Topics: MYEFO; Budget expenditure; Labour force data; COVID impact;
Scott Emerson: Simon Birmingham is the Finance Minister and Leader of the Government in the Senate, and he’s on the line now. Minister, thanks for being on 4BC Drive.
Simon Birmingham: G’day, Scott. Always good to be with you. Thank you.
Scott Emerson: Now look, a lot of good news in this. Let’s first talk about the forecast for the deficit going down to 99 billion for this year. What’s driven the improvement?
Simon Birmingham: So what’s driven the improvement overwhelmingly is a stronger economy, fuelling stronger revenue. That even though we’ve got tax cuts that we implemented and delivered to Australian families and households, which means they’re paying around $1.5 billion less in tax per month than they would have otherwise been. And we had tax breaks for small business, and we’ve got tax breaks to drive investment by bigger business. We’re still actually seeing stronger revenue because we’ve got more people employed than previously expected, fewer people receiving income support and welfare payments, stronger returns in terms of company tax because of stronger profits and returns. So that’s really what’s driving the improvement because on the other side, we have some real pressures that the Delta induced lockdowns of New South Wales and Victoria through the second half of this year really hurt the budget in terms of having to spend an extra $25 billion in additional economic support for income assistance for individuals, for households, extra hospital and medical assistance and support. We’ve got other costs in terms of the vaccine rollout and different aspects of that, as well as real spending pressures like the NDIS growing far faster than expected and the like. So what we’re seeing is that whilst there are real spending pressures, a strong economy is giving us a dividend that is helping us to keep up with the cost of those and actually managed to reduce the forward profile for debt compared with what it previously been the case.
Scott Emerson: Alright, so revenue has improved, the economy is getting stronger. I did note that in his statement today, Josh Frydenberg and the numbers he released, there’s about $16 billion of undisclosed, unallocated funds there. Is that your war chest, you’re building up for the federal election?
Simon Birmingham: Scott, much of this relates to decisions that we’re having to weigh carefully as we think about how we continue to manage COVID-19. How we ensure that we have a strong contingency in the budget, given the shock that we suffered from Delta this year. That as I said before, we had $25 billion of extra COVID-19 related expenditure that we hadn’t previously budgeted for as a result of that. So we’re taking a very cautious and prudent approach. There are decisions that we will work through as a government in terms of whether they ultimately get realised and announced as policy decisions. But what we want to make sure and it’s a very liberal and national party thing to do is to make sure when we hand down the budget that we continue, as we’ve done with this update, to improve the situation by taking a cautious, contingent approach to things.
Scott Emerson: Alright, so cautious approach. Prudent approach. But the bottom line is you’ve got $16 billion in your back pocket ready to spend and allocate if you need to in the lead up to an election in 2022. You can understand why people will say, look, this is just your war chest ready to make the promises and, you know, into various seats you need to hold or need to win in in ahead of the election, maybe in May.
Simon Birmingham: Well, there’ll always be cynics, but equally, people would be pretty disappointed if we didn’t provide for contingencies and didn’t think about carefully what we thought might happen or might be necessary or determined over the next six months. And then when the next budget came along, there was a rude shock in the wrong direction because we hadn’t provided for those sorts of things. So if we as a government decide to realise and announce additional investments in policy decisions. Well, of course, they’ll become transparent. They’ll be updated and reflected clearly in the next budget. But the fact that we have carefully put money aside and provisioned for them in this sort of budget update is about ensuring that when we go back to the international ratings agencies who all three of them have reaffirmed Australia’s AAA credit rating, we want to be able to say this is a genuine and authentic reflection of where Australia’s budget is headed. Under our government and that we have been prudent and careful and cautious, and that if anything, we would hope to see upsides, not downsides, wherever possible.
Scott Emerson: I’m talking to Finance Minister Simon Birmingham. Alright, and so today we find out revenues improved, unemployment rate a great result. They’re down by to 4.6 per cent. But obviously what everyone is talking about, I think across Australia, but particularly here in Queensland, is obviously the uptick in the number of cases, the surge really in the number of COVID cases and the arrival of the Omicron variant. How concerned are you about the impact that could have on the economy over the next six months, as we’re seeing predictions say from the New South Wales Health Minister Brad Hazzard of 25,000 daily cases of COVID?
Simon Birmingham: Well Scott, firstly the employment statistics today, also out alongside the budget update, are quite phenomenal. As you said, 366,000 extra jobs across Australia. That is a huge outcome, 14,000 extra jobs in Queensland. This is the dividend we’re getting from having a highly vaccinated population and being able to in accordance with the national plan that Scott Morrison took the premiers reopen, reopen safely, carefully, cautiously and take those steps. And we now have 180,000 more Australians in jobs than we had before COVID-19 hit. And that’s pretty incredible when you think that we’ve been through a recession, we’ve been through lockdowns, we had another downturn this year from Delta. All of those factors would ordinarily take years to come back from and yet we’ve got 180,000 more people employed. Now, Omicron, I know, is causing some concern and caution and angst, and that is entirely understandable. While people would expect us to take a little caution and we have taken a precautionary approach there, but it’s also important that we listen as we’ve done to the health advice and the Commonwealth’s chief medical officer put out a statement yesterday that continued to emphasise that early reports around Omicron indicate mild disease, especially in younger people, and that on current analysis, current vaccines remain effective against severe disease and death. And given we have one of the most highly vaccinated populations in the world now hitting 90 per cent double dose right across the country, more than New Zealand, more than the United Kingdom, more than Finland, Norway or many other advanced and developed nations. We should have confidence to stick with that plan of reopening. And of course, we’re now seeing around 100,000 Australians per day turn out to get their booster shot, which I urge everyone to do as soon as they’re ready and eligible for it.
Scott Emerson: Simon Birmingham, thanks for being on the show.
Simon Birmingham: Thanks so much, Scott. My pleasure and merry Christmas to all your listeners.