JOSH FRYDENBERG:
In March of this year when the number of coronavirus cases was increasing by more than 20 per cent per day, when Treasury believed that if we faced a full lockdown that GDP could fall by more than 20 per cent in the June quarter and Australia was facing the economists version of Armageddon. Many people turned to their banks for help. The Australian banks responded. It was a ‘Team Australia’ moment. The banks provided deferred payments on interest and principle and some $266 billion of loans, two thirds of which are residential mortgages. This was significant relief to Australians at a time of need.
Yesterday, the Prime Minister and I met with the CEOs of Australia’s leading banks, together with the Governor of the Reserve Bank and the prudential regulator to discuss economic conditions more broadly, but also specifically, the future of those loan deferral programs. The banks were very clear; they supported their customers on the way into this crisis and they will be supporting their customers on the way out.
The banks are working through an orderly transition so that those Australians who can make their repayments do so and that those Australians who cannot because of COVID-19 get the additional support that they need. This is how it should be. All Australians working together to get through this crisis.
QUESTION:
Do you believe all people in hotel quarantine should be subjected to a compulsory test?
JOSH FRYDENBERG:
As in New South Wales, people who are not being subjected to the tests are kept for longer and it is very important that people do put themselves forward to have these tests because, ultimately, if someone gets the coronavirus they are endangering the lives of others across the community. I know that the governments through the National Cabinet are discussing these very issues because it is important that we are able to test and to trace as many people as possible so we can prevent the spread of the virus.
QUESTION:
What action should be taken for people who don’t get a test, do you think?
JOSH FRYDENBERG:
Again, these are matters for the state governments to be working through. But my message to all Australians is if you are showing the symptoms, get the test done, and if you’re concerned about your health and the maybe the risk you pose to others, to get that test done.
QUESTION:
Just on the banks now. What actions are the banks proposing to take around loan deferrals after the initial six month period?
JOSH FRYDENBERG:
The banks were very clear to us yesterday, to the Prime Minister and I that they’ve supported their customers on the way in and they’ll support their customers on the way out. That means working through an orderly transition at the end of the six month period. We know already around 20 per cent of those customers who had been able to receive the deferred payments have now started to make their repayments. So, customers who can should make those repayments. Others who cannot because of COVID-19 will need to work with their banks and the banks have made it very clear they're going to continue to support those who need it.
QUESTION:
Does the Government believe the six-month period should be extended and perhaps relief provided in other ways?
JOSH FRYDENBERG:
Well again, the banks are working with the regulators to ensure an orderly transition through this period. We know that with the restrictions coming off across the economy, people are starting to get back to work and that's vitally important. But there are still some sectors, and obviously, the workers in those sectors who are doing it very tough and we saw just this week the terrible news out of Qantas of 6,000 people losing their jobs. We're going to continue to see some sectors really struggle as the international borders remain closed and people are affected by that.
QUESTION:
Could the Government provide banks with financial support or loan guarantees to help the process of loan deferrals?
JOSH FRYDENBERG:
We’re already partnering with the banks through the SME, which is small and medium size enterprise loan guarantee, and that has provided more than a billion dollars worth of support already. And so we continue to partner with the banks to get these loans out to small and medium-sized businesses to help them through this is challenging period. The Reserve Bank has announced a major injection of liquidity into the system and that has helped stabilise our financial markets.
QUESTION:
So what assurances can you give to unemployed Australians that they’ll be okay when it comes to paying their mortgage?
JOSH FRYDENBERG:
These discussions with the banks were designed for that very purpose, to come together with the banks, with the regulators to ensure that there is continued support that's being provided to those who need it. I mean, you wouldn't want to be in any other country but Australia at this challenging time. We’ve seen just this week Moody's reaffirm Australia's AAA credit rating. We saw the IMF upgrade Australia's economic outlook, being the only developed nation to receive an upgrade this calendar year and we've seen from the OECD that the expected contraction in the Australian economy this calendar year is much smaller than we're seeing in other comparable developed nations around the world. That all being said, there is still some very challenging and tough days ahead and we know that some sectors will be slower to recover than others. That's why we announced this week an arts package. That's why we've announced the HomeBuilder program which the banks have said is already increasing levels of activity across the construction and housing industry. What we do know is that we'll continue to provide the support that people need, but there is a long way to go and that is why the Government is talking to the banks.
QUESTION:
Do you think unemployment will rise after September?
JOSH FRYDENBERG:
The numbers will be updated on the 23rd of July. What we do know is that the end of September, as legislated, there’s a lot of supports coming out of the economy. That's why we're working through the review of the JobKeeper program. We will have more to say about that. But we recognise that some areas of the economy and those workers in it are going to need the support for months to come, given some of the these health-related restrictions that remain in place.
QUESTION:
Is the Government considering more support for the aviation industry and perhaps an extension of the JobKeeper program?
JOSH FRYDENBERG:
We’ve already provided significant support to the aviation sector and that's underwriting some of the important freight task and passenger routes as well as, of course, waiving some government related fees. That’s been important. But we've stood very clear with the aviation sector, particularly when came to Virgin’s future. We supported a market outcome and that's what we've seen in recent days. And I think that's an important development because we want to see two major airlines in the domestic market, Virgin and Qantas. We will continue to assess the needs of the various sectors across the economy and make decisions accordingly. As for the JobKeeper program, we are undertaking that review and working through our options and that's what we've been doing in recent days and weeks.
QUESTION:
Just to events in New South Wales. Should there be a Royal Commission into political links between the Labor Party and the Chinese Communist Party?
JOSH FRYDENBERG:
Well these investigations are conducted independent of government. They are obviously very sensitive and very serious matters, so I'm not going to provide a running commentary on those developments, other than to say they’re very serious matters and they're in the hands of the authorities whose job it is to protect Australia's national security and there's nothing more important than Australia's national security.
QUESTION:
Is this just a New South Wales Labor failing or does it go further into other federal and state Labor issues more broadly?
JOSH FRYDENBERG:
Well, as you know, as a Coalition we’ve passed important legislation around foreign interference and I think that's to the benefit of the whole nation and now we're seeing some investigations and some actions being taken by our authorities and I'll leave them to make any commentary on those matters.
QUESTION:
Are you worried about the impact it will have on Australia's relationship with China?
JOSH FRYDENBERG:
Well, the economic partnership with China is very important and that is helping to create jobs here in Australia and, indeed, providing vital services and products into China to help their economic growth. Long may that economic partnership continue. But where there are lines that need to be defended when it comes to Australia's national interest, we will defend them and we will speak out and we'll call it out and that has always been the Coalition Government's position and it will remain so.
QUESTION:
Just finally, its 20 years since the GST was introduced. What is the reason we wouldn't look at increasing the rate or broadening the base of the tax when so many reports from reviews have suggested that it would be a good way to go?
JOSH FRYDENBERG:
Well, you're right. The GST was an important reform and it has been providing an important revenue stream to the states and helping to streamline our system. What we're focused on is cutting taxes, that's been our focus and you saw that in the last two budgets with more than $300 billion in income tax cuts which is helping to flatten out our tax system and creating one major tax bracket between $45,000 and $200,000 where Australians will pay a marginal rate of no more than 30 cents in the dollar. We've also cut company tax for small and medium-sized businesses. Recently, we extended the instant asset right off which is encouraging investment by businesses right around the country. So our focus has been on cutting taxes, recognising that tax reform is one of those key areas that we need to continue to drive forward and particularly to help the recovery on the other side of this coronavirus pandemic.
QUESTION:
With $236 billion dollars of loans frozen, do you expect that to be bad debt and what issues do you expect that to pose for banks?
JOSH FRYDENBERG:
Well, again, the banks will work through with their individual customers and their circumstances and their ability to repay those loans in accordance with those initial contracts that were signed. So they are matters that will be worked through with the banks. But there's no doubt many Australians are doing a tough right now as a result of the COVID pandemic. That's why the Government is standing behind them with the JobKeeper program, the JobSeeker program, with the instant asset right off, allowing them to get early access to superannuation tax-free, as well as the $750 cash payments that have already been made to millions of Australians with another cash payment coming in July. These programs are all designed to support those Australians through this very difficult period where they find themselves in a challenging economic circumstance through no fault of their own.