Topics: G20; US-China trade war; Labor’s decision not to support full tax relief package; IR reform; ‘Bad Blood’ series.



David Speers:  I want to continue on this front, talk about what we can expect at the G20 but also the tax cut debate back here. Joining me now is the Trade Minister and the Acting Treasurer. Are you also acting Foreign Minister as well? You are.


Simon Birmingham: There’s things on the go (indistinct) president.


David Speers:  Right. Okay. A few of our colleagues away, taking a post-election break.


Simon Birmingham:     Just a quick few days of leave.


David Speers:              Alright. Well, acting all of the above and Trade Minister, the G20, what would be the measure of success this week there?


Simon Birmingham:     Well, the Prime Minister goes in firstly with a priority around countering violent extremism online and picking up from the horrors of the Christchurch massacre, and so, he’s

been making (indistinct) as is to other nations to embrace.


David Speers:  So that all social media companies do have to do better at bringing down violent videos and the like?


Simon Birmingham:     That’s right. To step through getting those social media companies to recognise that they have responsibilities in terms of ensuring this type of content should not be allowed to spread. They should act swiftly if somebody is doing it.


David Speers:  And have the Americans agreed to this?


Simon Birmingham:     No, not as yet but it’s really [indistinct]-


David Speers:  It’s the host of some of these big companies we’re talking about.


Simon Birmingham:     Well, they’re very important in terms of their cooperation and this is not about curtailing obviously free speech. In many cases, these are activities that are illegal in any other format and it’s just a- and of course, the acts themselves are horrific, highly illegal incidents. So it’s just about making sure that in terms of the way those social media companies operate, we’ve got clearer, stronger rules to prevent the spread of that, not just for the fact that that of course has an impact upon the people who see it but to remove it as a tool for terrorists to use in terms of promotion of their activities.


David Speers:  What about on the trade front? What does Australia want achieved this week at the G20?


Simon Birmingham: Well, we would love to see a real commitment to ensuring that some of the unfair practices around global trade are addressed so- and there’s an agenda to try to conclude negotiations around unfair and unsustainable fisheries subsidies this year through the World Trade Organization, to get all countries to commit to resolving those negotiations and make that happen this year with the-


David Speers:  Who’s the worst offender there? Is that Japan?


Simon Birmingham:     No, no. I mean, I think, in that sense, you’re looking more at countries who have unsustainable stocks in terms of the take of fish…


David Speers:  Right.


Simon Birmingham: and the subsidies that occur there and of course, many of these countries have been through different stages of development and so you’ve got to step through how it is you can address their local economic situations and circumstances in a manner that brings it back to a sustainable

fish stocks and for the environment as well.


David Speers:  Alright. So, giving out fishers a better chance. The big moment is going to be, though, the meeting between Donald Trump and Xi Jinping which will happen at the end of the G20 meeting. What would Australia like to see happen there?


Simon Birmingham: We would love to see an end to the trade conflict that has certainly been depressing global economic circumstances and the prospects for stronger global economic growth, and we’ve seen that in terms of forecasts from the OECD and the IMF, who’ve looked at the downturn in projections of growth in global trade and how that flows through into a downturn in projections for growth of the global economy and of course that then impacts upon each and every economy around the world. Now, there are valid concerns on both sides in terms of the use of unilateral tariff measures that the US may undertake but also in terms of concerns about ensuring security and intellectual property and that there aren’t unfair

in industrial areas or otherwise. So…


David Speers:  So just to break that down, China needs to stop ripping off intellectual property and the US needs to stop unilaterally jacking up tariffs.


Simon Birmingham:     Well, we think all of those issues ought to be addressed. Now, none of them are easy in terms of stepping through and making sure you have proper safeguards around intellectual property that you deal with unfair subsidisation practices. But ultimately, the world has been served, over a period of decades now, incredibly well by having a rules-based arrangement for global trade. It isn’t…


David Speers: That’s being flouted right now, isn’t it?


Simon Birmingham:     It isn’t perfect and it’s never been perfect.


David Speers: But it’s not working when the US and China are just unilaterally stacking up the tariffs against each other.


Simon Birmingham: And yet the benefit that we point to is the fact that over this period of time as global trade has grown and the economies of the world have grown, so too have hundreds of millions of people being lifted out of poverty. And so, opening up economies, opening up markets, and embracing trade has served the world incredibly well. It’s

very well. We now routinely record trade surpluses as a nation. That’s helped to fuel jobs and economic activity in Australia. But it has also served our region very well.


David Speers:  So, what happen- if they don’t reach a deal, these two most powerful leaders in the world, what will that mean for the Australian economy?


Simon Birmingham:     Well, continued uncertainty or indeed a continued depression in terms of the rates of global trade. It will not be good news for any economy of the world.


David Speers:  Will it hurt Australian economic growth?


Simon Birmingham:     There are, it will hurt economic growth globally and that will have an impact on pretty much each and every nation, including-


David Speers:  Us particularly though given our reliance on these two countries.


Simon Birmingham: Yes and no. And there could also be, depending on what occurs, short term or even medium term upsides that if trade in some areas is suppressed between those two economic powers, that may well create opportunities for Australian farmers…


David Speers:  Short…


Simon Birmingham: Australian businesses to fill certain voids in our space.


David Speers:  Short term, we could gain out of this.


Simon Birmingham: Well, that’s quite possible. And so, it’s a case that we take the long term

weaker global economic growth is bad for everybody including us and we’d rather see this type of trade dispute avoided. We urge the parties to keep talking. But we’ve also got to be realistic here, and that is Australia can’t fix these problems nor can any other country at the G20. We can speak of our opinions and give our urgings to the US and China to do everything possible to end that trade conflict. But ultimately, that’s a matter between the two of them. What we can do as a government is make sure that our access to other markets is as strong as possible, to make sure that our economy is as resilient as possible, and they’re the things that we keep doing on a trade agenda, on our tax agenda and elsewhere.


David Speers: Let’s talk about the economy here because the Shadow Treasurer today at the Press Club really went after the Government on economic management, pointing out debt has doubled; wages aren’t growing much; Australia has gone from eight to 20th in the OECD when it comes to economic growth; the Reserve Bank has cut interest rates to an historic low, it’s signalling it’s going to go further. How would you characterise the Australian economy right now?


Simon Birmingham: The Australian economy has good, strong, sound fundamentals. Our rate of economic growth, relative to the world’s largest economies in the G7, is incredibly strong, sitting at the second compared to those others in the G7. In terms of our budget position, we’ve been applauded by the international ratings agencies for being able to get our deficit under control, for handing down a surplus budget, and for having a trajectory to pay down debt into the future.


David Speers:  Well, planning a surplus budget, anyway.


Simon Birmingham: Well, handed down a surplus budget. Now, of course, what we expect is-


David Speers:  We’re not in surplus just yet, though, aren’t we?


Simon Birmingham: I think the language is accurate, David. We handed down a surplus budget.


David Speers:  A forecast surplus budget.


Simon Birmingham: And that’s what a budget is. A budget is for the year ahead.


David Speers:  Indeed. Anyway, we had this debate during-


Simon Birmingham: We did.


David Speers:  I know. But you think everything’s fine-


Simon Birmingham: I think my words were quite precise.


David Speers:  Okay. Do you think everything’s fine then with the economy?


Simon Birmingham: No. Look, there are always issues to deal with in the economy. Global issues, we were speaking about before, in terms of the impact on global trade. Are there issues that come along beyond the control of Government, such as of course the prolonged drought? I would expect to see impacts in terms of some of our exports to the nation because of a downturn in production in the agricultural sector, and obviously, agriculture remains a key part of our export mix.


David Speers:  Okay.


Simon Birmingham: But all of those things are factored into our economic projection.


David Speers:  But you agree we need to get a bit more growth in the economy right now? It’s not good enough.


Simon Birmingham: We are we are focused on continuing to try to get the strongest possible growth we can out of this.


David Speers:  Is it strong enough now?


Simon Birmingham: It is an economy that has been performing, and is performing, at strong levels. As I say, relative to…


David Speers:  Is economic growth strong enough now?


Simon Birmingham: Well it is as strong as we can make it now, but we want to keep driving the reforms to make it even stronger and even more [indistinct]. [indistinct] Prime Minister’s speech the other day…


David Speers:  So this is as good as you can do right now, is what you’re saying?


Simon Birmingham: On all the circumstances we’ve been dealing with as a Government, we have delivered jobs growth for Australians, got record numbers of people off of welfare and off of unemployment benefits. We’ve managed to bring the budget back to that point, handed down a surplus budget as we spoke about before. So in that sense, we’ve got some great achievements. The PM yesterday outlined clearly the economic agenda for the future, how we drive productivity through…


David Speers:  Let’s talk about that. Labor’s idea yesterday on tax cuts is to bring forward stage two of the tax cuts to right now, so that everyone gets a tax cut in this term of Parliament. Is that a good idea?


Simon Birmingham: Well it’s rather inconsistent. Labor’s- that they’re arguing against elements of the tax package, saying that it’s fiscally irresponsible, then they say we should bring forward parts of it and do it sooner. Now in the end, you can’t have your cake and eat it too in that argument.


David Speers:  Their argument is stage two gives everyone a tax cut. Why not do that now?


Simon Birmingham: Well, we’ve thought about it in a carefully staged way, that we think reflects the type of variabilities that we might see in future budget forecasts. This is a

that you have tax cuts that you believe are affordable, that meet our economic objectives of getting growth into the economy and ensuring that tax cuts helped to drive household consumption as well as incentives to work harder and work that extra shift, and that’s part of the agenda behind getting rid of bracket creep for the vast majority of Australians, more than 90 per cent of Australians who would see themselves as not paying any more than 30 cents in the dollar under our tax reform measures. But you’ve got to make sure as well that these steps are appropriately sequenced so that they’re affordable too, and that’s we’ve done carefully to protect the surplus.


David Speers: So protecting that surplus is more important than driving a bit more growth right now?


Simon Birmingham: Well, we’ll respond to any circumstances that come along. But based on the analysis we can do today, having looked at the impact of things like the drought, looking at the impact of things like the trade disputes, and all of that feeding into our economic forecasts, we think we have projected reasonable budget surpluses each year into the future

affordable that can sustain the type of tax cuts that we’ve proposed. Labor, as I say, are trying to mount an argument that says it’s fiscally irresponsible to do it in 2024, but yet somehow you can afford to do even more soon. Well, it’s not [indistinct] possible.


David Speers:  Well, their concern about that stage three tax cuts that they’re still resisting is that they’re not sure it will deliver, these $95 billion will deliver that much bang for the buck for the

economy. Is there any modelling to show what growth will get out of that stage three tax cut?


Simon Birmingham: Well once again, the modelling that sustains and supports all of our economic agenda is there in the budget papers, outlining forecasts for economic growth and the forecasts for wages growth. [Indistinct]…


David Speers:  So there is a figure that says what growth we’ll get out of stage three?


Simon Birmingham: Well in terms of what the growth looks like once you get out to 2024 and beyond, that’s all part of the medium term projections that we have in the Budget. That’s what we…


David Speers:  But not a specific breakdown of what stage three means- equals in growth.


Simon Birmingham: Well not a specific in picking that one element out, because you’re looking at the whole range of different factors that occur. Now what is the unlegislated part of stage three. It is to take the 32 and a half cent in the dollar tax bracket that applies for people with earning between $45,000 and $200,000, and turn it into a 30 cent in the dollar tax bracket. And that’s going to be a significant benefit to households earning wages from $45,000 up enormous [indistinct]…


David Speers:  Right up to beyond $200,000 wage increase?


Simon Birmingham: Well of course, and that’s what happens with any adjustment to the tax brackets at the lower levels, that it flies right through the entire row of the entire wage index above that. But this is not about the thresholds. Thresholds have already been legislated. Now I see Jim Chalmers today musing that perhaps Labor might seek to revisit that, which has already been legislated. I think we’ve clearly, in that sense, forgotten that they lost the election. What’s legislated is there and is locked in. What we want to see is the remainder of the agenda put in (indistinct) is it that the Labor Party would stand against reducing the 32 and a half cent in the dollar tax rate down to 30 cents in the dollar for wage earners that start at $45,000.


David Speers:  Let me ask, the Prime Minister yesterday also flagged some industrial relations reform might be on the way to try and get the economy moving a bit more. One of your colleagues, Luke Howarth, reckons if it’s easy to terminate staff in small business, more people might get jobs. Do you agree?


Simon Birmingham: No. I think what the PM did yesterday was set out very clearly the type of preconditions that have to be met for any consideration industrial relations form. It was a broad ranging economic speech. He spoke about the importance of tax relief. He spoke about the importance of openness to trade. He spoke about the importance of dealing with red tape reduction and relieving the regulatory burden on business. And he also said the business, and was really saying to business, if you want us to go further than what’s currently in our industrial relations agenda in terms of the measures to improve the integrity organisations, here are the pre-conditions that we set out. Pre-conditions that ensure workers are not worse off, but in fact workers benefit. Pre-conditions that it drives productivity and efficiency to the [indistinct].


David Speers:  So today, you won’t be making it any easier to sack staff?


Simon Birmingham: That’s not the Government’s policy and it’s not what the Prime Minister was talking about yesterday.


David Speers:  So you won’t do that?


Simon Birmingham: No, David. The PM was talking about very clearly the business to say: if you want us to consider other changes, you’ve got to demonstrate how it benefits your employees, how it benefits Australian workers and drives productivity.


David Speers:  All right. Final one: Peter Dutton. I’m not sure if you’ve seen this today but in our documentary, Bad Blood tonight, he suggests Malcolm Turnbull offered him the Deputy Leadership in the middle of that messy leadership week. I know you weren’t in the room, but is Peter Dutton genuinely a- or generally a truthful colleague, do you find?


Simon Birmingham: Yes. Look, I find I find all my colleagues to be generally truthful, David. These matters

I mean if it’s airing tonight, I think the Australian people cast their verdict on these matters on 18 May, and it’s a verdict that puts them firmly in the past. And the PM and I, and the team all are and need to be looking firmly into the future.


David Speers:  Okay. But my point is if Peter Dutton’s not the sort of bloke who make stuff up?


Simon Birmingham: People can sometimes have differences of opinions around conversations that happen particularly in the heat of the moment. I know that there are conflicting events around those conversations. I wasn’t part of the conversation between he and whoever he had the conversation with. If it was Malcolm or anybody else, that’s a matter for them.


David Speers:  Simon Birmingham, Trade Minister, Acting Treasurer, Acting Foreign Minister and everything else you’re doing right now, appreciate your time this afternoon.


Simon Birmingham: Thanks very much, David.