Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Thursday, 25 February 2021
Adrian Franklin: It's a real pleasure to welcome the Minister for Finance and Senator for South Australia, Simon Birmingham. Welcome to Ticker News. How are you today?
Simon Birmingham: Hello, Adrian. I'm great. It's great to be with you. Thanks for the opportunity.
Adrian Franklin: Absolutely. So we've been fascinated to watch Australia's trade relationship with China, particularly over the last six months. It's been suggested the partnership is at its lowest point in decades. So how does this impact our region and Australia's financial place, do you think, over the coming years?
Simon Birmingham: Well, certainly China's more aggressive or assertive stance in a number of ways has put additional tensions into different parts of the relationship. But many, many Australian businesses continue to successfully engage with China to successfully trade with China. And I would anticipate that will continue to be the case. And certainly as a government, we remain committed to working with all of our partners across the region, open to dialogue with China, but also to supporting our businesses to be able to diversify. And if you look at some of the other market trends we've seen in recent times, for example, the barley industry, one of those sectors most directly hit by China's tariffs and actions against certain industries, they have sent their first shipment of Australian barley ever to Mexico. And they've done that as a sign, of course, that the Trans-Pacific Partnership, our trade agreement that we struck with a number of countries across the region and gave us our first ever access to a market like Mexico is clearly yielding dividend, opening up market opportunities there and our farmers and grain exporters diversifying. I know they're also securing new markets into sectors across the Middle East and elsewhere. And all of that is just an example of the opportunities we're seizing through new trade opportunities under our Vietnam economic strategy, under our Indonesia Economic Partnership Agreement, and continually working on our India relationship as well.
Adrian Franklin: So you may have touched on it there, but in terms of our financial position and also the strategy how policymakers and businesses in Australia need to make any changes in our plans in terms of that strategy, given some of these trade barriers with China.
Simon Birmingham: So the government we've long had a policy of trying to open as many doors and opportunities as possible for Australian businesses. And that's what the growing network of trade agreements that we've negotiated has done, trade agreements that weren't just with China, but were also with Japan, with Korea, with a number of the countries that I mentioned before. And that see us also in negotiations with the European Union and the United Kingdom. But for business, I think particularly the last year or so has seen the risk profile of trading with China change, and that will see many more businesses look at some of those other opportunities that we opened. And so just as our grains producers may not have sent barley to Mexico, had they still had easy access into the China market, they have made that pivot. They've used trade agreements that we had negotiated. And I expect that other sectors, other businesses will continue to do so. And that Dan Tehan, our new trade minister at a federal level and all members of our government will continue to look at how we can create more of those opportunities and choices for business to choose to take.
Adrian Franklin: In terms of those opportunities. I think our viewers who are definitely younger in terms of age bracket in many ways, is there one opportunity that you would like them to know about that might be near that you're building towards in terms of opening doors up over the coming years, is there one that comes to mind?
Simon Birmingham: I think the exciting area of our region are the 10 ASEAN nations, the Association of South East Asian Nations, 10 largely tiger economies, countries that include Vietnam and Indonesia put together. Those 10 are our second largest trading partners. They are a crucial bloc within our region and we see very significant growth. Some of them, of course, Singapore, Malaysia, Thailand, with whom we have quite long-standing relations. Others like Vietnam and Indonesia, where there is real growth potential. And and across those economies, you see that growth potential in all different sectors, be they parts of our traditional trading relationships in areas of primary production, but also increasingly in areas of technology, in services sectors. And the opportunity there, particularly in some of those services sectors, to provide world leading high quality Australian services into those fast growing economies of our region. I think is one of the most exciting potential areas that we have.
Adrian Franklin: The past 12 months have clearly been remarkable in so many ways for every country, but particularly Australia. How much of a hit have we taken in terms of our general financial position and in terms of younger people in Australia? Clearly, they're worried about their futures, their jobs. What impact do you think this might have on younger people in Australia?
Simon Birmingham: Well, Adrian, it has been a truly remarkable year. And we do say that in terms of Australia's government budget position, we are facing the largest budget deficit in our nation's peacetime history as a share of the national economy. So the deficit to GDP ratio for this financial year is higher than at any point, except for during World War One or World War Two. And that puts it in very stark terms. But equally relative to other advanced economies around the world, our debt is relatively low. Our ability to manage that debt is certainly very good with the current very low interest rates that that are there. We are currently paying, as in terms of interest payments, zero point seven per cent to GDP interest payments. Now that is that is comparable or even lower than at some points during the 80s and early 90s. We actually have forecast for that to come down a little bit to zero point six per cent, given the very low interest rate environment that is projected to remain in place. But it is crucial that that we make the decisions to bring government spending back under control. We did what was necessary to get Australia through the worst of the pandemic, through the worst of the economic crisis in and out of recession relatively quickly. We know there are still tough times ahead for many businesses and that there will be challenges as we see structural adjustments across the economy. But equally, we have to make sure that we work to bring the budget position back to a point that is sustainable for the future.
Adrian Franklin: Let's switch our attention to America for a moment. Clearly, we've seen a big switch in U.S. politics with President Joe Biden now in the White House. What does this change mean for Australia?
Simon Birmingham: Well, with every new president and every new administration in the United States, we write a new chapter in what is a remarkable alliance between our two countries. We are very positive and buoyant about the opportunities that will exist for Australia to work with a Biden administration. Those opportunities will exist as part of the COVID recovery and the economic opportunities that we will both seek to pursue. They will exist in terms of regional cooperation, and we welcome the very strong indications from the Biden administration of their support for the Indo-Pacific strategy that Australia holds for our desire to see a safe and prosperous and open and free Indo-Pacific and support for the sovereignty and independence of all nations across our region. We also look forward to working with the Biden administration in areas such as climate change policy. The Biden administration has made very clear their priority on investing in technology to achieve the transformations that are necessary to achieve a low emissions and ultimately net zero future. And Australia under our government has scaled up our investments, laying out a series of technologies, stretch targets that we want to see met, and be that for how you get hydrogen, clean, green, hydrogen to an economically affordable price for how we equally make reforms in relation to soils and management in those areas. These are all important sectors to be able to actually achieve the outcome of net zero. And we can see real synergies in terms of what President Biden has committed in investing in those technology areas with those stretch targets that we had outlined and that we are investing into.
Adrian Franklin: Just one or two more questions for you. Prime Minister Boris Johnson recently made a comment that he believes the U.S. has now returned as the leader of the free world. You know, a lot of people are talking about the US and what took place over the last four years. And if they've lost a bit of that power in some ways, would you agree with him?
Simon Birmingham: I think that President Biden has rightly put alongside Secretary of State Blinken a real priority on strengthening, building the alliances between the US and its other nations. The Australia-US alliance has always been strong, but what we want is a United States that is able to promote the shared values that we have around peace, prosperity, democracy. The commitment to market based economies based on liberal democracies has been ways that achieve optimal outcomes. And I think President Biden, we will see a leader able to work constructively with other leaders from around the world, be they partners across the EU or crucially other partners across our region. And we want the US to be paying close attention, as they've indicated they will to the Indo-Pacific region, to be engaging, particularly with like minded nations, with fellow democracies, but also to be building bridges very closely with those developing economies coming through. And that is where I think we can see very strong opportunities for an administration that has an approach to foreign policy, that covers the full spectrum of engagement and is willing to work constructively in that way.
Adrian Franklin: Minister just a finish government MPs and industry figures are questioning the future of Linda Reynolds as defence minister after, of course, she was admitted to hospital following increased pressure over her handling of the alleged rape of former staffer Brittany Higgins in her office. It's been a really challenging time, of course, for Brittany, her family and many people in parliament. Just a thought on what's taken place recently?
Simon Birmingham: Well, these are challenging times. And clearly, clearly, our thoughts, first and foremost, go to Brittany Higgins and all of her loved ones. But but indeed, it creates an emotional toll on many others who may have lived similar other stressful experiences. And indeed, on those working through those issues. Linda Reynolds is a valued friend, a dear friend and a great colleague. I know she has the Prime Minister's full support. She was admitted to hospital on the advice of her cardiologist with a pre-existing condition. I'm sure she will be back at her desk as soon as possible, providing the strong and effective leadership around our defence policy that she has given over the last couple of years and I know will continue to give over the next few.
Adrian Franklin: Minister, thank you so much for your time. We have learnt plenty here this morning. Really appreciate it. We'll talk to you again on Ticker News very soon.
Simon Birmingham: Thanks, Adrian. My pleasure.
Adrian Franklin: Great stuff.