Topics: Budget update; Australia’s economic position; JobSeeker; COVID vaccine rollout, Aged Care home care packages, Australia-China trade relations.
Tom Rehn: But Kate, right now we’re going to talk some figures because it’s been a difficult year with everything that’s happened in 2020.
Kate Collins: Yes. To talk to us, give us a bit of an update on the budget, Senator Simon Birmingham, Federal Trade and Finance Minister joins us now. Good morning.
Simon Birmingham: Good morning Kate. Morning Tom and listeners.
Kate Collins: Thanks for your time this morning. Give us a bit of an idea. We’ve just had the economic and fiscal update come out. How’s the country looking?
Simon Birmingham: Well look, the country in what has been an incredible year, is looking about as well as could be hoped for and tracking far better than many other nations of the world. I think, everybody instinctively knows, when they flick the news on at night, that in a health sense, we’ve withstood 2020 far better than most other comparable countries and we can see just the tragedy of the loss of life and the overflowing health systems and hospitals all around Europe and North America and other parts of the world. But economically as well, we are doing much better than pretty much any comparable country. What we announced yesterday in the budget update is that we’re seeing more Australians getting back to work faster, businesses recovering stronger. That means that there’s a little less draw down on Government programs and payments and a little more revenue coming in. It’s still a very big, enormous deficit that is expected to be run this year at just under $200 billion across the country. But importantly, we’ve got 740,000 jobs created over the last six months and we are now expecting unemployment to peak at a lower level than had previously been the case and for the economy to continue to grow at a bit of a stronger level than had previously been the case.
Kate Collins: So JobSeeker is one of the points of the update. Senator, will it be extended any further than then, I think, of March next year?
Simon Birmingham: For this latest update, we reflect the decision that was taken to carry the JobSeeker supplement, the coronavirus supplement through until the end of March next year. That itself comes at a cost just for that three-month extension of $3.2 billion. So these are huge decisions that are there being made. In terms of what happens beyond March, look, we will continue, as we have right through the pandemic, to monitor all circumstances and the situation in that regard. You know, our number one priority is really our JobMaker plan – getting Australians back to work, and that is working. Our plans that are helping to drive more investment by businesses to create more jobs, particularly youth hiring credits that are there, focussed on ensuring that young people, who in every other recession have taken much longer to get back to more normal employment levels afterwards. So we want to make sure we have a real strong focus there. And, of course, across the board, continuing to invest in infrastructure projects, in creating activity in big employing sectors like construction and so on, that then has flow on effects right through the rest of the economy.
Tom Rehn: Senator, in terms of the deficit itself, clearly it’s come for a reason and it’s come largely out of your control, the fact that we’re going to be close to $200 billion. How do we begin to pay that back? And when- how long can it take before we start to draw that down?
Simon Birmingham: So we were lucky compared to most other comparable economies. We came into this with a stronger budget. We were basically at a point of balance in the federal budget cycle here in Australia, and other countries had been running significant deficits for many years and had much, much larger levels of debt compared to the size of their economy than Australia. And so we’ll come out of this in somewhat of the same position, that we will be in a much better position compared with others. But yes, we do now have a prospect of deficits that will run pretty much right through the next decade. And as much as I would wish, there was an easy way to fix that, there’s not. The economic growth that should have happened this year is now lost and we have to try to make up for that in terms of growth in forward years. The population growth that would have happened this year is now lost in terms of in terms of the extra effect that has across the economy, too. But interest rates are very, very low. The actual cost of sustaining the debt that we have now is comparable to what it was at lower levels in previous years because of those low interest rates. And our focus has to be on growing the economy so that we can get the annual deficit back down under control, and eventually at some point into the future, back to that point of balance.
Kate Collins: We’re talking to Senator Simon Birmingham, Federal Trade and Finance Minister. Senator, I wanted to ask you about the vaccine rollout in Australia – $1.6 billion for that, for the vaccines, the COVID-19 vaccines and the National Vaccination Programme. That is for the Pfizer vaccine only, though, isn’t it?
Simon Birmingham: No, that, that includes the Oxford- AstraZeneca vaccine as well, and it includes many millions of doses that- many multiples of the Australian population notes(*) that are contracted for, noting that, that it may be in the case of some of these vaccines that more than one dose is required.
Kate Collins: And that is assuming that it will be ready by March next year?
Simon Birmingham: So, what, what our assumptions are based on is that we get through regulatory approvals and start to see a distribution occurring in the early parts of next year. We’re only expecting that, in the first half of next year, vaccines are likely to flow through to those higher risk categories, those individuals working in sectors like aged care or medical services, as well as more vulnerable populations – so older Australians themselves and those who may have more serious consequences when exposed to COVID. And then it will really be through the second half of next year that we expect to be in a position to have enough vaccines available and distributed to, to pursue a population-wide strategy.
Kate Collins: And I wanted to ask you as well, you announced a billion dollars for aged care, including 10,000 home care packages to keep elderly Australians in their homes for longer, if they wish to do so. There has been some criticism, though, that that doesn’t go far enough.
Simon Birmingham: That’s right. Kate. We have announced a further 10,000 home care places – that brings to almost 50,000 the number of additional home care places that we have funded and are creating since just last- last late last year. So, in the space of about 12 months we have committed some 50,000 extra places.
The sector itself who provide these services need, of course, some time to, to be able to scale up in the delivery of these services, and that’s why we have been taking the gradual approach of each budget update, announcing funding new places. Again, it comes at a very significant cost, but it’s reflective of responding to the Aged Care Royal Commission, delivering services required for older Australians. And we will obviously have a complete response when that Royal Commission has finalised its work. But we’re not waiting for the full final report of the Royal Commission, we’re getting on with the job by funding and creating these additional places, now nearly 50,000 in total in just about a 12-month period.
Tom Rehn: And Senator, just finally, I wanted to get your thoughts on the relationship with China. Clearly, it’s a delicate issue at the moment. Where are things at? And is there irreparable damage that has happened in our relation with China?
Simon Birmingham: Some things are in a difficult position, that’s, that’s very clear, as a result of decisions that China has taken to target a number of Australian industries and different, different export sectors. It certainly shouldn’t be irreparable from Australia’s perspective. We continue to make clear that we value the partnership and relationship that we’ve had with China, and that we are willing to come to the table and work through issues.
We’ll never compromise on Australia’s sovereignty, our values or the protections that need to be in place for our national security. But we are always willing to sit down and talk about the areas where cooperation can occur, and that certainly should be facilitated between Australian businesses and Chinese businesses, between Australians and Chinese citizens. Government shouldn’t be getting in the way of those normal routine transactions and operations.
But in the meantime, knowing that many Australian individual businesses and sectors, like our wine industry here in SA, are doing it tough, we’re very focussed on how we help them to access other markets and grow into those other markets where these disruptions are heading in terms of China.
Kate Collins: Is that silence from China, though, the reason that you went to the World Trade Organization? Because, I mean, that process, we- we’ve heard, can take years.
Simon Birmingham: It can take years. But Australia defends and argues that we should all commit to a system of international rules. China has made commitments as a member of the World Trade Organization too. So, we think it’s the right thing that when there is a dispute and a disagreement like this occurring, that we should call in the independent umpire. There’s no point of signing up to those rules and having an independent umpire if we’re unwilling to use it and call them in. It’s the proper process.
China has done the same thing with other countries themselves. We’ve done it with countries like India and Canada before. But importantly with Canada, which was also a wine industry dispute, we were able, ultimately, to sit down, talk and resolve it without having to get to the final court ruling, if you like. But through discussion and dialogue, we interrupted those proceedings, worked it out between the two countries and Australia can withdraw from it. And the same offer clearly applies to China, that at any time they’re willing to sit down and talk we’ve indicated that we are.
Tom Rehn: Hopefully there’s a resolution there soon. Senator, thanks so much for your time this morning.
Simon Birmingham: Thanks, guys. My pleasure.
Tom Rehn: Senator Simon Birmingham, Federal Trade and Finance Minister.