Larry: Night of nights, the grand final for finances, the Super Bowl for subsidies, last night, Treasurer Josh Frydenberg delivered the 2021-22 federal budget and the phrase on everyone’s lips this morning: Australia is coming back.
Angela: After the short lived Covid-19 recession, the government is splashing some cash. So who were the biggest winners and losers and what does it mean for your hip pocket? For more, Finance Minister Simon Birmingham joins us live now from Canberra. Thanks for joining us. This is the government’s second pandemic budget, your first federal budget as Finance Minister. The purse strings have been loosened. So what does this mean for Australia’s economic recovery?
Simon Birmingham: Angela, you’re right. This is the second pandemic budget. And although Australia’s recession was short lived, we can’t take anything for granted. Over in Europe at present they’re facing a double dip recession. Obviously, we can see elsewhere the tragic human toll of COVID in places like India. And so this budget is a very careful plan, first and foremost, to continue to keep Australians safe. Safe from COVID, a safe economy where their jobs are protected and where we continue to see the type of jobs recovery that we’ve had with 500,000 jobs coming back through the pandemic. And we’re now in a position where, unlike the rest of the world, we’ve got more people in work than was the case pre pandemic. Everybody else is still struggling in developed countries to get back to those pre pandemic levels. And so we want to keep that going while also investing in the essential services that Australians rely on in aged care and disability services, in child care support, all very important measures. But crucially, we’ve been able to hand down this budget where the future debt projections, net debt for the government is actually lower than was forecast in last year’s budget for each of the next 10 years.
Larry: Minister, there’s some incredible numbers being thrown around this morning. You’ve announced $60 billion of new stimulus. And what our viewers really want to know today is can we afford this budget? Where does this come from, this money?
Simon Birmingham: So as I just said, we can, because we’ve carefully framed it in a way where the debt projections going forward are actually lower than was forecast last year. And so we’ve managed to make the targeted investments in careful ways against a stronger economic recovery that is providing a better budget bottom line position. But equally, you know, what we need to do is, of course, maintain that economic strength to be able to see us through the long term. You don’t recover from a global shock like COVID without a strong economy, without strong jobs growth. That’s why we’ve got plans for our manufacturing sector to back in the sovereign capability of Australia’s industry. That’s why we’ve got a digital economy plan that’s all about the modernisation of our economy. Our Ag 2030 plan and how we grow our agricultural sector and its export oriented focus. These are all important parts of continued strength, but also crucially, the skills agenda, how we actually invest in training Australians, 100,000 additional apprenticeship subsidies to get young people into jobs. And then those measures, like the child care reforms to help working families have the choice about working a few extra hours or a couple of extra days without childcare costs being an impediment to doing so.
Angela: Minister, up to $1080 is being put back into the pockets of 10 million workers. Great news, as low and middle income tax offsets are extended, but it’s only for a year. Why is this only a temporary measure?
Simon Birmingham: Because it’s part of a broader permanent tax reform agenda that we’ve been implementing that will see the vast majority of Australians ultimately pay no more than 30 cents in the dollar of income tax. So we’ve staged the implementation of that tax reform agenda. But this measure is an important one before we get the final implementation of those reforms and to continue to support the COVID recovery. It’s but one of some temporary tax measures that we’ve got in place. There are also some for business that are about encouraging Australian businesses to bring forward investment, to do things that make their businesses bigger and more productive, faster and sooner, and so that we don’t just get the benefit of that investment occurring in terms of jobs and spending, but that we also then get the longer term productivity benefits that makes Australian businesses more competitive and creates more jobs ongoing for Australians.
Larry: Ok, so some criticism around this morning. You were expecting that, no doubt. And one of the criticisms about the budget is that it doesn’t address underemployment. That’s people having a job, but not enough hours to meet the cost of living, particularly young people. We’re interested in your thoughts on that.
Simon Birmingham: Again, that’s why a strong labour market is so essential to that job creation agenda and this budget projects 250,000 additional jobs to be created over the next two years. So we’re coming off of a record level of jobs in Australia already, against a global backdrop of countries really struggling under the weight of COVID. And we can see the potential to generate a further two hundred and fifty thousand job opportunities. And so, the vast majority of jobs created in most of the months of our COVID recovery have been full time jobs. And the investment in these sectors that we’re making in high tech sectors, in digital sectors, in advanced manufacturing is about creating secure jobs and giving Australians that opportunity.
Angela: Working families with more than one child in day-care will see some savings, but not until 2022. Is that soon enough for struggling parents?
Simon Birmingham: So we already have made a big reform to the childcare system over the last couple of years that did deliver significant additional support for Australian families. These are about targeted reforms now, particularly supporting families who might have more than one child in child care and in ensuring that they don’t face cost barriers in choosing to re-enter into the workforce or to work an extra day or two, if that’s their wish. Now, we’ve, in all our budget projections, made conservative forecasts. We can’t predict in the Australian political system how the Senate will vote and how quickly things can be passed through. There are also some technical administration hurdles to clear to be able to get such a payment system operating for second or subsequent children. But if it can be done earlier, then we’re certainly open to looking at getting that one done sooner. But we’ve been realistic. We don’t want to overpromise and under deliver in these areas, we’d much rather surprise people by getting it done sooner if it can be done.
Larry: It’s got all this money. It’s got to be paid down at some point. This has got to be putting a huge burden of debt on future generations. Right?
Simon Birmingham: Look, these are unprecedented times. The covid-19 pandemic has been the biggest shock to the global economy since World War Two. And obviously there were big debts left after World War Two that took a long time for countries to be able to move beyond. What we’ve done is managed to keep Australia’s relative competitiveness very strong. In the UK, the US, Japan, they all have debt as a share of their economy, many multiples what ours is. We’ve managed to keep Australia coming into this pandemic with lower levels of debt as a share of our economy and coming out, we will still have lower levels of debt as a share of our economy. And as long as we can keep that growth going and create more jobs, then we’re confident in being able to manage that debt while ensuring that we support the fixing of our aged care system, the delivery of improved mental health services, fully funding the disability insurance scheme, as we promised to do.
Angela: Minister, thanks for joining us. I know it’s a busy day for you.
Simon Birmingham: Thanks so much. My pleasure guys.
Larry: Thank you for your time. Bye.