Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Monday, 15 February 2021
Liam Bartlett: If you are worried about the end of JobKeeper when it's wound up at the end of March, fear not, Federal Finance Minister Simon Birmingham is urging able bodied singles to pack up and head bush and get a job where there are plenty available. The finance minister has also warned that while our national debt is manageable now at a time of record low interest rates, that certainly won't be the case forever. And if we are to be in a position to be able to handle another crisis or, heaven forbid, another pandemic, then essentially we need to turn off the tap when it comes to financial support from taxpayers. That weighs heavily on our ever increasing debt levels.
Senator Birmingham has been outlining his position on the state of our finances this morning over in the eastern states and his first major speech since taking up the job following the departure of Mathias Cormann. Senator Birmingham, good morning.
Simon Birmingham: Hello, Liam. It's great to be with you.
Liam Bartlett: Nice to talk to you, too. So the big spending emergency measures are draining the national piggy bank?
Simon Birmingham: Well, it's certainly the case, Liam, we took unprecedented steps last year, quite rightly. The ends have justified the means. If you look at Australia's situation compared with the rest of the world, our health interventions and our economic interventions have saved both lives and livelihoods. And so there's much that our country can be proud of and pleased with in terms of the management of all aspects of this COVID pandemic. But we do also have to acknowledge that this year's budget deficit will be the largest in our peacetime history, that it is only second to those as a share of the economy that we were running during World Wars one and two. And so we have taken truly unprecedented steps in unprecedented times. And we now have to look at the fact that they are different times going forward. Our country has shown that it can successfully manage COVID whilst having a relatively high level of economic activity underway. That's not to say that all support is at an end. We have more than one billion dollars a month in tax relief flowing through households that will continue. We have huge tax relief for businesses, those who are running losses to be able to carry them back and deduct against previous profits those who we want to incentivise to invest in a big manufacturing support package. All of those things are crucial ongoing assistance. But the economy wide, widespread spending programmes like JobKeeper, that were an unprecedented intervention into the economy, that needs to now be much more targeted and stick to the principles we outlined at the outset around it being time limited and ultimately coming to an end.
Liam Bartlett: Well, when you say it needs to be much more targeted. Minister, would you agree and accept that it was rushed out a little bit too prematurely in that sense in timing and there was a few mistakes made?
Simon Birmingham: Well, I think the circumstances we faced in the second and third quarters of last year where we were looking at widespread economy wide shutdowns occurring and the potential for massive business failures, not just job losses, but business failures. And if we'd had that occur, then the chances of recovery would have been much, much harder, because clearly, if the businesses fall over and go into liquidation, you actually don't have entities to re-employ people afterwards.
Liam Bartlett: So I'm not arguing you didn't do enough. I'm putting the premise to you. Did you do too much too quickly?
Simon Birmingham: No, I don't think so. We went through a period there where we were saying pretty much all human contact facing parts of the economy, having to shut down and do so potentially for for unknown periods of time. And let's remember that we had estimates now from the Reserve Bank that some 700,000 Australian jobs were saved as a result of JobKeeper. So that's the scale of the impact that we're expecting without that type of programme.
Liam Bartlett: What about the other stories, though, Minister? I'm sure you've heard the stories, too, like me and like most of our listeners this morning, not anecdotal stories, real stories. You know, people who know people who know people and a lot of young people. And not just picking on that age generation. I'm talking about from a point of view of the jobs they had, lot of people who were getting JobKeeper have been getting JobKeeper getting more money than they ever got in a part time job. I mean, there's so many of those stories. Surely we've been we've been giving away money where we didn't need to give it away.
Simon Birmingham: Look, there are there are those stories that that we hear. But let's also remember we hit our first recession in many, many years. And so this type of spending hasn't just saved jobs, but it has also provided some stimulus into the economy and has enabled, indeed, the creation of jobs in other sectors, the retail sector in particular has enjoyed growth that was certainly unexpected at the at the midpoint of last year, and so that's created new jobs, new opportunities in different sectors to offset some of those in parts of tourism or travel that clearly have been hit. And so whilst we've seen jobs lost in parts of the economy, overall in recent months we've been seeing employment continue to grow. And even as we have tapered off, as we said we would, the support of JobKeeper and the JobSeeker supplement at the end of September and then again at the end of December, with the final step to occur at the end of March. At each of those earlier junctures, that withdrawal and slowing down of some of that support hasn't impacted the fact that jobs have continued to be created and to grow. And so that demonstrates that we have been getting, I think, that balance broadly. Right.
Liam Bartlett: Well, it may also demonstrate that we had too much largesse at the start.
Simon Birmingham: Look, as I say all of these decisions were taken in in times where we were confronting complete unknowns, none of us had lived through a global pandemic of this nature before. What we did know was that decisions were being taken to force businesses to shut and to force people to stay at home and to do that on a scale never before seen. But the risk of job losses at that stage, as I say, could have run that. The Reserve Bank predicts JobKeeper saved 700,000. And so it's been a crucial lifeline. But I think where we are in agreement is that those lifelines were made at that stage. We're now at a very different stage where we can see the strength in the Australian economy, the ability we have to better manage COVID and clusters and outbreaks in more targeted and short term ways and of course a vaccine on the horizon.
Liam Bartlett: So Minister, that lifeline that you talk about, JobKeeper finishes at the end of March. That's non-negotiable, isn't it?
Simon Birmingham: It does finish at the end of March. We've long flagged that and we've taken the steps of tapering it off at a couple of junctures along the way.
Liam Bartlett: Alright. And what about JobSeeker, Prime Minister? Will that change?
Simon Birmingham: The JobSeeker supplement is also scheduled to finish at the end of March. JobSeeker itself is the new NewStart. And so that, of course, continues to provide the basic support for Australians who are unemployed.
Liam Bartlett: But that supplement is also finished, dead in the water. There's no, because there's been discussion, as you know, that you may continue a fraction of it, but that's not happening?
Simon Birmingham: But we are closely analysing all of the data to make a final decisions in the run up to March in that regard.
Liam Bartlett: So it's not far away. What are you thinking?
Simon Birmingham: Know, we're getting the last step down in these in these programmes occurred at the end of December. So we are working with the Tax Office and with Treasury to get as much granular data as we can to make sure that the decisions we take going forward are as informed as possible due to the circumstances. We don't want rude shocks to the economy, but nor do we want to be propping up businesses that won't be viable at any stage into the future. We need to make sure we're supporting adjustments to occur in ways that help people to have secure jobs, looking forward.
Liam Bartlett: How much has JobKeeper cost the taxpayer? Just JobKeeper.
Simon Birmingham: Look, just JobKeeper. I mean, total economic support is running at around two hundred and fifty billion dollars. So just JobKeeper itself is about eighty three dollars billion that has gone out the door so far. Again for this remaining quarter. We're still getting final figures as to where that's likely to land.
Liam Bartlett: Eighty three billion so far and will well the unemployed at the end of March. Will the unemployed take your advice, do you think, Minister, to head out of the cities and get a job in the bush?
Simon Birmingham: So it's not just in the bush, but certainly we hear particular cries from regional Australia and they're not all just seasonal jobs in terms of fruit picking or the like. There are ongoing roles that exist. And so the point there is that we have vacancies in the Australian economy, some of them regional, some seasonal, some not, some in the cities in different sectors. And we also have growth sectors in services industries, particularly like aged care and disability services. And so there's a mix of steps being taken here. We've got incentives to encourage people to move. $6000 of support is available if somebody wants to up and move to an area where they can find employment in regional Australia. And we also have a big increase in investment in skilling that is there to try to help retrain or skill people for those sectors of future growth. And we've got a significant investment in continuing to support apprenticeships with wage subsidies up to 50 per cent, helping to create new opportunities there that are crucial about skilling in employment for especially young people.
Liam Bartlett: But realistically, do you think do you think young able bodied people, what are you what are you thinking? I mean, they have to be up, have to be but potentially single so that they can be more, more, more mobile. Do you think they will really take these sort of offers up?
Simon Birmingham: Well, we know that amongst those on JobSeeker there is a cohort who are single, who are younger, who don't have any particular impediments to being able to work. And so there should be a heightened level of mobility there for those individuals. Now, it's not always easy. We know there can be other commitments, but where you have relatively few impediments, then we want to make sure that people are taking the jobs that are available and encourage them to do so and make sure they're aware of some of the supports that are available to help them do so.
Liam Bartlett: Senator, I know this is a difficult question in a sense, but how long will it take? You know, we talk about 200 plus billion that we've spent so far just on this. And then, of course, there's the existing national debt level prior to COVID. How long do you think it will take for Australia and Australians to repay that national debt to sort of pre-COVID levels?
Simon Birmingham: Look, the repaying part is almost impossible to predict Liam, there are so many variables and assumptions you'd have to make to project out so far into the future. What we can see is that the position right now is sustainable and manageable. We have extremely low interest rates that actually mean that the amount of interest we're paying on our debt is decreasing, even though the debt is so much more. And so-
Liam Bartlett: But that's not going to last forever.
Simon Birmingham: Indeed. The point I'm making my speech today is we can't assume that will last forever. The current budget outlook is that is that it may be about 15 years before we see a return to long term averages around interest rates. But a point I'm making is if that were to occur in a 10 year horizon, well, it comes to close to 45 billion dollar additional cost. So we do need to be very mindful of the spending decisions we make today, have consequences into the future. And that's why we have to be responsible with them. Clearly, the way in which we have the strongest possible budget outlook is to have Australians in jobs, not on welfare. That's what was working for us pre pandemic. We'd created more than one and a half million additional jobs and that had got welfare dependency amongst working age Australians to record lows. And of course, it created more taxpayers. And that's the virtuous cycle that we want to recreate over the years to come.
Liam Bartlett: Alright, Minister, thank you very much for joining us this morning. Appreciate your time.
Simon Birmingham: Thanks Liam, my pleasure.