JOSH FRYDENBERG:
…justice to the victims of MH17. Tragically, 298 people lost their lives with the downing of MH17 including 38 people who called Australia home. Bringing the alleged perpetrators to justice through an open and independent judicial process sends a powerful message. Australia stands with our Dutch friends and our international partners in continuing with this process to bring justice to the victims of MH17. With respect to the spread of the Coronavirus, facts not fear must determine our response. Australians can be reassured that their Government and that their nation is as well prepared as any other when it comes to dealing with the health and economic impacts from the spread of the Coronavirus. Australia moved ahead of many other nations in putting in place travel restrictions. We have continued to take the best possible medical advice from the Chief Medical Officer at both the federal level but also the Chief Medical Officers at the state and territory level. And we provided assisted departures to those Australians out of Wuhan. When it comes to the economic impact, it is very significant. We’ve seen disruptions to international supply chains, we’ve seen a hit on particular sectors including the tourism sector, agriculture sector, seafood sector and education sector. We’ve already seen the Reserve Bank adjust interest rates downwards and the major banks pass those rate cuts on in full. We’ve announced that we will be going 50-50 with the states in meeting the costs at a health level that are incurred as a result of the spread of the Coronavirus and the Prime Minister has foreshadowed our economic response will be out shortly. That economic response will be substantial, it will be targeted, and it will be focused on supporting those people and those businesses that need our support in this period. Australia is well prepared economically and we go into this challenge from a position of strength. We saw from the most recent National Accounts economic growth pick up from 1.8 per cent through the year in the September Quarter to 2.2 per cent through the year in the December Quarter. And we’ve seen comments from the Secretary of Treasury as well as the Governor of the Reserve Bank about how the Australian economy was strengthening in the second half of last year and our fiscal discipline, our budget discipline has helped put us in a position where the OECD has singled Australia out as having the fiscal flexibility to respond to this crisis. So we’ll continue to take the steps necessary, but Australians can be reassured that we are putting their safety first and we will do everything to ensure that the Australian economy remains as resilient and strong.
QUESTION:
Treasurer the ASX has lost about 6 per cent today, do you have any words of advice to investors? And will the package this week contain any new economic forecasts?
JOSH FRYDENBERG:
Well market volatility in terms of equity markets is not uncommon at times like this and as you’d be aware there are many factors behind movements in equity markets and I note some announcements by the Russians and the Saudis in relation to oil overnight and we’ve seen a steep drop in the oil price in recent weeks. So there are a number of factors that play when it comes to the equity markets, but our financial system remains strong, our economy remains strong. This is a very different situation to what we saw through the GFC which was essentially a problem with the banking and the financial system and issues of liquidity; we haven’t seen those same problems in relation to this health crisis. What we have seen is supply and demand side constraints and that’s where our package will be focused. In respect to your second question about forecasts obviously we update our forecasts twice a year at MYEFO and on Budget Night so this package will be our fiscal response obviously will have an impact on our forecasts and our Budget numbers but they will be made clearer on Budget Night.
QUESTION:
Treasurer you said that it’s different from the GFC but this could be worse than the GFC couldn’t it? We sure could see consumer confidence collapse and that’s much worse for Australia’s economy than what we’re seeing?
JOSH FRYDENBERG:
Well Chris this is a health crisis with a significant economic impact. And as you know a vaccine is yet to be found and work is being done in that respect and we can be very proud that Australian medical researchers are at the forefront of the global effort to find a vaccine. At the same time, Australia’s health system is very well prepared and our economy remains resilient. So there will be disruption to the supply chain, we’ve already seen it, there will be a, a hit on some sectors of our economy in particular and we’ve already seen that. There are some 95,000 Chinese students that would otherwise be starting their semester that are unlikely to get here and of course the number of tourists has dropped dramatically. So these are the economic impacts but the Australian Government, with our fiscal response, with the work of the Reserve Bank is designed to continue to provide confidence to the Australian community.
QUESTION:
Oil prices have dropped 47 per cent since January 3, what can you do to make sure that those cheaper fuel prices are passed through to the economic system?
JOSH FRYDENBERG:
Well I’ve actually spoken this morning with Rod Sims, the head of the ACCC on that very point. I wanted to re-emphasise to the ACCC the importance of holding the oil retailers to account and ensuring that Australians get the benefit from the lower oil prices. As you know the ACCC plays a monitoring role with respect to prices at the bowser and they have assure me that they will not only maintain their mentoring role, and the vigilance that that involves, but they will also be calling out any energy companies that don’t pass on the reduction in the wholesale price to the Australian consumer.
QUESTION:
Treasurer what’s your message to casual workers who are concerned that they won’t have a wage coming in as a result of the Coronavirus? And is the Government looking at suggestions made by businesses and unions about offering a Newstart payment?
JOSH FYDENBERG:
I’m very conscious that Australians in employment, be it casual or permanent, will be concerned about their job security. This is obviously an issue that will be raised at tomorrow’s meeting between the Minister for Industrial Relations and the peak employee and employer groups. Our focus is on getting a cooperative workplace, our focus is on ensuring that businesses are flexible given the stresses and strains that we will see as a result of the spread of the Coronavirus. But the Government is working with those groups and tomorrow’s roundtable will be another important step forward in ensuring we can maintain those cooperative workplaces. The other point is that the Fair Work Ombudsman has been putting out information to give some guidance in relation to different types of employment contracts and different workplace agreements.
QUESTION:
Treasurer given the sudden impact, or the rapid escalation of this crisis if you look at it over the last month or so, and I know you have to wait until the May budget, but realistically do you think the Australian Budget will ever get back to surplus?
JOSH FYDENBERG:
I know that the Budget is in balance, Phil, and that is a significant achievement. It’s taken six and a half years but we’ve brought the Budget back into balance and that’s part of our economic plan for Australia to live within its means. That’s a really important principle for us, and what the Prime Minister and I have said in relation to our fiscal response, is it will be designed to get support to those who need it but also we won’t undermine the structural integrity of the Budget, it won’t undo all the good work that we’ve done over the last six and a half years to get the Budget back on track. That’s been our focus, so as for future Budgets, you’ll have to tune in on Budget night.
QUESTION:
Treasurer, we‘ve heard this morning that it could take as much as a year for a full vaccine to be able to be rolled out. What’s the advice to you about the timeframe of how long this disruption to the economy is likely to be?
JOSH FYDENBERG:
No stone will be left unturned in terms of looking for a vaccine, and Australia is at the forefront of global efforts. We’re working with our international partners, the Doherty Institute in Melbourne, the University of Queensland, the CSIRO, have all been focused on that and I know the Health Minister is in close contact with our medical research community. But it will be what it is, and the reality is that our best minds are turning to finding vaccine.
QUESTON:
On MH17, the Russian ambassador accused the AFP of a cover up as part of its five year investigation. Is that an insult to the 38 Australian victims?
JOSH FRYDENBERG:
It’s ridiculous. It’s absolutely ridiculous. Our single-minded focus has been on getting justice for the 298 victims of MH17, including the 38 who called Australia home. There are big questions to answer here about State responsibility, and when it comes to the alleged perpetrators, those names and those people are being subject to the independent open judicial process, and we welcome that and we welcome the work that is being undertaken by the Dutch Government and our international partners in coming to this point over the last five years.
QUESTION:
(inaudible) the RBA cut rates because it’s worried about (inaudible) spread of the virus to the broader economy. Now you’ve got targeted measures that you’ve said, are you considering wide measures perhaps to households that should be a support now that we have to have people stay at home, shops (inaudible) those kind of things?
JOSH FRYDENBERG:
Well obviously the RBA moved and the 25 basis point rate cut down to half a percentage point was passed on in full, and that’s good news for borrowers but it’s not so good for depositors, and that’s why we’ve said that we’re considering changes to the deeming rate. It’s important to understand that the fiscal response that we will be undertaking is scalable, so we will make an announcement sooner than later. But there’s also the Budget in eight weeks’ time, and I think that’s also important to keep that in mind. We continue to monitor the economic impacts, we continue to work closely with our partners. But as Chris Richardson, a noted economist has said, there’s both fiscal and monetary policy that are designed to support economic growth.
QUESTION:
Do you think we are close to quantitative easing?
JOSH FRYDENBERG:
Obviously they are decisions for the independent Reserve Bank, Phil, but the cash rate has never been so low at half a percentage point. And you’ve seen Central Banks around the world, albeit from a slightly higher level in the US there was a 50 basis point rate cut, we’ve seen also movement in Canada and elsewhere, so there’s been a coordinated response from Central Banks in relation to the spread of the Coronavirus. I was on a call with the International Monetary Fund just the other day, and on that call were Central Bank Governors from China, from the United States, the European Central Bank, the Bank of England, everyone is equally concerned about what we are seeing in the global economy. But this is very different to the GFC, and so the response needs to be very different, and our response is both on the supply and the demand side because we are seeing disruptions to the economy on both those ends which is quite different to the liquidity and financial systems crisis that we saw through the GFC.
QUESTION:
Treasurer, how might (inaudible) to households, particularly if this response is going to be different from what we saw from the Rudd Government back during the GFC?
JOSH FRYDENBERG:
We have our existing systems, tax and transfer systems, but in terms of the specific details I’ll leave that to our announcement, but what we will be focused on is ensuring that the support gets out there as fast as possible. Thank you.