Topics: COVID Disaster Payment; Economy; China-Australia relationship; EU trade deal; Trans-Pacific Partnership;
03/10/2021
01:00PM AEST
Ross Greenwood: Joining me now, Finance Minister Simon Birmingham. Minister, many thanks to your time. Can I just start with the suspension of the COVID relief payments as economies around Australia reopen. This week, you’ve been tackled in the media with suggestions even that the government is being mean or trying to strong arm state governments into reopening their borders. So can you just explain the timing of withdrawing those support payments?
Simon Birmingham: Thanks, Ross. There are a number of grounds for doing so. Most importantly is the fact that we are following evidence in this space that we’re working off of the data and analysis we had undertaken by the Doherty Institute, which provides a realm of certainty in relation to what can occur in the future and the safe points at which to see the economy reopen and start to track a path back towards the new normal. And what was clear under that Doherty Institute modelling is that 80 per cent double vaccination rates do provide quite high levels of protection across the community and allow us to treat COVID-19 in a way that is more analogous to other infectious diseases and to manage it in ways more consistent with traditional health practice than the type of extreme measures we’ve seen to date.
Ross Greenwood: But clearly, there are going to be more COVID breakouts in the future, more businesses that will need support, communities that need support. So is this a blanket decision that there’ll be no more support in the future? Or do you imagine there’ll be bespoke schemes for individual communities or industries where they’re affected?
Simon Birmingham: In terms of the ongoing economic support, there are things that we have had in place already, such as the loss carry back arrangements for businesses. There are things that we have in place for individuals as well, particularly economic support and financial assistance for people who need to quarantine and isolate under health instructions. Those sorts of arrangements are ongoing. We also have continued economic support for targeted sectors like aviation that has been put in place, recognising the ongoing pressures in that sector. We’ll look carefully if there are other areas that we need to respond, but there are also clear opportunities as you deal with much more targeted responses for states and territories who are setting those very targeted responses to be able to effectively deliver any assistance that’s necessary in those highly targeted areas, communities and for short periods of time that such interventions might be necessary. But we do need to make this transition because we need businesses to be able to get back to business, to get back to employing, to get back to underpinning our economy. And we need our budget to be able to stabilise as well. By the time we make these transitions, some $20 billion will have been paid purely in relation to assistance around these recent Delta outbreaks as part of more than $300 billion that has been committed throughout the COVID-19 pandemic.
Ross Greenwood: Okay, so can we go to the budget now and the deficit has turned out at $134 billion in the past year, so that’s $26 billion or so better than expected. Mind you that said, 136 billion is still a very big number, and the federal government’s gross debt now is around a trillion dollars. So have you got more headroom to spend if you need to? What do you think as the economy reopens, do you anticipate that the deficits will shrink quickly and get back to a position where you can start to address that big debt?
Simon Birmingham: Well, it’s certainly necessary for us to show restraint in the years ahead as we respond in relation to the debt that has been accumulated during this period of time. Australia will finish COVID-19 whenever we get to the end of all of these sorts of different measures and challenges, still with a better debt position relative to the size of our economy than most other developed nations around the world. We came into it in a good position, having brought the budget back to the point of balance that gave us the strength and the firepower to be able to respond and to still have a better debt to GDP ratio arrangement than many others. But nonetheless, it is a significant amount of debt that we have accumulated in this time, and we need to make sure we bring those deficits down as a share of our economy in the years ahead. That’s what we’ll be focussing on doing, making sure that we grow the economy faster than we see debt growing in the future. That’s the way to make sure we shrink that debt as a share of the economy, and that requires us to continue to pursue the type of economic growth strategies that were working before we saw these recent lockdowns.
Ross Greenwood: Now, obviously, it’s important that Australia can trade right now that borders are open. There’s a few issues here. One is, well our relationship with China. You’re a former trade minister. So I just want to ask about that relationship. The US President Joe Biden has reopened dialogue with Xi Jinping as the former Huawei CFO was sent back from Canada to China. They were going to face charges. Of course, there’s a feeling that there is a thawing in those very frosty relations, but is it Australia right now in a better position to re-engage with China?
Simon Birmingham: Ross, we would welcome the opportunity for dialogue with China. We’ve been consistent about that. The Australian government has always been willing to sit down and talk notwithstanding points of difference. We believe the best way to be able to move beyond those points of different is to have appropriate dialogue and to work through your issues with one another. Now we would welcome that at any point in time and of course, continue to encourage China to come to the table in that regard and to show a reciprocity of willingness to talk and to engage in that sort of dialogue.
Ross Greenwood: So reading between the lines there, I’m suggesting that hasn’t happened at this point that while there’s dialogue between the US and China, to this point, there’s no official dialogue between Australia and China?
Simon Birmingham: Not at the ministerial level. Now, officials have dialogue on certain technical issues from time to time, and that’s to be encouraged and we hope to see continue. We’re in a position where, as the prime minister’s made clear in recent days, we’re starting to look at how international movement and travel becomes something more open, more possible in the weeks and months ahead. As part of that COVID transition, that’s also going to see perhaps a bit more of a normalisation of some of the other areas of international engagement, including the different fora and events that that leaders and ministers around the world can engage with each other even informally out. And hopefully that will provide some scope for for some discussion there. We’ve been very clear that Australia is not for compromising on our values. We will protect our security, our sovereignty, our systems, and we will do all of that. But we’ve also been very consistent in our view that we do value the contribution China makes to the region. The bilateral relationship and that we do wish, as I say, to be able to have the type of dialogue that significant countries who share a region like ours should be able to have.
Ross Greenwood: Okay. So you are also on the front line of the group that started up the free trade conversation with Europe, given what’s taken place with the submarine contract, given the attitude of France subsequently. Many have talked about negotiations with Europe for a free trade agreement that they’re going to be more difficult. So how do you see it?
Simon Birmingham: Look, I don’t think we should read too much into the fact that there may be a one month delay in the 12th negotiating round with Europe. The European Union is a gathering of some 27 nations. I’m confident that across the board they recognise the benefit of closer trade ties with this region, closer trade ties with Australia and that though these negotiations can take quite a long period of time. Any concerns that France may have out of their understandable disappointment right now, won’t impede or get in the way of ultimately being able to conclude an effective deal, a good agreement for Australia and for the member states of the EU that can create the type of opportunities we’ve seen come from other agreements. You asked just before about China and often in that relationship, I’ve been asked about the impact on sectors like barley, where China have unfairly imposed tariffs on Australian barley growers. But one of the things we’ve been able to do as a country from that is that we’ve seen our first ever shipment of barley to Mexico, and we’ve done so under the terms of the Trans-Pacific Partnership agreement that was negotiated there. That’s just a demonstration of the fact that having a good network of trade agreements creates options and choices for Australian businesses and builds their resilience to be able to pivot where necessary from one location to another.
Ross Greenwood: So just on that Trans-Pacific Partnership, is there any chance, as has been suggested, that China will become a part of it? Of course, the US under Donald Trump took itself out of the TPP. China was originally and deliberately excluded from that group. So it is the case now that you think China could become a part of the Trans-Pacific Partnership?
Simon Birmingham: Well, first and foremost, we are looking to bring into effect the Regional Comprehensive Economic Partnership Agreement that involves the ASEAN nations, as well as a number of other regional partner nations. And that’s very important because it has those South East Asian nations at its core and centre, but then also has China and Australia, as well as Japan, South Korea and New Zealand at the table there and creates a very important and powerful regional bloc and so with China as part of it. In relation to the TPP, we would welcome expansion of the TPP membership. The UK has already started a process to engage in those discussions, we would welcome other countries, be they the US or China, to the table if they’re willing to do so in meeting the criteria in terms and high standards of the TPP.
Ross Greenwood: Simon Birmingham Finance Minister. Many thanks for your time today.
Simon Birmingham: Thank you, Ross. My pleasure.