Topics: Employment outlook; Consumer spending; Booster shots; MYEFO; Commonwealth grants programs;
16/12/2021
07:38AM AEST
Cathy Van Extel: I spoke with Finance Minister Simon Birmingham just a short while ago.
Simon Birmingham: Good morning, Cathy. Great to be with you.
Cathy Van Extel: Now, the budget update will show one million new jobs over the next four years. Just how much credit can the government take for that? Won’t almost all of those jobs be due to just the natural rebound of the economy following the COVID pandemic?
Simon Birmingham: Well, certainly not Cathy. Nothing can be taken for granted in terms of Australia’s economic recovery, and we are one of the top three performing global economies when it comes to developed nations, and that is a function of the hard work of so many Australians. But it’s also a sign that the economic recovery plans we’ve put in place are working. And one real proof point of that is the huge surge in investment, private sector investment, non-mining related investment by Australian businesses and the great thing about businesses investing more in plant machinery. Capital equipment like that is not just that it helps underpin growth right now, but it makes them more productive and competitive into the future.
Cathy Van Extel: Households and businesses have built up almost $400 billion in savings during the COVID lockdowns. Now you’re relying on pent up demand to boost economic activity and create the new jobs. We’re now dealing with the COVID Omicron strain. Are you worried the recovery will fizzle out if Omicron crushes confidence and that consumers don’t spend up big?
Simon Birmingham: Cathy, households certainly do have some strong reserves there, as do Australian businesses, that’s a function of much of the support that we’ve provided to households and businesses through the pandemic. We’ve seen big recovery in terms of consumer confidence, business confidence and retail spending growth coming back very strongly. We expect that that should continue. In terms of Omicron itself. Of course, we continue to get the best possible advice that we can. But our own chief medical officer, Australia’s chief medical officer, yesterday released a statement to providing the latest updates, which give, I think, significant reassurance to people that current symptoms still show relatively mild impacts and crucially, indicating that vaccines do continue to provide at this stage strong levels of protection against serious illness. And we can see that in terms of the fact that whilst case numbers may be growing in different parts of the world, to date, hospitalisations and severe impacts are not doing so so much. And so we, of course, will keep monitoring that. But that should give people confidence to keep resuming the forward path of reopening and re-engaging with the economy.
Cathy Van Extel: At this stage, most of the states and territories are continuing to open up. I’m just wondering, you know, from a federal perspective, how long you expect that they’ll be able to continue to resist the urge to reintroduce some restrictions, given we’ve already got warnings this week of 25,000 new cases a day in New South Wales, for example. Is there a risk that today’s economic statement could be quickly overtaken by events out of your control here?
Simon Birmingham: I think the states and territories that have opened up have shown enormous resolve in doing so. And congratulations to Steven Marshall, Annastacia Palaszczuk, Peter Gutwein in terms of taking those steps in reopening their borders-
Cathy Van Extel: I guess the question is though, do you have faith that they will stick with that resolve?
Simon Birmingham: I do, because they’ve been opening up whilst aware of Omicron, and this is not something that they were unaware of, particularly in the case of Queensland and Tasmania in terms of the decisions to open their borders. They’ve followed through with the commitments they made under the national plan, and they’ve had the confidence to do so because in Australia we have now one of the highest vaccination rates in the world. In the next couple of days, we will see Australia. The whole nation hit 90 per cent double dose. That’s more than Norway. It’s more than Finland. It’s more than New Zealand or the United Kingdom. It shows just how well Australians have responded.
Cathy Van Extel: There is a concern, though, about the boosters and certainly at the moment in New South Wales, I think the take up for eligible for those eligible is only 60 per cent for boosters. Is this going to be a real worry for just where our budget ends up if people don’t take up that booster shot?
Simon Birmingham: We’ve seen people with a step change, I think, in behaviour when it comes to boosters just this week alone that we’re now running at around 100,000 booster shots being administered per day, one million across the country have been administered already. And if you look at the daily number of COVID vaccinations in Australia last week, it was running at about 90 to 95,000 per weekday. This week, it’s been running at about 150 to 160,000 per weekday.
Cathy Van Extel: Let’s go to the budget deficit. The May budget forecast was for $106 billion for this financial year. I spoke to Chris Richardson from Deloitte Access a little earlier. They believe it will be lower today at about $91 billion. Are they in the right ballpark?
Simon Birmingham: Cathy, certainly. The improving employment outlook is driving good outcomes for the budget bottom line, particularly stronger revenue growth. And that is very encouraging when you think that right now, Australians are receiving around $1.5 billion per month additional into their pockets as a result of tax cuts and tax reductions our government has put in place. Yet still, revenue is holding up and showing that it is even stronger than we had forecast in the budget and for many small businesses now paying lower rates of tax too.
Cathy Van Extel: The government’s previously nominated at jobless rate, with a four in front of it as the trigger for starting the massive task of budget repair. So if we’ve got unemployment comfortably below five per cent by the middle of next year, which potentially will be after the election, is that when you will start paying off all of the debt and deficit? And will you be upfront with voters before the election about what kind of spending cuts you’ll introduce?
Simon Birmingham: Cathy, what we’ve outlined very clearly in terms of the medium term fiscal strategy, as it’s called, is that our strategy is to ensure we grow the economy faster than deficits and debt in the future so that we’re able to shrink that size of deficits and debt as a share of the economy.
Cathy Van Extel: You’re not going to be able to achieve it, though, without cuts, though, could you example would you, for example, target the blow-out in the NDIS? It stands at $26 billion.
Simon Birmingham: Cathy, I think you raise a fair point in the sense that what is necessary is restraint going forward to be able to ensure that we can achieve that rate of economic growth without seeing new commitments in spending growth. New areas of structural spending create even further challenges. The growth in the cost of the NDIS are significant. The growth challenges we face in delivering on the commitments we’ve made around the Aged Care Royal Commission are challenging. What we have to invest in Australia’s national security going forward is also challenging. These are the identified priorities for which the government is completely committed to supporting delivery of the NDIS, of aged care reform, of national security investment. But it means there isn’t scope for the type of sweeping promises we’re seeing from the opposition at present, such as for free TAFE or for free childcare. These are commitments we’re seeing from Labor that they’re not budgeting properly for. That would have put huge long term structural pressures in addition in terms of the budget and would really jeopardise the ability to get us back to a more stable budget position. We are still one of only nine countries in the world to have a Triple-A credit rating. Two of the ratings agencies this year have indeed taken us off of the negative watch list, so essentially they’ve given a real vote of confidence in Australia. But the budget challenges are real, and they-
Cathy Van Extel: And the budget challenges are real. The opposition says the budget would be in better shape without all the rorts. The analysis this week by the nine papers of more than 19,000 taxpayer funded grants found that there was a total of $1.9 billion that went to coalition seats over three years and just $530 million to Labor electorates. Why shouldn’t we see this as political corruption?
Simon Birmingham: Well, Cathy, firstly, I find the faux outrage from the opposition to be quite hypocritical. Anthony Albanese in this election campaign running up to the next election-.
Cathy Van Extel: Are you dismissing those figures?
Simon Birmingham: Well, I do dispute the figures in that it’s a very selective analysis. It’s 11 grants programs out of some 1700 grants of programs that that operated over the period of time. They’re grants programs that have a disproportionate approach in terms of supporting regional communities in supporting drought affected communities. These are communities the coalition holds the vast majority of electorates in. But I also dispute the type of outrage we’re seeing from Labor because Anthony Albanese himself in the run up to the next election, has already announced a support for multiple swimming pools. And guess what? They’re either in safe Labor territory or in seats the Labor Party is fighting to hold onto or to win. At the last election they went through announcing a $300 million car park program, announced in a seat the Labor party was hoping to win-
Cathy Van Extel: Your talking about Labor but it’s the government that’s actually been issuing these grants. I mean, if we look at-
Simon Birmingham: I’m just highlighted the hypocrisy-.
Cathy Van Extel: But if we look at what the government has been justifying, we’ve heard about, you know, disaster funding, drought funding. But if you look at the inner city seats which haven’t been eligible for those, you’ve got Albanese’s seat of Grayndler receiving 718,000 in grants. Yet the neighbouring seat of Reid 14.8 million, that’s a marginal Liberal electorate. In Brisbane, we’ve got Lilly, that’s a Labor held seat 932,000 dollars’ worth of grants. Yet Peter Dutton seat next door, Dickson getting $43.6 million. There is a massive discrepancy.
Simon Birmingham: And again, Cathy, it depends which programs you choose to look at, because if I add in some of the programs that aren’t part of this selective analysis, I can put an 87.5 million grant into Anthony Albanese’s seat onto that list. So the fact that this is a selective analysis means that many things that support Labor Party seats, that support electorates right across the country have been overlooked as part of it.
Cathy Van Extel: Simon Birmingham, thank you for your time this morning.
Simon Birmingham: Thanks, Cathy. My pleasure.