Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Wednesday, 30 March 2022
Richard King: Coming up to a quarter to seven with his perspective on last night's budget, joining me now is Federal Finance Minister Simon Birmingham, who is on the line. Good morning, Minister.
Simon Birmingham: Good morning. Good to be with you.
Richard King: Yeah, likewise. Thank you very much for your time. “Our recovery leads the world” Josh Frydenberg said last night, he began and ended his budget speech last night. You're obviously in accordance there that Australia's recovery from the pandemic does lead the world, Simon?
Simon Birmingham: Well, that is the case that our economic growth has been faster in bouncing back from COVID-19 than the major G7 economies, the US, the UK, many different European countries or Japan. It's also the case that our job numbers have bounced back far, far more strongly and that we're one of only nine countries in the world to still have a triple-A credit rating there, a recognition of how well managed our books and finances are, notwithstanding the huge shocks from COVID. But none of that's a reason to take anything for granted. And that's why last night's budget presents a clear plan for the future, a clear plan to keep that economic strength and growth going, but also support for Australians recognising that the shocks out of Ukraine are driving some real cost of living pressures for people, particularly at the fuel pump.
Richard King: Yes, the Treasurer last night said cheaper fuel, cheaper medicine and more money in our pockets. Something in there for everybody. Everybody's a winner last night.
Simon Birmingham: Well, first and foremost, from a stronger economic recovery, what we've done is we've lowered future debt levels and lowered future deficits. So we are banking a dividend out of that and making sure Australia is better prepared for a rainy day. But we also. Yes, correct. Lower fuel, halving of the fuel excise for the next six months, 22 cents a litre off the price of petrol at the pump. That's about responding to the spikes we're seeing in oil prices in Ukraine, from the battle in Ukraine at present, and making sure that flows through in terms of savings to motorists, helping those on low and fixed incomes with additional payments that will see low and middle income earners get a tax offset of up to $1500 each, as well as well as those payments for benefits, for medicines, but crucially, on top of that, making sure that we are supporting small businesses to keep that economic recovery going and keep the jobs growth going and to get it down below 4% in unemployment to 3.75.
Richard King: Well obviously unemployment down to the lowest it's been for some time, predicted to go lower, and also to the assumption there is that wages will increase, but I think within the budget papers there's the acceptance of the fact that inflation will probably increase higher than the wages which aren't expected to increase for two or three years, as I understand it.
Simon Birmingham: No, that's not quite right. So in the current financial year where we've incurred these big overseas shocks, we do see an inflation rate that is running higher. But then from 1 July onwards, our expectation is that wages growth will outstrip inflation. That because we've got unemployment so low and forecast to go even lower, there is scope there for stronger wages growth to help Australians out. Of course if we are re-elected there will also be another wave of income tax cuts that come in our next term, which we've already legislated and which will see 90% of Australians pay no more than 30 cents in the dollar. And in the meantime we're making sure there's more opportunities and support to hire apprentices, to create more of those training and skilling opportunities, and for small businesses to be able to invest more and receive incentives and encouragement in upskilling their digital capabilities, in providing extra training for their workforce so that that growth engine of our economy continues to be strong.
Richard King: There's an election just around the corner. Many have said, look, this is obviously a pre-election budget. There are a lot of temporary fixes, but no permanent solutions. What's your response to that criticism?
Simon Birmingham: Well, I reject that. First and foremost, what we've done is taken more than $100 billion in improved conditions for the budget, and we've reduced future deficits. We're having lower debt and lower deficits as a result of a stronger economy. And it would have been very easy just to go and spend all of that money. But as a good Liberal National Government, we want to make sure that those deficits we've incurred from COVID come down faster and quicker, and that's what we're doing. But beyond that, there's a clear plan there and investing in our national security, investing in critical industries like manufacturing, like agriculture, supporting regional development, a big lift in infrastructure, that's about the productivity of the nation. All of that designed to keep our jobs boom going, but also that recognition that yes, Australians are doing it tough from temporary circumstances overseas at present. And so we want to make sure that we, we respond by helping them address and get through those circumstances.
Richard King: Alright. A lot of money splashed around last night. Just by way of explanation, where has all the money come from?
Simon Birmingham: Overwhelmingly, it's come from a stronger labour market. So by having so many more Australians in work, it means that there are fewer payments going out the door in Social Security safety net payments, more people paying tax and contributing, and so that's where the big growth dividend has come. There are some additional revenues from the very high iron ore and coal prices that our exports are enjoying at present. But we don't assume those continue any more than over the next six months. So in terms of our forward projections of lowering debt and deficit, but maintaining that strength of the economy, we're assuming in the budget that those things go back to normal. And that's a very cautious and conservative approach that we've taken.
Richard King: Right. And just with reference to the fuel excise cut, which the Treasurer said came into effect at midnight last night but might not be reflected in bowser prices for a fortnight, how can you guarantee? I mean, the Treasurer said the ACCC will keep a handle on this. But I mean they've been trying to keep a handle on fuel prices for decades with not a great deal of success.
Simon Birmingham: Well, this is highly measurable. It is a very precise $0.22 a litre cut that should see the average driver save about 15 bucks on filling up their car. So what we will be able to do there with the ACCC is monitor very carefully against global oil price movements as well to ensure that 22 cents comes off. We're confident it will. There are multi-million dollar penalties for the oil companies if it is not passed on, and we will be making sure that they are firmly applied.
Richard King: All right. The sweetener for seniors and concession holders, this $250 cash bonus to help with the cost of living pressures. When and how will that end up in people's pockets?
Simon Birmingham: So the laws for all of these measures which are all very carefully targeted to help address these pressures that we see out of events in the Ukraine and how they're impacting on Australians, the laws for these will pass the Parliament today is our expectation. And then in terms of the $250 support for pensioners, for those other recipients of government payments, they'll get that within the next few weeks would be the expectation as quick as the Social Services Department can process it.
Richard King: Right my guest Simon Birmingham, Finance Minister. I did speak with Jim Chalmers, Labor Treasury Spokesperson, earlier this morning, and I asked him what his main criticisms of the budget were last night. This is what he said:
Jim Chalmers: Well I think three aspects really. There's not enough to show for this trillion dollars in debt that the Government's racked up. Secondly, real wages are going backwards. So ordinarily an average family's about $26 a week off when it comes to their wages. And thirdly, no plan for the future, no vision beyond the May election, which is something the government's got form on. You know, this government lives kind of week to week. We've got an election in May. They want to pretend they care about cost of living pressures in the hope that people won't realise and remember a decade of attacks on people's living standards.
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Richard King: And just quickly, your response to those comments.
Simon Birmingham: Well, in terms of vision, what we've got is in this budget, more than $1 billion in new investments in manufacturing, more than $2 billion in areas of research and commercialisation, particular incentives in areas of clean energy technology development in Australia. And so we've demonstrated that we have real plans in terms of the economy as to where we see the growth and how we're driving that forward in terms of support for families and indeed the debts that the nation has incurred, I think Australians know that that's a shallow criticism from the Labor Party. They in fact kept calling for more and more spending during the COVID 19 pandemic, more than $80 billion of extra spending that they would have incurred had they been in office. What we got for the spending in place was more than 40,000 Australian lives saved, more than 700,000 Australian jobs saved. You know, those are the dividends of the fact that we could respond with force to COVID 19, but we've done it in ways that we've been able to now bring that spending back down, bring the budget back closer to balance, whilst still having the capability to respond to these pressures that we're seeing out of Ukraine.
Richard King: And finally, on a much lighter note, I know you're an Adelaide Crows fan. I think it's been not since the late nineties you've had a cracker of a year. It's been a long time since you've sat at the top you're hoping for a better season this year?
Simon Birmingham: Well, I'm hoping for a better footy season this year, but two rounds in, I'm not too optimistic. It's been a pretty brutal one. But we play the hometown competitors in Port Power on Friday night, and so I'm hoping that either my wife or I are happy seeing as neither of our teams have managed to win.
Richard King: Right. And look for those who like a beer while they're watching their football down at the local, many would be disappointed there's no cut to the draught beer price?
Simon Birmingham: This is a budget where we've had to be responsible and make sure we target support in the places where it is most necessary. And so whilst I'll enjoy a quiet beer at the end of this week too, ultimately I think helping Australians with their petrol prices, helping them to get to and from work and to get to and from school to meet those costs is the right priority for Australia.
Richard King: Thank you very much for your time this morning. No doubt a busy day ahead for you, Minister. Thanks, Richard. My pleasure. Okay. Simon Birmingham, our Federal Finance Minister, Wednesday morning with Richard King.