Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Monday, 28 March 2022
Simon Birmingham: These are very uncertain times we face. Around the world, the challenge of continued aftershocks of COVID-19, global inflationary pressures and the war that Russia is waging on Ukraine are having real impacts on global economies and creating genuine uncertainty, particularly in relation to national security issues. Tomorrow we hand down a budget to respond to these uncertain times and to deal with the pressures we face globally and to provide reassurance and assistance to Australians. It will be a budget that demonstrates that our economic plan is working, that it's bringing down debt sooner and faster than had previously been forecasted, that it's achieving outcomes in terms of making sure that Australia's economy and jobs grow as fast as possible, that we're making sure that we invest in essential services for Australians.
Our long term economic plan is demonstrated by today's announcement that some $17.9 billion of new and additional investments in productive infrastructure across the country. Infrastructure that will get Australians to and from work faster and safer. That will get freight moving across our country faster and more cost effectively. That is coupled by investments announced today in expanding our home guarantee scheme, providing for Australians up to 50,000 opportunities, a doubling of that scheme to be able to more easily get a home deposit and building on our success in creating more opportunities for more first home owners across the country.
These are the fundamentals about keeping Australians safe, secure in their homes, safe, secure in their jobs and creating the opportunity for the future.
Journalist: The Treasurer has talked about a support package for households because of cost of living pressures. Are you concerned about fuelling inflation and of forcing the Reserve Bank to raise rates earlier than they need to?
Simon Birmingham: This is a very carefully calibrated budget against very uncertain global environments. We do face those global inflationary pressures which are putting pressure on interest rates right around the world. Those global inflationary pressures, they were also putting pressure on Australian households. And so we've sought to carefully respond to that in this budget and people will see we've responded to it in ways that build on our track record where there are temporary shocks to the economy. We respond in ways that are temporary and targeted to provide support. We understand that for many Australian households the global shocks in oil prices are translating to pressure on the household budget and that's why we will make sure that our responses are similarly proportionate, temporary, targeted to help them through this environment.
Journalist: With the Home Guarantee Scheme. If inflation rises and interest rates rise and you're not concerned that people who are lower income who have only paid a 5% deposit have a really large mortgage to pay back and suddenly what the other repay them?
Simon Birmingham: The Retirement Income Review found that the most important thing for people's safety and security in retirement is homeownership. So helping people to get into homeownership as soon as possible is one of the best things that any government can do to provide economic security right throughout their life, including into the retirement years. That's why our government has worked so hard to be able to lift home ownership rates again in Australia, to lift the rates of first home owners coming into the market. And we make no apologies for continuing to support first home owners to get into the market, knowing that this is a program that has worked effectively with Australian banks, carefully assessing the ability of individuals to be able to make repayments. But the government provided the ability for them to start making those repayments to start this homeownership journey sooner and earlier than would be the case if they had to save for an even larger deposit.
Journalist: But if interest rates rise earlier than previously thought that they would. Are you not concerned that these people who don't have high income will suddenly be stuck and won't be able to repay their mortgages?
Simon Birmingham: That's why this program was always carefully designed to work in tandem with Australian banks and financial institutions. It's not just governments providing a handout and it's not just government saying everybody's entitled to a loan, but it is government saying that we want to help you. If the bank assesses you as someone who could meet your repayment obligation, we want to help you start that journey sooner. We don't want you having to pay rent and struggle to get the deposit for years and years and years. When the bank says, actually, this person has an income stream that is high enough, that it's secure enough to be able to meet the repayment arrangement. That's why the program is working. That has very little virtually no really default rates to date. And again, it's demonstration though that is helping people get on that journey fast and saving the many thousands of thousands of dollars because they're not having to pay rent while going through the hard yards of saving for a deposit for years and years extra.
Journalist: Economists say that a cut to the petrol excise won't actually make a difference to the cost of living and ease those pressures are, you simply trying to buy votes now?
Simon Birmingham: Look, I'm not going to talk about specific budget measures. Aside from those that have been publicly announced, others will wait for tomorrow night. But it's easy sometimes for economists or others in a theoretical landscape to say what does or doesn't make a difference. But if you're an Australian who has to juggle driving longer distances to work, getting kids to school, getting kids to sport, and meeting all of the different pressures in terms of transport needs, then I'm hearing loud and clear from those Australians, as are other members of the governments, that the impact of events in Ukraine and others around the world are hurting them in their hip pockets right now.
Journalist: The Deputy Prime Minister said cutting the fuel excise wouldn't make a difference to the cost of living. Do you disagree with him?
Simon Birmingham: Well, we'll see the details in the budget and we can debate the details in the budget after tomorrow night. But I think Australians will see a carefully targeted budget that seeks to provide cost of living support, help to households, but also continue the long term economic plan that is ensuring debt peaks lower and sooner than previously been forecast. Our economy keeps growing as it has been faster than other leading national economies and the jobs growth in Australia, including record apprenticeship employment numbers, continues a pace, which is where we want to make sure we keep those opportunities for Australians, especially young Australians.
Journalist: You say you're aware of the cost of living pressures over the last two weeks. You've seen the budget drops and public announcements mainly in the Defence budget. Why not announce cost of living pressures two weeks ago? So Australians are struggling, like you said, can have two weeks of extra reprieve as opposed to the headline announcements?
Simon Birmingham: The budget is handed down tomorrow. In terms of measures that require legislation or other things, they'll also be detailed as to how we intend to apply them, where they where they can be applied quickly, where they require longer term application. Australians already have support from our Government through income tax cuts that we delivered previously, putting around one and a half billion dollars per month extra into the pockets of Australians and increasing disposable income to meet some of these challenges. They have the dividend from our work in energy markets to drive down and support lower electricity prices, which have dropped by around 8% over the last couple of years. But these latest fights in other ways have created pressures for Australians and that's why this Budget is seeking again targeted, temporary, proportionate way to respond whilst not losing sight of the longer term economic plan is all about continuing economic growth and jobs growth.