Interview on ABC Radio Adelaide, Mornings, with David Bevan
David Bevan: But we are joined by Senator Simon Birmingham, Minister for Trade, Tourism and Investment, South Australia's most senior Liberal, and certainly the most senior South Australian in the Federal Cabinet. If you've got a question for him about COVID-19, the Federal Government's response to it, give us a call, you can speak directly him. 1-300-222-891. Now, all I'd say on that is that we'd like to get through as many questions as possible, so let's not have a rant, let's just put the question directly to the Minister.
Good morning, Simon Birmingham.
Simon Birmingham: Hello, David. Thanks for the opportunity to join you.
David Bevan: Now, you are the Trade Minister and the Tourism Minister. So, I'm thinking after health and after the budget you're the one that's in the firing line because trade must have just fallen off a cliff in the class few days, am I right?
Simon Birmingham: Well, the only thing worse than trade at present is tourism, and yes, look, those sectors are doing incredibly tough. The businesses at the forefront of our trade and tourism industries are those that are at the forefront of the economic impact of coronavirus. And all that has happened in terms of restrictions on travel and movement, and changes to consumer behaviour.
And yes, David, I've spent most of my time this week speaking with businesses and their representatives across the country who are on the brink, who first and foremost are usually concerned about the welfare of their staff and the wellbeing of people who they know they probably will not be able to keep on, and then of course the concerns about the viability of their businesses. And that's why really the approach we're taking and focused on as a Government is twofold – how do we make sure that we support those whose jobs may well be threatened or lost as a result of what's happening at present? But also, how do we ensure that businesses, who potentially have next to no cashflow, no revenue coming in, are actually still sufficiently viable or able to withstand the weeks or months ahead? So that when we get to the end of it, when we have a recovery phase, we actually still have the productive capacity of those businesses to employ people again and to start up again-
David Bevan: But how- what does that mean in real terms? I mean, for instance coffee shops down in the tourism precinct, like Glenelg, or Brighton or Henley - what are you going to do? Are you going to send them cheques? Wineries up in the Adelaide Hills that rely on trade and tourism, what are you going to do, send them a big cheque?
Simon Birmingham: So, it's the flow through, David, as well, it's not just those we automatically think of in tourism and hospitality - it's the audio suppliers who deliver the conferences, the security contractors, the laundry services that help do work for and they do work for hotels, sort of. So yes to an extent, we are basically pumping cash into small businesses across the country. The stimulus measures announced last week - $17.6 billion - a big part of that with payments up to $25,000 per small or medium sized business that are linked to the size of their payroll as an indicator and they really are sustainability grants to try to keep those businesses operating.
Yesterday, more than $100 billion of support going into the banking systems and lending systems to make sure that low-cost, very low-cost financing is available to businesses who need extra support to see them through. And we expect now with the Reserve Bank's actions yesterday, to see the banks say more on that today. But we saw already with the Commonwealth Bank yesterday cutting far more significantly than the 25 basis point cut, they went for a whole 100 point cut in terms of their small business lending and so forth. And, these are the types of actions we're trying to act in sync with the financial sector.
David Bevan: In terms of tourism activity what's your projections? Has it reduced to virtually nil? I mean, that's what they're talking about in Tasmania since their decision to insist that everybody coming to the state has to isolate for 14 days. I mean that's going to- it's going to reduce down to virtually zip.
Simon Birmingham: International tourism activity obviously is, from tonight Australia's borders are effectively sealed to new arrivals. And so we have already seen over the last few weeks a severe tanking essentially in international tourism. And so, that's really hitting some of those parts of Australia who are most reliant and dependent on those international visitors. I spent the start of this week in north Queensland, and then around the Gold Coast, I mean these are our iconic tourism attractions. But similarly, around Uluru in central Australia and of course here in South Australia, we know that tourism regions like KI have been doing it tough already following on from bushfires.
So, yes, the domestic tourism downturn now is very, very real as people take in the messages about not pursuing unnecessary travel seriously.
David Bevan: Should Crown Casino close?
Simon Birmingham: Well, Crown Casino should do the same as any other venue now, and that is abide by the restrictions on gatherings. And so they need to manage their spaces effectively to make sure that they don't have gatherings within any single part of the venue of more than 100 people, and that they do apply the same type of social distancing expectations we're applying elsewhere, in terms of keeping degrees of space between individuals. So, I'm not going to determine for an individual business whether that tips them over a point where they need to close.
For some, opening the doors is no longer viable under the type of conditions that are there and that is the real crisis point we're dealing with - with those businesses who don't have revenue or cash flows. But all certainly need to be understanding that the decisions that are being made by the National Cabinet, bringing the prime minister, and premiers, and chief ministers together, and those decisions around limiting group gatherings, has obviously a very serious impact for hospitality businesses like casinos, convention centers, restaurants or the like.
David Bevan: Our phone lines are open, 1300-222-891, if you want to talk directly to the Minister, but the text line – 0467-922-891. And Margaret wants to know: what about the banks cutting credit card interest rates? Many people will be living on credit as the salaries dry up.
Simon Birmingham: David, those sorts of debt pressures for households certainly form part of the discussions that we're having with the banks. I thought yesterday is the initial response we saw from the Commonwealth Bank, which is the first mover amongst the big banks after the Reserve Bank's decision. It wasn't just business lending they acted, they also interestingly made cuts to their fixed term and usually fixed interest home loan rates. So, usually when we have reductions in interest rates come from the Reserve Bank, that flows through of course into variable interest rates. But the bank actually stepped up to recognise that those on fixed interest rates would be feeling pressures.
David Bevan: But what about the credit cards?
Simon Birmingham: Credit cards, I understand the message there and that's something I'm sure that we will be talking to the banks about - credit card rates or at least indeed trying to make sure that people understand they should intervene before it comes to relying on the credit card. Because credit card rates are always going to be more than other forms of debt and so if there are ways of trying to refinance other parts of your financial circumstance, in terms of your other loans or the like, that's going to be far better than relying on credit card.. You should talk to your bank before you get to that.
David Bevan: Another text says: The Senator agrees there is a cash flow issue for businesses and yet we won't see any cash from this stimulus until June. I need a cheque yesterday. This will be an utter disaster.
Simon Birmingham: So, what we've tried to do is use the automatic mechanisms that are there. We know that when governments try to put new programs in place, that's when it takes an awfully long time and when things go horribly wrong. So we're using the tax system to make these automatic payments. People should be able to work out what their payments will be and know that that is coming to their business.
We are also- and there'll be more news over coming days in terms of additional measures that we're pursuing to help people either losing their jobs or to try to support business sustainability. But it's not quite that simple to simply say we can get cash into every business in the country tomorrow. We can do that when the banks make decisions to cut their interest rates and do those sorts of things which is what the $100 billion dollars plus of extra liquidity going into the banking system yesterday was all about - that will have a flow-on impact very quickly for businesses. But that up to $25,000 dollar payment will be on the way and businesses should be able to at least bank on the fact that it's coming. But it does require us using those existing tax mechanisms to try to get it as quickly as we can to people.
David Bevan: Fiona is on the line to talk to see a senior minister in the Morrison Government, Minister for Trade, Tourism and Investment Simon Birmingham. Good morning Fiona.
Caller Fiona: Good morning to you both. How is your day?
Simon Birmingham: Hello Fiona, It's nice to hear such a cheery voice.
Caller Fiona: I must say I don't feel particularly cheery but we will get through this. Firstly, I'd like to say congratulations for the job you guys are trying to do. I think it must be incredibly difficult and I'm sure you're doing your best.
Simon Birmingham: Thank you.
Caller Fiona: Now, however, I'm a sole trader. At the moment, we're not eligible for a cent of assistance. There's absolutely nothing for me in the first stimulus package. Nothing. Is there likely to be anything in the subsequent package?
Simon Birmingham: Fiona, many people have raised sole trader issues with me this week and sole traders frequently operate just through the income tax system. And so that's of course a real challenge there in even identifying sole traders as business entities is something that, how do you distinguish from other PAYGE income earners through that tax system. But we are ..
Caller Fiona: But what about people like me who pay BAS? Doesn't that indicate- doesn't that differentiate me?
Simon Birmingham: So if they're in the BAS system then that can absolutely help. So yes, we are firmly trying to turn our minds to how can we- how can we make sure that those micro businesses who are usually sole traders are factored into the response plans as well. So yes, in the period of the last week - and obviously we've all acknowledged that way back early last week when we announced the initial stimulus package, things were looking different to how they looked by the start of this week in terms of just how quickly the downturn was occurring and in what sectors it was occurring. So yes, well aware of that, and the ...
David Bevan: Fiona, are you happy with the response?
Caller Fiona: Look, I think they're in an incredibly difficult position. I don't know what they can do. But I'll be frank, all of my close business associate – the sole traders - we will all be gone. None of us will survive.
David Bevan: Yeah. Minister I've got another text here saying: please David, ask the Minister about sole traders. I have my own business and ABN, I am a specialised educator. What financial support will I receive when I am unable to work with students?
Simon Birmingham: Yup. And David, I'm saying we have heard that message this week very much loud and clear. I have to say - and we've been very open in saying this - we're not going to be able to save every business or save every job. We are going to try to make sure we get enough extra cash flowing into businesses in the economy to make a difference where it can, and our focus is especially on looking to the other side of this. And as the Reserve Bank governor used the analogy of building a bridge to try to get people to the other side, and especially those critically large employers and the like who need to be able to scale up and put staff back on the books or back onto more hours or whatever it is they're doing in the interim that scales down their operations. We need them to be able to scale up, or else rather than becoming a months long problem, it could drag out much, much longer than that.
David Bevan: Okay. Jimmy in the Hills says I work in hospitality, the industry has been devastated. The whole casual workforce has been let go, thousands of people don't have jobs. You will see the first wave of mass unemployment next week. I understand the new rules are important, but you need to act now before people become homeless.
Simon Birmingham: And that is the other big part of what the cabinet has been working on this week, is looking at the social safety net support structures that kick in and making sure that if we have to adjust rules or approaches for access, we do so so that people can get it quickly and effectively. There is a real risk, we acknowledge of Centrelink services being swamped. And so both administratively, as well as its impact on households and the economy we've got to make sure those processes work quickly.
And as the Prime Minister's acknowledged there are more measures being announced over the next couple of days. And as I said at the outset of this interview, dealing with those individual impacts sits right there alongside dealing with those business impacts in terms of the way we're trying to craft these responses.
David Bevan: So people listening right now who have lost their shifts or perhaps lost their jobs, they can expect to learn what support they will get over the weekend?
Simon Birmingham: Yes. And the Parliament is back next week and so we are working to make sure that anything that needs legislating in terms of the support that we're going to have to deliver will have to be finalised, announced, ready to roll for us to be able to get it through the Parliament next week. And of course we've been talking to the Opposition to make sure that we have maximum cooperation, which they've indicated to get all of these types of reforms done and dusted next week.
David Bevan: That's Senator Simon Birmingham, Minister for Trade, Tourism and Investment. Anne has called from Adelaide. Hello, Anne.
Caller Anne: Hello. I want to know how the $25,000 goes to like coffee shops, which are struggling. Twenty-five thousand goes to the owner - is he obliged to pass any onto the staff? Because the staff are being told there's no business after three hours, go home. We pay for three hours not for the usual eight. So they are really, really struggling.
David Bevan: Simon Birmingham, similar question here but on a bigger scale, and that is somebody saying you've handed out $700 million to the airlines, but we saw yesterday that thousands and thousands of Qantas workers lost their jobs, in fact they've been stood down for months. Wouldn't it have been better - this text says - to give the money directly to the worker rather than the big airline or - to come back for something much more down your street, Anne's question - what about the people working in the coffee shop as opposed to the owner?
Simon Birmingham: And this then goes to a couple of things - one is the question of how do we make sure we still have businesses at the end of this? We could say yes, you've got to give all that money to employees, but businesses still usually have to repay debts to banks. Now we've been talking about that in terms of getting banks to act and they are acting. There's rent questions that businesses face, there's utilities payments and so on that businesses face. And of course, in the case of a business like Qantas - as Alan Joyce has been explaining - they literally have no revenue coming in the door at present and yet they still have contracts in terms of planes and other factors that are there.
So we would want to save every job that we can but we desperately also need to actually ensure that we still have airlines at the end of this. Because there is a real threat that without the type of interventions we've taken you could see a situation where airlines the world over start to fall over, and then how do we ever get the tourism industry back on its feet afterwards.
David Bevan: Well, Simon Benson on the front page of The Australian, this is The Australian it's not The Guardian that's saying this: PM looks to nationalise failing firms. And he's raised the prospect that the government might have to end up nationalising - that is owning - privately run bus services, even airports and airlines, and even basic economic infrastructure that at the moment is delivered by private companies.
Simon Birmingham: I think we're a little way off getting to getting to that and hopefully that is completely avoidable. But there may be things beyond the measures we've contemplated to date in terms of underwriting or supporting different parts of our economy that we view as being critical to the recovery. And it is really a point of trying to distinguish- we're trying to work through a survival phase now for businesses and people whilst keeping a firm eye on the fact that if we lose all of that productive capacity in our economy, if too many businesses fall over – particularly the businesses that other businesses rely upon like airlines to move people around and sustain many other business operations - well then even when the health threat has passed and we've started lifting restrictions, it will take many more months or longer to be able to recover thereafter because we just don't actually have those businesses able to operate.
So that is- that is why yes, much of the support is geared towards business survival. And to go right back to the coffee shop question it's kind of the same answer. And we want the coffee shop to keep on as many of their staff as they possibly can but we also, ideally, don't want them to go out of business. So there's no- and we don't want to keep on their staff for two weeks and then go out of business and everybody lose their jobs. We'd rather, if it comes to it, they use the payments that are coming through to keep some people there for fewer hours and to save the business than for the whole show to go under.
David Bevan: Sue has called from the Clare Valley. Hello, Sue.
Caller Sue: Good morning, David. Good morning, Minister.
Simon Birmingham: Good morning.
Caller Sue: Shall I just go ahead with the …
David Bevan: Yeah. You just put your question directly to the Minister, Sue.
Caller Sue: Thank you, David. Minister, I guess my concern is clarity of message regarding regional tourism. We all know - and blow after blow this year - it's been a hard time for everyone, for many, many people. Now, in my circumstance and my neighbours and friends, we have a small bed and breakfast in the Clare Valley - we're not a big hotel. Many of our cellar doors host maybe half a dozen people at any one time. So while we need to be sensible- and I think we've seen that Australians are sensible and responsible and, apart from the shopping-
David Bevan: Apart from when we're really stupid, Sue, we're really smart.
Caller Sue: Yeah.
David Bevan: But is your basic question. Look, there are some things you can do as a tourist which are quite safe.
Caller Sue: Yeah.
Simon Birmingham: Yes.
Caller Sue: Yes, David, there are. There are. And I'd really like people to keep coming to Kangaroo Island, the Adelaide Hills, the beautiful Clare Valley. It's stunning here. Get away from the city where everybody is crowded on public transport. And you know, I'd like to see the Government stepping in and encouraging people to keep visiting because, personally, I don't want to go to Centrelink - I never have and never want to. I can keep going, if people keep visiting.
David Bevan: Simon Birmingham, what can you do for Sue and all of the other people like her?
Simon Birmingham: Absolutely. I'm just going to say one little thing first and then I want to deal with the substantive part that Sue raised and that is just that last comment- many people are very proud of not having to call on social safety nets, but in the end please do so if you need to. It's just a firm message - don't let pride get in the way of reaching out for help at times like this, that's why government has the help there for us . And it's a topic that we've discussed around the Cabinet table of making sure that people understand there should be no shame, no guilt in reaching out to get the help that- that we make available to individuals.
Now, when I heard Sue say that she was from the Clare Valley I was thinking fantastic - regardless of what Sue's question is I'm going to put a plug in for sensible drive tourism that is consistent with the type of public health messages that we have out there at present. We're not asking the whole country to go into lockdown. That is happening in some parts of the world where things have gotten completely out of control. But at present Australia has managed this well and we do and are blessed of course with having wide open spaces in the country in regions like the Clare Valley.
And people should think about the opportunity, frankly for a bit of a mental health break given the type of stress that everybody is under, if you can and if you can afford to and your circumstances allow, hop in the car and take a day trip or take a few days away in one of our many different regional areas. There is nothing wrong with booking a bed and breakfast or booking accommodation in terms of an apartment style accommodation or hotel style accommodation where you and your family and loved ones are still living in the same separate space to anybody else – you're not breaching any of the group gathering rules. You can go to small restaurants or restaurants that have reconfigured or you can get takeaway and go and eat it sitting there looking at the beautiful vineyards.
Yes, still try to get out and about and support the coffee shop on your way to work by picking up a cup of coffee. All of those things are very important.
David Bevan: Thank you for your call, Sue. Let's go to Ben. Ben Cunningham is with the Master Painters Association. Good morning, Ben.
Caller Ben: Good morning fellas. Look, I could probably speak on behalf of subcontractors across the country, Simon. We appreciate what you've done with the apprenticeship figures- that's a very good move. But the issue that I have is that we're going to be holding the bag when it all falls apart like we normally do because the nature of the way the business model is structured in Australia- and John Howard's property developers, we're what they call the Aussie Howard Battlers - that was the thing out there for a long time.
My question this time is how are you going to stimulate the economy to maintain the subcontract model? Because they are the biggest employers. Now, you could talk to the builders, the builders don't do anything- we build it and we carry the bag. So what- what have you got in place? Because there's going to be a hell of a lot of unemployment through the subcontractor model, and these guys with an aging demographics in the building industry - they won't come back.
David Bevan: It'll be the subbies that miss out.
Caller Ben: The subbies will hold the bag. It'll come crashing down and we're the ones that have to face suppliers you know, long service, it's just the massive trickle down and builders don't hold the bag.
David Bevan: Simon Birmingham, what do you say to Ben Cunningham and all the other subbies out there listening?
Simon Birmingham: So where we can, we are trying to create more incentives for businesses who can to bring forward investment and activity that will offset the fact that others will stop doing so. So one of the big measures last week, Ben mentioned there was support for apprentices, significant financial support to be able to keep apprentices on and that's crucial. But also one of the big tax measures last week was accelerated depreciation to really try to incentivise businesses who can't afford to - and not every business in the economy is doing it tough at present, of course some are doing it relatively well thanks to changing circumstances - to bring forward investment activity so that we do maintain that type of construction work that flows through to subbies and the like.
Now again, it's something we have to keep under constant scrutiny and watch. The type of financing measures announced by the banks, by the Reserve Bank yesterday, again will be key to keeping and stimulating activity elsewhere in the economy that flows through in those construction sectors.
So there's the first tier of, obviously hard hit sectors like travel, tourism hospitality and so on where we've been talking. Then there's sort of the disruption that occurs in parts of the rest of the economy. And obviously those travel, tourism and hospitality businesses won't be investing as we would have expected them to.
But if we can stimulate other parts of the economy who can afford to – whether that's the supermarkets, whether that's in medical supplies or whether that's just businesses who have larger cash reserves or otherwise are in a position to say: well I was going to do something in two years' time but the Government's now changed the tax rules to make it so attractive that I'm going to undertake that construction work now.
And so that's what we've done with the tax system with accelerated depreciation. We'd already brought forward billions of dollars of Government infrastructure projects and we'll continue to work with the states, and Stephen Marshall and I've been in contact talking about these things as to wherever we can get work happening faster at present we should because that would help to prop up all of those subbies, suppliers and others who rely upon it.
David Bevan: Minister, thank you for your time.
Simon Birmingham: Thank you very much, David.
David Bevan: Senator Simon Birmingham, Minister for Trade Tourism and Investment.
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