• Transcript, E&OE
Topics: COVID-19 impacts on tourism sector.
16 March 2020

Patricia Karvelas: I’m joined by the Trade and Tourism Minister, Simon Birmingham. Simon Birmingham, welcome.

Simon Birmingham: Hello, Patricia. Thanks for the time.

Patricia Karvelas: The Prime Minister, the Treasurer and the Finance Minister met today to discuss economic stimulus measures. Is a second package or measures, more measures, on the way after last week’s announcement?

Simon Birmingham: Well, Patricia, I’ve spoken twice to the Prime Minister today, as I’m up here in Far North Queensland talking to tourism and trade exposed businesses who are of course feeling a world of pain at present. There are already job losses. There are businesses under immense stress and pressure. And of course, for some of them that’s been going for some time as a result of the pressure from the China market, as a result of earlier decisions. But obviously the events of the last few days, decisions made, in relation to public gatherings, decisions made in terms of all international arrivals to Australia, compound that harm. And the situation we’re dealing with today is distinct even from what it was last Tuesday, Wednesday, Thursday, when the initial financial response and support package was being put together. So we’ve already got $17.6 billion coming through the system to support businesses, to support households, to support investment and to give some targeted support into these trade and tourism exposed sectors. But, yes, we are also feeding in information on the ground as I was doing with the PM today, to help look at what else we need to do to ensure that we help businesses, households and communities get through these tough times.

Patricia Karvelas: Well, let me be specific about your portfolio, tourism, and of course you have trade as well. I know there’s $1 billion already in the last stimulus. Are you looking at scaling up that amount?

Simon Birmingham: Patricia, we’re not necessarily looking at that. What I’ve been consulting with businesses on here the is; precisely how we most effectively get that $1 billion targeted towards those tourism, trade exposed industries, into the regions, the sectors and the businesses that need it most, and so we’re looking at the delivery options for that. We are also very conscious of the fact that many casuals in the business and events sector will now find they don’t have work, others may find that they don’t have work for their permanent roles at present, right across parts of our economy that are facing shut-down circumstances. And so in those circumstances, of course, we need to make sure that the welfare system is as responsive as it can be. And that the adequacy of all our measures is there to sustain businesses so far as we can, through this downturn, which could run, not just for days or weeks, but potentially for months, but these are often critical businesses that are necessary to make sure we can scale back up again when we do get to the end of this crisis and when recovery becomes the order of the day.

Patricia Karvelas: So, you expect unemployment to rise particularly from the tourism industry, significantly?

Simon Birmingham: There are no doubt job losses that are occurring already and sadly, will continue to occur. That’s a consequence, of course, of the loss of custom and business. We have 1 in 13 Australian jobs that are reliant on the tourism or hospitality sector broadly. International tourism and visitation is a multi-billion-dollar industry. We effectively have virtually no international tourists coming to Australia at present. That is a massive hit for regions like North Queensland, where I am now, and for many other parts of the Australian economy. And of course, that is putting immense pressure on businesses in terms of their viability, and that flows through in terms of the decisions they have to sadly make about their workforce. And I’ve got to say the businesses I’ve spoken to today, often the number one issue they raise with me is indeed the welfare of their staff and wanting to ensure that where they can’t continue to employ those staff, they will receive ready, quick access and support in terms of support through our welfare system. And the Government is determined to make sure that that does work as it should.

Patricia Karvelas: So the Prime Minister’s Office says the focus of today’s talks is in making sure industries survive. We know aviation will take a big hit and tourism has already. So what industries is the Government most worried about in developing more stimulatory measures to be unveiled?

Simon Birmingham: Look, we obviously see in addition to the tourism sector generally, to the aviation sector, as you mentioned, that there are trade exposed sectors that rely upon getting particularly high quality goods or services into international markets. And of course, as a result of the shutdown of many other countries that are facing even more severe circumstances in terms of the scale of outbreak than what we’ve got here in Australia, that’s obviously limiting access into those countries and those markets. So those trade exposed sectors, I referenced before, the meeting and events sectors and that flows through of course across sports and arts and others, where the limitation on public gatherings has a profound impact, whether you’re running a conference venue, an audio hire business or a range of other sectors. Now, Government isn’t able to step up and simply save every business right around the country. But we are looking at unprecedented circumstances and therefore we’re considering everything necessary to try to get as many businesses through this as possible, because when we get to the other side, we need to be able to scale up activity again quickly.

Patricia Karvelas: So, Minister, it was only last week that we heard of this nearly $18 billion that of course goes up to $22 billion over the forward estimates, are you talking about billions more dollars that the Government is prepared to spend given what you’ve learned in the last few days?

Simon Birmingham: Patricia, our approach will remain, as the Prime Minister outlined to start with, that is it needs to be targeted and proportionate, but I think in terms of proportionate we can say that the scale of impact has grown even in the last few days relative to where it was a week ago. That means we have to consider and work in sensible ways as to how we make sure that the natural levers of government work, such as the welfare system, responding for those who are losing their jobs. But also then the support necessary to ensure that we do keep businesses viable, so that they are there when the economy recovers and when we need them to be able to grow and stimulate that jobs’ growth again. First and foremost, for our government, of course, remains the public health considerations, and making sure that we reduce the spread of the virus so that we save lives. But right alongside that consideration now is how we make sure that Australians feel safe in the knowledge that we’re doing everything we can to protect their jobs now, and if their jobs are threatened right now, to make sure that they will be able to get those jobs back or access new jobs when we reach the point of recovery at the end of this virus.

Patricia Karvelas: And Minister, how quickly, or how soon, will we know about additional measures given the Government has decided more stimulus is necessary?

Simon Birmingham: Look, I don’t want to pre-empt the processes that will occur there in terms of government. Obviously, I’m on the ground at present out there, talking to business and industry, relaying that back firsthand to the Prime Minister, as I’ve done in multiple conversations with him today. He’s working through them with the senior economic ministers about this type of ground commentary and effect that we’re seeing out there to look at the type of policy levers that are working, that we hope can work and that might need to be applied into the future. And we have a Cabinet meeting scheduled for tomorrow and no doubt, today’s deliberations will feed into those Cabinet discussions.

Patricia Karvelas: One of the criticisms of the first package is the instant asset write-off doesn’t work for businesses whose cash flow has dried up because they don’t have the money to spend in the first place. Do you need to come up with something else? Is that what’s necessary here too?

Simon Birmingham: Well, the instant asset write-off is a really important measure where businesses can. It stimulates spending in a very short period of time, which creates flow-on benefits through other parts of the economy. And it doesn’t just stimulate spending but it ensures businesses are better prepared for the future by investing in the type of assets and equipment that can make them more productive and help them bounce back. So, that’s an important piece of the puzzle. Of course, the payments that we are making to small and medium-sized businesses, between $2,000 and $25,000 depending on the size of their payroll, is a direct cash stimulus to underpin the viability of those businesses and encourage them to keep people in employment. But we will continue to look at any other means, as I say, that can help to sustain businesses through these tough times and to save jobs where we can.

Patricia Karvelas: So what’s been your direct message then to the Prime Minister in your two conversations that you’ve mentioned today? Have you said: we need to funnel billions of dollars more to help businesses keep people afloat, based on the people you’ve talked to today in Cairns?

Simon Birmingham: Well, the PM is obviously having his own conversations, and not just with me, but with business himself and with other ministers and MPs from around the country, as he gets a full handle on everything that is happening. We’ve talked about the scale of the impact; the fact that there are businesses who are talking openly about the staff that they can’t keep on and the decisions that they’re having to make, that do feel threatened in terms of their viability and potentially in a very short time horizon. And so we are considering just how it is that we can best target government response and government assistance, as I say, to save those businesses where we can, where they are viable for the future in the long-term and/or to preserve jobs where we can.

The Government can’t step in and run the entire economy. We can’t run everybody’s business or save everybody’s business, but we are looking at how we continually recalibrate and approach the different policy responses to give the most effective assistance on the ground. $17.6 billion last week is an unprecedented action in terms of the scale and the directness of that assistance, targeted in such a short time frame in terms of when it applies; focused with the additional or inclusion of the $1 billion within it on these tourism and trade exposed sectors. So we’re going to make sure we get that out the door and get that right.

And next week, Parliament has, as the PM has said, one key duty, and that is to pass these stimulus measures and to make sure that support is there. But we are going to keep listening to the community on the ground, to the business sector, to those whose jobs feel threatened, to make sure that we are responsive to their needs as well.

Patricia Karvelas: Minister, you mentioned that a lot more people will become unemployed, particularly in the sector you are the minister for. They will be essentially on welfare benefits. Are you looking to make changes to the welfare system too? That’s the first part of my question. There’s a second part too. There’s this $750 payment for people on welfare. Are you now looking at extending that payment to general taxpayers as well?

Simon Birmingham: Patricia, I don’t want to get ahead of the decisions that will be made through the right processes of government. So, I’m acknowledging the fact that we’re getting live feedback from businesses and communities on the ground about the scale of economic pain that they are feeling. The Government is listening to that, and we’re looking at the way in which we make sure the $17.6 billion of existing measures hit the ground, provide the support we want them to. But if there are gaps, then what we could do potentially to respond to those gaps. But specific measures are things, of course, that we have to discuss as a Cabinet if and when they come to the fore.

Patricia Karvelas: Sure. But on the question of whether welfare is something you’re looking at, because obviously, there’s keeping businesses going, but then there’s the people who are going to have to rely on government benefits. Is that part of the Government’s thinking here?

Simon Birmingham: Well, the operation of the welfare system is one of those, in a sense, automatic stabilisers that you look to make sure works at a time like this, where if people are losing their jobs because of these types of business shut downs or slowdowns, that they can access the welfare system quickly, efficiently, appropriately; have confidence that there will be a social safety net to fall back on; and of course, receive an income flow that allows them to support themselves and their families. And so, making sure that works effectively is key. If it needs any policy changes, well, there are things that Government would consider, but first and foremost is making sure it works, as it should, for people as they need it.

Patricia Karvelas: Minister, thanks for coming on.

Simon Birmingham: Thank you, Patricia.

Patricia Karvelas: That’s the Trade and Tourism Minister, Simon Birmingham, and confirming there that the Government is developing a second stimulus package, saying that he has actually talked twice today to the Prime Minister to feed back what he thinks needs to happen. And clearly, the Government is now looking at billions of dollars of extra money for stimulus here.