JOSH FRYDENBERG:
Today’s final budget outcome for the 2021 financial year sees a deficit of $134.2 billion or six and a half per cent on GDP, an $80 billion improvement on what was forecast in last year’s budget in October and a $27 billion improvement on what was forecast as recently as May. What is driving this improvement to the budget bottom line is more people in work and less people in welfare. What is driving its improvement to the budget bottom line is more people in work and less people on welfare. Since May of last year, more than a million new jobs have been created and the unemployment rate has fallen below 5 per cent for the first time in a decade. We recognise that since this final budget outcome the economy has been hit by the Delta variant, but with the vaccination rates fast approaching the 70 and 80 per cent targets, restrictions will be eased, and what these numbers confirm is that when restrictions are eased the Australian economy bounces back. With respect to these numbers the final budget outcome confirms real GDP grew by 1.4 per cent in 2021, stronger than the one and a quarter per cent forecast at the 21‑22 budget and significantly stronger than the one and a half per cent fall in GDP that was forecast at the 2021 budget. Nominal GDP grew by 4.1 per cent in 20‑21, a larger increase over the budget forecast of three and three‑quarter per cent owing both to stronger than expected labour market outcomes and higher commodity prices. The labour market continued to strengthen ahead of expectations with employment exceeding pre‑pandemic levels ahead of any major advanced economy. With the October budget last year forecasting unemployment at seven and a quarter per cent for the June quarter of this year, around 290,000 less people were unemployed by year’s end than expected. With more people in work and less people on welfare the improvement in the labour market has been the key driver of the improved budget position. The improvement in the budget position consisted of $20.1 billion in higher receipts and $6.7 billion in lower payments. The improvement in receipts was driven by higher tax receipts on the back of stronger labour market and increased consumer spending and higher commodity prices. Individual and other withholding taxes were up by $5 billion in line with the strength we saw in employment, particularly at the back end of 2021.
GST receipts were up $3.1 billion consistent with the rebound in consumer spending as restrictions were lifted and the support provided to individuals through tax cuts. Tax cuts boosted the disposable income of Australians by $14.2 billion in 2021. Company tax receipts were up by 5.5 billion, around half of these upgrade was due to high commodity prices with the remained reflecting stronger than expected economic activity. In total, payments were $6.7 billion lower than expected with JobSeeker payments $1.2 billion lower than expected at budget, reflecting improved labour market conditions. The improvement in the UCB resulted in improvement in debt levels at the end of the 20‑21 financial year compared to what was estimated at budget. Net debt was $592.2 billion or 28.6 per cent of GDP, $25.3 billion lower than the 21‑22 budget estimate. Gross debt was $817 billion or 39.5 per cent of GDP, $12 billion lower than the 21‑22 budget estimate. Our effective fiscal management has been endorsed recently by comments by the IMF and the OECD and Australia retaining its AAA credit rating from the three leading credit rating agencies. We recognise there are many economic challenges ahead and, indeed, many Australians are doing it very tough right now, particularly in the lockdown states of New South Wales and Victoria as well as in the ACT.
And finally before handing to Simon, you may have seen reports this morning that we have reached agreement with the Victorian, the New South Wales and the ACT governments on the business support payments where we have partnered with those respective jurisdictions on a fifty‑fifty basis with business support that tapers from 70 per cent double‑dose vaccination rates and ends at 80 per cent double‑dose vaccination rates. It’s consistent with the announcement that we made yesterday with respect to the COVID disaster payment and aligns the economic support measures that the Morrison Government has put in place with the national plan that was agreed at national cabinet. Simon.
SIMON BIRMINGHAM:
Well, thanks very much, Josh. And these figures show today that throughout the year of 2020‑21 we saw a situation where employment was consistently growing faster than forecast, wages grew faster than forecast and Australia’s economy grew faster than forecast. As a result, we saw tax receipts stronger than had been forecast and payments lower than had been forecast. This is the virtuous cycle of a stronger economy. It’s the reality that by having stronger Australian companies and businesses and more Australians in jobs we have achieved stronger financial outcomes right across the country. Stronger financial outcomes for Australian households, for Australian businesses and ultimately for the bottom line of the Australian Government. These results underscore the reality that the best way for us to continue to secure stronger results for the budget bottom line is to continue to focus on having a stronger economy. The budget that Josh and I released this year was one very much focused on need for a stronger economy, how we continue to encourage Australian businesses to invest, particularly to invest in productive equipment such as capital machinery, plant and equipment through our full expensing measures. We continue to support Australian business through these difficult Covid times through the loss carry back measures. And we continue to plan to help Australian families and households to get ahead through lower tax environments that support them whilst, as we’ve shown through the Delta outbreaks, the agility to be able to respond to unforeseen circumstances.
These results should give Australians confidence in the future. They should provide confidence that as our economy comes back out of the lockdowns imposed by the Delta strain we will see strong growth, as we’ve seen before when we’ve come out of lockdowns and various restrictions in place. They should give people confidence to plan, to invest and the hope and certainty that Australia’s economic fundamentals remain incredibly strong and secure and that from these fundamentals we will see recovery in terms of employment and business conditions again in the future. That doesn’t mean that things aren’t challenging or difficult right now for many – clearly they are. That’s why we’ve responded during the course of this financial year with the type of necessary economic supports for business, households and individuals to get them through the tough times of lockdowns. These unexpected and unplanned additional payments obviously will place some pressure on the current budget. But the best way for us to respond to that will be to continue to drive the economic growth and particularly to give every Australian the dividend of the very high vaccination rates our nation looks like achieving – that dividend being a return to greater freedoms, to greater normality and the opportunity for businesses to reopen, to re‑employ and for households to start getting ahead again that will come from that. That’s what these results demonstrate – work in the last financial year and it’s the pathway that we seek to achieve in this financial year, too. Thanks, Josh.
JOSH FRYDENBERG:
Thanks, Simon. Well, we’ve got a list of questions, and I’ll throw to Shane Wright first up.
SHANE WRIGHT:
Treasurer, the Parliamentary Budget Office yesterday put out a report on bracket creep pointing out that the tax cuts that are coming in 24‑25, the trade off is extra debt of 276 billion more by 2030‑31, and it makes clear that there is a trade off between tax cuts and future debt. You said when you announced the package that it was going to be the end of bracket creep. The PBO is making clear that is not true. Does that mean that the government will have to consider additional tax cuts and will that come at the cost of higher debt for future taxpayers?
JOSH FRYDENBERG:
Well, Shane, I would say to you that cutting taxes is a never‑ending journey. We’re always looking for opportunities to cut taxes. It’s in our DNA. It’s been our track record, and if you look at what we’ve legislated through the parliament and are implementing, it’s more than $300 billion of income tax cuts. We’ve cut taxes for companies with turnovers of up to $50 billion. We’ve put in place the largest ever investment incentives through the expanded instant asset write‑off. We’ve put in place the loss carry back measure. We’ve also introduced a patent box for the medical and the biotech industry which will see concessional rate of company tax at 17 per cent for businesses that develop technologies here through their own R&D and patented and then subsequent income from it.
So we are looking to cut taxes at every opportunity. And as you know, what’s really important about our stage 3 of our tax plan, bearing in mind that we brought forward early stage 2 and put in additional LMITO payments as well, is that it is real structural reform. It abolishes a whole tax bracket, the 37 cents in the dollar tax bracket, which sees 95 per cent of taxpayers pay a marginal rate of no more than 30 cents in the dollar. Now, the Labor Party have opposed our tax cuts every step of the way. And as you know, it was a real battle line at the last election, and it will be a battle line at the coming election because they promised $387 billion of higher taxes. People will have taxes on their franking credits, taxes on their superannuation, taxes on their family businesses, taxes on their higher income and taxes on any housing investments. Those taxes have not been put away by the Labor Party. They might put out a statement on Christmas Eve or on Christmas Day and bury it in the papers that they’re walking back from some of their commitments at the last election. No‑one believes them. No‑one believes them. And, in fact, there was a front page story in one of the newspapers just yesterday indicating that Jim Chalmers had taken a policy forward for more taxes on family businesses. So that’s as of yesterday, that is what the Labor Party is proposing. They have a higher tax agenda and that’s because they’ve always got a higher spending agenda.
So with respect to your question, we continue to look for opportunities to reduce bracket creep and to ensure that people can keep more of what they earn. Our tax cuts are based on our fundamental political philosophy, which is that we should encourage aspiration, we should reward effort, and people should keep more of what they earn. Ronald Mizen.
RONALD MIZEN:
Thank you, Treasurer. Obviously there’s been a lot of change since this document became irrelevant. To what extent will the savings from the last budget that you’ve got here be eaten up by what’s happened over the past three months?
JOSH FRYDENBERG:
Well, I’ll say something and then I’m sure Simon would like to add to that. We’ve already put out more than $13 billion in the COVID disaster payment and the business support payment. And as you know, we’ve provided those payments to not just the locked down states; we’ve provided business support payments in partnership with every state and territory, particularly supporting tourism businesses, for example, that have been impacted by closed borders in Simon’s home state of South Australia and recently in Queensland as well as other states. Our expectation is by the time the COVID disaster payment has ended and that the business support payments have ended that we will be up for a bill of more than $20 billion. That’s what we’re expecting. And so the costs to the taxpayer continues to rise from the economic impact of the lockdown. Now that’s the fiscal cost from it. You add on to that the decline in economic activity which is at least $2 billion a week from the lockdowns in our two largest states and it is a significant hit to the budget and we will see it reflected in the GDP numbers for the September quarter where we are expecting a decline or a contraction in the economy of at least 2 per cent plus. And we’ll also probably see it in future jobs data as the unemployment numbers come out.
We’ve seen it more reflected in the participation rate – some people have left the jobs market – and we’ve also seen it reflected in obviously the hours of work as people are stood down on zero hours. But we expect it to flow through to the labour market outcome. So no‑one is overlooking the significant impact that these lockdowns are having on our economy. But that is why it’s so important that we open up in accordance with the national plan. And Scott Morrison’s cabinet has taken a decision, a decision which we articulated yesterday and we’re again articulating today. And that decision from the cabinet is that the COVID disaster payment is brought to an end at 80 per cent double‑dose vaccination rates and that the business support payments are brought to an end at 80 per cent double‑dose vaccination rates. And it’s hoped by all of us that we can make lockdowns a thing of the past and that we can start to see Australians get their lives back as restrictions are eased. Simon.
SIMON BIRMINGHAM:
Thanks, Josh. So in terms of the budget impact of, indeed, the current Delta outbreak and the flow‑on effects that has on payments in terms of the individual business payments, individual household and income support payments as well as the impact on economic growth and receipts, clearly all of those figures will be updated in MYEFO. By the time we get to MYEFO the nation should well and truly have pushed past those 70 and 80 per cent double vaccination rates and it will provide an appropriate time for us to update all of the relevant forecasts and projections at that stage.
There’s no doubt that the payments we’ve made and the lockdowns have come at a cost. As Josh has said, a cost to the economy, a cost to businesses and households, but also a cost to the budget bottom line. Now those costs are defensible and appropriate in terms of the bottom line costs insofar as they’re necessary to help ensure that businesses and households don't fail while restrictions are necessary. And that's what our model has proven throughout the course of the COVID outbreak right from the early stages of last year, with the programs we've put in place – be they JobKeeper, be they the COVID disaster payments or support for individual businesses – all of them have helped get people through the tough times. And by minimizing the risk of business failure or of crippling financial circumstances on Australian households we maximise the ability of businesses and households to come back as strongly as possible when the economy reopens. And that, of course, is why these payments should not go on any longer than is necessary, why the tapering and transition arrangements we’ve announced over the last couple of days are essential to make sure that we don’t carry even more expenses and even more debt than is being accumulated, that the payments have been the right thing to do for this phase of responding to COVID but extending them beyond that would be the wrong thing to do for our economy, for the budget bottom line and, indeed, for the many businesses that will want to reopen as strongly and quickly as possible and who will be looking to have willing labour market participants when they’re doing so.
JOSH FRYDENBERG:
Andrew Probyn.
ANDREW PROBYN:
Treasurer, your home state has just today recorded 1,438 new cases of Covid. How can you reconcile the notion that you’re going to be withdrawing support at a time that where your own Victorians are really unnerved by the steeply growing coronavirus cases? And can you foresee a situation where it gets even more, becomes even more – the case load becomes even more and there will have to be those smaller lockdowns because of the size of the outbreak that will require some federal help?
JOSH FRYDENBERG:
Well, as you know, we have taken the decision about our economic support payments transitioning and ending based on the best medical advice and based on the best economic advice. So we’ve had extensive discussions with Australia’s Chief Medical Officer before reaching this decision. Now, the Doherty modelling has said that there will continue to be cases and, indeed, there will continue tragically to be some deaths, even as vaccination rates increase from 70 to 80 per cent. But that at that time lockdowns become unlikely and in the event that they are put in place they’re very temporary and they’re very targeted. And what we announced yesterday with respect to the COVID disaster payment is that there would be a couple of weeks’ transition and then people would be able to access the welfare system after that point in time. But I put to you, Andrew, if it’s not 80 per cent double‑dose vaccinations when we bring to an end the COVID disaster payment and the business support payment, then when is it? When is it that the government can stop spending one and a half billion dollars a week on these emergency support measures and when is it that people can get their lives back and that the lockdowns can be lifted? You see, Melbourne is now the holder of the unenviable title of the longest locked down city in the world. Melbourne tragically and sadly has gone from being the most liveable city in the world to the most locked down city in the world. And speaking to you, Andrew, right now from Melbourne to you in Canberra, I can tell you there’s a level of despondency as people just want these lockdowns to come to an end. Kids haven’t been in school for the better part of a year. Businesses have closed. Families have been separated, yet the lockdowns have just gone on and on and on. And so Victorians are looking for restrictions being eased as they get the jabs in record numbers. That is what we hope the state government delivers, but also that is what the people of Victoria need. They need their lives back. They need the lockdowns to lift, and our end to business and COVID disaster payments was taken on the best medical and economic advice. Next question is from Clare Armstrong.
CLARE ARMSTRONG:
Thanks, Treasurer. These payments coming off at 80 per cent vaccination rate, at the same time none of the reopening plans of New South Wales, Victoria or the ACT at the 80 per cent mark have unencumbered business and trade. There’s no guarantees that state borders will be open. So is this an implied expectation that these states will readjust their reopening plans to factor in that there won’t be that money there for them to be more cautious as they come out of lockdowns? And can we therefore expect that workers who remain on reduced hours will be transitioning on to JobSeeker and other types of welfare?
JOSH FRYDENBERG:
Well, of course states will need to factor in the economic supports that are available in making their decisions about the various domestic settings that they have. And it’s our expectation and our hope that the border restrictions will be lifted and that Australians will be able to travel more freely within their state and interstate. And the Prime Minister’s already indicated that we are looking to provide more opportunities for Australians to more freely travel internationally, particularly as those vaccination rates hit 80 per cent. So, yes, Clare, the question as – or the answer to the question of should this be factored into the thinking by state Premiers and Chief Ministers, the answer to that is yes.
SIMON BIRMINGHAM:
And, Clare, as of today, some 77.8 per cent of Australians have had their first dose vaccination and 54.2 per cent have had a second dose vaccination. Our vaccination rates are pushing into the territory of being among some of the best in the world. If you look at the over 70s, the first age cohort to have access to the vaccines, more than 94 per cent of them have had a first dose vaccination. That is been an inspiration to the nation, but it is also about then the dividend of those vaccinations. And the dividend of that is that we as a population carry significant protections against COVID‑19. And the question before from Andrew, it’s going to be increasingly important to not focus so much on the number of COVID cases as on the health outcomes of COVID, as on the hospital rates and the serious health consequences from it, which we are seeing as our population gets more and more vaccinated that those protections are very effective, are very strong, and as the Doherty Institute modelling show, do change the dial in relation to the threat posed by COVID to individuals and, therefore, should change the dial in the way in which governments respond to COVID in terms of the type of restrictions that are necessary. The changes that we’ve announced these couple of days are a reflection of that scientific approach, of that modelling and the reality that vaccines give us the protections that are necessary to deal with this in a very different way.
JOSH FRYDENBERG:
Jade Gailberger.
JADE GAILBERGER:
Treasurer, following on from Probyn's question, has the Victorian Treasurer Tim Pallas asked you to consider further support beyond that 80 per cent vaccination point. And, if so, what was your response?
JOSH FRYDENBERG:
They would have liked me to continue to support it indefinitely and even to provide more support currently than we are. For example, they asked could we support their decision to lock down the construction industry, and I said, “Well, construction workers with entitled to the COVID disaster payment but that they didn’t put on the list the construction industry,” which is a list which sees other industries receive money under the jointly funded plan. So the answer is they’re always asking us for more money, and most of the time we’re providing it. But in the case of their lockdown for the construction industry, it if they want to provide extra support, then that’s a decision for them. But, Jade, with respect to 80 per cent, we’re taking a nationally consistent approach. It’s an approach that was endorsed by our cabinet, which is to bring to an end those business support payments and the COVID disaster payments at that time. I just want to point out to you, Jade, is that right now we’re providing about twice what the Victorian government is providing to the people of Victoria. Pretty much the whole tab of COVID disaster payments, which is supporting around 600,000 Victorians. And we’re going fifty‑fifty on the business support. And as you know, today the package is just over $2.2 billion that will provide support into Victoria as they reach that 80 per cent double‑dose vaccination rate. So we’re providing an unprecedented amount of money into Victoria. And per day of lockdown we’re providing more business support to Victoria than any other state. And that’s what we’ve been doing to support the Victorian people through this very difficult time. Next question is from Eliza Edwards.
ELIZA EDWARDS:
Treasurer, how are businesses supposed to keep paying their workers and cover rent when the support comes off but ongoing restrictions and density limits mean they can only seat half the customers they usually would?
JOSH FRYDENBERG:
Well, there is an easing of restrictions at 70 and 80 per cent. You’re starting to see retail, hospitality, some of the entertainment sector and recreation sector starting to open. But for the state governments, they have to ask themselves the question: can they move quickly, more quickly, to ease those restrictions? I note that the Victorian Premier has said his going to watch what happens in New South Wales and if it’s effective there then he will look to bring forward the opening in Victoria because the Victorian road map is slower than the New South Wales road map. The 70 per cent in New South Wales pretty much looks like the 80 per cent in Victoria. And so it’s incumbent, I would have thought, on the Victorian government to catch up to New South Wales and to ease those restrictions as quickly as they can do so in a COVID‑safe way. They’re being particularly cautious. Now, that might be the Burnett Institute advice that they have received, but we know that from the Doherty modelling we start to see numbers come down as those vaccination rates hit 70 to 80 per cent. So my message is very clear to the Premiers, and it’s the same message to Daniel as it is to Gladys as it is to Annastacia, as is it to Mark McGowan, as it is to all the Premiers and the Chief Ministers: ease those restrictions as soon as it is safe to do so, allow people to get back to work and kids to get back to school because it’s not just the economy that’s being hurt by these lockdowns; it’s also the wellbeing of so many Australians.
SIMON BIRMINGHAM:
Let’s also not forget we have some lived experience. Let’s not forget we have some lived experience of the end of JobKeeper and the fact that there were many doomsayer predictions at that stage and that that lived experience that the economy came back very, very strongly and, indeed, labour force shortages were what many businesses quickly found themselves talking about. That is not to say that will instantly happen in this regard, but we should have confidence that the Australian economy and labour market can make these sorts of transitions successfully even when there are some changes in business conditions for some sectors that might remain in place for a short period of time. We’ve seen before that when that’s the case there’s been stronger demand often the case in other sectors of the economy that drove us prior to these recent lockdowns to a point of having record levels of employment, record levels of participation and very strong labour market demand despite the doomsayers suggesting that when JobKeeper came off there would be some sort of crisis. So we should back the confidence that exists right across the Australian economy, the desire of businesses and households to get back to work and to sees the opportunities that will be available to them. Patrick Commins is I think where Josh was going.
JOSH FRYDENBERG:
Exactly.
PATRICK COMMINS:
Thanks very much, Treasurer. Isn’t it the case that removing emergency support could create a perverse incentive for COVID‑free states like WA keep their borders closed because the stakes are even higher now if they get on outbreak as there won’t be that federal support?
JOSH FRYDENBERG:
I don’t think so. It was also put to me yesterday that maybe bringing an end to the COVID disaster payment could lead states to slow down their vaccination rates. I just don’t believe that is the case. And as you know, closed borders cost jobs, and it doesn’t matter which state you’re in. So I think there’s an imperative here to follow the national plan, to open up in accordance with the plan. And our economic support measures, as Simon and I have both repeatedly said, were emergency measures. And the commonwealth has spent around $300 billion in direct economic support. And it comes to a point where the labour force, the labour market, needs to find its own level. People need to be able to move more flexibly between jobs within states and that – and as Simon rightly said, there were a lot of doomsday predictions, including from Anthony Albanese, who said that the economic roof of the economy would come crashing in at the end of JobKeeper. Far from it – when JobKeeper ended between the end of March and May we saw 120,000 more jobs being created. So the experience of the economy to date throughout this pandemic is that once restrictions are eased people get back to work. And that’s what we need to do as soon as possible. Next is from John Kehoe.
JOHN KEHOE:
Thanks, Treasurer, Finance Minister. It looks like the month of June alone was a deficit of about $9 billion. Given the forecasts for this year is for a deficit of $107 billion but now you have these shutdowns, big costs that you’ve laid out, is it plausible the deficit you’ve actually handed down today might not be the record deficit and the one that we’re going to hand down this year is going to go close or at least rival that?
JOSH FRYDENBERG:
Well, I’m sure both Simon and I will make some comments here. The numbers will be updated at MYEFO and then again at budget so I don’t want to pre‑empt that, John. But obviously the economy’s taking a hit from the Delta variant and the lockdown in the major states. And we’ve also seen commodity prices come down a touch from what we were seeing in the June quarter. The iron ore price has now settled around $90 a tonne free on board, bearing in mind that both Simon and I have in the budget a pretty conservative estimate on the iron ore price at $55 a tonne. And so we’ll continue to meet the challenges that come forth, but, you’re right, the economic situation is uncertain. There are many factors at play. But what these numbers do confirm is that the economy does bounce back once restrictions are eased. Simon.
SIMON BIRMINGHAM:
When the budget was handed down, Delta had not touched Australia and Delta has had a very profound impact on Australia, as those who have lived through prolonged lockdowns in New South Wales and Victoria and now the ACT know only too well. And that profound impact is reflected in elements of the budget with those $13 billion of payments that we have made to date and that expected to grow closer to $20 billion in payments. It will be reflected in terms of changes to economic activity across those states that have been in lockdown which will in relation to both areas of other payments and receipts. But it is too early at present to be able to firmly update those budget forecasts and to make predictions. MYEFO will be the time to do that. MYEFO will come at a time when the nation will have cleared 80 per cent double‑dose vaccination rates. It will come at a time where we will have some lived experience of how reopening steps are tracking and going and hopefully can provide us then with a clearer picture in relation to what the forecasts can genuinely be updated to and look like for the future.
JOSH FRYDENBERG:
We’ll take two more questions. Phil Coorey and then Matt Killoran.
PHIL COOREY:
Treasurer, when Delta first took hold in New South Wales and Victoria and the ACT, several times you tried to draw a line in the sand on federal financial assistance to make the states more accountable for their decisions on lockdown. And I think there was four or five different iterations before we arrived at where we are now on income support and business support. Can you say categorically that the cessation of support at 80 per cent as announced yesterday and today for business is the final line in the sand? There’ll be no alteration to that position?
JOSH FRYDENBERG:
Well, Phil, all I can tell you is the cabinet has taken a pretty clear position here – that our business payments will transition and see a tapering at 70 per cent double‑dose vaccination and then will end at 80 per cent double‑dose vaccination. That’s reflected in the press release that I’ve agreed today with the New South Wales Treasurer and it’s also my stated position with respect to Victoria and we’ve announced joint support with Victoria for the next six weeks. So that’s our government’s position. I can’t be clearer than that.
SIMON BIRMINGHAM:
But Phil ‑
JOSH FRYDENBERG:
Sorry, Simon, I was just going to say on the COVID disaster payment, the position is similar – we’re providing a transition off the COVID disaster payment, but what we have always sort to done – do throughout this whole pandemic is to provide the economic support that is there for the Australian people. But we set out a target at national cabinet that was agreed to by the states and the territories that would see restrictions eased at 70 to 80 per cent and people get their lives back, and that’s what our announcements on the economic support are designed to do. Simon.
SIMON BIRMINGHAM:
Phil, I was just going to make the one observation [inaudible] –
JOSH FRYDENBERG:
I think we’ve lost Birmo. I think.
SIMON BIRMINGHAM:
– out of JobKeeper. We face many calamitous claims but we stuck to it, we held by it, and it proved to be the right thing to do at the time. No doubt, there will be from the Labor Party once again calamitous claims made, but the right thing to do here is to follow the evidence, and that’s precisely what we’re doing.
JOSH FRYDENBERG:
Yeah, and I do point out that, you know, the Labor Party’s trying to have a bet each way. It’s saying, “Oh, we should continue these payments,” but they can’t tell you continue them to when. It reminds me of their position on JobSeeker when they said, “Oh, it should go up by more than we announced,” but they couldn’t tell you by how much. It reminds me of their position on JobKeeper where they said, “This should be extended beyond the end of March,” but they couldn’t tell you for how long. And, of course, they have these $300 payments for people to get the jab even if you’ve already had so. So it’s not exactly going to be changing behaviour there – a $6 billion price tag to the Australian people. So the Labor Party is having a bet each way when it comes to these economic support measures, as they’ve continually done. But we always hear the doomsday predictions from the Labor Party as they pursue the cheap politics of this. Final question, Matt Killoran.
MATT KILLORAN:
Thanks, Treasurer. I was wondering, can you tell us how much of an impact did commodity prices have on the final budget outcome here, particularly coal, which has had some fairly strong performances lately? And was there any noticeable impact from the trade sanctions being put in place by China which would have been felt particularly in the second half of last year?
JOSH FRYDENBERG:
I’m sure Simon will also want to add to this. So company tax receipts were up about five and a half billion dollars from previous estimates and about half of that was driven by commodity prices and about half of that was driven by improved overall domestic economic activity. And you can also see a $5 billion increase in income tax receipts, which is, of course, a reflection of more people being in work and growing domestic activity. And then there’s also a reduction in the JobSeeker payments of over $1 billion, again, reflecting more people in work and less people on welfare. With respect to China’s economic coercion towards us – barley, beef, wine, coal – as I said in a speech just a couple of weeks ago, Australian exporters have been remarkably resilient and adaptable in being able to find new markets for their exports. And, for example, with respect to coal, 30 million tonnes less of coal going to China, 28 million tonnes of coal going to other markets. Wine that was otherwise going to China is now going to Singapore and Germany. Barley that was otherwise going to China now going to Saudi Arabia as a major export market. So we’ve seen a high terms of trade. We’ve seen a strong export performance as the economy has been able to adapt and as our exporters have found new markets. Simon.
SIMON BIRMINGHAM:
Well, a $79.5 billion improvement in the budget bottom line is a testimony to the resilience of the Australian economy across all of the different challenges they’ve faced. Be it the challenges supposed by COVID‑19, the challenges supposed by China’s coercive economic activities and unjustified trade sanctions. In all of those areas we’ve shown adaptability and resilience in different sectors. Some sectors do continue to do it a little tougher than others in terms of the impact of some of China’s sanctions. And that’s where we continue to provide support to those sectors in trying to open up opportunities in new markets and to diversify their opportunities. Elsewhere we’ve seen, indeed, the fluctuations in commodity prices with the much higher than forecast iron ore price, which, as Josh noted before, continues even despite its recent decline to be significantly above the forecast that we have in the current budget. Right now we’re seeing fluctuations in terms of prices for coal and LNG, which, again, will have positives for some parts of the Australian economy but that’s about the backing that we do of a diversified economy. That whilst the resources sector is incredibly important, the investments we’ve made as a government in strengthening our manufacturing sector, in encouraging businesses through this budget and the previous one to invest in plant, machinery, capital equipment, are all about making sure that across the board we have the strongest possible economy and we have businesses investing not just in ways that stimulate growth today but enhance their productivity and capability for the years to come, because that’s what will give us the strongest economic dividends in the future.
JOSH FRYDENBERG:
Well, thank you very much, Simon. Thank you, members of the media. These numbers confirm the resilience of the Australian economy. What is driving the improved budget bottom line is more people in work, less people in welfare. An $80 billion improvement on what was expected in last year’s budget just last October. This confirms that our economic plan has seen a strong economic recovery, but obviously we’ve more recently been hit by the Delta variant. That’s going to cost the economy. But what these numbers should give people confidence about is that the economy, once restrictions are eased, does bounce back and it bounces back strongly. Thank you very much.
SIMON BIRMINGHAM:
Thanks Josh. Thanks everyone.