Topics: Omicron; Budget; Fiscal strategy;
Peter Van Onselen: Finance Minister Simon Birmingham is behind the economic forecast and joins us now. Minister, let’s start with Omicron. Every epidemiologist that we’ve spoken to has said that it’s just too early to be so optimistic. So who is telling you guys differently?
Simon Birmingham: Well, Pete, look, we are being optimistic because the health advice we’re getting is saying that at this stage, at least, Omicron is showing it has relatively mild symptoms, especially in younger people, and that people should still have confidence in relation to vaccines preventing serious illness or disease and we are one of the most heavily vaccinated countries in the world. We’ve hit 90 per cent double dose for the nation now, we’ve got an advanced booster program, a childhood program and that should give us the confidence and safety that we can keep reopening and keep this economic recovery going.
Jan Fran: Minister, your government loves to be in the black, back in the black – there is red as far as the eye can see here, with tax cuts to come. What’s your plan for closing the deficit that you’ve been so adamant that you want to close?
Simon Birmingham: So, indeed, look, COVID has been a game-changer for so many different parts of our lives and for the world, and in Australia’s case we’ve had to spend and we’ve run the biggest deficits in the nation’s peacetime history, with tens of billions of dollars of investment in our hospitals, in vaccines, in a range of supports and, of course, all of the economic assistance to keep small businesses afloat. But what we’re seeing from this budget update is that where debt for Australia for forecast to peak at close to 44 per cent of GDP or the size of the economy, it’s now going to come in closer to 37 per cent, and that’s a function, of course, of having so many more Australians in jobs and so many more Australian businesses doing better than we had thought COVID indicate for them.
Peter Van Onselen: There’s still no move towards what you would call budget repair. You guys originally said that when unemployment had a four in front of you would start budget repair but you did not think that would happen until after the election. Is that the reason why you are not going down fiscal tightening at this point in time because you have an election you have to win?
Simon Birmingham: No, Pete, what we spelled out in what’s in the rather un-sexily called the medium-term fiscal strategy was that when we saw sustainable levels of unemployment we would be transitioning into a period where we focused on getting that debt lower and that’s precisely what we’re seeing happening. The stronger we can keep the economy going, the lower we will be able to drive that.
Peter Van Onselen: But that is a function of economic growth that is not a function of any fiscal belt tightening?
Simon Birmingham: Peter, certainly at this stage of the recovery we don’t want to be taking decisions to cut or to cause difficulties elsewhere.
Peter Van Onselen: Because you’ve got an election to win.
Simon Birmingham: And we’re committed to honouring our promises, too, and that’s why in this budget update people can see that we’ve committed even more dollars into the National Disability Insurance Scheme, because we want to be honest about the costs of that scheme, but also make sure we honour the promises we made to fully fund a scheme like that.
Tony Armstrong: Thanks for joining us tonight, Minister. You’re talking about commitment at the moment. You’ve got 16 billion set aside but it is not yet announced. Are you going to announce that on the campaign trail or in the budget?
Simon Birmingham: This has been about making sure we are really prudent and cautious in providing this budget update. That we want to make sure that for those international ratings agencies and for everyone else we have conservatively allocated for contingencies. Since the last budget, we had to spend $25 billion more on COVID-19 response than we had thought to be the case and where we have extra policies that we think need to come to bear and need to be announced and locked in, of course we’ll announce those and we’ll provide the full update in next year’s budget to detail where those spending commitments are, what we’ve had to do in terms of delivering on that, but also hopefully being able to do so to provide even further improvements to the budget bottom line just like this update provides.
Peter Van Onselen: Minister Birmingham thanks for your time tonight.
Simon Birmingham: Thanks, guys, my pleasure.