Topics: Jobs recovery; household savings; budget surplus
Jim Wilson: Simon Birmingham is the Finance Minister and he joins me live on the line this afternoon. Minister, welcome back to Drive.
Simon Birmingham: Jim, it’s great to be with you again.
Jim Wilson: Good on you. The last time our unemployment rate was below five per cent was before the 2008 GFC. Is this going to be a realistic target?
Simon Birmingham: Well, according to according to the Reserve Bank of Australia and the Federal Treasury, there’s been a shift in the way we look at the labour market that historically the kind of notion of where employment and unemployment got to before it started to trigger inflation growth and wages growth was around five per cent marker. They’re now thinking that it exists somewhere between four and a half and five per cent. And so that means that there is extra room to drive and to grow. And what we’re seeing right now is that the Australian economy is exceeding all previous forecasts, all expectations. We’ve got more people in work in Australia right now than ever before, more people than we had prior to the pandemic. And we’ve got the unemployment rate way below what the forecasts were for this time of this year. And so our priority is to keep growing those jobs and to keep driving down that unemployment rate and to get it as low as we can, because that’s obviously first and foremost great news for those Australians who get a job and to get the security and the opportunities that come with that. But it also has enormous other benefits, including for the federal budget, which is driven back towards a more sustainable and balanced setting with each and every person that we get off and unemployment queue and into a job.
Jim Wilson: You say you want people to spend their record high household savings on things like home improvements, business ventures or a holiday. But if they’re not getting a pay rise and if it doesn’t fall below that magical five per cent number, the unemployment number, it’s going to be tough for them to go and spend.
Simon Birmingham: We’ve seen Australians, quite understandably, stash a little bit more away during the very uncertain times that we’ve had. And I expect many Australians will continue to take a cautious approach. But household savings have grown by a couple of hundred billion dollars as a result of the pandemic. And that means that many are sitting in a circumstance where they have that bit extra that they can invest, they can choose to spend wisely, or if they’re lucky enough and fortunate enough, they can choose to treat themselves. And I’m not encouraging anybody to be irresponsible. But I do think Australians should have confidence that our economy, our country is performing better than almost anywhere else in the world that we’ve bounced back faster than almost anywhere else in the world. And that they ought to be able to back themselves with a degree of confidence that perhaps they didn’t quite have last year when they were putting a bit away for a potential much rainier day, then it turned out to be so far.
Jim Wilson: It’s clear the federal government is planning a big spending splurge in the budget in 12 days’ time infrastructure, skills, tax cuts, aged care. Have you given up, Minister, on paying back the debt and achieving a surplus?
Simon Birmingham: No, we certainly haven’t given up on responsible budget management and on making sure that we do get back ultimately to a point of balance in the budget, but you know how we got to balance last time around. And people should remember we came into this pandemic with the budget effectively in balance and forecast for surpluses over all of the forward years at that point. And we got there through job creation, we got there through one point five, one point six million additional Australians being in work. And that created a virtuous cycle where we had more people paying taxes, fewer people on welfare. And that’s what we’re committed to do. Again, even in the analysis the Treasurer released today, it shows that by having 200,000 more Australians in the workforce than had been forecast at this time this year, it’s generated a five billion dollar improvement in the budget bottom line. Why? Because you’ve got more people paying tax and you’ve got fewer people receiving those welfare payments. And that is how we sustainably balanced the budget while still delivering the services Australians expect and rely upon. And I know many of your listeners will think it is important that in this budget we address needs in critical areas like aged care and other key service sectors. And our determination is to do that in a responsible way, addressing those future pressure points for Australians, but also making sure that we don’t take our eye off of what will make all of that affordable in the future and that’s a strong economy and continue jobs growth.
Jim Wilson: Minister, as always, thanks for your time this afternoon.
Simon Birmingham: Thanks so much, Jim. My pleasure.
Jim Wilson: That’s Federal Finance Minister Simon Birmingham.