Topics: Tasmania tragedy; Budget deficit; Wages growth; Budget expenditure;
17/12/2021
07:32AM AEST
Michael Rowland: Staying with the mid-year budget update, we’re joined now by the finance minister, Simon Birmingham, he joins us now from Adelaide. Minister, good morning.
Simon Birmingham: Good morning, Michael, good job with you.
Michael Rowland: Putting politics to one side, I want to ask you, you’re the father of young children, it’s our main story this morning. How are you dealing with this awful tragedy in Devonport?
Simon Birmingham: Michael. Look, I’ve got to say in all honesty, that that more than once a tears come to my eye when I’ve listened to news reports about it, and it’s just incredible to think about the trauma, the loss, the difficulty for those kids, their playmates and friends, their parents, the teachers, the police and ambos. It’s just something that is for many of us, I guess, who’ve particularly spent many hours standing beside bouncy castles it’s just an unspeakable trauma and tragedy and just a loss that obviously many will never recover from.
Michael Rowland: Indeed.
Simon Birmingham: Our hearts go out to them.
Michael Rowland: Indeed, they do. Let’s switch now to the budget update. Okay, so good news on the budget deficit for this financial year. It’s $7 billion better than forecast, although the assumption centre on the government controlling the pandemic and most restrictions coming off from the start of next year. Given the exceptionally uncertain situation we are now facing with Omicron, are those assumptions simply way too rosy?
Simon Birmingham: Michael, I don’t think so. You know, we’ve been cautious along the way, and we’ve continued in many instances to be able to exceed expectations that the economic outcome, the employment outcome, the jobs outcome are all better than we’d previously forecast. Our debt is going to be lower than we previously forecast. So on previous occasions, we’ve shown that we take a careful and cautious and conservative approach to these things. And in terms of this budget update, we’re continuing that in terms of Omicron and COVID, Australians should still have confidence because we have one of the highest vaccination rates in the world more than 90 per cent double dose across Australia, higher than New Zealand or the United Kingdom or Finland or Norway. We’ve now got more than one million Australians who’ve had their booster, and we’ve just recorded a record day in terms of delivery of booster shots, and we encourage people to get those done as soon as they fall due to make sure that we can maintain that maximum protection that can enable us to continue to safely and effectively reopen.
Michael Rowland: As we head towards the next election. A lot of voters, we firmly focussed on wages. A lot of people haven’t had a wage rise, as you know, for a long time. The budget update shows that real wages will continue falling this financial year. But even then, when they start to pick up the following year, it’ll be pretty sluggish. It’s not a great record on wages, is it to take to the people?
Simon Birmingham: Well, Michael, actually last year we saw quite strong wages growth against an environment where in fact, we had negative inflation now. Now, of course, what we’re looking for moving forward is that we will shift back into wages growth. But right now, the things government can do, we’ve made sure that we’ve delivered for Australians through tax cuts $1.5 billion a month, extra in income tax cuts, going into the pockets of hardworking Australian families, helping them with cost of living pressures, electricity prices which through policy reforms we’ve driven, we’ve managed to drive downwards over recent times compared with the increases that we’ve seen before and over the history of our government. We’ve achieved real wages growth, which is in contrast to what we saw in the final years of the previous government.
Michael Rowland: Treasury’s forecasting wages to rise by 11 per cent by 2024-2025. Treasury, as you would know, they haven’t had a great record had they on forecasting wage rises over the last decade. Is 11 per cent simply too heroic?
Simon Birmingham: Michael, look, we don’t think so. Treasury continue, as I say, to show a fair degree of caution in terms of their projections. Now these are projections and there will always be things that come along and impact them, as we’ve seen over the years. But on the whole, as a country, our economic performance continues to be quite world leading our economic growth, a top three performance amongst developed nations for the previous 12 months. And we saw just yesterday with more than 360,000 extra jobs added to the jobs market and the fact we are now 180,000 jobs ahead of where we were pre-COVID-19. And that’s pretty incredible and there aren’t many nations in the world that can speak that strongly about the economic performance and the jobs and employment market as Australia can.
Michael Rowland: Okay. I want to ask about this $16 billion worth of decisions taken but not implemented. And I know that at least part of that goes to vaccine purchases and commercial and confidence, which is understood. But if the government was really serious about deficits, cutting deficits and winding back debt, wouldn’t you put what’s not commercially in confidence, not that $16 billion towards bringing down the deficit even further?.
Simon Birmingham: Michael, this does go to a couple of things, it goes indeed to those issues you just raised. Issues that have commercial sensitivities around why you don’t publish the figures. But also it goes to the type of cautiousness and conservative conservatism I was talking about before in that there are decisions as a government that we think are likely to be necessary that we’ve had to work through to make sure that when we outline what the budget bottom line figures look like, there are genuine and accurate reflection of where we think things are going. Now, we’ll finalise decisions around those between now and the budget. If indeed they are crystallised and realised, they’ll be announced and they’ll be transparent for all to see in terms of the details around those things. But if it’s possible not to proceed with certain things, then of course we’ll be looking to make sure that we save as much as we can. And indeed, the budget update handed down yesterday does show that whereas in 2020, debt was projected to peak at some 44 per cent of the size of the Australian economy net debt, it’s now going to peak closer to 37 per cent of the size of the Australian economy, showing just how far down we’ve managed to bring those debt projections from the very worst days of COVID.
Michael Rowland: Okay, Simon Birmingham, we’ll leave it there. This is going to be our last interview of the year. You have been a regular fixture on the show over 2021. Really appreciate you all of your appearances. Thank you. And all the best.
Simon Birmingham: Thanks, Michael, to you and your team and to all viewers, all the best for Christmas and a happy 2022.
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