Senator the Hon Simon Birmingham

Hamish Macdonald:  The Morrison Government has announced that the relaxation of isolation rules will be extended further to teachers, childcare workers and other critical industries in an effort to contain the economic impact of the Omicron wave. It comes amid warnings today that the highly contagious COVID strain could take out 10 per cent of the workforce as it peaks in coming weeks across Australia. Simon Birmingham is the Minister for Finance, the Leader of the Government in the Senate. Good morning to you. Welcome back to breakfast for another year.

Simon Birmingham: Hello, Hamish. Good to be with you again.

Hamish Macdonald: These rules for relaxed isolation rules have been extended to other industries. Treasury is predicting up to 10 per cent of the workforce could be sidelined this month. You must be pretty worried about the impact on the numbers?

Simon Birmingham: Hamish, this is about continuing to respond to the vastly different set of circumstances that the Omicron variant poses. On the upside, Omicron is proving to be less impactful in terms of severe medical illness and health issues for individuals who contract it. But of course, it is showing to be wildly more contagious than previous variants of COVID-19. That's having impacts right around the world in terms of supply chains, case numbers, workforce shortages and Australia is not immune from that. But it does because you have the lesser health impacts and because we have such a highly vaccinated population, enable us to change some of the settings from the previous variants of COVID-19 to the Omicron variant and to make sure they are fit for purpose in dealing with the new challenges this new variant poses. That's why these changes are being made to make sure that so far as possible, we can keep as much activity happening across the Australian economy, knowing that this is posing real pressures in a number of industries and sectors.

Hamish Macdonald: When you planned to reopen, why didn't you secure a reliable supply of rapid antigen tests for Australia in order to facilitate this reopening?

Simon Birmingham: Hamish, at the time of decisions around reopening, we were all dealing with the Delta variant. We were responding to the health advice at the time, and that health advice was very strongly in favour of continuing to use PCR testing as much as possible. But as I said, Omicron is a significant game changer there. There's a shortage globally of rapid antigen tests. It's not just Australia facing some of these pressures. There's shortages in the UK, the US, Canada, many other nations. We have been-

Hamish Macdonald: Sorry to interrupt you, but you did have advice that you did need rapid antigen tests and it was coming from all quarters. Why did you ignore that?

Simon Birmingham: Hamish, we didn't ignore it, Hamish. We've been in a position where we're providing 10 million kits to the states and territories to help them right now. And then we are procuring many millions more, as are the states and territories, and together that some 200 million additional kits that will be coming into the country. But we've been able to provide additional and to meet needs in aged care sectors and others in terms of those kits that we had procured already.

Hamish Macdonald: Yeah, I understand you're doing more now. I'm trying to get to the bottom of why you didn't do it then. You had advice from the likes of Innes Willox of the Australian Industry Group asking for it just after the Tokyo Olympics, businessman Tony Shepherd was asking for it, saying this was going to be needed if Australia was to reopen. I think Katie Allen and your own side of politics was saying it as early as June last year. Why didn't you secure supply of this for Australia in good time?

Simon Birmingham: Well, Hamish, as I said, the federal government and the states and territories, Labor or Liberal, worked with our health advisers in terms of the plans for reopening, how we were responding to Delta, and there was a strong preference to keep using PCR testing as much as possible. Given the accuracy of that, we procured rapid antigen tests for use in critical sectors that we could see were going to be necessary. But Omicron has meant that the demand for all of those different types of testing is far, far in excess of what had been modelled or envisaged previously in Australia or in any other country around the world.

Hamish Macdonald: So was that a mistake? Was that a mistake then?

Simon Birmingham: Well, Hamish, if we could all have predicted what the Omicron variant would look like of course, you would have prepared for it in different ways. But ultimately we modelled very carefully how we would reopen against the Delta variant. Omicron has changed a lot of that. It's changed, of course, vastly the case numbers we're seeing and that the world is seeing in terms of COVID-19. But it's also meaning we're dealing with a virus that is less impactful in people's health. Less likely to result in severe illness or hospitalisation. And coupled with the fact that we have one of the highest vaccination rates in the world and the fast moving booster program that is reaching into more and more of our population. That is helping to ensure that in terms of health outcomes, we continue to be the second lowest fatality rate in the OECD, a function of our management through the other variants, a function of high vaccination rates and a function of the fact that the investments in our health system in terms of additional support, additional treatments and medicines are all working.

Hamish Macdonald: Sorry to press the point. I know you saying you are modelling against Delta rather than Omicron, but epidemiologists the world over were forecasting more variants? Why didn't you? Why didn't you expect other variants?

Simon Birmingham: Hamish, we've always known that there would be different variants that would come. Delta was a different variant to what we dealt with previously. But it's not possible to predict precisely what those variants are going to mean in terms of the impacts of them. Most crucially, from the very earliest days of the pandemic, we scaled up the availability of ventilators and other stocks within our hospitals. We made the agreements with the private health system to be able to use their facilities, their beds, their resources so that there were supercharging capacities to respond to different scenarios that could play out. We have managed to undertake and maintain one of the highest testing rates in the world. I think that is something that is actually overlooked that Australia, even with Omicron and the pressures there, has been maintaining one of the highest testing rates per head of population in the world, using the PCR system, using the rapid antigen tests that are available to us. And that is a credit to the many hardworking healthcare staff and others that have been able to do that. And those rapid antigen tests and PCR tests remain free for Australians who need them, who are defined as close contacts, who have symptoms and again working with the states and territories to make sure that they are able to implement as they are mostly now all doing new supply systems to ease some of the queues and wait times people were facing.

Hamish Macdonald: I understand everything that you're saying, Minister, but when Omicron first emerged and when it arrived fairly soon after in this country, there were very strong calls for the government at a federal level, state and territory level as well not to continue on the path to reopening immediately to give it a little bit of time so that it could see the impact or how this variant was different. And you didn't heed those calls, you pressed ahead with the roadmap for reopening because you said you'd made a commitment to that. So you did have an opportunity to reassess briefly and perhaps get some of these things in place. Are you saying that you acknowledge there was a miscalculation?

Simon Birmingham: Not on that score, Hamish. I think importantly, what we did do was we made some decisions around border controls for a period of time that we tightened in relation to some countries, particularly while we sought more health advice about the impacts of Omicron in terms of its severity in terms of the effectiveness of vaccines against Omicron. That enabled us to make the decisions that clearly Omicron was not going to pose heightened health risks. In fact, it was the opposite in posing lower health risks. It enabled us, though, to also get the advice that we should bring forward parts of the vaccine roll out booster program, which we have done in taking that health advice to shorten that program. And that's seeing significant numbers of vaccine boosters applied. And indeed, yesterday was the third highest day ever in terms of the number of vaccines administered in Australia as more than 340,000 vaccines were administered. The vast majority of them booster dose. But of course, also crucially, now in the third day of the five to 11 year old vaccine rollout program and some six per cent of all Australian five to 11 year olds having had their first dose within just three days.

Hamish Macdonald: Okay, I'm talking to the Federal Finance Minister Simon Birmingham. In other news. Some alarm bells are being sounded about inflationary pressures underlying inflation rising, within the Reserve Bank target range for the first time in six years. Yesterday, though, it was confirmed inflation has hit a 40-year high in the US. The supply chain crisis is obviously likely to exacerbate that, isn't it?

Simon Birmingham: We certainly supply chain pressures will have some impacts across the economy, and we can see that. It's why the decisions made at National Cabinet were taken yesterday in response to those pressures and consistent with the health advice to be able to try to ease some of the pressures on the workforce in critical sectors and particularly freight and logistics sectors that really can see mounting pressures. These, though, are more likely to be shorter term pressures in terms of how they play through that. Whilst it's challenging times right now, they're unlikely to sustain to the degree they are close to the peak in cases that is predicted for later this month across much of the country.

Hamish Macdonald: Unions say they're screwing up for a fight over pay rises. They're pushing for annual rises of at least three per cent. Do you accept that with inflation rising, real wages are actually going to fall?

Simon Birmingham: Hamish, the budget forecasts updated in the mid-year economic update show predictions over the forward estimates period for real wage rises. Now we'll continue to work to update those as we go through the next lot of budget settings. We want to make sure that we support Australians to be able to earn as much as they can in a strong economy. We've seen how well our economy bounced back previously, with some 500,000 jobs created since September, when the lockdowns in Victoria and New South Wales started to ease and those restrictions came off. I think we should have confidence that our economy again after suffering this, Omicron related setbacks will no doubt once more be able to recover and bounce back again because it's shown such resilience on previous occasions. With the types of economic supports we've put in place to get businesses and the economy through these tough times.

Hamish Macdonald: Simon Birmingham, thank you very much.

Simon Birmingham: Thanks, Hamish. My pleasure