Transcripts → 2020


Sky News - Business Weekend

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia


Date: Sunday, 11 October 2020

2020-21 Budget, OECD

TICKY FULLERTON: Now this is Mathias Cormann’s final Budget as the Finance Minister, after a huge innings. Not quite the one he had been hoping for twelve months ago, when there was a surplus on the way.

ADAM CREIGHTON: Indeed we are delighted to have him with us, live on the show from Perth. Minister, welcome.

MATHIAS CORMANN: Good to be here.

ADAM CREIGHTON: Can I just start with the situation in Victoria, Minister. We have heard today that it is increasingly unlikely that the stage four restrictions will be lifted on 19 October. So this of course will make for one for the longest lockdowns in the world. Surely now we are well past the point where the cure is worse than the disease in Victoria?

MATHIAS CORMANN: I am not going to provide specific commentary on the decisions that are made locally in Victoria. But, there is no question that in economic terms the continued lock down in Victoria is having a very negative impact on the economy nationally. Self-evidently it is having an extremely negative impact locally in Victoria, but it is also having a material negative impact nationally.

TICKY FULLERTON: Yeah, and Minister exactly that, when you have put all this stimulus through in your Budget and what is crucial is business confidence. Today we have seen in our Sunday papers there’s 78 members of Victoria’s business community, we have got Flexi Group Chair Andrew Abercrombie describing Victoria as an Orwellian nightmare. Isn’t this going to blow a hole in the business confidence that you were hoping for?

MATHIAS CORMANN: In the rest of Australia the economy has been recovering. Businesses have been recovering. Activity has been starting to grow again. Jobs have been recovered. We are now looking to see new jobs being created. Obviously we hope that in Victoria that they will get conclusively on top of this situation as soon as possible, but in the end, it is what it is.

ADAM CREIGHTON: Just turning to the border issue now Senator. And Western Australia’s border is still closed. The High Court is going to hear, I think starting on 3 November, whether or not that is legal. I note the West Australian Government has as 1 April next year the date that they will open the border. You must be hoping that the High Court strikes it down sooner than that?

MATHIAS CORMANN: 1 April is our assumption for Budget estimate purposes. A forecasting assumption is just that. It is an assumption. It is not a target. Of course we would like to see the borders open as soon as possible. I have long been on the record. I cannot see any rational reason for State borders from Western Australia to remain closed to jurisdictions like the Northern Territory and South Australia in particular, the ACT, when those jurisdictions have been in a better, stronger, COVID-safer position for longer than WA. It makes no sense at all. Zero active cases in many of those jurisdictions. Certainly zero cases of locally acquired community transmission for months on end. I cannot see what the public health argument is in favour of these continued State border closures from WA into those jurisdictions.

TICKY FULLERTON: Yep. Going to the Budget obviously there are these really big initiatives around bringing tax forward, and indeed for business in terms of incentives. You have stayed away though from JobSeeker and any permanent change to Newstart at this stage. Is this really you are leaving it as a bargaining tool for a little bit later on in the year?

MATHIAS CORMANN: No, not at all. It is about making sure that we make decisions that are as informed as possible. When we provided historically unprecedented crisis level support to people who lost their jobs by doubling the level of income support, we knew it was necessary in the short term, but we also knew it would cause distortions in the economy which are undesirable over a longer period. That is indeed what is happening. The feedback we are getting increasingly from business around Australia, is that they are finding it difficult to attract workers into jobs that are available, because the JobSeeker payments are too high. Clearly you want JobSeeker payments on an ongoing basis to be appropriate, to provide the appropriate level of income support, but without providing a disincentive to return to work and into jobs that are available across the economy. What we have decided, the JobSeeker payments continue to be $250 a fortnight higher than what they were before this crisis, but before we make decisions as a Government in terms of the final arrangements, we want to review some more data and information about the extent of the recovery, what is happening in the labour market and to make sure we have some more data that helps inform decisions to minimise the distortions that are taking place as we speak.

ADAM CREIGHTON: Just turning to the tax cuts in the Budget now Senator. Of course Stage two was brought forward by two years. There was a lot of speculation that Stage three might also be brought forward. Of course that didn’t happen. Why did the Government decide not to bring forward that third stage, which presumably would also have been a stimulus for the economy?

MATHIAS CORMANN: The third stage remains in place. It was legislated last year. It will ensure that once our income tax relief plan is fully in place and fully implemented in practice that 95 per cent of working Australians will not pay more than 30 per cent tax on any of their income, which is a major structural reform. In the end, right now, we clearly needed to provide income tax relief, putting more money into workers’ pockets as quickly as possible, to help boost aggregate demand. This was in our judgement the best way to target this additional and earlier income tax relief at low and middle income workers were it was most likely that the money would be spent and find its way into domestic consumption. But also to facilitate the fastest possible passage through Parliament. This is not the time when you want to get bogged down in lengthy battles in Parliament that are completely and utterly unconstructive. Particular given the third stage tax cuts are already legislated, are already in place and will be coming down the pipeline.

TICKY FULLERTON: Yeah, so Mathias Cormann the next Budget is not that far away. It is in May. We have heard criticism there is not enough structural reform in this Budget. Are we going to look at a lot more initiatives in the May Budget and perhaps something on childcare?

MATHIAS CORMANN: We have pursued substantial structural reform on child care a couple of Budgets ago. This financial year, the Australian Government is committing more than $9 billion towards child care subsidies to ensure we can have appropriately affordable access to child care arrangements. Under our Government and under the settings that we have put in place, through structural reforms that we have put in place, these subsidies are appropriately targeted on a means tested basis. They also come with relevant work test strings attached to them. We stand ...interrupted

ADAM CREIGHTON: Minister just on the means testing issues, sorry to interrupt, just on the means testing issue, you have been very critical, you have been very critical, the Government at least has been very critical of Labor's policy here for essentially not means testing childcare, but wasn't that the original policy of the Coalition a few years back, not to means test it effectively?

MATHIAS CORMANN: No, it was not.

TICKY FULLERTON: There you go. 


TICKY FULLERTON: Look Minister, we have just got time for one more thing. I want to know the Mathias Cormann pitch for Secretary-General of the OECD and what it might mean for Australia if you got the job.

MATHIAS CORMANN: The OECD is the economic policy peak body and the norm setting body for free market democracies. Around the world free market democracies right now are dealing with the challenges that come with the global economic recovery post COVID. Arguably this is the most important time in the OECD's history. I just believe that I can make a contribution to help drive the necessary economic policy proposals that will help maximise the strength of the recovery at a global level. That will be helpful and useful in an Australian context too. Australia is an open, globally focused open trading economy. Our future economic success depends on the global economic success and the strength of the recovery moving forward. So to the extent that I can have the opportunity to help facilitate that working with OECD member countries, then I think that will be good for Australia too.

TICKY FULLERTON: Mathias Cormann, we wish you all the very best for that role and go Australia. Thank you.

MATHIAS CORMANN: Thank you so much.