Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Wednesday, 12 May 2021
Adrian Franklin: Hi there, I'm Adrian Franklin with Ticker News Live. I’ve got the latest breaking news and trending stories on business, tech and media. Well, in many ways, Australia has been the envy of the world in terms of pandemic management. But the next test, of course, is how we move out of this major hit to the economy. There is pressure to get back into full gear and continue to boost productivity. For more, it's a pleasure to welcome Australia's Federal Minister for Finance, Simon Birmingham. Welcome back to Ticker News today.
Simon Birmingham: G’day Adrian, it's great to be with you again.
Adrian Franklin: So a busy time for you. I just want to start with the debt picture, which is obviously, you know, a little bit of a scary one. It's not all anyone's fault. We know what's happened over the past 12 months. But how concerned are you at the moment with the level of debt? If we were to see another shock or an issue to Australia nationally, do you think we will be able to manage that, economically speaking?
Simon Birmingham: The Budget plan is a careful and prudent one which we have outlined. It actually sees net debt in absolute terms and as a share of the economy lower in this Budget than was forecast in last year's Budget. And so that's a very important benchmark to which we're focussing on how we ensure the sustainability of that debt profile for the country and relative to much of the rest of the world. Australia's debt is far, far lower than the US, the UK, Japan, who have debt that is many multiples of ours as a share of their economies. And so we've made sure we're in a good position as a country. We came into the pandemic in a good position with that very low debt compared to those competitor countries. And we want to make sure we come out of the pandemic in a similarly strong position.
Adrian Franklin: In terms of productivity, obviously, that's the word of the moment. We want to be more productive moving forward, considering what's happened over the past year. How confident are you that this Budget will make us much more productive as a nation moving forward?
Simon Birmingham: It's a Budget that has many measures designed to help to ensure the country becomes more productive. The full expensing measure that we are continuing for Australian businesses for a period of time as part of our ongoing COVID response, will bring forward investment by Australian businesses. That doesn't just ensure they end up with higher jobs and higher investment over the next couple of years. It makes them more productive for the long term by investing in their capabilities, their equipment and their ability to produce effectively and efficiently. Long ongoing tax reform, such as the establishment of the patent box for the medicines and biotechnology sectors, with exploration of extending that into clean and renewable energy sectors as well, is all about ensuring that we continue to generate an innovation culture in Australia. But put more incentives there for those innovations and those technology breakthroughs to be commercialised in Australia and to be manufactured in Australia by having more concessional tax rates for those Australian breakthroughs in patents that are registered here. And equally, our digital economy strategy at $1.2 billion investment, particularly focussing on areas of artificial intelligence. Another area in which we see Australian potential to lift our productivity of our businesses and that capability. And we we’re investing in complementary training and skills to upskill Australians to be able to pursue those digital economy breakthroughs.
Adrian Franklin: We speak to a number of economists here at Ticker news and Evan Lucas is one of those from InvestSMART. Now, I spoke to him earlier this week. His belief is that this Budget was such an opportunity. But he doesn't always have faith that politicians are the best people to make the decisions and take advantage of the opportunity. How much do you rely on experts in their field to make some of these decisions?
Simon Birmingham: A great deal, a great deal. I think through the pandemic we've seen that expert advice has been an essential ingredient to the way in which we have navigated the challenges that Australia faces. And indeed, in framing of this Budget, the Treasurer, Josh Frydenberg and I and the Prime Minister spent countless hours with the head of Treasury, Dr Stephen Kennedy, working through the advice from the Reserve Bank, from other expert agencies around how we best respond to these very challenging global problems. Australia is living it pretty well at present in an environment where we've kept the health consequences of COVID under control and the economic consequences of COVID under control. We've got employment in Australia back above where it was pre-pandemic levels. We're essentially the only advanced economy in the world to have achieved that outcome. But over in Europe they are facing a double dip recession now. And so in terms of the ongoing worldwide impact of COVID, it's not just the human toll and catastrophe that we see in places like India, the economic toll and catastrophe continues elsewhere. And that's why working with those experts is indeed so essential and why we've framed this Budget to deliver long-term services Australians rely on, long-term jobs growth, investment, and productivity, but also that continued pandemic response, which is about $40 billion of measures specific to continue to get the country and the economy through the pandemic.
Adrian Franklin: Housing affordability for young people, of course, is crucial and no doubt many people feel priced out of the market at the moment. What does the Budget offer them and will it be enough, do you think, to make a difference over the longer term?
Simon Birmingham: So it was a couple of things in terms of supporting the demand side of the housing equation. We’re expanding a program that provides a government guarantee support for first home owners and now in a new program for single parents who won't necessarily need to save up that 20 percent deposit to avoid mortgage insurance. We're actually supporting them at lower levels of deposits to be able to get into the housing market. This was a policy we took to the last election. We're now extending and expanding that and integrate more of those opportunities, more places for those loans at lower deposit rates for young Australians, for first home buyers. But also then on the supply side of the equation, we've made some changes. We're making changes in relation to superannuation that will encourage senior Australians who, if they sell the family home from the age of 60 onwards, they'll be able to take a $300,000 dividend at a particular downsizing their home and putting that into their superannuation, getting the concessional tax treatments and benefits that come with that money going into superannuation. So, that's importantly about trying to encourage greater liquidity in terms of the housing market by getting more movement amongst those older Australians and freeing up some of that housing stock.
Adrian Franklin: Last quick one from me. A big part of the Budget has been described as aimed at women. So tell us why that decision and how this is going to make a difference.
Simon Birmingham: With a couple of different streams to that. Crucially, there's an economic security stream for Australian women where there are some fairness provisions, if you like, that have been taken. We are removing what had been a minimum income threshold to be paid guaranteed superannuation rates so that $450 per month minimum income threshold that disproportionately impacted women doing casual jobs will now go and superannuation will be paid there. But importantly, in terms of stimulating the economy further, targeted childcare reforms will help to make sure that more Australian families can choose to participate in the workforce. Again, that has a significant, disproportionate benefit to Australian women, given that choice, which we estimate would generate hundreds of thousands of hours of additional workforce participation across the economy. But it's also a big safety piece in place there. Further support for domestic violence services, further support through family court systems, and further support in relation to mental health reforms as well. All of all of it about tackling the scourge of domestic and family violence and seeking to make sure that, that is clearly culturally changes to being unacceptable and reduce the incidence of it. But we increase along the way the supports for those who face those terrible circumstances, including some funding streams, to enable people to be able to have the financial support to leave where that's the best option.
Adrian Franklin: Minister, really appreciate your time today. Good luck with the 20 other interviews you've got for the rest of the morning.
Simon Birmingham: Thanks so much Adrian. My pleasure.