Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 7 October 2020
JENNA CLARKE: Joining me this morning for his seventh and final Budget is Finance Minister Mathias Cormann, our WA Senator, who we are unfortunately losing when he retires from public life in December. But he joins me this morning after sending all of the Budget papers to print. Senator, good morning, it’s nice to have you with us. What’s in this Budget for West Australians?
MATHIAS CORMANN: Good morning Jenna. West Australians, like every Australian, are keen to see a plan to get Australia out of this COVID recession. That is what we delivered yesterday. It is a plan for jobs, it is a plan to maximise the strength of our economic and jobs recovery moving forward.
We were hit with this massive unexpected crisis event. Initially, we had to work very quickly to protect people’s health, to suppress the spread of the virus, to cushion the blow on the economy and jobs. But now we are in the phase where we have to do everything we can to maximise the strength of the recovery, so that as many Australians as possible can get back into work to the fullest extent possible, as quickly as possible.
JENNA CLARKE: Absolutely. And that’s been the key for your messaging for the past couple of days. It’s all about jobs, jobs, jobs. And there’s so many incentives to get young Australians into the workforce and also encourage people like elderly people and women to stay in employment. What are some of the incentives that people may be under, or unemployed can look at and look forward to once all of the legislation passes?
MATHIAS CORMANN: It is all about jobs, jobs and jobs. The important first point to make is that jobs do not grow on trees. Jobs are created by viable, successful, profitable private sector businesses. Nine out of 10 working Australians work for a private sector business. So their future job opportunities, their future job security, their future career prospects depend on the future viability and profitability of the private sector businesses that employ them or could hire them. And that is why much in this Budget is designed to make it easier for business to be successful, to give business the confidence to invest in their future growth and success.
Because we know that a growing business will hire more Australians moving forward. There are some specific measures targeted at those that were particularly severely impacted. One of the groups of people that was disproportionately heavily impacted when the Coronavirus Pandemic hit were young people. And that is why we have put this measure in place to boost the number of apprentices by 100,000, by providing a 50 per cent wage subsidy in the context of any business taking on an apprentice. We also have put in place this hiring credit, which we believe will lead to about 450,000 jobs being supported where young Australians between the ages of 16 and 29 will be able to attract a $200 a week wage subsidy and any Australian between the ages of 30 and 35, $100 a week wage subsidy. The question has been asked why we are focusing on young people, and it is precisely because previous recessions have taught us that if you allow young people to be disconnected from the labour market, disconnected from the work force for too long and get entrenched on welfare, it becomes harder and harder to bring them back.
JENNA CLARKE: And also, we’re looking to young people, and I’m speaking for myself here. It will be my generation that will be looking down the barrel of repaying the debt that we have used for this COVID, this necessary COVID recovery. So it just sort of makes good fiscal economic sense right?
MATHIAS CORMANN: Well yes. Just on that point, because people say “haven’t you spent too much money and it’s all the younger generation who will have to pay it back”. If we had not invested this money, if we had not responded the way we did, the level of disruption, social and economic disruption, would have made the recovery much harder, would have delayed it, would have made it weaker, would have meant that young Australians for a very, very long time would have found it harder to break in to the labour market. So it was very important for us to provide the support we have to the economy, to business, to jobs, to working Australians, to those who lost their job so that we minimise to the greatest extent possible the level of social and economic disruption in what was clearly a very difficult context.
JENNA CLARKE Absolutely. And I think I’m very much simplifying things like Budget when people look at things like gross debt, net debt and things like that. I think at the end of the day people just want to know when they hear the word Budget, tax cuts is probably what they think of or tax increases. I understand that Australians will be getting more money in their pay packets Mathias Cormann, how much can they expect as soon as next week?
MATHIAS CORMANN: Well there are 1.2 million tax payers in Western Australia who will receive income tax relief as a result of the income tax relief decisions that we have made in this Budget. Low and middle income earners will receive tax relief of up to $2,745 for singles or up to $5,490 for dual income families in 2020-21, when you compare that to the 2017-18 tax settings. The Labor Party has indicated this morning that they will be supporting our tax proposals. So that means that the Tax Office will be in a position within weeks to reflect the new lower tax rates in the Pay As You Go withholding instalments that are taken out of people’s pay on a fortnightly basis. So people should be able to see that additional money on a pro rata basis get in to their pay packets on a fortnightly basis very soon.
JENNA CLARKE: That’s great. There are some really great initiatives in there that I think a lot of people have probably been crying out for, for a long time, such as the changes to superannuation where basically when you leave a job your super will now automatically follow you. And also things like the instant asset write-offs for 99 per cent of Australian businesses that are earning under $5 billion as of next June. This is a great incentive. Has that been well received this morning?
MATHIAS CORMANN: Yes, we wanted to provide encouragement for businesses to invest in their future growth and success now. That is why we are giving, for a time limited period, an opportunity to immediately write-off and deduct from their tax liability in one year, the full value of investments that are made to facilitate future growth in the year that it has been incurred. That will really encourage businesses. It will trigger businesses to bring decisions forward, we hope. That should then also help to boost activity and boost job creation. In relation to superannuation, too many Australians do not make active choices in relation to superannuation. So what happens is, as they change jobs, people who go to several jobs end up with several superannuation accounts. Every new job sets up a new superannuation account. And that means a lot of unnecessary fees, a lot of unnecessary insurance premiums in multiple unintended accounts. By stapling the superannuation account that you are entered into when you first get into the workforce and for that superannuation account to follow you all the way through, it means that you will pay fewer fees, lower fees, and it means that you will end up with more money in retirement in terms of savings.
JENNA CLARKE: Exactly. That’s exactly what we like to hear. Now there’s lots in this Budget for our first home owners and those who are potentially trying to get into the market. What’s in it for just regular mum and dad investors that may have one or two investment properties because of some smart decisions they’ve made over the years?
MATHIAS CORMANN: General mum and dad investors, or indeed self-funded retirees, will do better and will be better off if and as the economy recovers more strongly. All of the measures in this Budget to boost business growth, to boost investment in future growth and success, all of that will increase the value of investments by investors all around Australia. This is why we need to maximise the strength of the recovery. This is why we need to get out of this COVID recession as soon as possible and in the strongest possible way.
JENNA CLARKE: Indeed. Despite COVID and I guess that is sort of being conducted in the shadows of this Budget, how are these papers different from anything else you have worked on over the past couple of years you have been in this position?
MATHIAS CORMANN: The environment was obviously very different. When we came in to Government in 2013, we inherited a weakening economy, rising unemployment and a rapidly deteriorating Budget position. We worked hard to turn that situation around. To the point where we brought the Budget back in to balance in 2018-19. We were on track for a surplus in 2019-20 and moving forward until such time as the COVID pandemic hit. Now, I take a great amount of personal pride out of the fact that Australia did go into this crisis in a comparatively strong fiscal position. Even after all of the expenditure that we have incurred to respond to this crisis, we continue to be in a much stronger fiscal position than just about any other comparable advanced economy around the world.
JENNA CLARKE: Indeed. One of the hallmarks of your political career, is definitely helping Western Australia access a more fairer percentage of GST. That’s expected to reach 75 cents in the dollar come 2024-25. Given the unprecedented nature of the world right now, that won’t change will it? That’s locked and loaded?
MATHIAS CORMANN: It is locked and loaded. It is legislated. You are quite right, I am very proud to have been able to secure that alongside my colleagues from Western Australia, for Western Australia. It is obviously good for WA, but I also actually believe it is also good for the nation because the previous arrangements provided a disincentive to individual jurisdictions to be the best they could be in terms of pursuing growth opportunities. In 2020-2021, it means that on top of the $2.8 billion base GST payment to WA, Western Australia is getting a $1.5 billion transitional GST top-up payment as a result, directly as a result of the reforms that we have legislated. And yes, it is totally locked into legislation. I cannot imagine that anyone would be brave enough to touch that legislation.
JENNA CLARKE: You’d hope not. Look, one final question before you go, because it’s very niche WA. There’s a story out this morning Senator, that there’s a potential West Australian republic party that’s set to run in the WA election next year. Are we stronger as a Federation and stronger together, or do you think these people have a voice in Parliament?
MATHIAS CORMANN: Look, we are definitely stronger together and stronger as a Federation. Western Australia is a great State. Western Australia is the ultimate trading economy in what is a great trading nation. Of course we are an open externally focussed people and we are best by engaging with as many people all around the world as possible, including all around Australia, by selling as many West Australian products and services all around Australia and all around the world as we possibly can. Of course we are stronger as a nation and I know that most West Australians believe likewise.
JENNA CLARKE: Borders. When should they come down?
MATHIAS CORMANN: Well you know, we have made an assumption in the Budget that that will be by 1 April, 2021. That is relatively soon after the State election. Look the truth is that I do not know. I do not know what the intentions are of the Premier of Western Australia. I do know that in my view there is a case to bring the borders down in relation to those jurisdictions that are COVID safe, that are in a better or stronger, healthier position than Western Australia consistently and for longer, such as South Australia and the Northern Territory. I do not understand why the State Government in Western Australia would stop businesses in Kununurra doing business with people across the border in the Northern Territory, when there have been zero cases in the Northern Territory for months and months and months. There has been no case of locally acquired transmission in the Northern Territory for months and months and months. I think it is cruel to stop an accounting firm in Kununurra from visiting its customers just a little distance away across the Northern Territory border. I think it is just unnecessarily cruel to prevent people pursuing business opportunities when there is absolutely no proper health reason to do so.
JENNA CLARKE: Do you think we deserve a roadmap sooner rather than later?
MATHIAS CORMANN: I have said this for some time. It is absolutely incumbent on the State Government in Western Australia to give Western Australians an indication of what the objective predictable criteria are going to be for the pathway out of this current hard State border closure. I still cannot get my head around it. If months and months on end of zero active cases of COVID. If months and months on end without any locally acquired community transmission of COVID in the Northern Territory and in South Australia, if that is not enough, what is enough? What is the objective predictable criteria that will enable businesses in Kununurra to do what they have always been able to do, and that is to sell their products and services across the border freely and to go and buy products and services from Darwin if that is what they choose to do. Surely we are not going to restrict the freedom of people in Western Australia to this extent without any proper health reason for an unlimited period moving forward. People deserve to know what the objective and predictable criteria are going to be moving forward.
JENNA CLARKE: Indeed. Finance Minister Mathias Cormann and great champion of Western Australia. Thank you so much for your time on The West Live this morning, chat to you again soon.
MATHIAS CORMANN: Thank you, talk soon.