Topics: Omicron; MYEFO; Employment outlook; Vaccination; Budget recovery;
Steve Price: The Mid-Year Economic Statement will be delivered by the Treasurer Josh Frydenberg. At some stage, I think around lunchtime, his right hand man is Simon Birmingham, the finance minister who joins us. Thanks for your time again, Minister.
Simon Birmingham: G’day, Steve. Great to be with you again.
Steve Price: Yeah, you too. We like to be upbeat and very positive about these things, and certainly the job growth and wages growth in these statements looks good. Are you now becoming increasingly concerned, though, with this new variant, Omicron?
Simon Birmingham: Steve, we understand certainly the hesitation that some people have, but I think everybody should keep Omicron in perspective. The Australian chief medical officer yesterday issued a statement making clear that early reports still indicate that it eventuates in mild disease, particularly amongst younger populations, and also said that current vaccines remain effective against severe disease and death. And that’s a really, really important point in terms of the fact that the vaccines are appearing to be effective against severe disease. And as a country that has one of the highest vaccination rates in the world higher than New Zealand, higher than the United Kingdom, higher than Norway or Finland. And in the next few days as a nation, we will tick over 90 per cent double dose. We should have confidence that we can continue the path of reopening and withstand this new variant given the fact that we are so heavily vaccinated.
Steve Price: We still have this problem with the federation, where you’ve got a liberal premier of New South Wales, Dominic Perrottet, who seems determined to open up his state. He wants the economy to get back up and running. And yet you’ve got Labour premiers like Mark McGowan in WA and Annastacia Palaszczuk in Queensland. A lot more gun-shy about this. So how can you possibly do the work on this mid-year budget update when you when it’s almost impossible to frame the figures on an economy opening up as one? How do you do that?
Simon Birmingham: Steve, because the fact is that the national plan that Scott Morrison brought forward informed by scientific evidence and encouraging steps to be taken at the high levels of vaccination in the country is working. We have seen the states that had COVID outbreaks New South Wales and Victoria reopen their economies, end those lockdowns, ease restrictions. And we have now seen led by South Australia, now followed by Queensland and Tasmania, borders come down and movements begin. Now, are they all working through this with some teething problems and some issues to iron out? Yes, they are. But the reality is we have borders open for movement into South Australia, into Queensland, into Tasmania, from New South Wales, the ACT and Victoria this week that weren’t open in the case of Queensland or Tassie a week ago and in the case of South Australia, weren’t open a few weeks ago. And so it’s really encouraging to see that progress. Yep, we need to see further progress and that march forward. But happily, they are all taking those steps and doing so in accordance with the national plan that Scott Morrison laid out.
Steve Price: So these numbers would be predicated on a post delta economy in Australia Omicron came along. We’ve seen in the UK overnight seventy eight thousand six hundred new cases. They’re going back into some restrictions. Would you prefer Australian states to avoid lockdowns and if they have to go into lockdowns, does it blow up your figures here?
Simon Birmingham: We definitely would prefer Australian states to avoid lockdowns. The dividend of vaccination has to be that as a more protected population, we get to stay open, we get to keep our lives freer and our economy stronger and our jobs safer. And so that’s why we’re working hard to ensure that Australians now pursue the booster program that’s available in around 100,000 people a day at doing so at present. And as soon as people are due, we encourage them to come forward and get that booster just as we encourage people to bring their children forward to get their doses in January, when that part of the program opens up. And that will take us from what is already one of the most protected populations in the world to be even further protected, which should give everyone the confidence to be able to be open. A really important factor to remember here, Steve is not the headline reporting of case numbers, but the impact on our health system. That’s where it really matters, and that advice from our chief medical officer that vaccines remain effective against severe disease and that early reports indicate a mild disease from Omicron should give us confidence that even if those headline case numbers increase, it won’t place undue pressure on our health system because we are so well protected by that deep vaccination penetration across our population.
Steve Price: The wages growth that will be announced today in these numbers by Josh. Is that being driven by labour shortages or is it being driven by a recovering economy or is it both?
Simon Birmingham: Steve, all manner of factors play into these things. What we’re expecting to see over the next few years is the creation of one million additional jobs, a faster rate of jobs growth than we had forecast in May this year. So notwithstanding the impacts that Delta had in terms of the closed downs and lockdowns across New South Wales, Victoria and the ACT. We’re actually seeing the economy recovering faster, jobs growth faster than expected, revenue flows into government better than expected. And that’s going to push the unemployment rate down towards four and a half per cent in the middle of next year and further trending down to four and a quarter per cent by the year after. And we’ll be the first time in many, many years that we’ve seen sustained levels of unemployment in the fours. That, of course, does translate to some greater labour market pressures. And I know for Australians where that does translate into wages growth, that will be welcome for some. But importantly, in terms of the things we can control as a government and we’re already putting $1.5 billion a month extra into the pockets of Australian households and families through the tax cuts that we’ve delivered as a government.
Steve Price: The fact that we’ve got anybody on an unemployment benefit at the moment staggers me, given there’s 80,000 jobs alone that are freed up in hospitality. But I guess at any given time, there’s going to be some people who are not employed. I should point out Australia’s just hit, which is great news for everybody of everybody over the age of 16. Simon, we’ve now got 90 per cent of the population vaccinated, which is double vaccinated, which is amazing.
Simon Birmingham: It is a huge, huge accomplishment by Australians. And as I said before, this puts us above all of the main global averages and above so many countries that we would ordinarily compare ourselves with, like New Zealand or the United Kingdom, many other European nations. You know, this is a demonstration of the fact that Australians have turned out have backed the evidence around getting vaccinated, and we just encourage people now to keep that up in getting those boosters that can further advance our protections and ensure that we can handle Omicron without the need for lockdowns or undue restrictions, and can make sure that in handling Omicron, we keep safe whilst keep businesses open, people in jobs and the economic recovery that’s well underway continuing.
Steve Price: Just finally, in the first quarter of next year, you’ll fight an election against Labour. I note Labor are making less big promises than they did under Bill Shorten, but Anthony Albanese has been talking about things like childcare and TAFE education. Can the budget stand those sorts of cost blow-outs?
Simon Birmingham: Short answer to that, Steve, is no. We have some big spending pressures growing in the future at the cost of operating the National Disability Insurance Scheme continue to grow. The cost of delivering reforms and solutions to aged care pressures are significant. The costs of meeting our national security challenges, investing in our defence forces, in our cyber security and those protections are also significant. So the priorities we have in terms of spending growth are already well mapped out, and it’s going to be challenging enough to make sure we can meet those whilst retaining the AAA credit rating we have from all three of the world’s major credit rating agencies at present, without bringing on board extravagant new promises like free childcare for everybody, regardless of a family income or free TAFE, which would be a huge shift of costs from states and territories onto the federal government. Those sorts of things which Anthony Albanese and the Labor Party are talking about would either endanger our Triple A credit rating, make the budget position worse, damage potentially our economic recovery. Or, of course, would see Labor resort to going back to some of Bill Shorten’s $387 billion in higher taxes to find a way to pay for them so Australians would pay one way or the other. And that will be a defining element of next year’s election campaign in terms of the fact that to keep our economy strong, to keep our credit rating strong, we do need to make sure that we show restraint in the years ahead, not the type of profligacy or pandering to the Greens and other sectional interest groups the Labor Party will pursue.
Steve Price: Good to catch up. Thanks for your time, Minister.
Simon Birmingham: Thanks, Steve. My pleasure and merry Christmas to you and all of your listeners.