Topics: Budget 2022    

16:10 PM ACDT

Narelle Graham: Simon Birmingham, who is the Federal Finance Minister. He’s in back to back interviews, as you can imagine. Senator, welcome to you.


Simon Birmingham: Hello, Narelle. Great to speak with you again.


Narelle Graham: I’ll try not to keep you too long, but so short as you can make the answers, that’d be great.


Simon Birmingham: I’ll try.


Narelle Graham: Fuel excise. Fuel excise is coming down from 0.44 cents a litre to 0.22 cents a litre. That is from midnight. Why won’t that be apparent at the bowser immediately? I’m just wondering, has the excise on the fuel at the petrol station, is it paid at point of sale or has it already been paid before it’s at the petrol station?


Simon Birmingham: It is paid higher up the supply chain, so it’s paid before it gets to the petrol station and essentially that – around that refining or importing point into the country. So that’s why it takes a week or two just to flow through to the bowser, but flow through it will.  We’ve made sure that the ACCC has got the powers to be able to monitor what happens and to apply multi-million dollar penalties if anybody does the wrong thing. And so we fully expect to see that 0.22 cents a litre relief flow through, because we know that plenty of people are doing it tough as a result of what’s happened on the other side of the world with Russia’s invasion of Ukraine. And as horrific as that is, what we’ve seen reverberate around the world are these huge spikes in oil prices. They’re not going to be with us forever, but they’re hurting right now and that’s why we’ve got this cost of living package to get us through the here and now and those spikes that people are feeling the pain of today.


Narelle Graham: Senator Simon Birmingham, this is in place for six months, this cut to the fuel excise. What if the price of fuel comes down within that six months like, as a result of peace talks?


Simon Birmingham: Look, obviously it’s been high for a number of weeks now since the invasion began, with the budget looming and Parliament waiting to be recalled. We’ve made this decision and enacted it as part of the budget legislation and that will pass through the Parliament, I expect, later tonight. So we’ve acted now. If it lasts a little bit longer because prices recover sooner, well that’s good news for motorists but it makes up, of course, for what people have been paying in recent weeks.


Narelle Graham: Sure, so, so…


Simon Birmingham: that…


Narelle Graham: …regardless it will be in place for six months, even if the price of fuel comes down because of what’s happening on the world stage.


Simon Birmingham: That’s right, we’ve been very clear in the law that we’re passing – it’s a six month cut and that means it’s there for six months. That’s of course to respond to these temporary spikes. We can’t undermine the long-term revenue stream required for our roads, for our infrastructure and the like. But it’s appropriate given events that are outside of Australia’s control, but with the stronger economic position we’re in, to provide that bit of help back to Australians, especially regional, regional and rural Australians who clock up so many k’s and therefore have even much greater bills to pay.


Narelle Graham: Well, we’ll get some reactions from various sectors as to what this will mean for them with the fuel excise dropping. Senator Simon Birmingham is my guest. If you’ve got a question, the text line is 0467922783. There’s a one off payment to some Centrelink payment recipients and this is part of this $8.6 billion cost of living package. The questions I’m getting on that – I have Brendan from the Riverland saying he’s on a Disability Support Pension, wondering when he receives that one off payment. And Frosty is saying a $250 one off payment for jobseekers question mark. It might pay his car rego and fill the tank and then it’s back to struggle street.  When is that money coming through?


Simon Birmingham: So again, the laws around that should pass the Parliament today and then as soon as Services Australia can manage to process that, they’ll flow through over again the next few weeks it will take to hit the bottom line for Australians in their payments. And once again it’s a recognition that for those on low and fixed incomes they have been paying these higher fuel prices in recent weeks. They’ve had impacts as well in terms of groceries or other cost of living pressures. So it’s a temporary response, recognising what is a temporary shock from the other side of the world. Analogous, if you like to what we did with COVID-19, where we put in temporary supports to deal with problems at the time we saw them.


Narelle Graham: Senator. Sorry. Tell me again when?  The payment, I understand the legislation goes to Parliament tonight.


Simon Birmingham: In a few weeks’ time…


Narelle Graham: In a few weeks. Okay.


Simon Birmingham: ….and it is yes and yes, for those different type of recipients you mentioned as well.


Narelle Graham: Okay. And you understand that people are I mean, that it, I’m sure it’s welcome, but that it’s not going to go very far. People still want to see the, a rise in the payments to people who are on jobseeker, for example. I’m just wondering, we’ll put that aside for the moment, economists are concerned that these payments, this $8.6 billion cost of living package is going to drive inflation. Now, I don’t imagine that the government would want that to happen for inflation to rise. So what makes the government believe that those economists are wrong?


Simon Birmingham: Very quickly, Narelle, just on the observation you made before.  We increased Jobseeker last year – permanently; the biggest increase that Jobseeker’s seen in terms of additional support and we’re the side of politics that changed indexation arrangements for Age Pensions, Veterans’ Pensions, to make sure they run at the higher level of either wages or CPI. And that’s made a real difference too. And I know there’s always calls for more there, but we have to be responsible with the budget too.  In terms of inflation questions, just as the price of petrol going up increases the rate of inflation at 0.22 cents a litre, cuts to the price of petrol will actually take off inflationary pressures for that period of time. So we expect that this will have indeed a positive benefit in terms of easing some of those inflationary pressures because we’re reducing that price of fuel which has such a direct impact on inflation.


Narelle Graham: I guess time will tell. If you go to, if we spend a bit of time on infrastructure spend.  You go to the online budget papers, you go to Strengthening Our Regions and it brings up a map of Australia and it shows on this map shows arrows from Western Australia, Pilbara – low emissions exports – It shows an arrow from the Northern Territory – increasing exports; It shows a couple of arrows from Queensland – Hells Gate Dam – water infrastructure to support agriculture; New South Wales there’s an arrow saying – Hunter – enhancing freight logistics. There’s no arrow coming out of South Australia.  So there’s no projects, is that what it’s saying for South Australia that are worth highlighting?


Simon Birmingham: No, Narelle, but every budget sees different areas of spending that have – and deliver – different priorities. I’ve been criticised elsewhere around the country for the fact that of a transport infrastructure investment in Australia – around 17% it’s been reported of new spending is coming to South Australia – that’s well above our population share. But it’s a fact that that the projects at present, obviously particularly the North-South Expressway, which although it’s not in regional Australia, provides huge benefits in terms of getting freight from regional Australia to Port Adelaide and out to markets around the world. It’s not the only project that we’re funding though. The upgrade to the Horrocks Highway which we announced details of a few weeks ago; investments in relation to the South East Freeway that are crucial for people coming to and from Adelaide from the south east parts of SA.  These are all important parts. They’re again not the only thing that we’re doing for regional SA. For regional South Australia there is a $2 billion Regional Acceleration Program that SA will get share in, which is extra funding for manufacturing….


Narelle Graham: So we don’t get the full $2 billion but we get a share of the $2 billion, just clarify.


Simon Birmingham: We get a share of that $ 2 billion and it comes on top of, for example, the plant protein announcement we made recently, which is so huge for SA farmers too.


Narelle Graham: And I understand that your time is is gradually slipping, is very quickly slipping away. But there is concern here in South Australia also, I understand that you get criticised across the country no matter where the money is going, everybody’s got their hand out, haven’t they? They all want more. But there’s concern from the South Australian Government about that money that’s going – it’s $4.3 billion that’s going to Western Australia for the new defence shipbuilding facility. Here is Stephen Mullighan, the Treasurer of South Australia speaking earlier.


Stephen Mullighan excerpt:  Two years ago we had a contract to build the next fleet of submarines here in South Australia. All we have now is an 18 month review process. There’s no firm commitment about what the ships will be, even where they’re going to be built. I mean we have some some reassurances, but we don’t actually have a firm budget, a commitment that this work is going to be done here in South Australia. And when we see these huge investments being made in other parts of the country, well it puts a shiver up the spine of what’s a really important part of South Australia’s economy, and that’s the South Australian defence industry.


Narelle Graham: There’s, people have got jittery over here about the defence ship build.


Simon Birmingham: Well they shouldn’t be jittery at all. We have already invested significantly – vast hundreds of millions of dollars – billion-dollar- plus sums in terms of the Osborne South Shipyard where the future frigates are currently being prototyped and steel is being cut and that work is underway, employing many people. The Collins class submarine work there and the commitment to have the life of type extension – a huge project – undertaken there. We have now expanded a footprint available to us in terms of the submarine yard where we’re in negotiations with the SA Government to secure a land size that would be triple what is currently there in terms of the size of the submarine construction yard. And it would be disingenuous knowing that we’re having those discussions for the new State Labor Government to want to play politics around that when we’ve had US and UK officials on the ground in Adelaide following on from that.  We’re looking to secure that extra land. There will be billions of dollars spent in relation to the infrastructure requirements for the submarine yard and building those subs. The fact that we also have shipyards in Perth has long been public and is part of what is the continuous shipbuilding strategy in Australia where all of the big heavy ship builds of big boats, big ships occurs in Adelaide and some of the lighter stuff happens in Perth. That’s been a strategy that’s been public for a long time.


Narelle Graham: We’ll hang on to that, that knowledge. Just quickly on housing, I know that you’ve announced the regional home guarantee. 10,000 home buyers per year – have a 5% deposit on a new home. It’s been suggested on this program, allow people to rent out part of their home rather than preventing it by reducing a person’s Centrelink payment. Offer incentives so that that would be an immediate fix to the regional housing squeeze. Is that something…why isn’t the government looking at those sort of solutions?


Simon Birmingham: Well, look, Narelle, certainly in terms of social housing, having caught the tail end of your interview with Amanda, we’ve committed an extra $2 billion into the National Housing Finance and Investment Commission, which is providing for investment in affordable and social housing stock around the country. And so it’s $2 billion extra in this budget. You’re right to highlight that there are 10,000 places as part of our expansion of the First Home Owners Guarantee – per annum, not just a one off. And indeed that is a minimum, not a cap, so if regional Australians and regional South Australians end up being more of the applicants for that first home owners guarantee getting in at a lower deposit level and not having to pay rent as long and being able to start paying off your mortgage sooner, then we’d love to see that.  In terms of the policy idea you put, I’m happy to take that on board, but of course taking income streams out of the means testing of the different payments that people receive is potentially a fraught area and one that has to be handled carefully to not create means to either avoid the counting of income and undermine the integrity of what is one of the best social safety net systems in the world.


Narelle Graham: Thank you Senator Simon Birmingham who is the Federal Finance Minister.