Topics: Budget 2022
Steve Price: Finance Minister Simon Birmingham joins me. Thanks for your time.
Simon Birmingham: Good morning, Steve. Great to be with you.
Steve Price: Dreadful news again about the Northern Rivers area, New South Wales. There was provision in the Budget last night for flood relief payments and the people of those areas, Simon, are going to need every bit of it, aren’t they?
Simon Birmingham: They are, Steve. Look, it’s hard to imagine the heartbreak that people would be going through in facing yet more flooding circumstances, having only just started the very long and tough road of recovery from the earlier devastating one in 500 year events. Across the federal budget there’s more than $6 billion of support that is earmarked for northern New South Wales and south east Queensland in flood support. Much of that we’ve already started the process of providing; more than one million temporary payments were made in record time to record numbers of individuals out of these disasters. Of course more than 7,000 Australian Defence Force personnel have been involved from early rescue efforts to ongoing clean-up efforts. We’ll continue to respond as is necessary to help those communities get as best as they can through these tough times. Nothing can alleviate completely the pain and difficulty that they’re feeling. But we’re going to be there for them and with them as best we can.
Steve Price: Machinery of government is notoriously slow sometimes. Can you guarantee those people that yourself and the other ministers, and I spoke to Bridget McKenzie earlier, will do your utmost to make sure this money flows as opposed to gets locked up in red tape?
Simon Birmingham: Absolutely, Steve. And so, as I said, in terms of the direct payments to individuals, the emergency disaster payments that that are made, we have processed those through in record time. We’ve provided additional staff to Services Australia to make sure that they get through those claims and more than one million of those payments have been made in support of individuals, and we will keep that sort of effort going. Some of the funding then flows into critical, over the longer term rebuilding of infrastructure, roads, bridges, those sorts of things which clearly take a little longer and for which the support in this budget in other ways for skills development and so on, becomes a crucial part of ensuring that over the longer term our construction sectors have got the workforce that they need to both keep all aspects of the economy going as well as to respond to crises like this.
Steve Price: Let’s go through the budget you’ve worked so hard on. I know you’re pressed for time, so I’ll be as quick as I can. The issue of the petrol fuel excise – the Treasurer last night said it would from midnight last night the excise would drop by 0.22 cents a litre. How quickly will that flow through to retail prices given that the fuel in the ground already the excise has been paid on, so stations won’t be able to give us the relief until they top up their supplies. How quickly will that happen, do you think? And how confident are you that the ACCC will keep their feet to the fire on giving relief in the retail price?
Simon Birmingham: Thanks, Steve. So we’ve done this first and foremost, because clearly the pain of higher fuel prices is being felt right across Australia, but especially in regional communities with longer distances to travel. It’s been caused very much by the war in Ukraine, Russia’s actions there. Terrible, terrible actions. And so we are providing this relief knowing that the global spike in oil prices is a spike. They’re expected to come back down over time, but providing this temporary and targeted support is a way that we can help Australians get through this period of higher prices and get to the other side of it. The 0.22 cents a litre cut will take a couple of weeks to flow through because you’re right, it’s not retailers who collect that tax that helps to fund our roads and infrastructure. It’s paid earlier in the supply chain. So there’ll be a little bit of a lag effect before that flows through. But we are very confident motorists will see about a $15 buck difference to the cost of filling up their car. The ACCC has extensive mechanisms in place to monitor fuel prices. They have extensive powers to act if there are any profiteering or breaches of laws in that regard; multi-million dollar penalties that can and will be applied if anybody does the wrong thing. So we are confident that motorists will see the full benefit of that 0.22 cent cut and that over the six month period that will be hundreds of dollars of benefit to many, particularly those in regional Australia.
Steve Price: This is an electoral budget, election budget. Obviously you want to frame it with good news being reported on the budget. Hopefully then when the election comes around you’ll get re-elected. I note in the figures that you, or Treasury’s predicted wage growth to be 2.75% in 2021-22 to the middle of this year, which is just after the election. But the cost of living will peak at 4.25% during the same period. There’s a gap there isn’t there of about one and a half per cent? So people’s wage increases, if indeed they get any, are going to be swallowed up by inflation. That’s hardly a good message for the electorate if you want them to vote for you, is it?
Simon Birmingham: So this is a year where we’re seeing some pretty extraordinary events, just as we’re all recovering from the battles of COVID and the difficulties of the last couple of years. We now are hit by a war in Europe that’s shocking global supply chains, transport and logistics routes around the world, and having those impacts on petrol prices that flow through to so many other areas of the economy and prices for households. It’s why we’re not just doing the petrol price cut, but we’ve also provided these cost of living payments that will flow through to 6 million pensioners, veterans, carers and others, as well as to 10 million low and middle income earners. The one-off payments that that will provide for $500 once you take indexation of pensions into account as well. Extra to individuals are about helping with the spikes we’re seeing this year at this point in time. The good news in terms of looking at our economic plan longer term is that with such strong jobs growth, achieving unemployment rates that have come down to 4% and are forecast to go down to 3.75%, the lowest unemployment in close to 50 years in Australia, we will also see stronger wages growth that from 1 July this year it’s forecast to pick up to three and a quarter per cent, then growing to 3.5%. That’s forecast to be ahead of inflation, real wages growth to make sure that Australians see those benefits, not just in more job opportunities but in stronger economic outcomes in take home pay, which comes on top of course of the income tax cuts that we have delivered already that are putting about $1.5 billion a month extra into the pockets of Australian households and further income tax cuts that we have legislated for the next term in Parliament and which will be delivered if we are re-elected.
Steve Price: That sounds great, but the increase in interest rates on a mortgage payment means that any of that wage growth, aside from the cost of food because of global inflation, is going to get sucked up by an increased payment on your mortgage. I mean, you’re asking people to vote you back in. I guess the point I’m trying to make here is that when the election comes around, whether it be the 14th or the 21st of May, people still won’t have seen any of that money in their pocket. They’re not going to be feeling particularly flush and they’re staring down the face of an interest rate rise. I mean, that’s a hard argument for you to mount that people should re-elect you, isn’t it?
Simon Birmingham: But Steve there aren’t magic wands that governments can wave in these areas and when the Labor Party go out there and try to…..
Steve Price: Well, I think Labor will be waving a few magic wands won’t they?
Simon Birmingham: Well, they’ll be pretending to and Australians should treat that with the cynicism it deserves, that if Labor’s promising magical solutions they will come with magically high costs and no doubt higher taxes down the track. We’ve got a track record of lowering taxes, of lowering income taxes. We’ve done it twice already in in the last few years as part of our tax reform plan. And in the next term we will eliminate the 0.37 in the dollar income tax bracket. We will have around 90% of Australians paying no more than 0.30 cents in the dollar income tax. That means much, much more in take home pay that people get. So when we talk about wage rises, yes, we want and we are seeing in terms of the budget forecasts the dividend of having close to full employment, driving stronger wages growth, improving that. But then when it comes to take home pay, lower taxes as the Liberal and National Parties always deliver and will deliver more of in the next term of Parliament are all about helping Australians to have even more take home pay to meet those challenges, not all of which we can control in terms of global factors like wars and pandemics and the impacts they have. But Australia has come through this far, far better than pretty much any other nation in the developed world with stronger economic recoveries than the US, the UK, much of Europe or Japan, stronger jobs recoveries. And so we’ve managed to save some 700,000 plus jobs through the pandemic and are now in the position where recovery can be cemented thanks to policies in this budget that back small business to skill their workers more, to invest more in technologies that deliver them more productive outcomes better opportunities for growth, policies that make investment in manufacturing, record infrastructure spending particularly in areas of regional growth. All of this is about making sure that the jobs boom that we’ve got underway at present is sustained into the future, especially for young Australians in areas like apprenticeships where we’re really encouraging employers to keep hiring apprentices in the record numbers they currently are.
Steve Price: I appreciate you joining us. Just before you go, one of your Senate colleagues in a speech to the Senate last night, Concetta Fierravanti-Wells, described the Prime Minister as a bully with no moral compass. What would you say to Concetta about those comments?
Simon Birmingham: Connie has had the honour of serving in the nation’s Parliament for the last 17 years, and she’s done so having been selected by the Liberal Party through that time. Last weekend, New South Wales Liberal Party preselectors, some 500 of them, chose a different Senate ticket for the next election. I understand Connie’s disappointment that she wasn’t chosen again, but I’d urge her to be a team player looking forward rather than to lash out.
Steve Price: She ever told you that she thinks the PM’s a bully?
Simon Birmingham: No.
Steve Price: And that has no moral compass?
Simon Birmingham: No.
Steve Price: It’s a big criticism.
Simon Birmingham: Look as I said, I can understand her disappointment that her time in the Parliament is about to come to an end and that the Liberal Party members have chosen instead to back a Foreign Minister to continue as a candidate, a distinguished former General, Jim Molan to continue in these times of national security challenges. But it is it is important that really what we see is, is all members of the team act as team players and even if you’re disappointed that you’re not going to be in the Parliament in the future, 17 years is a pretty good run.
Steve Price: Thanks for your time. Appreciate it. Know how busy you are?
Simon Birmingham: Thanks, Steve. My pleasure.