Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
The Hon. Scott Morrison MP
Date: Friday, 9 October 2020
PRIME MINISTER: Good afternoon everyone, I’m particularly pleased to be here today and joined by the Minister for Finance and the Leader of the Government in the Senate on this significant day for you Mathias, and, of course, Hayley and the family.
But as we both know, today is an even more important day for Australians all over the country. Earlier today, in the Senate, the Government was successful in having the tax relief, the bring-forward of personal income tax cuts to ensure that working Australians all across the country can keep more of what they earn some 11 million of them. Also as part of that bill, we were successful in being able to pass what are critical tax changes for businesses to be able to invest in their future, creating jobs right across the country to ensure that we can come out of this COVID-19 recession. In addition to that, there is the important changes to our tax laws, which will mean that businesses, through no fault of their own, who are performing well as they came into this COVID-19 recession, making profits, paying taxes, and they've been hit with what I'd call COVID losses. We won't make them wait for years and years before they get back into profitability, if they can achieve that. They can offset those losses, those COVID losses, against the taxes they paid out of their profits before they came into this COVID crisis. Which means they can get back on their feet quicker. Which means they can keep more people employed. Which means they can invest in their business. Which means, importantly they can create more jobs.
In addition, $2 billion worth of special incentives on research and development, which will drive forward particularly our manufacturing industries, as part also of our manufacturing plan. And important changes that says that you're a small business, and medium-sized businesses, up to $50 million in turnover, where you can access important concessions that cut red tape and enable you to get about your business. All of this means more jobs.
This was all in the Budget speech on Tuesday night from the Treasurer, and it's law on Friday. This is real change. This is a real Budget that is going to have a real impact on Australians as we come out of this COVID-19 recession. This is the Budget that Australians needed. This is the plan that Australians have needed. And this is the plan that has been legislated, made law in our Parliament, in three days. In just three days. That's how serious we are about our plan. That's how serious we are about making this real for Australians. We know they need that support now. This is a plan to boost business, to boost jobs, to boost investment, to boost research and development and technology, to drive jobs in our economy.
And I want to thank the Finance Minister, and in this particular case, as Leader of the Government in the Senate, to ensure we were able to take this through the Parliament this week, to ensure that Australians can go into this weekend, turn up to work on Monday, even those working over the weekend, I'm sure, knowing that our plan for the economic recovery from the COVID-19 recession is moving. It's happening. It's law. It's real.
MATHIAS CORMANN: Thank you very much, Prime Minister.
Yes, so today the Parliament passed the foundation of our plan to get Australia out of this COVID recession. Within three days, we were able to persuade the Parliament, including the Senate, to back in our plan to maximise the strength of our recovery, to get Australians back into work as quickly as possible.
What we have legislated today is income tax relief for hardworking Australians. Putting more money into workers' pockets, but also stimulating the economy by boosting aggregate demand. That will help to maximise the strength of the recovery sooner. What we also legislated today is a whole range of initiatives to give business the incentive and the encouragement to invest in their future growth and success, because in the end, what our Budget is all about, it is about facilitating a private sector-led recovery, a private sector-led recovery where viable, profitable, growing businesses start hiring more Australians again.
I thank my colleagues in the Senate for working with the Government as constructively as they have to pass this very, very important part of our plan to get Australia out of this COVID recession.
PRIME MINISTER: Questions?
JOURNALIST: What does Minister Cormann's departure mean for MYEFO in December? Will there be one? Is there a need for one?
PRIME MINISTER: That's the regular schedule and that's what we intend to do. We will keep on with the job. As Mathias kindly said in his remarks today, when he steps down later this month, he will be leaving a Government that is stable, that is united, that has a clear plan for recovery from the COVID-19 recession, and that is getting on with the job. Mathias has made an extraordinary contribution, not just to this Budget, but the six that preceded it. We have worked now together on six of those Budgets in total, including this one. They've all been confronted with different challenges, and different situations and of all of them, I'm sure Mathias would agree, this has been the most challenging, where we find ourselves now. But this Budget, through the hard work that has been done by all who have contributed to it, has ensured that we can put this plan in place very quickly, just as we moved so quickly in putting the JobKeeper and JobSeeker arrangements in place as the COVID-19 pandemic hit this country. And so we go forward with strength. We come from a position of strength, of which Mathias has been a key part, and we'll get on with the job of delivering our plan.
JOURNALIST: The RBA today has warned that Australia's historically low population growth rate will hike the...
PRIME MINISTER: Sorry, I missed the second part of that.
JOURNALIST: Sorry, the RBA has warned today that Australia's historically low population growth rate will heighten the risk of falls in property values in the future. And Treasury has said that your stimulatory housing measures are bringing forward demand for future years. What will the Government do to fill that approaching cliff?
PRIME MINISTER: Well, the population impacts of the COVID-19 recession are obvious and I don’t think they’re of any surprise to anyone. But whether it's programs like HomeBuilder and others, what we’re doing is there has always be an excess of demand over the supply of housing in this country. Always has been. And that's what has fundamentally driven house price values all around the country and that is still true today. There is still a surplus of demand over supply and that's why our HomeBuilder program, and to give you an idea of its impact, what we've done in the housing sector is we've been unlocking and bringing forward the decisions that home builders want to make. And that will see some 20,000 homes built at a cost of around $500 million. If I hark back to the GFC and, Mathias will remember this, the then Government had a scheme to build just under 20,000 homes, and it cost $5 billion. So, I think I can leave it to you to work out which is the better way to get homes built when it comes to the taxpayer and generate the construction activity in the residential building sector, to get things moving in that area. See, this is what our plan is all about. Our plan, as Mathias just said, is about enabling investment in the private sector. We don't see government as the solution forever. We see government's role in the middle of this COVID-19 recession to assist the private sector get back on its feet, to bridge this gap during the course of this COVID-19 recession. But back the fact that our long-term prosperity, and the jobs that depend on it, will come from those businesses going forward again. And that's why what has passed today is so important. So important. It's important because businesses can go now and say, we can purchase that equipment, we can go and purchase that new header, we can go and purchase that new blast freezer, we can go and purchase that new fridge, we can go and purchase that new fleet of vehicles, or those trucks or those utes, or the testing equipment and medical laboratories, or whatever it happens to be. What we've said today in the Parliament, through the law, is we're backing you to invest and employ people. And they can go out there with that confidence. Not off a speech, off the law. This is real. And the Parliament just made it real.
JOURNALIST: Prime Minister, the WA State Government posted a surplus of $1.2 billion yesterday. Is that a good thing? Obviously some people were critical, given it's a pandemic. Minister, if you'd like to pitch in as well?
PRIME MINISTER: Well, I'm going to quote the Minister for Finance, because as he pointed out in the Senate today, and I wish the Western Australian Government well, and I wished them well some years ago, when we put the GST reforms in place. I note that $1.5 billion, wasn't it, Mathias...
MATHIAS CORMANN: The top up payment.
PRIME MINISTER: The top-up payment as a result of the GST reforms that the Finance Minister and I worked together on as Treasurer means that the Western Australian Budget is in surplus. And so you're welcome, Mark.
JOURNALIST: Prime Minister, just on Labor's childcare reforms, do you agree that it will help low and middle-income families and boost female workplace participation?
PRIME MINISTER: Well, look, there are many questions that the Leader of the Opposition still has to answer for us to understand exactly what he's put forward. He hasn't released the detailed costings of his policies, he hasn't told us what the changes are to the activity test and how that impacts on things. What I do know is that someone who is in the top 10 per cent of income earning in this country are the big beneficiaries of that plan. When we announced our childcare changes, it was focused on those low and middle-income earners. That's where all the money was spent. That's where the majority of the $9 billion goes under our plan, is to support those on low and middle-income earners. And when we put our plan in place, that's why I wasn't surprised that workforce participation increased to record levels, that women's participation in the workforce rose to record levels, that the arrangements we put in place to ensure that rebates were based on a price cap meant that we could start bringing the costs of child care down. And, indeed, the Australian Bureau of Statistics has confirmed that since our package went into place that those costs actually did come down. So, there are many unanswered questions about what the Leader of the Opposition said the other night. You know, for the most part, we'll file it under fiction. What this is is law. Our plan is law. Our plan is in place. But Mathias?
MATHIAS CORMANN: I might just reinforce a very important point here. After six years of Liberal-National Government, and our economic reforms and implementation of our plans to strengthen the economy and create more jobs, workforce participation by women in Australia was at its highest on record. The gender pay gap was at its lowest ever on record, under our Government, as a result of the policies of our Government. So, we do not need an unfunded policy prescription. We need to go back to what got us into that good position before, as we work our way out of this COVID recession.
PRIME MINISTER: John?
JOURNALIST: Thanks, PM. On the business-led recovery, businesses generally welcome that, and also the 100 per cent temporary expensing. But it is a temporary measure, about a hundred of the largest companies are going to miss out on it, they say. And also when that measure ends, as you'd understand, because they won't get the depreciation they would have otherwise got, those smaller companies, their effective tax rate is going to go up in the medium term. Does this underline the need for a broader, more fundamental, permanent tax reform at some point, once these temporary measures move? Would you be open to that?
PRIME MINISTER: This plan that we've been working to, frankly, since the start of this pandemic, has had three phases. The first is to cushion the blow and that's what we've achieved. Had we not acted with JobKeeper and JobSeeker, 700,000 more people would have been out of work. And over that period of the last six months, we've seen 760,000 jobs that had been reduced to either zero hours, or had gone, come back and that has ensured that we've been able to get the economy to where it is today. The second part of the plan is to get things brought forward as part of our recovery plan from the COVID-19 recession. And the measures we've announced particularly, which the Finance Minister has been able to steward through the Senate, has meant that we can bring forward decisions to invest, bring forward decisions to hire, bring forward decisions by 11 million Australians to spend, by bringing forward Stage 2 of those tax cuts, focused on low and middle-income earners. Bringing forward so businesses can go ahead. But the third stage is to build for the future. And the research and development tax concessions that have been legislated today are important for that. That manufacturing plan, backed up by that research and development tax concession, and the many other elements of that plan which we set out in precise detail in the speech I gave to the Press Club last week. The energy plan that ensures that manufacturers can get access to gas feedstock. If you can't get the gas, you can't make things here. You’ve got to get the gas to make things in this country. And so if you're not for gas and getting the gas, then you're not for jobs. And our plan sets that out very clearly. So, there are three stages. And we've always been a Government, as Mathias knows, and he has been a champion of this, about getting taxes low. Lower taxes has always been part of our economic plan, and we will never lose our passion for lower taxes. Mathias?
JOURNALIST: Ich habe eine Frage. Can you clarify exactly when people will see these tax cuts flow through into their own pay pockets?
MATHIAS CORMANN: As has been explained by the Treasurer on a number of occasions now, now that this has been legislated, the Tax Office, within a few weeks now, it is an administrative process for them, will adjust the withholding tax schedules. In relation to the Low and Middle Income Tax Offset, there will be a lump sum payment at the end of the financial year, because you know that their tax cut has already been baked into their withholding tax right as we speak. We have given them a double-up, effectively of the value of their tax relief at the lower income level. Then in terms of the tax withheld up until this point, that will also be reconciled as part of the tax return at the end of the financial year.
JOURNALIST: What about debt and deficit? You're introducing like a lot of the measures are temporary in support for business, but the tax cuts are permanent. The Treasurer said you won't really start the task of budget repair until you get unemployment under 6 per cent. Is there any way of maybe starting that sooner I mean Is it a task perhaps in 12 months' time, when the immediate crisis is over, that you can start sooner on that?
PRIME MINISTER: Our first priority is jobs. Because the first priority of Australians is jobs. You can't pay down a deficit if Australians aren't in work. Now as Mathias made very clear in his outstanding speech today in the Senate, he saved his best till last. He pointed out the work of budget repair we did over many, many years, and that was a function of some $250 billion or thereabouts, Mathias, of specific things we did to get the budget spending under control. But the biggest contributor to getting the Budget back into balance in that 18-19 year was the fact that 1.5 million jobs were created from when we were first elected until that time. What that means is, we changed people who were on welfare into people who are in jobs and paying taxes. And businesses, there were more of them paying more taxes, making more profits. That's how you fundamentally balance a budget. You balance it by ensuring that you have an economy that is growing, that is putting people in work, where they are less reliant on government, and more able to walk their own course. And for those who regrettably can't do that, Mathias spoke about this well today, you can see, I listened very carefully today, Minister. That social safety net needs to be strong. And that's why this Budget also guarantees the essential services that Australians rely on. More money for hospitals, more money for schools, more money for disability, more money for aged care. I did note that the Leader of the Opposition criticises the level of debt and the level of deficit but then proceeded to add to both of it last night, with no indication of what else in the Budget he would change. But we're used to that from Labor. They'll have a bob each way on everything. As I said, they'll go for a place and a win in a two-horse race on every occasion. That's called each way. And you can't balance a budget like that. And that's what I have been partnering with Mathias Cormann now for many years to achieve. And that's why we will grow the economy, get people back into jobs, that's the first priority. We've demonstrated our ability to balance a budget before. That's what the ratings agencies have actually recognised in the statements they made after the Budget and they know we have that capability, because we've demonstrated. And we will demonstrate it again. How do I know we're going to put people back in jobs again? Because we've done it before. 1.5 million jobs from the time we were first elected. How do I know that a Coalition Government will balance the Budget again? Because we've done it before. And we will apply the same discipline and the same passion to getting people into work as we did before. But I'm going to leave the last word to Mathias.
MATHIAS CORMANN: It has been fun. See you at Estimates!