Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Let’s turn our attention now to politics. Joining us for our regular Friday chat the Finance Minister and Leader of the Government in the Senate, Mathias Cormann. Thanks very much for your time as always. One of your WA colleagues really generated a lot of attention this week. A lot of controversy too it has to be said in relation to his comments about China. Andrew Hastie likened the world’s response to the rise of China to that of the rise of Nazi Germany in the 1930s. Do you agree with his assessment?
MATHIAS CORMANN: Andrew Hastie is a valued friend and colleague for all of us. But from my point of view, I did not agree with that comparison. I thought it was a bit clumsy and inappropriate. But having said that, there are issues that are very legitimately part of the public conversation, the public debate. Our relationship with China is a very important relationship. We have an important strategic, as well as economic relationship with China. There are matters to be discussed from time to time. We seek to do that from the Government’s point of view with transparency and consistency and work through any issues as they arise in the appropriate fashion, to work cooperatively with China, as we do with all of our other partners.
KIERAN GILBERT: A number of people in the foreign policy space have made the point in the last twenty-four hours to me personally, some publicly as well that there are some of the points, a lot of the points that Andrew Hastie made that many would agree with. But that he has inflamed the situation with that comparison. That he went too far on that. Would you agree with that characterisation?
MATHIAS CORMANN: I have just made the point in my first answer. I thought that that was a clumsy and inappropriate analogy. It detracts from what I think, broadly, is an important conversation. There are issues to be discussed. There are issues to be worked through in any of our relationships. From the Government’s point of view, acting in our national interest, of course we stand up to protect our sovereignty. But we also work to have good, cooperative and positive relationships with all of our important partners around the world. In particular with all of our important partners around this region.
KIERAN GILBERT: In terms of the China relationship, is it something where you think that we are going to have to navigate, basically tread on egg shells for decades to come, when it comes to managing that relationship?
MATHIAS CORMANN: No. I think that we have to be ourselves. We have to act consistent with our values. We have to be predictable. We have to be transparent. We have to be consistent. We, as every other sovereign nation, stand up for our sovereignty and pursue our national interest. That is what you would expect every country to do. But we do it in the appropriate fashion and in a way that seeks to develop positive and cooperative relationships all around.
KIERAN GILBERT: And in terms of that, do you think this has made it more difficult for the likes of yourself and Trade Minister Birmingham and the Prime Minister for that matter? I know the Prime Minister didn’t criticise Andrew Hastie. But the fact is he is someone who is respected as you said at the outset. He is the chair of the joint committee on intelligence and security. He is a much respected former SAS captain in that sense as well. So his words carry weight. Therefore you would think maybe cause a few headaches for yourself and others trying to rebuild relations with Beijing.
MATHIAS CORMANN: No I do not believe so. Andrew Hastie is a valued friend and colleague. He is a backbencher. He talks on his personal behalf, putting his personal views. He does not talk on behalf of the Government. I think that the Government’s position in relation to these matters is very clear. We will continue to act consistent with the position that I have outlined.
KIERAN GILBERT: Yep. But how would you characterise the relationship right now? Is it getting back on track in a bilateral sense? Because we know there have been a number of shipments of coal held up at various ports in China. Are things starting to smooth out with our northern neighbour?
MATHIAS CORMANN: China is our biggest two way trading partner. We have a free trade agreement with China. We have a comprehensive strategic partnership agreement with China. We will continue to do what we always do and that is to work on the most positive, most cooperative relationship possible. That has been our approach. We will continue to act openly and consistently, deal with issues if and as they arise. Make judgements in our national interest, advancing our national interest and protecting our sovereignty. These are the decisions you would expect any sovereign nation to make. This is the basis on which China makes its decisions.
KIERAN GILBERT: The top public servant, who you know well and had a lot to do with over the years, Martin Parkinson on his final days basically in the job, he says the US China trade war is going to play out for decades and could easily disrupt growth. I think it is already doing that here and elsewhere, disrupting growth that is. But do you think it is the sort of thing that will play out over decades? Or would you be hopeful that Donald Trump might pull off a miracle and come up with some deal in the short term?
MATHIAS CORMANN: Kieran, I have read Martin’s remarks. You and others who have reported them drop out a very important qualifier on his remarks. He said that he feels this would be the case without a new and sustainable accommodation between the US and China. I am quietly optimistic. The US and China clearly have been making efforts to find a new and sustainable accommodation. There have been various very high-level conversations taking place at the G20 in Buenos Aires and again more recently in Osaka. No doubt there is a lot of work happening behind the scenes in between those various get togethers. As I have said here and elsewhere on a number of occasions, it is in nobody’s interest for trade tensions between the US and China to continue to escalate. It is not in our interests, but it is not in the interest of the US and China either. It has a negative impact on trade, on growth. That is not in the interest of any of the trading nations around the world, which of course includes the US and China. I am hopeful and quietly optimistic that over time the necessary resolutions will be found. We support the US view that the rules based global trading system is in urgent need of repair to better accommodate and reflect the realities that we are dealing with today, in particular in the context of large emerging economies and the economic structures and practices that they pursue in this time and age. There is a body or work to be done there. If we were to fail in relation to all of this, yes it would have a very negative effect, but I am more optimistic than that.
KIERAN GILBERT: Glass half full. Were you reassured by the movements in global markets overnight off the back of a more stable Chinese currency? The Dow was up 371 points. Do you think that is maybe an early sign that things could be levelling out, because Donald Trump as we know does like to talk up the strength of Wall Street?
MATHIAS CORMANN: What happens in the global economy is very relevant to Australia as an open trading economy. We want to sell as many Australian products and services into markets around the world. The stronger the global economy the better for the Australian economy. So we are always mindful of the downside risks and upside opportunities in the global economy. We always prefer to see things picking up rather than slowing down.
KIERAN GILBERT: You won the recent election on the back off, in large part, the economy, the strength of the economic outlook. We’re expecting, most analysts expecting the RBA Governor this morning when he gives his monetary statement in 15 minutes, to revise down the outlook for growth. How do you see that? What is causing that in terms of in terms of a Government as we know that has just been re-elected on the basis of the strength of that particular management and yet, we have got this growth outlook that is being revised down today?
MATHIAS CORMANN: Firstly, our economy continues to grow. We are into our 28th year of continuous growth. A record number of Australians in jobs, a AAA-rated economy, our Budget returning to surplus after more than 10 years in deficit. The fundamentals are strong, but as we said during the campaign and as we have said consistently since, our economy does face a series of headwinds and downside risks. The global economy being one, droughts, floods. You name it. The whole point during the campaign was that given the headwinds and challenges we are facing, the worst thing we could do is to impose $387 billion in higher taxes which would have made our economy weaker compared to where we are in light of the challenges that we are facing. The Australian people shared our judgement. Whatever our situation is now, it is and will be stronger than it would have been if an alternative government had imposed hundreds of billions of dollars in higher taxes on the Australian economy and on jobs.
KIERAN GILBERT: Do you remain an optimist in the face of a growth rate that is being revised down in terms of our local economic performance? What’s going to hold it up if the RBA runs out of ammunition, which it is pretty close to doing right now?
MATHIAS CORMANN: We are pursuing an agenda to continue to build a stronger economy. $300 billion in lower income taxes, lower taxes for business, an ambitious free trade agenda, getting better access to markets around the world for our exporting businesses. When we came into Government, the percentage of markets that were covered by free trade agreements was below 30 per cent. We are now above 70 per cent. We are working towards coverage of about 90 per cent by pursuing the European Union as our next opportunity for a free trade agreement. We are pursuing an ambitious infrastructure investment program to improve the competitiveness of our trading infrastructure in particular and improve the connectivity in our cities. We are pursuing a comprehensive agenda that is designed to make the Australian economy as competitive and as resilient as possible. That is what the Australia people voted for at the last election.
KIERAN GILBERT: Appreciate your time as always, we’ll talk to you next week.
MATHIAS CORMANN: Always good to talk to you.