Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Tuesday, 11 May 2021
Paul Murray: Birmo joins us now. The Finance Minister, his first go around putting a budget together. Mate if the ABC can only find one or two losers. It seems like you put together a pretty good political a political document. But to those sitting watching those debt pictures, what is there not to worry about some of the bigger numbers in this further down the track?
Simon Birmingham: G'day Paul, and thanks for the opportunity tonight. Look, what we've done is put together a budget that has been true to the types of promises that we made way back at the last election when we said we were going to deliver a strong economy that created jobs growth for Australians and funded the essential services Australians rely on. Now, in the interim, of course, we've had a global pandemic that has knocked parts of the world for six knocked parts of our economy for six for a period of time and knocked parts of our budget for six. But we've been able, because of the management through the covered crisis, get to a point where we're seeing strong economic growth. We've got more Australians now in work today than we had pre-pandemic. We're the only country across the developed world to be in that position where we've actually got more people back in work pre-pandemic. Everybody else is still struggling to get back to that starting point, and that is giving us the window of opportunity to be able to invest in our aged care services, in our mental health services in careful, targeted ways, but in ways that we're doing that still keep net debt lower than had been forecast in last year's budget. So we've actually managed to improve the economic circumstances enough to be able to make these investments and bring net debt down compared to what it was, both in absolute terms and as a share of the economy.
Paul Murray: Look, there's all obvious upsides in things like the traineeships, like the 300,000 dollars in super for people if they want to downsize. And I'll give you a chance to talk about those in a second, but I just want to try to nip it in the bud what I think is going to start to take hold here, you're going to be asked about a lot in the next few days. First is that debt question. Second is the immigration question I was just talking about with Mark Latham. In part of the document suggestion at one point we're going to be bringing in two hundred and thirty seven thousand new people to the country who aren't already here at the same time as we're being told that that would be something that would mean Australians don't get a pay rise, because if there are more people competing for jobs, then those numbers stay down the fewer people. Competing for those jobs means that wages go up. So what's the logic of 237,000 people coming in in just one year?
Simon Birmingham: So our migration policy settings, in terms of migration to Australia, we have maintained at a consistent level from what they were entering COVID and that operates as a cap, not a target. A ceiling, not a target. And importantly, there the focus always has to be on the quality of migrants coming into Australia, making sure that we have people who are going to make an economic contribution as so many people coming to this country have done over the years. Now, of course, when we reopen borders over a period of time, we will expect to see some significant movements of people overall, a return of some permanent residence, particularly potentially to Australia, a potential return in relation to international students and other temporary visa holders coming back in over a period of time as well. There's a lot of different moving parts that will come about in terms of the numbers of people that might come in or out of our country. But people should have absolute confidence in two things. One is we won't be reopening the borders until it is safe to do so, because continuing to suppress COVID is a key factor in our economic success as well as our health and safety. And the second thing is that when it comes to the permanent migration programme to this country, we will maintain a resolute focus on how we ensure those places are filled by people and families who are making the type of contribution as taxpayers to our country that Australians rightly expect.
Paul Murray: So for us to go from the deficit that was announced tonight to smaller ones in the next couple of years, it seems that the two biggest bets that the budget is making is that there will be a lot more money coming from company tax, i.e. more profits and more companies that will exist between now and 2025 and more people that will have a job and the higher rates of tax that they will pay because of their increased earnings. Put simply, to explain to people what I'm talking about here - in the budget forecasts this year, company tax. Eighty two billion dollars by June 2025, we're talking about 100 billion dollars. So 20 billion dollars up in the next couple of years, income tax goes from 219 billion up to two hundred and sixty one billion. So let's deal with company tax first. What evidence, what logic do you have that you will make? You know, the best part of, you know, 20 something billion dollars more in company tax than you do this year?
Simon Birmingham: This is a factor of economic growth that is forecast and forecast still at relatively careful and cautious levels, and you look at the types of assumptions that drive things like company tax revenue in Australia, for example, iron ore prices, we are still projecting a trajectory downwards of iron ore prices to a fifty five dollar a tonne level. So we're actually putting in place, as we've done consistently as a government quite conservative assumptions that underpin those sorts of revenue projections. So we've been careful in that regard to not seek to gild the lily in any way, but to make sure that we have those cautious approaches even in relation to income tax receipts, as you said. Yes, these projected strong growth there that can sustain strong growth relative to what had been forecast, even with income tax cuts that mean many Australians are paying less in income tax at present. But we're achieving those outcomes because we've got more people in work. Now, are our projections for a further 250,000 extra jobs realistic? We're confident they are because we're only projecting in this budget that unemployment comes down to four and three quarter per cent. The Reserve Bank had already been out there forecasting 4.5 per cent. That would come even further down than our assumptions. So, again, an example of where we're applying a conservative and a cautious bias when it comes to these budget projections. And the proof really is in the fact that historically we have always exceeded the types of ambitions because we've adopted these sorts of cautious and conservative approaches.
Paul Murray: Again, I'm going off your own budget papers here. How the hell did we get to the state as a country where we are spending more than two to one on welfare than anything else in the federal budget? Two hundred and nine billion dollars, health 94 billion. Education, 42 billion. Defence, 34 billion. Now I get it. Welfare means lots of different things. It doesn't it doesn't just mean the dole it means family tax benefits. It means childcare subsidies to some degree. But that is an extraordinary number, when it is two to one. The next biggest thing in the federal budget part of the gig, the finance minister and certainly your predecessor in Mathias Cormann, was to be obsessed about numbers like this. What do you say to people when they see the graph they can currently see on screen that two to one is money that doesn't really create much. It supports lots of people. It helps in politics, but it's two to one. Anything else?
Simon Birmingham: That we fully realise the importance of shifting people wherever possible from welfare into work. Every single person we move off of JobSeeker and into employment is in effect a budget savings measure. If you look just at the impact in this financial year, the fact that we saw some 200,000 fewer people on JobSeeker than had been projected, that means that we were able to save three dollars billion in those welfare payments and generate a further two billion dollars in tax receipts, in payments from people making a bigger contribution to the economy and therefore acting as taxpayers in the type of way that we want to see much more of. And that's where the focus on the two hundred fifty thousand additional jobs forecast to be created over the next few years again helps to move more people from welfare into work, investment in relation to skills and training, and the creation of thousands of new apprenticeships designed to be able to help make that a reality. Now, of course, there are then areas such as the superannuation measures we've put in place, the incentive and the ability for people if they're downsizing their home at an earlier age to be able to top up their superannuation. That again helps to reduce the welfare bill into the future because people getting more money into their superannuation in their early 60s will see either fewer people needing a whole pension or a reduction in relation to the part pension that they might be receiving.
Paul Murray: Alright, well, I'll check it in a couple of weeks how members of your family reacted to that news when you asked them about what their plan is going to be. Minister, thank you for the chat. Appreciate it. Congrats on your first budget.
Simon Birmingham: Thanks, Paul my pleasure.