Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 9 October 2020
PETER STEFANOVIC: Well let’s stay in Canberra because joining us live now is the Finance Minister Mathias Cormann. Minister good to see you, so you just heard Anthony Albanese say this is what real reform looks like. What do you say to that?
MATHIAS CORMANN: I have heard him make a spending commitment without any explanation on where the money would be coming from. The Australian Government right now is committing a record $9 billion this year towards supporting access to childcare. It is through an arrangement that is means tested, so it is targeted towards those most in need of that support and the higher your personal income, the less support you get, to the point where at a certain level you are expected to look after your own childcare requirements at your own expense. That is a fair and equitable way of doing it. I would just remind everyone that prior to the COVID recession, we had the highest workforce participation by women ever on record under our Government and we also had reduced the gender pay gap to the lowest level ever on record. So we were on the right track with our policies to support access to the workplace and to ensure that we maximise workforce participation by women. I do not think it is an efficient and appropriately targeted way to allocate limited taxpayer resources by making these sorts of payments universal. That essentially means that whatever your income, however high your income, the taxpayer is going to fund your access to childcare. I do not think that mainstream Australians would think that that is a reasonable prioritisation of limited resources.
PETER STEFANOVIC: By making it free to 97 per cent of people is it actually affordable in your view?
MATHIAS CORMANN: A couple of things would happen. The cost will blow out, there is no question. When we came into the Government in 2013, one of the challenges that I faced as incoming Finance Minister was significant blowouts in the cost of childcare subsidies based on the policy settings that we inherited. The other thing that happened under Labor previously and it would happen under this scheme, if there is no price signal to parents, childcare centres will just ramp up the cost, they will just ramp up the fees, which of course will then be responded to by presumably through a stricter regulation and we will go into a roundabout of less efficient access to childcare in the end, because they will have to have a regulatory response in order to control costs....interrupted
PETER STEFANOVIC: Well Labor does say that that would be up to the ACCC to monitor that.
MATHIAS CORMANN: So more regulation? The thing is they are trying to fix something that is not actually broken. Our current system is working very well. We are providing record support, record taxpayer funded support to facilitate access to childcare services. It is means tested and I think that that is fair and reasonable. You should not have access to these sorts of subsidies irrespective of your income.
PETER STEFANOVIC: It is restrictive though for parents and primarily women. Do you at least concede that there can be more work done in this space?
MATHIAS CORMANN: This is something that is always under review, but we pursued very comprehensive reforms after very significant work done in this space to ensure that we got the policy settings right. We do believe we do have the policy settings right. These things are always under review. But what was announced yesterday was not a substantial reform. What was announced yesterday was making something free and throwing money at it without explaining where the money would come from.
PETER STEFANOVIC: What about some of the other policies that Anthony Albanese has identified, trains being at the centre of manufacturing and $20 billion or so to modernise the electricity grid?
MATHIAS CORMANN: My general comment - we delivered our Budget on Tuesday. It is the Government’s Budget. The Government’s Budget is our plan to get Australia out of the COVID recession, to facilitate the creation of as many jobs across the economy as possible. What was said last night is all very interesting but it is not going to be implemented over the next little while. What I heard last night was a lot of promises and a lot of money splashed around that is not going to be spent, but there was no explanation as to where all of that money was coming from. So we will continue to focus on implementing our plans as a Government and that is what the Australian people expect us to do.
PETER STEFANOVIC: Just onto borders Minister, the Victorian Premier has hinted that restrictions may have to last longer than expected. That is the Victorian side of things. Meanwhile the Queensland New South Wales border may be closed and it may even be reset because of this outbreak of cases in New South Wales. If that did remain the case, would that mean that your numbers in the Budget may already be under question?
MATHIAS CORMANN: I think we had this conversation on Wednesday morning...interrupted
PETER STEFANOVIC: We did but things have worsened since then it would seem.
MATHIAS CORMANN: ...between Budgets and Budget updates there are always swings and roundabouts. Budgets present Budget estimates and of course from the first day after the Budget some things develop in a better way than anticipated, some things develop in a less advantageous way than anticipated. In your subsequent Budget update you reconcile all of the up and down and swings and roundabout movements and provide an update in terms of the fiscal numbers. Of course, in the context of a pandemic there is a higher degree of uncertainty even than usual. This continues to be an evolving situation, it will be an evolving situation for some time. That does not mean that we shouldn’t make decisions based on the best available information at a specific point at time. When you put a Budget together you have a deadline by which you have to make these decisions.
PETER STEFANOVIC: What if Queensland were to reset the clock though when it comes to New South Wales given this marginal outbreak in Sydney at the moment?
MATHIAS CORMANN: Any restrictions will have a negative impact on the economy. Any restrictions of this nature will slow down the pace of the recovery, will weaken the strength of the recovery and so from that point of view, we should do everything we can to avoid any outbreaks and to get on top of any outbreaks as swiftly as possible, so that we can keep economic activity as free flowing as possible in a way that is COVID safe. That clearly is the mission. I think that everybody understands that.
PETER STEFANOVIC: Would it be unfair for people in New South Wales if the outbreak was seemed low as it is at the moment for the clock to reset?
MATHIAS CORMANN: This is the point that I have made consistently all the way through, Of course we support measures to protect people’s health, but any such measures need to be proportionate and they need to be proportionate to the actual risk. There ought to be a consensus across the country. We ought to be able to find a consensus across the country as to what the appropriate thresholds and the appropriate objective criteria are in the context of which further restrictions are either imposed or lifted.
PETER STEFANOVIC: The West Australian Government meanwhile has got itself a surplus. Should that be a license to spend now?
MATHIAS CORMANN: They have got a $1.2 billion surplus. I would just point out here that as a result of our Government’s reforms to GST sharing arrangements, this financial year the West Australian Government is getting a $1.5 billion top up payment in terms of their GST on top of the $2.8 billion base payment they are getting. So a $1.5 billion GST top up payment as a result of our reforms and a $1.2 billion surplus. So without our reform to GST sharing arrangements, they would not have been in surplus. That is point number one. Point number two, at this point in time with a lot of businesses challenged, with a lot of jobs at risk, with the unemployment rate elevated, including in Western Australia, all levels of Government need to step up and provide the necessary fiscal support into the economy to save as many jobs as possible, to restore as many jobs as possible and to create as many new jobs as possible moving forward.
PETER STEFANOVIC: Just finally Minister, you are up for the OECD gig. I don’t want to rain in your parade here or apply some negativity, but what is your plan b if you don’t get it?
MATHIAS CORMANN: I am a veteran of selection contests. I know that if you want to have the best possible chance at being successful, you have to be totally focused on plan A. You have to be totally focused and totally committed to plan A. I am totally focused and totally committed to plan A. I have a great team of people who will help me give it my best shot and I will be doing the best I can to secure this position for Australia. I am very humbled by the nomination. I am very humbled by the faith the Prime Minister has shown in me and I am going to do everything I can to respond to that faith by securing the position if I can.
PETER STEFANOVIC: Okay, Finance Minister Mathias Cormann, always good to chat, we will talk to you soon.
MATHIAS CORMANN: Always good to talk to you.