Topics: Jobs figures; Cost of living; SA election
18/03/2022
09:25PM AEST
Laura Jayes: Live now is the Finance Minister Simon Birmingham, live from Adelaide. Good to see you, Minister. This is a fun time of year. The budget speculation season is in full swing. I know you’ve got not going to tell us individual measures, but what is the purpose of this budget? What are you trying to achieve rather other than get re-elected? Of course.
Simon Birmingham: Well, thanks, Laura. It is, of course, yes. A bit of the silly season for budget commentary where I see lots of guesses and many of them inaccurate in terms of what will or won’t be in the budget. But this will be a budget framed around how we ensure we continue Australia’s economic recovery from COVID and how we make sure that we manage the very many difficult issues we face around the world at present. It is a budget being framed against a very uncertain global backdrop that COVID continues to cause challenges. We have a war in Europe and we have inflationary pressures that are much worse overseas than are here, but are having impacts, of course, right around the globe. And so all of these different aspects mean we need to frame this budget carefully to maintain that momentum of our very strong economic recovery from COVID, to manage the transition from the big injections that were necessary to get us through COVID-19 now into a steadier phase that enables us to continue to see, as the Treasurer has outlined today, those projections for gross debt as a share of the economy coming down over time, peaking earlier and lower than had been forecast to be the case. But making sure, crucially, that we keep the focus also on achieving and maximising the jobs growth that we have been so successful at, with 1.7 million jobs created since we were coming to office. Now seeing unemployment hovering on tipping below 4% and we want to make sure we get every possible opportunity for as many jobs as possible for Australians.
Laura Jayes: Life has got more expensive under your government. What are you going to do to ease the cost of living?
Simon Birmingham: Well, it starts, Laura, by building on the things that we are already doing. And we have made sure that in terms of supporting Australians with cost of living pressures, we’ve provided additional disposable income to Australian households through our income tax cuts. They’re providing around one and a half billion dollars a month extra into Australian households. And that means that if you’re on about $90,000 you’ll be receiving about $50 a week extra in terms of disposable household income thanks to those lower income tax rates that we’ve introduced. And of course our plans have further cuts to income taxes coming through in the years ahead. We’ll be building as always, on trying to drive further downward pressure in areas like electricity prices, where again, our policies have seen an end to the skyrocketing of electricity prices and actually around 8% reductions over the last two years. But in this Budget we’ll be looking carefully at any other ways where we can very carefully make sure that we address cost of living pressures without undermining the economic recovery or without adding to the inflationary pressures that we’re getting from other parts of the globe, which of course put their own pressure on interest rates.
Laura Jayes: What do you mean when you say adding to inflationary pressures? What would do that?
Simon Birmingham: Well, the type of wild spending promises that sometimes we see from Labor parties and that’s happening here in South Australia at present and we’ve seen it in the past from Federal Labor and of course we’ve seen during the course of the COVID-19 pandemic that the Federal Labor Party has at different junctures called for what would tally up to more than $80 billion worth of extra spending over and above what the Government undertook. Now we did some pretty extraordinary things to get through COVID-19, but when you think about the fact that Australia has an economic growth stronger than any other G7 nation, that we’ve had employment growth tracking us into this territory of seeing us reaching levels that could see a three in front of the unemployment rate. The idea that you would have needed to have another $80 billion of spending in terms of extra spending on JobKeeper or extra spending to get people vaccinated. These would have been wasteful. But they also with the scale of spending proposed, if you were to see that in the future, that’s the type of spending that would add additional pressure.
Laura Jayes: But Minister, we’re in the twilight zone. When you’re criticising Labor for money that they may have flagged spending at one time and didn’t spend when you spent $10 billion in JobKeeper on people that didn’t need it.
Simon Birmingham: I don’t accept that, Laura. Where the Labor Party called for JobKeeper to stay at a higher rate, they called for it to go for longer. They called for more people to be eligible for it. They also went out and said that we should give every Australian 300 bucks to get vaccinated. You know, these are just some of the examples of what would have piled a further $80 billion onto Australia’s costs and debt at present. Now of course they weren’t in government, thankfully. And we said no. We showed the resolve to step away from JobKeeper even when they said we should keep extending it. And the proof of that result was that as we stepped down from JobKeeper each subsequent month, we saw more people coming into the labour market, more people getting jobs, and there’s these very impressive unemployment rates.
Laura Jayes: Yeah, it is impressive. Absolutely. We’re almost at full employment. Why then aren’t wages going up?
Simon Birmingham: So when we handed down MYEFO at the end of last year, that showed that that from the next financial year onwards, the forecasts do have for wages growth, wages growth above CPI. So real wages growth forecast in each of the forward years. The COVID-19 disruptions have been extraordinary. We saw indeed deflationary aspects at one stage. Then we saw a reinstatement of costs in areas of the economy. Now we’re dealing with other shocks. But importantly, the forecasts do show real wages growth. What we’ve done is the government that is within our control, though, is, of course, to address those issues of disposable household income, which is where things such as our income tax cuts are making a difference in Australian households. We know that it’s tough in many circumstances, but it would be much tougher if households didn’t have what has been $30 billion extra so far this year of additional cash going into their pockets from lower income taxes.
Laura Jayes: Sure. But you’ve been in government for the better part of a decade. Something’s gone wrong along the way in either fiscal or monetary policy, hasn’t it, when we have some of the highest household debt in the world, wages haven’t gone up. We have full employment. Indeed, businesses cannot get enough workers. What in that is within your control that you should have done better?
Simon Birmingham: Laura, you always look to see what you can do better. Crucially, when we framed the economic recovery plan from COVID-19, we focussed on areas of productive investment in the Australian economy. So the big measures that we’ve brought in and such as the full expensing measures for Australian business, have driven a huge surge in investment in plant, machinery, equipment, the type of things that that will make businesses more productive, more competitive in the years ahead. They don’t just provide short term stimulus and from that productivity it’s how you help to achieve stronger wages outcomes and contribute to that too. The same is said for the productivity enhancing benefits of our record infrastructure spend, or of course the record investment in skills and the benefits that will provide across the economy in the years to come.
Laura Jayes: Okay, finally, before I let you go, it doesn’t look good for Steven Marshall tomorrow. Would you agree?
Simon Birmingham: No, I don’t. I don’t agree, Laura. Look who nobody likes to predict. I certainly don’t like to predict. At least I’ll leave it to the commentators what election outcomes will be. But I think Australians in the last, South Australians in the last couple of weeks in particular have seen the starkness of the choice before them, that they’ve got a Labor Party who is spending and promising big but hasn’t outlined any plans for how they would effectively pay for that, how they would effectively grow the South Australian economy. Versus Steven Marshall, whose track record is one of having changed South Australia around to be in a position of being the fastest growing state in the country for its economy. Record jobs numbers in this state. Businesses and people actually relocating to the state rather than moving out of it. It’s a strong record of achievement and I think South Australians are seeing that there are enormous risks with changing after just four years of having those turnarounds achieved.
Laura Jayes: If he does lose, I mean, does the party only have themselves to look at they seem more inclined to fight with themselves than the opposition?
Simon Birmingham: Oh, look, I think there are many factors at play across what will drive voters positions. But right now, 24 hours before polling day, what’s crucial is that people do think about the future of the state and how that future is best positioned to make sure that we have incentive and reasons for young people to stay here, for people to move here, for jobs to be created here. That’s how you invest in health and education systems. I think this is a bit of a fork in the road moment for South Australia that having gone on the pathway of turning around the state from what was getting a pretty poor reputation for its business and economic outcomes to now being a place where there is a real buzz about it, that if we don’t double down on that and make sure it is solidified over the next four years, then it could be a terrible wasted opportunity.
Laura Jayes: Okay. Simon Birmingham, thanks so much for your time.
Simon Birmingham: Thanks Laura. My pleasure.