Topics: MYEFO; JobKeeper; Australia-China trade relationship;
17/12/20
03:07pm
Cathy Border: Well, if the Federal Budget was a game of footy, the Mid-Year Economic and Fiscal Outlook is half time. It’s a chance to examine the accounts of the nation. And an initial examination seems to show an economy recovering quicker than expected. Simon Birmingham is the Finance Minister. Good afternoon, Minister.
Simon Birmingham: Hello, Cathy. Thanks for the opportunity to speak.
Cathy Border: What is the nation’s projected deficit, Minister?
Simon Birmingham: So indeed, in terms of deficit, we have seen an improvement in relation to our deficit forecasts as a result of getting more Australians back to work. We’re now in a situation where we are seeing the deficit forecast improve to the extent that the figure is some $24 billion better over the forward estimates period for this year. It comes in at $197 billion, which is again an improvement, having been forecast to be in excess of $200 billion previously. And that equates to about 9.9 per cent the total size of the Australian economy. So, it’s a very significant-
Cathy Border: Still a pretty frightening figure, yes.
Simon Birmingham: It is, it’s still a very significant deficit. Obviously, we had never expected to find ourself in this circumstance. But what is holding Australia up better than much of the rest of the world is the fact that we came into this crisis with less debt, with a budget that was largely in balance. And we’ve been able to work our way now through this crisis. Yes, deploying enormous supports to keep Australian businesses afloat and to keep the Australian people employed wherever possible, as well as keeping people safe. But we’ve done that in a circumstance where we are still actually having on average, across the rest of the comparable world, lower levels of debt, lower deficits than most other comparable economies.
Cathy Border: When are you expecting unemployment to peak?
Simon Birmingham: So, unemployment forecasts, we expect there’ll still probably be some continued growth into next year in relation to the unemployment rate, but that now is something that we are seeing good gains around employment. We don’t expect to see recovery back to its pre-COVID levels until really about four years’ time. But we have seen growth now of some 740,000 plus jobs across the Australian economy over the last six months. Around 85 per cent of Australians who lost their jobs as a result of the shutdowns that occurred or were cut back to zero hours have now recovered work. And so, we are tracking again ahead of what was anticipated. And in doing so, that’s creating a circumstance where we can be grateful for the fact that by having people come back to work faster, jobs being recreated faster, it means that there is this improved budget circumstance because there’s reduced demand compared to what was expected on some of the government program there, and of course, improving revenue projections in terms of taxpayers being back in the economy.
Cathy Border: There has been that reduction in people on JobKeeper. Are you sticking with the same timeframe there? And does it mean all of those no longer on it have gone back to work?
Simon Birmingham: So indeed, having seen such strong jobs growth across the country, we do have high degrees of confidence that people have been going back to work. As I said, the data indicates that 85 per cent of people who lost their jobs or were taken to zero hours earlier this year are now back in the game in terms of being back at work. And that’s very good news for them, but none of this suggests that we don’t understand that there are difficulties that still exist across many individual businesses, many individual circumstances, and that’s why there’s a continued focus on investing in the right ways. We’ve had to change gear, of course, it’s not now about the emergency crisis responses that we were dealing with earlier this year. It’s about getting the parts of the economy still struggling to grow, creating jobs in other parts of the economy that can soak up areas where there may now be reduced capacity or demand for employment compared to what occurred previously, and very conscious that that means difficult adjustments in some circumstances. But we have to face up to that and work through those challenges.
Cathy Border: Another matter, if I may, before we let you go, Minister. The Federal Government’s only referred China to the World Trade Organization about barley exports. Other industries like coal and wine have also being targeted. Why not make it broader?
Simon Birmingham: Because the World Trade Organization process we’ve initiated with barley is very much a legal process. And of course, when you’re going to start a legal challenge, you want to make sure you’ve got all of your I’s dotted and T’s crossed in terms of the evidence to mount a successful challenge. We’re very confident of that in relation to barley because China has made final determinations there that are public. We think those determinations are based on errors of fact and substance, and we’ve got the evidence that we will present to mount a strong case in defence of our grain growers and barley industry. We’re working through similar processes at different stages in relation to other challenges that the Australian exporters face. And so, I certainly wouldn’t expect that if China were to continue with its current pattern of behaviour, barley to be the last case that may get to the WTO. But it logically, because of the timing of decisions that China made about barley, makes it the first one that we would initiate.
Cathy Border: But still no dialogue happening between us and the Chinese Government?
Simon Birmingham: Not at a ministerial level. And we continue to stress and urge our willingness to sit down and talk, including in relation to that WTO case. Yes, we’ve called in the lawyers and the independent umpire in the WTO to hear that case. It’s a long process, the WTO appeals. When we’ve engaged them before with countries like India and with Canada, we’ve always been willing to talk and have dialogue. And indeed, in the Canada case over the last couple of years on some wine industry market matters, we ultimately resolved it without having to go through the full legal processes of the WTO, because we sat down and we talked and we negotiated as mature governments should be able to do. And certainly, Australia is willing to do that. We won’t ever compromise on our values or our security, but we will absolutely sit down as a partner of China, willing to have that dialogue and discussion to try to resolve these issues.
Cathy Border: Appreciate your time. Thank you, Minister.
Simon Birmingham: Thank you, my pleasure.
Cathy Border: Finance Minister Simon Birmingham.