significant effort to boost jobs across Australia, to continue to save the jobs that are at risk, to restore jobs that were lost and to create as many new jobs as possible.
CRAIG ZONCA: We will talk through some of the assumptions in the Budget in a moment, but just on the tax cuts how soon could we see that money in our wallets?
MATHIAS CORMANN: Well if there is an indication of bipartisan support soon, which I hope there will be, then the Tax Office will be able to administratively adjust the withholding tax out of people’s fortnightly wages within weeks.
LORETTA RYAN: Treasurer Frydenberg of course will introduce this legislation so you would be hoping that it will be passed, are you confident about that?
MATHIAS CORMANN: Well look, listening to what has been said so far I am quietly optimistic that there will be the necessary bipartisan support. And look I have to say in Australia, in the wake of this unprecedented crisis, we all have pulled together very well. There is always political debate at the edges, but in relation to this particular measure my expectation would be that yes there will be the necessary bipartisan consensus. But I do not want to talk for the Labor Party.
CRAIG ZONCA: Now we have been asking our listeners this morning, extra money in their pocket do they want to spend it or save it? You’d be hoping that they are to spend it and stimulate the economy. Many are saying they are on the side of saving it because they are worried about their job and there is such a lack of certainty over the next six to 12 months. You can’t blame them for that can you?
MATHIAS CORMANN: And I don’t. My message to people across Australia is it is your money. We are saying we want you to keep more of your own hard earned money. It is your judgement on how best to deploy it. We do expect that quite a bit of it will be spent and will boost aggregate demand, but individual Australians are best equipped to make judgements about what is in their best interest and to save money and put it away for a rainy day and improve your financial position in the face of potential future risks. That in itself also helps to improve the overall position across the economy because it provides people with more confidence.
LORETTA RYAN: What is there for older workers?
MATHIAS CORMANN: Well there is a whole range of measures to support older workers. But the most important thing is that in the wake of this COVID pandemic, younger Australians were hardest hit, they were disproportionately hit. The learnings out of previous recessions are that what we need to absolutely avoid is younger Australians getting entrenched on JobSeeker support, on welfare income support, and getting disconnected over an extended period from the labour market. It is good for the economy as a whole, it is good for Australians of all ages for us to get younger Australians back into the workforce as soon as possible. In the wake of this pandemic older Australians are a number of steps ahead compared to their younger counterparts, which is why we have this hiring credit specifically targeted to their needs. But when it comes to retraining and a whole range of other measures, there are a number of specific measures that are available for Australians of all ages.
CRAIG ZONCA: Now older women who are highly represented on JobKeeper numbers and JobSeeker as well, there doesn’t necessarily seem to be a lot for them to reengage them in the workforce. Have they been left out?
MATHIAS CORMANN: No they have not. You have to remember that before we went into this crisis, female workforce participation in Australia was at record highs, at record highs. Women, like young people, were particularly hard hit by the initial impact of the coronavirus pandemic, but as the economy has started to recover, as jobs have been restored, women and younger Australians have also been proportionately the biggest beneficiaries. Women will be among the biggest beneficiaries moving forward as we get Australia out of this COVID recession, as we get a million jobs supported through this Budget. There are a whole range of measures through our Women’s Economic Security Statement as well, which are designed to increase women’s workforce participation, improve their earning potential and indeed enhance their economic independence. I should just say that under our Government the pay gap between men and women had shrunk to its smallest on record prior to this crisis hitting.
CRAIG ZONCA: The Federal Finance Minister, Mathias Cormann, is with you on ABC Radio Brisbane. How do you feel Mr Cormann about burdening your children, and effectively now your grandchildren with what will end up being over a trillion dollars in debt?
MATHIAS CORMANN: Well I would say to our children and grandchildren that we did what needed to be done to preserve their opportunity to live in a strong, resilient and prosperous economy that gives them the best possible opportunity to get ahead in the future. If we had not done what we did, and yes we did have to invest a lot of public money, but if we had not done what we did the level of disruption that would have caused, economically and socially, would have destroyed their opportunities, at least for a generation. We needed to do what we did in order to preserve our capacity to get ourselves back into the strongest possible position as soon as possible. The level of disruption that would have come from not providing this sort of support would have delayed the recovery and it would have made the recovery weaker. This is as much about their future and their future opportunities as about anything else.
CRAIG ZONCA: And what happens if there is no vaccine? You are counting on a vaccine next year judging by the assumptions in the Budget, what happens if there is not?
MATHIAS CORMANN: Well we are making assumptions, as we do in any Budget, based on the advice in front of us and based on the best available information. We publish these assumptions openly and transparently so that people can make informed judgements about what the risks and opportunities are. Based on the advice in front of us it is realistic to expect that there will be a vaccine by the end of this year, but any Budget is based on assumptions. If certain assumptions do no eventuate then we will have to make adjustments to our estimates. But it could also be that the vaccine will become available sooner and in that circumstance of course we will have a positive variation. At the beginning of this year we expected unemployment to hit 10 per cent by the end of June. It came in at 7.4 per cent. So we had assumed a worse-case scenario compared to what ultimately happened. There are always swings and roundabouts. There are always uncertainties that you have to deal with and you necessarily have to make judgements based on the best available information at a particular point in time.
CRAIG ZONCA: Mathias Cormann thanks so much for your time.
MATHIAS CORMANN: Always good to talk to you.