PATRICIA KARVELAS:
Welcome to the program.
JOSH FRYDENBERG:
Nice to be with you, Patricia.
PATRICIA KARVELAS:
Treasurer, Australia has avoided a technical recession for now, but today's result is likely to disappear because it predated the lockdowns across NSW, Victoria and the ACT. How bad is it likely to get for the economy?
JOSH FRYDENBERG:
Treasury is expecting the economy to contract by at least 2 per cent in the September quarter, and as you say, Patricia, that reflects the fact that our two biggest states, New South Wales and Victoria, have been in sustained lockdowns. But these numbers for the June Quarter at 0.7 per cent and 9.6 per cent through the year, are actually better than what the market was expecting and there were 29 days of lockdowns in one part or another of the country over the course of that June quarter, including across four of our largest states. So there were lockdowns and they did impact on the economy but what was pleasing in these numbers is that household consumption. So, families going out and spending in cafes and restaurants, tourism, transport services, it was housing, investment, particularly off the back of homebuilder, it was businesses buy new machinery and equipment and strong farm GDP numbers off the back of a strong winter crop that has actually helped deliver this positive result.
PATRICIA KARVELAS:
Do you expect spending in the last quarter will be slightly depressed, though, not the usual bounce, because we will be emerging with COVID cases now that our two biggest states are living with COVID rather than eliminating or suppressing?
JOSH FRYDENBERG:
It's an important question. I think certainly in the September quarter, the one we are currently in, you will see consumption affected just because of the health restrictions. You cannot move freely and spend as you otherwise would. In the December quarter as restrictions ease, I expect people to go out and spend again because there is some $290 billion that’s been accumulated on household and business balance sheets that was not there at the start of the pandemic and I would expect that the savings ratio, the proportion of people’s income that they’re actually saving, which has gone up during the pandemic, but is now starting to come down as restrictions eased in the June quarter, I would expect that will continue to come down, one would hope, as restrictions ease. So a lot will depend on sticking to the plan and people trying to travel more freely across their own state and the country.
PATRICIA KARVELAS:
Lockdowns can still happen according to the Doherty plan, but they are just less likely - will you keep economic supports in place for those possible lockdowns? Even when we’re passed 70 per cent?
JOSH FRYDENBERG:
The Doherty Institute actually used the words ‘stringent lockdowns are unlikely.’ That’s what they say. They do say that there will be health restrictions that may still be needed, and that can be anything from mask wearing to density limits within cafes and restaurants...
PATRICIA KARVELAS:
But also lockdowns are possible in the Doherty Institute modelling.
JOSH FRYDENBERG:
They are possible but unlikely, but in their words, they’re unlikely.
PATRICIA KARVELAS:
But in terms of your hat, Treasurer, will you keep economic the supports for stood down workers, the payments in place, in case lockdowns are needed post-70 per cent?
JOSH FRYDENBERG:
I have been very clear, there should be no expectations on behalf of the premiers and chief ministers that the Commonwealth will continue the scale of economic support that we currently have in place...
PATRICIA KARVELAS:
The scale, sure, but will you step in if the targeted lockdowns are implemented by any state because it is necessary after 70 per cent is achieved?
JOSH FRYDENBERG:
I wouldn’t want to make that commitment right now.
PATRICIA KARVELAS:
Why not? Because if they’re necessary, it’s actually in your modelling, it’s actually contingency allowed for in your modelling, why not make the commitment?
JOSH FRYDENBERG:
Because it's important that we do stick to the plan...
PATRICIA KARVELAS:
But that is part of the plan.
JOSH FRYDENBERG:
If we get the vaccination rates of 70 per cent, 80 per cent, we are unlikely to see lockdowns. We may see health restrictions and that may impact for example on density limits, and there may be economic support in that circumstance when people do not have the same hours of work as they once otherwise did. But the scale of support we have provided right now has been unprecedented and with every state and territory that has gone into lockdown, we have been providing income support, and with every state and territory that has gone into lockdown, we have reached agreements on business support. Indeed the states that have not gone into lockdown, we have agreed to reach business support so we cannot keep this level of economic support...
PATRICIA KARVELAS:
I’m not talking about this level, it would obviously have to reduce because you have higher rates of vaccination but in those scenarios the Doherty Institute says could happen, is the Federal Government really going to step away and not support those people?
JOSH FRYDENBERG:
We have supported people right throughout the pandemic and of course our focus is on ensuring that they can get back their lives in a COVID-safe way. I'm not about to incentivise state premiers or chief ministers, Patricia, to go and have lockdowns. What I want to do is focus on getting out of these lockdowns which means getting vaccination rates up, but holding the states and territories to account for the agreement they have reached at National Cabinet, and that's the key point. Today we have seen 80 of our largest business organisations around the country employing a million people, go out publicly and call upon federal, state and territory governments to actually stick to the plan. And that is critical. We have to stick to the plan. Why? Because people need hope. Why? Because business need certainty and their ability to plan. Our emergency economic support has seen our debt burden rise rapidly and we have committed more than $300 billion in health and economic support, it’s a lot more than what the states and territories have committed to. That is effectively borrowing from future generations, so I will be prudent. I will focus on the situation at hand and we will make decisions based on those circumstances when they arise.
PATRICIA KARVELAS:
Scott Morrison said yesterday that each state was at a different point. Karen Andrews just spoke and she says the Federal Government is of the view Queensland should be open. Is that your view?
JOSH FRYDENBERG:
Certainly in accordance with the plan...
PATRICIA KARVELAS:
So it shouldn't be open right now?
JOSH FRYDENBERG:
It should be open in accordance with the plan. Their vaccination rates are below that in New South Wales and Victoria, and Western Australia has also seen a slower vaccination rate. I think it is incumbent upon those governments and those public health officials in those states to drive that uptake in the vaccination rate. We have seen in New South Wales spurred on by the lockdown and the experience many people going through, has seen a record number of people get the jab. That is a really good thing and it’s putting those 70 per cent 80 per cent targets in sight. Queensland should open up in accordance with the plan and the same applies for Western Australia. I believe it is in their health, economic interest and ultimately the long-term health interests as well.
PATRICIA KARVELAS:
Okay, let’s talk about that national interest. You keep saying stick to the plan, that has been your line over and over again but the plan it's not clear about opening borders at 70 per cent. Do you expect Queensland and WA for instance, to open their borders when they hit 70 per cent vaccination, double dose, if there are thousands of cases in New South Wales?
JOSH FRYDENBERG:
Well 70 to 80 per cent is what we have been talking about in terms of reopening ...
PATRICIA KARVELAS:
So there are thousands of cases in New South Wales, right and they have hit that vaccination rate, you think they should open their border to New South Wales?
JOSH FRYDENBERG:
Well it depends on their vaccination rate and that is the point. I mean, that is what the Doherty modelling has said, it doesn't matter if you start with 30 cases or 800 cases, you can still open up in a COVID safe way…
PATRICIA KARVELAS:
Sure, but if their vaccination is at 70 per cent, for instance, in WA right, you think there are 4,000 cases a day, in New South Wales, you think they should open?
JOSH FRYDENBERG:
I think they should be opening between 70 and 80 per cent and…
PATRICIA KARVELAS:
Regardless of the caseload in New South Wales for instance?
JOSH FRYDENBERG:
Again, decisions will be based on the medical advice at the time but the view expressed very explicitly in the Doherty modelling is that the country can open up when it reaches that double key, that double key of 70 to 80 per cent in the individual jurisdictions as well as the 70 to 80 per cent vaccination rates across the nation as a whole and this is the key point, Patricia. The country needs to learn to live with COVID. And the admission and the acknowledgement in Victoria today is very significant. Patrick McGorry, former Australian of the Year and noted psychiatrist has said it is a game-changer because it means that the governments that the state level are recognising they can’t eliminate the virus. They can suppress it, they can buy time to get the vaccination rates up but they cannot eliminate it and Queensland and Western Australia also need to have that mentality to know that they cannot your borders closed and you can’t keep COVID out indefinitely.
PATRICIA KARVELAS:
Victoria is no longer going to COVID zero, and you are right, it is very significant actually and a big shift and the Premier says case numbers in Victoria will go up, that is the advice they have. Now Daniel Andrews says there will be significant restrictions until vaccination rates hit levels were enough of the population can be protected and that essentially means that Victoria is headed for a long lockdown now. Do you support that?
JOSH FRYDENBERG:
Well again, they will take those decisions on their public health…
PATRICIA KARVELAS:
...you have been critical of lockdowns, do you think a long lockdown that is necessary now until those vaccination rates are lifted?
JOSH FRYDENBERG:
Well again, they would take the decisions in Victoria based on medical advice that’s available to them. I recognise that you need to suppress the virus and it does come with health restrictions but it is always about getting the balance right because as I have been saying in recent days, preventing COVID and illnesses related to COVID are an important priority but they not the only health outcome that we need to be conscious of. We also need to be conscious of the mental health strain that lockdowns, which are very blunt instruments, have on people and I welcome the announcement today in Victoria about playgrounds because I think that goes to the fact that we need to live with the virus and that we also need to be conscious of the burden placed on our young kids. At some ages they will not be vaccinated in a hurry because that is not what is occurring with the medical advice. Between 12 and 15 are going to be vaccinated shortly and that is to be welcomed, keeping kids out of the classroom, where kids cannot either associate with the teachers and face-to-face learning but also with their friends, puts an enormous amount of strain and Patricia you have seen the numbers, I am sure, of the increased numbers of teenagers turning up at hospitals with mental health issues. In Victoria, it is more than 340 a week, that is a 163 per cent increase in the numbers that we saw pre pandemic and in New South Wales it is about a 50 per cent increase. So we are...
PATRICIA KARVELAS:
There is no doubt it is alarming Treasurer…
JOSH FRYDENBERG:
So it is a really trying time.
PATRICIA KARVELAS:
Yes, New South Wales has given some sort of go back to school plan. Victoria has said no, no return to face-to-face learning in term three and we don't know what is happening in term four. What is your view? If cases still keep going up, should Victoria aim to get students back into schools in term four?
JOSH FRYDENBERG:
My view has always been the sooner you can get kids back into school, of course in a COVID-safe way, and that’s the caveat...
PATRICIA KARVELAS:
Should term four be what you are aiming for now?
JOSH FRYDENBERG:
You are asking me to be the Victorian Government’s school and medical advisor.
PATRICIA KARVELAS:
I am not.
JOSH FRYDENBERG:
To be fair, you are cheekily. But what I would say to you Patricia, is we should be trying to get kids and I'm sure the Victorian Government is conscious of this, we should be trying to get kids back in the classroom when it's COVID-safe to do so because I do think losing more than 200 days as kids in Victoria have lost out of the classroom, does have a massive impact on their educational outcomes as well as their mental health and well-being. And for all of us, that is a collective responsibility and that is why I feel very passionate about this.
PATRICIA KARVELAS:
Do you think the curfew should go?
JOSH FRYDENBERG:
Well again, that will be decisions they will make. I do not like curfews because I don’t have a great deal of inherent trust in them but again they will be decisions around public health orders that the Victorian Government will make based on the advice…
PATRICIA KARVELAS:
So you’re not critical of curfews staying?
JOSH FRYDENBERG:
Well again, that will be a decision that only the State Government will make and that the State Government will have to be accountable for in Victoria, just as the New South Wales Government is accountable for its own public health decisions and other governments in their own jurisdictions.
PATRICIA KARVELAS:
I think your office is grumpy, I have gone over time. Thanks Josh.
JOSH FRYDENBERG:
My pleasure.