JOSH FRYDENBERG:
Good morning, the Australian economy is recovering strongly after what has been the biggest economic shock since the Great Depression. 1.3 million of our fellow Australians either lost their jobs last year or saw their working hours reduced to zero. The Morrison Government responded with an unprecedented amount of economic support; JobKeeper which saved more than 700,000 jobs, the CashFlow Boost, $750 payments to pensioners, to carers, to veterans and others on income support. It was a real Team Australia moment. And what we saw was that Australia ahead of any major advanced economy in the world had employment levels and growth levels coming back to where they were pre‑pandemic. This was a strong sign of the recovery in the Australian economy. And then we were hit by Delta. And 13 million of our fellow Australians went into an extended lockdown period and that hurt the economy and we saw that reflected in the September quarter of the National Accounts. But since that time, with vaccination rates here in Australia reaching among the highest in the world, restrictions were eased, freedoms were returned and people got about their lives. And the economy is bouncing back very strongly. In the labour market, we see that unemployment today is lower than when we came to government, even after the COVID-recession. We’ve seen 350,000 jobs created since the start of September. We’ve seen job ads reach a 13 year high, with more than 250,000 job ads available. Economic growth forecasts have been upgraded with the Reserve Bank increasing their growth forecast from 4 ¼ to 5 ½ per cent by the end of next year. Business and consumer confidence has returned and lifted. We’ve seen our trade surplus reach a record high and the terms of trade at a record high and our AAA credit rating from the three leading credit rating agencies has been maintained. Australia, one of only nine countries to have such a credit rating from the three leading credit rating agencies. Business investment has been growing and has been lifting and increasing off the back of record business tax incentives. Today we reveal in that in the Mid-Year Economic and Fiscal Update that I’ll provide with the Finance Minister later this week, business investment is up 16 per cent over this year and next. That’s the strongest business investment since the mining boom more than a decade ago. Non-mining investment will reach its highest level on record at $200 billion. Non-mining investment, I say it again, non-mining investment will reach its record level at more than $200 billion. This is a sign of growing confidence in our economy by businesses big and small and by households who are going out and spending. With retail sales up in the Black Friday sales, up more than 50 per cent on the previous year, with more than $5 billion being spent. Now, we know we’re not out of this pandemic just yet. The Omicron variant is a reminder of the challenges that we face. But states need to keep calm and carry on and not overreact to the Omicron variant. Our economic recovery depends upon it. We have the vaccination rates, now at record highs and that has proven to be a vital defence against COVID. So Australians can go into Christmas confident about their future, looking forward to being reunited with friends and with family, enjoying a well-deserved break after what has been a pretty trying two years, but also knowing that their economy – which is the heart of everything – their economy is strong and growing and confidence is lifting and that next year, the expectation is that the unemployment rate will even come down further.
JOURNALIST:
Can you guarantee that Australians will be together at Christmas? States like WA are just digging their heels in and refusing to open up.
JOSH FRYDENBERG:
Obviously, WA has been the laggard, whereas other states are opening up and we welcome the announcement in QLD about their opening and obviously in NSW and Victoria, people are moving very freely between our two biggest states. So I am confident that Australians can get together at Christmas. Obviously, Western Australia has taken its own decision which it needs to explain to its own public. But as the vaccination rates have lifted, we’ve seen states be more confident that they can reopen in a COVID-safe way.
JOURNALIST:
What will next Christmas look like (inaudible)?
JOSH FRYDENBERG:
I’m looking forward to this Christmas. I’m not getting ahead of ourselves, we’ve got, obviously, a lot of work to do to maintain this momentum in the economic recovery, to ensure Australians are kept safe from COVID and next year, there’s an election to be won as well.
JOURNALIST:
You mentioned states need to keep calm when it comes to Omicron, what happens if they don’t? What happens if we see states close up, like we’ve seen so many times over the last two years?
JOSH FRYDENBERG:
The medical advice is still coming in, in terms of the Omicron variant, but we have heard from the medical professionals and the Chief Medical Officer that it’s looking encouraging and that some of the early signs are more positive than initially thought. The virus is certainly highly transmissible, but perhaps not as severe as other variants. We haven’t seen the mass hospitalisations in South Africa for example where the vaccination rates are lower than a country like Australia and there’s no evidence, as yet, that the vaccine is not a defence against Omicron.
JOURNALIST:
Back on the economy, Victoria has recorded a budget deficit line of $19.5 billion. What did you make of that?
JOSH FRYDENBERG:
What’s happened in Victoria has been very unfortunate and we’ve seen the most liveable city, Melbourne, become the world’s most locked-down city and that had a very significant impact on the economy and you’re seeing that result today. At the same time, it’s also had an impact on people’s wellbeing. What Patrick McGorry has termed the shadow pandemic is very real, with our kids out of the classroom for more than a year. That’s why it’s so important, here in Victoria as well as in other states across the country, that we don’t go back into lockdown, that we stay open, we maintain people’s confidence about their futures and that will help ensure that our strong economic recovery maintains its positive trajectory and its very strong momentum.
JOURNALIST:
Just on the economy, what couldget in the way of a healthier GDP forecast you’re planning to announce on Thursday?
JOSH FRYDENBERG:
Being still in the middle of a pandemic is a very significant risk and it’s one of those that is posed not just to Australia’s economy, but indeed, to the world’s economic recovery. That is why vigilance around the health measures are important. That is why it’s important for people who are not vaccinated, to get vaccinated, to get the booster shots or early next year for younger kids who will now be able to access the vaccine to get it. That’s why we need to continue to be vigilant, because obviously the health risks posed by the pandemic are still there.
JOURNALIST:
On those GDP forecasts, what happens if another COVID variant that is more dangerous emerges?
JOSH FRYDENBERG:
Again, I’m more positive than that. What I am focused on here is ensuring that the positive signs we’ve seen in the economy continue, that the momentum is maintained and that involves all of us taking responsibility to adhere to the COVID health related measures. I don’t think we should be talking about another lockdown, we want to avoid another lockdown and that’s why it’s really important that people follow the health advice and get about their lives in a COVID-safe way. And that’s why it’s important that the states don’t overreact to the Omicron variant.
JOURNALIST:
How do you plan to alleviate the shortage of workers? Will you be beefing up immigration?
JOSH FRYDENBERG:
Skilled workers are in high demand and we are seeing that in a range of sectors across the economy we are seeing it in construction, we are seeing that in mining, we are seeing that in agriculture, we are seeing that in the hospitality sector, we are seeing that in professional services as well. We have announced that we are bringing in 200,000 people whether they were skilled workers, whether they were people who were coming in through the humanitarian intake - obviously we made a decision to put a two week pause on that reopening based on the medical advice at the time with respect to Omicron. We’ll make a decision and announcement in coming days about the next steps with respect to that pause, but the early signs are indeed positive as I say. We are certainly focused on opening those borders as soon as possible so that international students, skilled workers can come in and play their role across our economy. We are also investing heavily in new programs like the JobTrainer program and we’ll provide more than 450,000 places of which 250,000 already have got enrolments in. At the same time we have supported apprentices there are now more than 217,000 trade apprentices in work that’s the highest on record and records began in 1963. And programs like our 50 per cent Wage Subsidy for apprentices have played a key role there. We will continue to focus on the medical advice with respect to opening those borders but there are signs now that those borders will open sooner than later and we’ll also be announcing in MYEFO that the expectation that we‘ll be getting an extra 120,000 workers or 120,000 people that we weren’t necessarily expecting in that time frame because the borders can more safely reopen earlier.
JOURNALIST:
Just on borders, and obviously there’s a call for the states to remain calm, yesterday we saw the final National Cabinet meeting and the extension of those biosecurity measures, like testing for international travellers and masks. Is that sort of, counter intuitive? Going against your message to stay calm?
JOSH FRYDENBERG:
Precautionary measures. Because, as you know, we are still in the middle of this pandemic and we have to be vigilant. Certainly, there is no room for complacency. And so those biosecurity measures are there as precautionary measures – have served Australia well to date and obviously, we are focused on maintaining people’s health and maintaining the restrictions being eased and freedoms being returned.
JOURNALIST:
How does the maintaining the restrictions being eased though weigh up against extending this until February?
JOSH FRYDENBERG:
We are not out of the pandemic and people have to understand that. I was asked earlier about what are the risks to the recovery. Well obviously, new variants are a risk but the early signs about Omicron are not as concerning as what some people initially thought. We are still waiting on the data to come through but the early signs are positive.
JOURNALIST:
How worried are you that your predications about the economy are wrong and we’re headed the same way as the US as it comes out of the pandemic?
JOSH FRYDENBERG:
Firstly, every country is different. But Australia has seen a stronger economic recovery than Germany, than Italy, than Japan, than Canada, than New Zealand and many other countries. And our strong economic support through programs like JobKeeper has helped put us into the position we are in today. Now, there are some $370 billion that has been accumulated on household and business balance sheets that was not there at the start of the pandemic. That’s money that people have saved because they haven’t been about to go out and spend because of the health restrictions in place but also the economic support we as a government have been providing. That money will be spent as long as the restrictions are eased and as long as we can keep COVID under control and that will help boost economic activity and will help create jobs. Unemployment, as I said earlier, is at 5.2 per cent. But the forecasts for the unemployment rate from the RBA to get down into the 4s and to be sustainably there. That would be only the second time in the last 50 years for that to occur. So one of the biggest achievements of our country and certainly the biggest economic focus for the Morrison Government has been on keeping people in work and creating new jobs and to ensure that we don’t have what is called a scarring effect of the labour market that was so reminiscent of the earlier recessions in the 1980s and 1990s. And the evidence today is that we have avoided that scarring effect and that’s a really positive sign.
JOURNALIST:
Is a period of inflation inevitable and if so, what are your plans to curb it?
JOSH FRYDENBERG:
You referred to the United States earlier and they have seen higher levels of inflation than here in Australia. Inflation is more persistent than we initially thought, but what we did see is that the underlying inflation – so you take out the cyclical effects, is at 2.1 per cent. Now, the RBA has an inflation target band of between 2 and 3 per cent. That’s the first time it’s in that band since 2015 and that is not a bad development. But we are watching inflation very closely, what’s driving inflation is supply-side constraints, that’s one factor. So, higher costs for building material, timber and steel and the like. We’ve also seen fuel prices go up and that’s been a global phenomenon. But the inflation pressures here in Australia are not identical to what we’ve seen in the United Kingdom or indeed the United States. For example the gas shortages in the UK are quite different to the energy challenges here in Australia.
JOURNALIST:
So just to clarify, do you have a plan to curb inflation should it occur in a way that is more severe than what you are expecting right now?
JOSH FRYDENBERG:
We’re trying to drive down the cost of living in a whole host of areas and in fact the cost of living, the inflation numbers, the CPI numbers have averaged 1.8 per cent increases under us, 2.7 per cent under Labor. Electricity prices doubled under Labor, and they’ve actually come down by 10 per cent in the last three years under us. It’s a very different track record. We’ve been able to push down on those pressures, whereas under Labor they went up. The other key point here is that we’ve been cutting taxes, cutting taxes for families and cutting taxes for small business and that has helped boost household disposable income. In the September quarter we saw more than $10 billion in tax relief go to more than 11 million Australians. That was the single biggest quarterly increase in tax relief – the single largest quarter of tax relief in more than 20 years. We’ve actually been putting more money into people’s pockets, rewarding aspiration, encouraging effort and providing lower taxes – something the other side of politics would never do.
JOURNALIST:
Just on state politics, today a Liberal preselection is underway, are you concerned that the state Liberals just don’t have enough support contend against the Andrews Government at the next state election?
JOSH FRYDENBERG:
I’ll leave those state preselection decisions to the voters, and in fact the one that’s occurring today, in my own backyard, is in Kew and I am going to be a very close watcher of developments there. I won’t pre-empt any of those outcomes, I’ll leave that to the voters and to the pre-selectors of the Liberal Party. We’ve got some great candidates. I spoke to Matthew Guy this morning, he knows what is involved in the job ahead to hold the Andrews Government to account and I’m confident he’ll continue to give his best and so will his team to that. But my focus is not on state politics. My focus is on federal politics and what I can do as Treasurer to strengthen and support the Australian economy and the signs are very positive. We’ve got an election next year and the election will be a clear contest between a coalition of Liberal and National Parties and a coalition of Labor and the Greens. We know Labor’s been in partnership with the Greens before and given half a chance, they’ll do so again. And you’ve got Adam Bandt running around calling his own members of his team Shadow Ministers because he knows what he is seeking to do with Anthony Albanese’s nod and a wink. Labor and the Greens, given half a chance on the Treasury benches, will do one thing. They’ll increase taxes, just as Labor was promising at the last election, $387 billion of higher taxes. A leopard doesn’t change its spots, that is what the Labor Party are planning for the Australian electorate. On the other hand, what we’re seeking to do is to keep the Australian community safe from COVID, to create more jobs, to strengthen our economic recovery – and with a strong economy, you can fund all the other important social services programs like disability support, health and education and aged care which we have done, as well as provide for further investments in defence. And we’ve certainly done that because we are facing a very complex and challenging geo-strategic environment as well. Our focus is on putting to the Australian people our clear plans for a stronger economy and for stronger national security, which is also in their very best interests.
JOURNALIST:
Kew though, is in your backyard. Are you concerned that the seat of Kew is now a marginal seat and will the party be able to retain that?
JOSH FRYDENBERG:
Every seat should be treated equally in that you can’t take anything for granted. And it’s really important that whoever is successful today gets to work straight away and wins over the confidence and trust of the local community in Kew and just as I am doing in my own electorate of Kooyong.
JOURNALIST:
The Director of Neurology at the Royal Children’s Hospital has stood down to take you on in your seat of Kooyong at the next election. What was your reaction to that?
JOSH FRYDENBERG:
The first thing to say is, what a great privilege it is to be the member for Kooyong. It’s an area that I grew up in, it is an area that I went to school in, it’s an area that with my wife Amie that we are raising our two kids here. And I work hard every day for my local community. Now, I have been challenged by Greens and Independents and the Labor Party before and in fact, they have thrown millions of dollars in their campaigns against me and I’ve seen more recently their fellow travellers in the Extinction Rebellion harass staff, let off flares outside my office, chain themselves to the doors, graffiti the area, create property damage, wreak havoc for small businesses and local communities and distract our emergency services personnel from the jobs they really should be doing. That’s the fellow travellers of the Independents, of the Greens, of the Labor Party in our own backyard here in Kooyong – the Extinction Rebellion. So, those challenges in the past haven’t deterred me, in fact, they have even strengthened me to continue to work hard for my local community and I feel very privileged and grateful that the people of Kooyong elected me in 2010, in 2013, in 2016 and in 2019. And again, at the upcoming election I will be putting myself forward and they know that I’ll continue to work everyday for them and for their best interests. Thank you.