Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Friday, 12 February 2021
Laura Jayes: A speech today, Simon Birmingham, you'll say if interest rates rise, almost 50 billion dollars could be added to our debt. What rates and timing is that modelled on?
Simon Birmingham: Well, Laura that is modelled on where we to see a shift from what is our current projection that the interest rates will return to their long run averages over about a 15 year horizon. But if that were to occur instead over a 10 year horizon, then you see that sort of significant increase in terms of interest payments we have to make and therefore additional debt that is incurred along the way. So we need to be mindful that we are in a position right now with very, very low interest rates. And they are clearly expected to remain the case for quite some period of time, which allows us to manage the types of debt levels we have. But they are extraordinary debt levels that have been undertaken. The current budget deficit is the highest in peacetime history for Australia as a share of the national economy. And that's why we have to be mindful of sticking to the principles that our government laid out at the start of this economic crisis, that the types of temporary measures we would put in place would be just that. They'd be temporary, they'd be targeted, they'd be proportionate to the circumstances. And that's why we have gradually worked our way from the initial response with JobKeeper, as it was right at the height of the pandemic and the concerns of nationwide economic shutdowns through the different graduated steps of easing some of those costs to now the next transition point at the end of March, where we don't see an end to support across the economy, but we see a change from those blanket approaches of very high cost to more targeted activities underpinned, of course, by lots of other support through the different tax measures that we've put in place.
Laura Jayes: Are you preparing the ground here for austerity ahead?
Simon Birmingham: No. What we've made very clear is that the number one priority is still economic recovery. Of course, keeping COVID under control is a central part of that. But we must get economic and employment recovery before we worry about the true path back to budget repair. But we do nonetheless need to be mindful that every spending decision has to be about the quality of the spending decision as to ensuring that we are focussed-
Laura Jayes: When will you look to budget repair. Is that part of the next term?
Simon Birmingham: Well, that that is about is getting unemployment levels back to a good sustainable level and seeing the progress that is necessary there. And so on current projections, that is certainly a task that we would be undertaking in the next term. But knowing that it will take a considerable period of time, given the shock that has been had to the economy, our country and much of the world has basically lost an entire year's worth of economic growth that isn't caught up again in a hurry, and that has an ongoing lag effect when it comes to budget projections. But we do need to make sure that we take careful spending decisions in the future that are targeted in proportion to the circumstances that are here to get employment levels to where we want them to continue the success that we've had and with remarkable success that Australia has had relative to the rest of the world. In the December quarter, many comparable nations still had their economies shrinking. Ours was growing. Many comparable nations still have vast numbers of people out of work in Australia more than 90 per cent of those who lost their jobs it went to zero hours are back employed. And so our success stands tall compared to much of the rest of the world. And we need to keep that going.
Laura Jayes: Can you get employment down, wages up and make a meaningful contribution to paying down the debt?
Simon Birmingham: Well, ultimately, they are all of the different objectives, we managed to bring the budget from significant deficits when we were elected in 2013 back to the point of balance at the point of the pandemic commencing. And we did that by growing the economy, by getting record jobs growth. More than one and a half million new jobs were created during those six years. And what that achieved was record lows in terms of welfare dependency, more taxpayers and all of that, alongside spending restraint, contributed to us being able to bring the budget back to balance. That ultimately is the same formula for the future. You have to show spending restraint and be careful in your spending decisions. You grow employment and the economy in ways that give you fewer levels and lower rates of welfare dependency and higher numbers of taxpayers that that achieve that type of budget balance. But it would take time and it's not going to happen quickly.
Laura Jayes: It is a difficult balance. In the meantime, post JobKeeper, you're encouraging people to go into the regions to find a job. If they can't in the cities, how easy will that be and how many jobs are there in the regions?
Simon Birmingham: Well, it's not just regional Australia, Laura. You know, the ANZ Job Ads Index, which is a well-regarded, long running indicator that runs alongside employment forecasts quite, quite tightly in terms of the synergy there. It's sitting at at levels of job vacancies higher than pre pandemic levels. So we have a situation where we've seen in some states, such as South Australia, full time employment is now above the levels it was at the start of the pandemic. And you've got those job ads indicators and as you well know, many, many anecdotal examples of regional communities, but also in cities, parts of different industries, saying they're struggling to get people to fill shifts or to do jobs, so we've put on the table $6000 in relocation allowance-
Laura Jayes: If I can put a scenario to you. Cairns is struggling at the moment, there's many people are out of work because the tourism industry has tanked because no international arrivals. We all know that, would you encourage those people to move out of Cairns and look for jobs elsewhere?
Simon Birmingham: Well, even there within the communities and regions of North Queensland. There are other points of the agriculture and other industries who are crying out for some staff. And so it's not necessarily a case of needing to move out of Cairns or a long way from Cairns. There are other parts of regional Australia in the agricultural sectors who traditionally rely on imported labour and staff on backpackers and seasonal workers who are looking for those roles to be filled and have vacancies there. Now it's not going to work in every single circumstance. And that's why we have a strong social safety net system in Australia. But in trying to help people to look at those opportunities, we've got a $6000 relocation allowance that is there. And we do want people to see that there are real job opportunities that exist, some in metro areas, some in regional areas. But of course, in communities like Cairns, we are also mindful of the particular impact there. And so we will be looking very closely at that transition point at the end of March as to any targeted assistance that might be necessary in those types of very unique circumstances that exist.
Laura Jayes: Isn't this the problem as well, Minister? If you encourage people to move for work, aren't you undermining the recovery that will eventually see in some of those areas if the workforce moves out, are they ever going to move back?
Simon Birmingham: Was it said Laura, Cairns is a pretty unique example in terms of the high levels of international visitation, and while even there in the surrounding regions, there are some roles, we will look at those unique circumstances that exist. But we also have to acknowledge that there will be, as you and I discussed last week, some parts of the economy that will face some structural changes in corporate and business travel may not go back to the way that it was before-
Laura Jayes: But if I could stick on Cairns because it is a unique example, as you say. Are you talking about Caren's when it comes to structural change? Because if some of these residents and workers move out, the recovery is going to be a lot harder in places like Cairns, isn't it? So what is your specific advice for that area?
Simon Birmingham: Well, in that area, I'm acknowledging there are special circumstances and we will work through some of those in the run up to the end of March. And in looking at what we can do in terms of any particular actions that might mitigate some of the circumstances in a community like Cairns, we want to make sure that it is there afterwards strong, able to recover. Cairns overwhelmingly a leisure tourism destination. So before I was talking about changes in terms of corporate and business travel, that is likely to be a permanent effect of the pandemic as businesses go about using remote communications in a greater way to reduce ongoing travel costs and so on. The changes that airlines and others are taking account of already. And it leads to difficult decisions, but it's a reality of business that the pandemic has changed things that won't go back to the way they were. And what we are seeing, though, is elsewhere in the economy, jobs growth, more jobs being created in some areas where Australians are spending more at present. And so what we need is to people to fill those jobs. We know in other parts the services sectors, crucial services, sectors like aged care and disability, that there's an ongoing need for workforce in those areas. And that's why we're investing so significantly in the skills agenda to make sure Australians can train to fill vacancies in those areas, that all of the projections say there will be future jobs vacancies.
Laura Jayes: You keep on flagging targeted assistance. Can we please have some more details on that?
Simon Birmingham: Well we will and we will make sure that we release all of those as we make decisions. And we're making those decisions based on granular, detailed analysis of the evidence that's available.
Laura Jayes: Can you give us a timeframe?
Simon Birmingham: We'll be certainly making sure that the decisions are made clearly in advance of March in relation to that next juncture point with the changes to JobKeeper. And of course, there will no doubt be further decisions that we will take based on further analysis in the run up to the May budget as that budget will again be firmly focussed on ensuring that we successfully deliver the economic recovery that Australia needs.
Laura Jayes: Simon Birmingham, before I let you go, how do you feel about potentially sharing a chamber with Pete Evans?
Simon Birmingham: I trust the Australian people to make sure that's not the case.
Laura Jayes: Well, we've seen it before. Very low numbers can get people elected. Is there any real danger?
Simon Birmingham: Well, Senate voting reforms made sure that some of those very quirky examples from the past have ridiculously and unacceptably low numbers, can't translate through secret preference deals into somebody getting elected. You now have to actually have at least a decent vote to be able to get over the line. And I think that Australians have little tolerance for some of the types of views that Pete Evans has pushed in the past. And I'm sure that Australians will elect more sensible people to the Australian Senate at the next election.
Laura Jayes: We will see. Simon Birmingham, thank you.
Simon Birmingham: Thank you, Laura.