Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Wednesday, 30 March 2022
James Valentine: Minister, good morning.
Simon Birmingham: Good morning, James. Great to be with you.
James Valentine: Thanks so much for coming on. Your you, the Treasurer, Prime Minister, you're all telling us this is the budget to deal with cost of living, which is real for us all at the moment. The fundamentals of cost of living that's going to really affect us over the next months and years is going to be lack of wage rises, the rise of interest rates, the effects of inflation. There's not much in the budget to deal with any of that.
Simon Birmingham: Well, James, this is a budget that does deal with some of the immediate pressures Australia faces resulting from the war in Ukraine and the oil price spikes and so it does that in terms of providing practical, responsible and targeted measures such as the fuel excise cuts over the next period of time. We know those price spikes are just that in terms of oil prices; they've gone up sharply and they're forecast to come down, we're providing relief while Australians deal with that. But it's also a budget with a long term economic plan, real investment in areas of our economy to keep small businesses growing, to lift their digital and technical capabilities, to invest in manufacturing, to invest in research and commercialisation, to support the employment of more apprentices across the community. And what the budget shows is that whilst yes, we are dealing with a spike in inflation this year - from the 1st of July as we enter the new financial year and through the rest of the budget years, there is real wages growth there; that the strength of our economy with unemployment forecast to come down below 4% and to hit a 50 year low of 3.75% is going to provide pressure in terms of wages growth and of course those benefits we expect to flow through to Australians along with the benefits of our lower income tax cuts that we've delivered already,..
James Valentine: So inflation's a spike, wages will be dealt with by unemployment by a fall in unemployment. These are all predictions, though, aren't they? Is there anything in the budget to deal with what will be the real rises in interest rates and potentially still a stagnation in wages?
Simon Birmingham: Well, James, the budget is there in terms of what is driving some of the strongest economic outcomes in the world and making sure we continue that trajectory, that Australia's economy has come back more strongly from COVID-19 than the US or UK or a number of European countries or Japan, our employment market has come back more strongly than most of the rest of the world and indeed we've now got far more people with 375,000 more Australians in jobs than before. And it is those sorts of outcomes that help to drive improvements in wages and that's what the Budget shows. That having achieved that success with the plan we're implementing to support small businesses, to support key sectors of our economy and to particularly support skilling and training and apprenticeships, that we are going to see that dividend flow through in terms of wages growth as we keep securing even more jobs across the economy.
James Valentine: So the economy's come back with a vengeance, which is which is good. Everyone's very happy about that. A lot of that would be because of government spending of the last couple of years to get us through the pandemic. This has given us big deficit. Are you, how is your thinking around that? I mean traditionally, none of those things are things you want to do, that a conservative government doesn't want to spend, it doesn't want to have those big deficits. Are these things that you're just going to live with?
Simon Birmingham: Well, you're right, James, in the sense that we didn't like having to go and spend as much as we did to get through COVID-19 and to incur the type of debt and deficit that we did. But it has proven to be money well spent. More than 40,000 Australian lives saved; more than 700,000 Australian jobs saved; many, many Australian businesses saved; and the result of our economy being in such a stronger position than many others around the world shows the effectiveness of our responses in Australia compare well with…
James Valentine: So does that change your thinking overall? Are you now someone who supports lots of government spending? Look how good it was.
Simon Birmingham: No, it was there to address a problem. And what we did was we made sure that was targeted and temporary. The scale of spending that we put on, we've been able to take much of it off. In fact, in this year and in next year, we've got some of the biggest reductions in government payments in real terms that Australia’s seen in the last 50 years. And because we're turning down that COVID extraordinary spending, of course we're applying the same principles of being temporary and targeted to addressing the oil price spikes we're seeing out of Ukraine, and that's why those measures are there for a time-limited period in terms of the 22 cents a litre fuel excise cut; in terms of the payments to those on low middle incomes or fixed incomes, making sure that that support is there until we see those oil prices come down. But the other point that is really important to appreciate is - we have had, through having far more Australians in work and a stronger economy, big gains against a deficit and debts that had been projected. And the vast majority of those, more than $100 billion of those, we have banked in terms of having lower deficits in the future, lower debt in the future. So whilst we've responded with some targeted cost of living sport support, we've been very responsible in terms of making sure that the vast majority of the improvements in our economy and the improvements flowing through to the budget we have put against having lower deficits and lower debt into the future, so we’ve got….
James Valentine: Simon Birmingham’s with us, Minister for Finance for Australia and explaining the budget to us. Let me put to you, Mr Birmingham, some, some comments that came up from a little earlier. Joanne (sic) Quilty is the CEO of the New South Wales Council of Social Services. This was her concern.
Joanna Quilty: For people who are really struggling to put a roof over their head that are at risk of being squeezed out of the rental market or even at risk of homelessness, the Home Guarantee Scheme and expanding that isn't going to do anything to help them. We really needed national leadership here. We really needed a substantial investment in construction of social housing across the nation, and we're not seeing that.
James Valentine: There's a big difference between an incentive for first-time homebuyers and affordable housing that she's describing there, Simon, and she's saying there's nothing in the budget for that.
Simon Birmingham: Well, there is, James, but there is in fact support in the budget there. There's $2 billion extra for the National Housing Finance and Investment Corporation. They work with affordable housing providers to be able to provide financing vehicles to help get people into lower cost and more affordable housing. So we have responded there in in terms of support for that...
James Valentine: That’s the, are you describing the first home buyers, the lowering of the 5000 there?
Simon Birmingham: No, that's a separate measure. So our support for first home buyers under the Home Guarantee is about helping those who have lower deposits to be able to get into the market sooner, to spend less time paying rent and more time paying off their mortgage. And that's been a very successful programme that’s actually lifting first home ownership rates. And so we've increased that in terms of doubling the number of people who can access that first home guarantee...
James Valentine: You're saying your $2 billion is separate to that and that's affordable housing?
Simon Birmingham: It is, correct.
James Valentine: Alright. Let me put Daniel Hunter, CEO of Business New South Wales, concern to you.
Daniel Hunter: I think the biggest challenge for small business and businesses of all sizes in Australia at the moment is the labour shortage. There's just not the people to do the jobs and we've seen in this Budget some…..[AUDIO DROP-OUT]
James Valentine: …..big infrastructure spending going on. You've got a situation in the Northern Rivers that needs to be, needs to be sorted. We need, as he says, that skilled migration is the only thing that's going to fix it.
Simon Birmingham: Well, that's true. And so, of course, with the closed international borders we had during COVID, we saw a net overseas migration actually negative, which is an extraordinary event in Australia's history - to have 90,000 people net terms leave the country. But that's turning back around and it’s projected to come back to pre-COVID levels over the next couple of years. And so we're seeing strong returns already of skilled migrants coming into the country because what we did during COVID was we escalated the approvals of partner visas for people who were in the country and had a wait to get their partner visa – that’s cleared a backlog there, and so it means within our migration cap, we're able to now have more skilled visas issued over the next year or so. So that's only one part of the equation though and it's why in this budget, as indeed you heard in that grab, we've put the effort on skilling Australians first and foremost, the support to hire apprentices, support for apprentice wages as well, as well as the tax measures to support small businesses being able to skill their workforce, but also crucially to improve their digital capabilities and technology in their small businesses as well.
James Valentine: Mr. Birmingham, I know you've got to go to other interviews, so thanks for some time this morning.