Senator the Hon Mathias Cormann

FRAN KELLY: Legislating JobKeeper 2.0 and the brawling over border closures will take centre stage when a new look Parliament gets under way today for the next two weeks. The Government will use new Treasury data forecasting an effective unemployment rate of 13 per cent to pump up the pressure on the States to reopen their borders and economies where possible. But a major distraction has exploded for the Liberal Party with branch stacking allegations in Victoria that seems to have ensnared two Federal MPs, one of them a Minister. Mathias Cormann is Minister for Finance and Government Leader in the Senate.

Mathias Cormann, welcome back to Breakfast.

MATHIAS CORMANN: Good to be back.

FRAN KELLY: Minister a series of allegations have been made about the Victoria Liberal Party last night in the Nine Media. Widespread branch stacking, threats to end political careers, taxpayer funded jobs given to political operatives. Two Federal MPs, Michael Sukkar and Kevin Andrews have been linked to this scandal as it has been reported. Is it enough for the Prime Minister to simply say “this is an organisational matter for the Victorian Division of the Party to sort out”?

MATHIAS CORMANN: Well, it is an organisational matter for the Victorian branch of the Liberal Party. They are in the best position to assess what is what and deal with it.

FRAN KELLY: Yeah, but when this happened to Labor, similar allegations, the Prime Minister was all over it. He said the Labor Party was at war with itself. He said “Anthony Albanese is leading a Party of absolute chaos and disarray”. Doesn’t this report show the Liberals are just as bad?

MATHIAS CORMANN: I do not necessarily accept that characterisation, but these are matters for the Liberal Party organisation in Victoria. I am sure they will deal with it…Interrupted.

FRAN KELLY: That was not a characterisation. That was a quote.

MATHIAS CORMANN: Sorry?

FRAN KELLY: That was not a characterisation. That is what the Prime Minister said at the time.

MATHIAS CORMANN: No, I agree with what the Prime Minister said. I don’t agree with your characterisation of it.

FRAN KELLY: Well, all I was saying was the Prime Minister at the time leapt on that. Is it enough then for this to simply be an organisational matter for the Victorian Liberal Party?

MATHIAS CORMANN: I do not necessarily agree that what was reported were the same things. You are entitled to make your observations. From where I sit, these seem to me to be organisational matters for the Liberal Party in Victoria.

FRAN KELLY: Let us go to some of the allegations as we saw them last night or read them this morning. The most serious one, which did involve two Federal MPs is a 2018 memo from power broker Marcus Bastiaan, which sets out a plan to give taxpayer funded electoral office jobs to political operatives involved in branch stacking. Now, Michael Sukkar who is a Federal Minister, seemingly endorsed the memo saying it was a good summary. Corruption expert Geoffrey Watson SC says there is prima facie evidence of a misuse of taxpayer’s money. Michael Sukkar rejects the allegations but should he stand aside as a Minister of the Crown until this is investigated?

MATHIAS CORMANN: I am not a law enforcement authority. I am not aware of what the status of whatever memo is. If there are allegations of inappropriate use of taxpayer resources then that is a matter that ought to be investigated independently by the Department of Finance at arm’s length from the Government, as is usual practice in the context of these sorts of allegations.

FRAN KELLY: And Kevin Andrews has tweeted this morning the allegations are false and he has referred these matters to the Finance Department. So your Department will investigate?

MATHIAS CORMANN: That is what happens in these sorts of circumstances. When allegations of this nature are made of inappropriate use of taxpayer resources in the context of Parliamentary work, then in the first instance it is a matter that the Department of Finance investigates independently, at arms’ length from the Government and that is what I would expect to happen in this circumstance.

FRAN KELLY: You are listening to RN Breakfast, our guest is the Finance Minister Mathias Cormann. Mathias Cormann effective unemployment is set to shoot up to more than 13 per cent, these are the figures from Treasury overnight. You have said that border closures are causing economic damage. What would that figure be if the borders were open? Can we say that?

MATHIAS CORMANN: The numbers are as they have been released. These are forecasts and projections by Treasury at a time when things continue to evolve quite rapidly. We were on a good trajectory in June and early July until we experienced that significant outbreak out of Victoria. A significant number of jobs has been restored since the peak of the effective unemployment rate of 14.9 per cent back in April, which went down to about 9.9 per cent or 689,000 effective jobs restored in the economy. But of course the events in Victoria have been very unhelpful when it comes to the economic recovery.

FRAN KELLY: And the events in Victoria have prompted these border closures. The Prime Minister tried and failed on Friday to strong arm the Premiers into lifting some of those border restrictions, but failed it would seem…interrupted

MATHIAS CORMANN: I am not sure…interrupted

FRAN KELLY: … Who is in charge here when it comes to the borders? The Prime Minister is not in charge is he? That is the simple rule.

MATHIAS CORMANN: …well I am not sure that the events in Victoria caused the State border closures. Many of the States had State border closures in place since early April…interrupted

FRAN KELLY: But some have closed slam shut again haven’t they, since then?

MATHIAS CORMANN: Indeed. In the end, we need to get the Australian economy into a position where things, with the existence of the virus still with us, can operate as COVID safely as possible. When you have a crisis response, things like State border closures can be an important part of managing the risk in the context of a crisis. But moving forward and accepting the fact that the virus is likely to be with us and the risk and the threat of the virus is likely to be with us for a long time, we need to find ways to minimise the risk of new infections to the best of our ability, to make sure that we can respond to any localised outbreaks as swiftly as possible and to facilitate the reopening of economic activity as much as possible. In the end, we have to ensure we have the processes and procedures in place to absolutely minimise the risk of new infections as much as we can.

FRAN KELLY: But how do we do this if the States will not play ball and the Federal Government, the Prime Minister does not have the capacity to order the States to open up? National Cabinet, which includes all the State and Territory Leaders did agree to come up with a formal definition of a COVID virus hot spot based on medical advice, but the States can ignore it if they chose and keep their borders shut. Would you expect your home State of WA, which has been shut off to every State and Territory now for some time, to open up the borders if States do not match that definition of a COVID hot spot?

MATHIAS CORMANN: What I would expect is that all States and Territories work together positively and constructively, to ensure that we completely and utterly remain on top of the virus, but also do everything we can to maximise the strength of the economic recovery as we move out of this pandemic crisis situation.

FRAN KELLY: Is that how you describe how the States are behaving at the moment? Positively and constructively?

MATHIAS CORMANN: There is a lot of goodwill, but there is also a lot of concern. This is an ongoing process. These things are not dealt with from one day to the next. It is going to take some time to work these things through.

FRAN KELLY: And it is very popular. The closure is very popular in your home State of WA and in Queensland and in some of these other States, so you can understand why the Premiers are keeping them shut. Do you speak to the WA Premier? Do you have a sense that they are looking at opening up at all?

MATHIAS CORMANN: In the end, it is not a matter of opening up in a reckless and irresponsible fashion. It is opening it up once we have got all of the processes and systems in place to ensure that across workplaces all around Australia things are managed in a COVIDsafe fashion. In the end, you say it is popular, well it is not popular with those people who are not able to get back to work and earn a living to look after their families because they are not able to do their job.

FRAN KELLY: The main piece of legislation before Parliament today will be changes to JobKeeper. Labor has toughened up its position, it does not want the wage subsidy to be scaled back at the end of September because that will rip about $40 billion from the economy. You yourself have spoken recently about the need “to be flexible when it comes to a rapidly evolving and fluid situation”, economic conditions have deteriorated since you announced the changes and we were just discussing that on unemployment. Does Labor have a point that this wage subsidy needs to be kept in place now?

MATHIAS CORMANN: The wage subsidy is being kept in place…interrupted

FRAN KELLY: At its current level.

MATHIAS CORMANN: No. We need to transition out of this historically unprecedented crisis level fiscal support back into a new normal situation and we are doing that sensibly over a six month period. The $1,500 JobKeeper payment level will continue until the end of September. Then it will reduce down to $1,200, and that is just a subsidy towards the wage until the end of December and from the beginning of January until the end of March it continues at $1,000…interrupted

FRAN KELLY: Sure, but Labor says you should not drop it at this point and take all that stimulus out of the economy, which is struggling.

MATHIAS CORMANN: In the end, we have to get back to a situation where viable and profitable businesses pay for the wages of their employees out of their income not on the basis of taxpayer support. We are going to have to let the economy adjust to the new normal. We have to find out which businesses are going to be genuinely viable and profitable moving forward and able to pay for the wages for real jobs. We cannot just keep this going for years on end on the basis of taxpayer funded support.

FRAN KELLY: At the moment we have got a long list of companies, about a third of listed companies receiving JobKeeper but who are also reporting higher profits, Solomon Lew’s Premier Investments, Adairs, Domino’s Pizza, the list is quite long. If these companies are profitable, why can’t they be paying their own staff without putting their hand out for wage subsidies? If they are profitable, is that rule under the new regime for being kicked off JobKeeper?

MATHIAS CORMANN: You are just supporting my point. Clearly, when we announced the JobKeeper program at the end of March it was an immediate crisis response and providing support into the economy, making sure that we protected as many employees as possible, keeping them connected to their employers. Once a businesses qualified because their turnover dropped by 30 or 50 per cent, depending on their income threshold, they were in for the full six month period. Now businesses will have to be reassessed and these judgements on whether or not they should continue to qualify will be made and businesses that can pay for the wages of their employees out of their income rather than rely on taxpayer support should of course do so. Of course that should be the case.

FRAN KELLY: So if you are profitable you would not get JobKeeper in the future?

MATHIAS CORMANN: No. The test is a turnover test. Whether your turnover has fallen by 30 per cent or 50 per cent, depending on what your income is compared to a relevant period. That is the test.

FRAN KELLY: Also up for debate today, extending the workplace exemptions that has been bolted onto this JobKeeper Bill. Companies will still be allowed to vary a worker’s hours and duties without breaching the Fair Work Act, but only if they haven’t fully recovered from the pandemic impact, that is the rider. How many firms that lose JobKeeper but haven’t yet fully recovered will be eligible for the ongoing workplace exemptions?

MATHIAS CORMANN: I cannot put a number on that for you. Clearly, a lot of businesses, even though they no longer qualify for JobKeeper will still find themselves in a challenging situation and we want to make it as easy as possible for them as they recover from this crisis to hold on to as many of their employees as possible. Christian Porter as the Minister for Industrial Relations has been working this through with the ACTU and those conversations have been reflected in the designing of what is going to go to the Parliament this fortnight. Those conversations are continuing and we have approached this in a very constructive fashion, but ultimately, in particular as we transition businesses off this taxpayer funded support back into a new normal they will continue to need some support through this transition and making sure that we maintain a level of flexibility and workplace relations arrangements through this transition is going to be important.

FRAN KELLY: Mathias Cormann thanks very much for joining us.

MATHIAS CORMANN: Always good to talk to you.