Topics: Australia lifted out of recession; JobKeeper and JobMaker programs; Australia-China trade relationships; Australian lamb trade with Qatar.
Jim Wilson: Well, overnight tensions between Australia and China escalated further, this time with the Chinese Communist Party mouthpiece The Global Times publishing a cartoon of a bloodied kangaroo targeting an Australian journalist. I’ll ask our next guest about that very shortly. But before that, we’ve got some great figures, new figures that Australia is out of recession, and Finance and Trade Minister Simon Birmingham is on the line this afternoon. Welcome back to the program, Minister.
Simon Birmingham: G’day, it’s great to be with you today. Thank you.
Jim Wilson: Today’s GDP figures, Australia’s officially out of recession. The economy’s grown 3.3 per cent, really good news story.
Simon Birmingham: Well, it is good news. Look, we’re out of the technical definition of recession, but I know that many people out there are still doing it tough. I really want to pay tribute to the many small businesses, their employees and people who have come through this extraordinary year showing such incredible resilience. The Australian economy is just coming back strongly and certainly far, far stronger than other comparable countries around the world. And it is because of Australians cooperating with governments right across the country that we’ve saved lives and had one of the best health results. And, of course, we’ve saved jobs and had one of the best economic results around the world.
Jim Wilson: You must have also been pleasantly surprised with those numbers, though, considering what we’ve come through this year.
Simon Birmingham: Look, 3.3 per cent growth in this quarter is the strongest quarterly growth rate since 1976 that Australia has seen. And so that is very pleasing to see. It’s pleasing that it translates into businesses saved, jobs saved, people back in work. And over the last five months, we’ve seen 650,000 jobs that have been created or recreated back in the Australian economy as we’ve got things open again. And of course, so many of those have been saved on the way through, through the different support measures that have been put in place. And that’s where all of the different pieces of the puzzle have come together. The fact that Australia went into this crisis with lower debt levels than other countries, with a budget that was under control. And we were able to respond strongly, invest strongly through programs like JobKeeper, through payments to small businesses that kept people afloat, and that’s allowing them to bring jobs back online.
Jim Wilson: And of course, Minister, if Victoria had grown in line with the rest of the country, the number would have been even higher.
Simon Birmingham: Well, that’s right. Victoria was the one standout state that contracted. Every other state saw strong growth during that September quarter. And that is a reminder that the economic outcomes are closely tied to the health outcomes through this. And it’s where all parts of the Australian system have managed to respond in sync, that by keeping Australians safe, we’ve been able to keep them more secure in their jobs and their livelihoods.
Jim Wilson: Are you worried that we could slip back into recession once JobSeeker and JobKeeper are officially end?
Simon Birmingham: What we did in this year’s budget was outline the next steps- emergency measures we put in place. Let’s remember, JobKeeper is the single largest intervention by an Australian government in the Australian economy ever in our history. Now, we did it because we faced a once in a century pandemic. We created it, we extended it. But we’ve also made sure it was temporary and it’s tapered and it’s been tapering down over a couple of different steps. In this year’s budget looking ahead, what we did was create the new JobMaker program, incentives to be able to hire young people to make sure they don’t stay on unemployment any longer than is necessary. Big investment incentives to get business spending and investing in ways that create jobs. We just recently extended the HomeBuilder program that will help to get further construction activity, and the flow on and knock on effects that has across the rest of the economy.
What we’re doing is shifting through into that recovery phase where we are backing small business and the private sector to recreate and to grow the jobs again, because that’s where the sustainable jobs come from, not from just government prop up payments.
Jim Wilson: You’ve done a great job at managing the economy in very difficult circumstances, dealing with the great unknown, which continues. There’s no doubt, I reckon, that Australia’s handling of the virus in the way we’ve controlled the spread has allowed our economy to rebound.
Simon Birmingham: Oh, look, as I say, it all works hand in glove together. The health response, together with the economic response. And what we saw was that in the depths of economic slowdown and shut down that had to occur to keep Australians safe, we applied the maximum economic support through JobKeeper and small business payments to keep people afloat and to support them. Now, as businesses have been able to reopen and it’s wonderful to see further news on the reopening front from Gladys Berejiklian today and those extra steps, that is, of course, helping the economy in getting more businesses more profitable, more people back to work. And this is the sort of trend we’ve got to keep going with. Our government put in place $257 billion in direct economic support. And our intention is to keep supporting the economy, but do it now in increasing ways that really back growth in businesses that generate long term sustainable job opportunities for Australians.
Jim Wilson: Treasurer Josh Frydenberg said earlier today that we don’t have to rely on China, with, obviously there’s increasing and ongoing tension with that trade partner, that we don’t have to rely on China, as far as trade’s concerned, that we can rely on domestic consumption. What do you say to that?
Simon Birmingham: Well, domestic consumption is the largest part of our economy. And so, you’ve got to have a strong domestic economy to be able to have strong economic dividends and outcomes overall. And, of course, many parts of the world, as a result of the disruptions of COVID to supply chains and elsewhere, have looked at how they build greater strength in their domestic economies as a result of that. But we are still a trading nation and we have trade agreements not just with China, but our government has struck them with Japan, Korea, Canada, Mexico, Vietnam, Indonesia. We’ve opened up a lot of other doors for Australian businesses. And in these tough times with China, we’ve got to make sure that Australian businesses seize those opportunities elsewhere as well.
Jim Wilson: Now, tensions escalated overnight as far as China is concerned, they’ve doubled down, releasing more cartoons. What’s your response to them?
Simon Birmingham: Look, the Prime Minister made pretty clear our disgust and disappointment in relation to the image that came out the other day, our belief that there ought to be an apology. But we are determined to be mature about the way we handle all aspects of our relations. Australia will always stand up for our values and protect our national security and interests. But we’re also not going to act in any way inflammatory. We are about getting on with business and urge others to do so in a way that frankly provides the type of economic confidence that we all need for the continued recovery.
Jim Wilson: I understand Australia’s ambassador to China met with Chinese officials yesterday. Do we know how that went?
Simon Birmingham: Look, those meetings did occur. It’s not helpful to sort of run public commentary in relation to those things. Clearly, there are ongoing issues in terms of the actions that China has taken. But our desire is not to inflame them. Our desire is to stand true, as I say, to Australian values and interests. But in the meantime, get on with supporting Australian businesses, to reach into other markets where they can, to use those other trade agreements. And earlier today with the Agriculture Minister, I sat down with the National Farmers Federation, the Winemakers Federation, representatives of timber, seafood, grain sectors to really work through the type of long-term strategy we can deploy to help those industries grow in their markets right across the world.
Jim Wilson: What was the mood like in those talks this morning? It would have been one of concern.
Simon Birmingham: Yes, but these Australian businesses are long established and skilled exporters, and they are realists. They’ve seen disruptions in global markets before. I mean, we can even go right back to the 1970s when the UK then, of course, a huge importer of Australian agricultural produce, went and jumped into the European economic market. And that was a big disruption at the time, and it cut off a lot of trade opportunities for Australian farmers at that stage. So they know how to handle disruptions. That doesn’t mean that it doesn’t hurt at times, but the Government is there with them improving the market access opportunities, trying to get tariffs and other barriers to trade in different countries removed and supporting them through our network of Austrade offices around the globe to get into those markets and, of course, through other programmes like our Export Market Development Grants, which we’re seeking to reform and enhance, that can further help to make sure that businesses can get out there and into different markets around the world.
Jim Wilson: Just on the text line, there’s been- one of our listeners has said: please ask traders, growers, farmers and others who’s been doing business with China for many years. You talk about looking at other markets and other options, but they have been such an important trade partner. And it’s- we- they risk losing millions.
Simon Birmingham: And sometimes I get asked the question, should we turn away from the China market? Should we cease trade there? And that’s certainly not our government’s view either, that- China is the largest economy in our region. Of course, a huge population base, the growing middle class, and it remains an important economic partner. So we want to try to support economic engagement and trade to continue with China. Hasn’t just been good for Australia. It’s been good for China in terms of their growth and growth right across the region. And equally, the decisions that China has made this year aren’t just bad for Australia, they are bad and disruptive for Chinese businesses, Chinese consumers. Ultimately, tariffs on Australian wine mean that Chinese consumers are either denied the product or have to pay a lot more tax on the product. And so these are things where we think China should reconsider the actions it’s taken, and we will continue to present all of the evidence to show why China is wrong in its approach, but we’ll stand our ground, and we’ll support our exporters accessing other markets in the meantime.
Jim Wilson: That listener also makes another good point, that it takes years to build a market and to get consumers to understand your product. So going exploring, let’s say, opportunities in India or- for our winegrowers, winemakers, it just doesn’t happen overnight.
Simon Birmingham: No, it doesn’t. And look, for different product sectors, there are different impacts. Those that are more commodity driven can probably shift contracts a little more easily than, for example, branded wine products that take time to build brand recognition and establish their contracts and supply chains into different markets. So we know that in each case there are different challenges, but the industries are very pragmatic in terms of their approach. They understand these are long term challenges we face, that equally the solutions require an approach of determination over a longer period of time to build and strengthen the opportunities and the presence in other international markets. And we will work with them to do just that.
Jim Wilson: Now, just on another front, the Qatari government has abruptly ended the subsidy of its Australian lamb importation programme, jeopardising a deal worth $300 million a year to the Australian industry. What more can you tell us about this?
Simon Birmingham: So the actions by Qatar appear to be, as we understand it, that they have previously run what you might see as a central government programme of contracting the supply of lamb into Qatar. Over time, that programme, which was initially done to support Qatari households, is increasingly being used by large hotels and food service businesses as their tourism sector and travel through Qatar has grown, and so they don’t think it’s appropriate to continue to have that type of central government programme. They appear to be moving to more of a market-oriented situation where individual importers will contract. So Australian lamb has enjoyed opportunities under the government programme; we will now have to compete for opportunities in more of a market environment if they make that decision, and I’m sure our producers will compete effectively.
Jim Wilson: Just very quickly, I mean, it’s an abrupt end. Is it that Doha Airport incident involving 13 Australian women who were violated and the Government’s criticism of Qatari authorities? Do you think that could be blamed for this?
Simon Birmingham: No, we’re fairly confident in this that it’s something Qatar have been actually looking at and working on for two years. It well and truly predates this incident. And it- even post this incident, we recognise the action Qatar has taken and that our diplomatic engagement and relations remain in a strong place. And so I understand that when these things occur, people will sometimes look to the coincidence and seek to join the dots, but on all of the evidence we have this has been a decision Qatar has been running up to for a couple of years. And it is a change, as I say, a technical change from a government-controlled sourcing of lamb to now more of a market environment that a country like Australia would operate. And that just means that we have to pivot in the way in which we seek to contract and sell our lamb into Qatar. It’s certainly not a ban, not a new tax or tariff or restriction, just a different way that we have to approach sales in that market.
Jim Wilson: There was a lot to cover there, Minister. We appreciate your time this afternoon.
Simon Birmingham: Thank you. My pleasure.
Jim Wilson: Good on you. That’s Finance and Trade Minister Simon Birmingham.