Senator the Hon Simon Birmingham

Stephen Cenatiempo: As we know, the federal budget was handed down last night. One of the men charged with putting it together is the Finance Minister, Simon Birmingham, and he joins us this morning. Minister, good morning.

Simon Birmingham: Good morning Stephen, great to be with you.

Stephen Cenatiempo: This budget was always going to be criticised by certain sectors and applauded by others. I know. Look, there was a very big concern about the cost of living, but the reality is there's nothing there to bring the cost of living down. But I don't know that governments really have much power over that anyway.

Simon Birmingham: Well, Stephen, you've got to respond in ways where you're going to make a practical difference and that's what we've done with this budget. It's a budget building on our long term economic plans and making sure that we keep the economy strong and the jobs growth that we've seen, which is quite remarkably strong and drive unemployment down below 4%, but it also responds in the practical and targeted ways we can to cost of living pressures, the oil price spikes that we've seen from Russia's war in Ukraine as having a global implication. Australia's been withstanding that better than many other countries, but it's still hurting people at the petrol pump in Australia. Those price spikes aren't expected to last forever, but it's why we've responded in targeted, temporary ways in terms of cutting the fuel excise for six months by $0.22 a litre, which will all flow through to the petrol pump in terms of reduced costs. And that means about $15 less in filling up your car and it also is providing targeted assistance to low and middle income earners and those on fixed incomes to make sure that they get a bit of helping hand with the additional costs that these pressures from overseas have placed on Australia.

Stephen Cenatiempo: A couple of the good news items out of the budget were obviously the forecast for unemployment is extraordinary. We also have modest wage growth over the next few years, which is only just going to keep up with CPI increases. My concern is, and I know a few economists have echoed this, is that with these various cost of living payments, the one off payments that are going to be made to low and middle income earners, how do you stop that from having further inflationary pressure?

Simon Birmingham: Well, the cut in petrol excise actually works in the opposite direction because we'll be bringing down the price of petrol that will reduce inflationary pressures and will have a flow on impact in terms of the pressures that businesses and others feel too in the cost that they pass on. The one off payments - again, it's why they're carefully targeted in terms of who receives them, as well as being carefully calibrated as to how much they are so as not to add to those overall inflationary pressures. They've all been considered in terms of Treasury's assessment of where they see inflation going, which they expect to come down after the pressures of this year from 4.25% this year, coming down to 3% in the next financial year and then sitting a bit under 3% in the years that follow. Whereas wages, we expect to see the wage price index grow as we get closer to that full employment level of having unemployment rates down at 3.75% and the wage price index expected to be growing at 3.25% over the next couple of years and then 3.5% after that. So we can see there that there's a dividend that flows through from having these remarkably strong employment outcomes, 3.75% unemployment is the lowest in nearly 50 years in Australia. And so it's a big dividend from the effective success we've had in in managing our way through and out of COVID.

Stephen Cenatiempo: A lot of money, a lot of extra money for defence spending, which most people would welcome. But having said that, given the threat that is potentially there from China and the situation in the Solomon Islands, is it a missed opportunity that there hasn't been an increase in foreign aid spending?

Simon Birmingham: So there is extra support for the Pacific flowing into this year what we've done and of course local ACT Senator and Minister for the Pacific Zed Seselja has really led in terms of our engagement with Pacific Island nations, but also making sure we have COVID supports for the Pacific in terms of vaccines, in terms of finances, in terms of the recovery of their economy and there's a continuation and additional support for our Pacific Island nations going into the next year to help them bounce back. As well as that extra defence spending which yes, is good news right across the country in terms of the security of our nation, but has particular benefits to Canberra and the uplift in our cyber security capability. This latest area of modern warfare that before a single bullet was fired in Ukraine, we saw the cyber-attacks were launched and so we're providing now a ten year, $9.9 billion plan that will see the Australian Signals Directorate, who already equip Australia with some of the best cyber defences in the world, employing around an extra 1900 people across there and other associated activities to make sure that we continue a world leading edge in our cyber security capabilities.

Stephen Cenatiempo: Now I know you've got to cram another 30 interviews probably in the next 10 minutes, so I won't keep you much longer but the CPSU are critical of the Budget, suggesting that there are cuts to, there's going to be job cuts in Centrelink and some of those frontline services. I know overall the public service is going to grow to the highest levels in a long, long time – but was it a mistake to, I guess was the positioning of it, wrong? Have you funded the wrong areas where particularly with things like what we're seeing with the floods and response to those in South East Queensland and Northern New South Wales, those frontline services are more important now than ever.

Simon Birmingham: Well Stephen, what we actually have done is provide additional funding and additional ASL positions for Services Australia to be able to deliver those emergency supports. We did that to help Services Australia deliver emergency supports in terms of pandemic leave payments for people affected by COVID. We're doing the same in giving Services Australia extra support for providing those flood recovery payments. More than 1 million of those have been processed by Services Australia to date. It's the largest response to a natural disaster ever by a government in terms of the number of payments and volume of payments and I pay credit to the Services Australia team who have effectively got those out the door. Elsewhere of course we continue to try to find efficiencies in technology to allow us to reprioritise public service numbers and positions and as you acknowledged, the total number increases a bit out of this budget as we continue to take a practical case by case approach to improving ASL numbers across the public service.

Stephen Cenatiempo: Simon Birmingham, thanks for your time this morning.

Simon Birmingham: Thanks Stephen, my pleasure.