Topics: Employment outlook; MYEFO; Commonwealth grants;
16/12/2021
04:10PM AEST
Raf Epstein: Simon Birmingham is the Minister for Finance in Scott Morrison’s government. Good afternoon.
Simon Birmingham: Hello, Raf. Good to be with you.
Raf Epstein: The employment numbers are really good. I expect you’ll be congratulating Victoria for doing better than New South Wales?
Simon Birmingham: Well, it’s great to see that Victoria, in terms of coming out of the Delta induced lockdowns that it faced, came out a little bit later than New South Wales, but has absolutely come back strongly in terms of employment. That is fantastic. And across the country, we’ve now seen 366,000 jobs added on the employment statistics just this last month. And that actually puts us now 180,000 jobs ahead as a country of where we were pre-COVID, starting early last year. And so that is pretty remarkable and incredible that despite a recession, another downturn, the lockdowns, all of those challenges. We’ve got more Australians in more jobs today than we had pre-COVID, and that’s far better than most other developed nations.
Raf Epstein: I ask that pointed and parochial question because we’ve had more lockdowns, but we’ve got in Victoria a better participation rate, a better employment to population ratio, and we’ve got more people in work now than the start of the pandemic, unlike New South Wales. So can I- would you be willing to say that Victoria has specifically done better than New South Wales as the numbers stand today?
Simon Birmingham: Raf, I’m always a little conscious of playing parochial state politics, whether it is for or against either. But today’s numbers are impressive for Victoria and they are welcome and I congratulate Victorian business industry and particularly households who have done it so tough on the extent to which they have shown that resilience and bounced back so strongly. Last month’s figures, New South Wales bounced back more strongly than Victoria. This month we’ve seen Victoria do so more strongly than New South Wales, and what we want to see is both of those states and the rest of the country who are going through a different process of adjustment. Now these, the COVID free states who are opening up their borders and adjusting to having COVID in their communities, want to make sure that they retain the sort of confidence and resilience that we’ve now seen through New South Wales and Victoria.
Raf Epstein: On those official figures, there aren’t nearly as many people looking for work, and actually that’s been quite good given what we’ve gone through, but our wages are still not going up. Why is the job market so tight? But wage growth is still so poor?
Simon Birmingham: I think Raf, there is still a fair degree of caution across parts of business and parts of the economy in terms of the way people are operating now. Last year we had indeed some of the highest wages growth in a decade, which was sitting alongside of a fall in inflation that occurred last year due to some of the extraordinary circumstances attached to COVID. So that translated into quite a significant outcome for wages. Over the next few years, we do see projections for wages growth that next year and the year after and the year after that are expected to exceed inflation and provide real wages benefits-
Raf Epstein: So under inflation, isn’t it for the next more than six months?
Simon Birmingham: So if we do face some, some persistent inflationary challenges right now that have been factored into this budget update. Those challenges in terms of fuel prices that people would be aware of due to international shortages and higher prices globally. Some of the pressures on international shipping and you know, there are things that Treasury has a degree of optimism will right themselves to a degree over coming months. And of course, what we want to make sure is that we retain this economic strength, this employment strength and importantly for households where we have helped them, even in a period where real wages, as I say, we’re quite strong last year and have grown under our government, unlike what occurred under the previous government. What would have really helped is the tax cuts that are providing $1.5 billion a month extra into Australian households and their pockets and electricity prices, where we’ve seen the inflationary data show that they have actually trended down on average over the last year or so.
Raf Epstein: I will get to calls on 1300 222 774. That’s the phone number. The finance minister won’t be taking calls today, but I’m happy to hear what you have to say after Simon Birmingham has answered just a few more questions. The budget update today, the gloriously named MYEFO, you are assuming no lockdowns and no border closures. You made the same assumptions in the May budget and we have lockdowns and border closures. Is it wise to risk repeating that mistake?
Simon Birmingham: Well Raf, we didn’t quite make that assumption in the May budget, we assume there would be some lockdowns and that there was a process for borders to open. And indeed, borders have started to open faster than what we assumed in parts of the May budget, particularly, some of the international border settings have opened faster than we assumed at that time. But we did face harder, tougher, longer lockdowns than we had anticipated or forecast for. These are the uncertainties of dealing with a global pandemic in that sense. This budget does provide for the fact that there may need to be still some activity restrictions required to respond to rising case numbers or to contain localised outbreaks. That is part of the assumptions that are there. But with Australia now, as one of the most highly vaccinated countries in the world, we are certainly hoping and budgeting on the premise that states and territories should work with us in accordance with the national plan to keep moving forward. As pleasingly, Victoria has been doing, New South Wales has been doing and in terms of opening up to other states Queensland, South Australia, Tasmania have all been doing.
Raf Epstein: Your update includes a column with the title, I think it’s – decisions made but not yet announced. So there’s $16 billion there potentially of spending. Last time that column had, I think, $2 billion in it. What election promises are in that $16 billion?
Simon Birmingham: Raf, there’s a few things there to juggle. We were just talking about some of the uncertainties that exist, and this all sits as part of what’s known as the contingency reserve overall, where we do allocate for some of the uncertainties. And in responding to the Delta outbreaks, we’ve had to commit around $25 billion more in spending to support households to support small businesses than we budgeted for back in May. And so we recognise the need to have really strong-
Raf Epstein: But it says decisions made. You haven’t made decisions to support a household in case of a lockdown because you’re not assuming big ones. So how much of that $16 billion is likely to be an election promise?
Simon Birmingham: Raf, we’ll work through whether these sorts of decisions and these sorts of contingencies that we have in place are ultimately realised in terms of policy that flows through and is announced to the Australian people. But we want to make sure we have a conservative approach to budgeting so that so just as we’ve handed down a budget update showing stronger growth than we expected stronger employment outcomes and lower debt levels as a share of the economy than expected, we have that same conservative approach going forward.
Raf Epstein: This analysis from The Age and the Sydney Morning Herald of the government grants that aren’t things like hospitals, schools and the NDIS. If I can just mention one example and you tell me what you make of it, there are nine connected Labor seats in Melbourne’s west. They got $14 billion worth of grants. There are nine connected liberal held seats in Melbourne’s east. They got $86 million worth of grants, so that’s Labor seats in Melbourne, getting 25 seats. Sorry, Labor seats getting 25 cents every time a dollar goes to liberal seats. Do you think that’s fair?
Simon Birmingham: A number of these programs, and this is an analysis that only relates to 11 grant programs out of around 1,700 that operate. And depending on which ones you include-.
Raf Epstein: But, these are the ones that politicians decide not the department.
Simon Birmingham: Some of the ones that are updated even in today’s budget figures, the Community Development Grants, which is one of the ones that have been picked on as part of the 11, I think the main spending proposals and projects it identified in this budget update are in Labor seats. Indeed, Labor seats that we have never held and probably have no hope of winning such as such as in Port Adelaide or for projects like Whitlam House. So different things come to bear in relation to these programs-
Raf Epstein: That’s announcements in one period. This is an analysis of grants over three years. It’s not just Melbourne, either. I mean, I know you’ve probably read the articles more than most people listening. But another example up in Brisbane, you’ve got the Labor seat Lilley surrounded by coalition seats like Dickson. There’s sort of it’s a 40 to one ratio. It seems very much like coalition seats or seats you’re targeting get a lot more money than Labor seats.
Simon Birmingham: Well, we do make commitments, particularly during election cycles, to deliver on community infrastructure, different projects and the Labor Party does that, too. Anthony Albanese has already committed to a couple of different aquatic centres that in fact are in Victoria, and they happen to be in Labor held seats, at least one of them in a marginal Labor held seat and the other supporting other Labor held seats. I would expect if he were to win the election, he will deliver on those commitments. Otherwise he’ll be breaking his promise. We have made commitments in terms of election campaigns and yes, we’re fulfilling those in terms of delivering those commitments to the people that they were promised to.
Raf Epstein: I appreciate your time and have a merry Christmas and thank you.
Simon Birmingham: Thank you, Raf. To you and all of your listeners.
[END]