Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Monday, 28 March 2022
Madeleine Morris: Finance Minister Simon Birmingham joins us now from Canberra. Good morning to you, Senator Birmingham. We've got figures out today saying that you expect unemployment to be at 3.75% by the end of the year. That's great. Now you're banking on that to lift wages, but you're predicting inflation to be at 5% by the end of the year. But wages are only lifting at 2.3%. When are we going to see a commensurate lift in wages?
Simon Birmingham: Good morning, Madeleine. The budget tonight will show a long term economic plan that shows positive wages growth over the next few years. That shows that we have managed to achieve on our ambitions in terms of delivering unemployment rates, far exceeding anybody's expectations in getting them down to 4% and now driving below that 4% level, the lowest in in some 47 years, which is a remarkable timeframe to achieve. Of course it's all about implementing an economic plan that also responds to the very uncertain global environments we face. The war in Ukraine, the continued aftershocks of COVID, the pressures of China and trade sanctions all of these different factors mean that we need to make sure we respond in a very targeted, very responsible way to those sorts of cost of living pressures Australians fear and they will see that in tonight's budget.
Madeleine Morris: Yeah, those are all sorry Minister. Yes, certainly they are. Those are all inflationary pressures that you've just talked about then. So when are we going to see wages keep up with inflation. Do you have a target for set for that?
Simon Birmingham: Indeed, Madeleine. As I said, people will see that positive growth in tonight's budget and they'll be able to see that out right through the next few years. It's all about making sure the strength of our economy continues to deliver more jobs, which turn and translate into stronger wages outcomes for Australians, but also that we grow the different sectors of our economy. So the economic plan for the future makes sure that we invest in areas of digital skills, in our small businesses, in skilling Australians and creating more apprenticeship opportunities. This is a plan that backs our agricultural sector as well as our manufacturing sector, but also deals with the here and now that we know Australians are facing with those pressures at the petrol pump and elsewhere in their lives.
Madeleine Morris: It sounds from that that you're saying that wages actually aren't going to keep up for inflation until the next couple of years, which will be worrying a lot of people. And there has been wide reporting that in terms of-
Simon Birmingham: That's not quite what I was saying, Madeleine, actually.
Madeleine Morris: Well, you said in the next couple of years.
Simon Birmingham: And people will see the projections from one July forward in relation to all these different parts of the economy.
Madeleine Morris: Let's talk about some of these cost of living relief measures that have been widely reported are going to take place now talking about a one off payment of $250 to low and middle income families. But it's also being widely reported now that the lower and middle income tax offset, which was worth $1,080, is actually going to be cut. So what's the rationale for cutting that and giving a smaller short term handout?
Simon Birmingham: So the low and middle income tax offset is actually paid out over the coming months, the month starting from one July. So Australians are going to receive that tax offset and that support and that's going to provide yet more assistance in terms of cost of living pressures. It's part of what have been a lower income tax regime our government has implemented. Around one and a half billion dollars a month extra is flowing into the pockets of Australian households, adding to their ability to manage some of these pressures at present. It's two stages of tax cuts that we've delivered already as a government and if we're re-elected, Australians will receive a third stage of income tax cuts and see that income tax rates for most Australians around 90% will be no more than $0.30 in the dollar, which is a very significant transformation in income tax for Australians.
Madeleine Morris: $250. I've spoken to many people who say their grocery bill has gone up by $100 a week recently. That's not really going to be much more than a band aid, is it?
Simon Birmingham: What we're doing is acting in a way that is responsible and targeted. These are temporary pressures we're seeing in terms of the huge spikes in oil prices as a result of the war happening in Europe right now. And so we're responding in targeted, responsible ways. We've managed as a result of stronger economic growth to drive the budget deficit lower, and it's only responsible we bank some of those savings to make sure Australia can respond to future shocks that we may face, that we have lower deficits in the future, that we ensure Australia's debt peaks sooner and at a lower level than had previously been forecast. But we will also have a very comprehensive package of measures to support Australians through these temporary shocks, and those measures will ensure that people can see a difference in a number of different aspects of their lives, not just through one payment.
Madeleine Morris: All will be revealed tonight. We need to let you go. You've got a very busy morning, Senator Birmingham. Thanks for making time.
Simon Birmingham: Thanks, Madeleine. My pleasure.