JOSH FRYDENBERG:
Yesterday’s GDP numbers for the June quarter were devastating for the nation and devastating for the economy. They reflected the impact of COVID-19 on all Australians’ lives. But there is hope for the future, there is a road out. It’s our JobMaker program. It’s important to understand that the Australian economy is today operating at two speeds; there’s Victoria and then there’s the rest. Outside of Victoria, seven out of the eight jurisdictions the jobs are coming back. Of the 1.3 million Australians who either lost their job or saw their hours reduced to zero since the start of the crisis, around 700,000 are now back at work, more than half. Of course, in Victoria, it’s a much more difficult and challenging situation. We await the Premier’s roadmap out that he has promised the Victorian people on Sunday. There is hope for the future. There is a light at the end of the tunnel and we do have the plan out through JobMaker.
QUESTION:
Treasurer, if you decide to bring forward the tax cuts, can you remind us what that means in terms of the dollar figure for people?
JOSH FRYDENBERG:
Again, we’ll provide those details when we get to the Budget, because obviously these are issues that are still under consideration and what we did take to the last election was a three-stage plan which would see the abolition of a whole tax bracket, 37 cents in the dollar tax bracket. It would see 94 per cent of Australian taxpayers pay a marginal rate of no more than 30 cents in the dollar. One big tax bracket between $45,000 and $200,000. It’s important that people recognise that tax cuts put more money into people’s pockets. More money into people’s pockets means more spending and more spending means more jobs. But these are still under consideration, so I don’t want to add to the detailed speculation, you’ll have to wait until Budget day.
QUESTION:
What are the actual deciding factors that will influence whether you bring them forward or not?
JOSH FRYDENBERG:
Well of course, what we’ve seen yesterday was a reduction in consumption, but that was for the June quarter based on the health restrictions that we saw in place. But what we’ve seen is people lose their jobs, we’ve seen a reduction in aggregate demand. These are all factors that increased spending by households can make a difference to. We will continue to monitor the Australian economy, continue to monitor developments in Victoria and elsewhere and we will make a decision on the timing of those tax cuts in the context of the Budget.
QUESTION:
Yesterday we saw a 7 per cent contraction in GDP. We’ve seen the Victorian economy virtually shut down. Stimulus measures that you introduced, that was all before we knew how really bad it was going to be. Does the Government need to do more heavy lifting after that?
JOSH FRYDENBERG:
Well it’s important to underline that our economic support is at an unprecedented level. It’s made up of a number of component parts, obviously the single largest one is JobKeeper at $101 billion. In response to the challenging economic situation, we’ve made changes to that program, including to the business eligibility requirements, as well as to the employee eligibility requirements. We will have a situation over coming months where there will be more people on JobKeeper from the state of Victoria than from all the other states and territories combined. That is the advice of Treasury. So we’ll continue to take what action is necessary to support the economy, recognising that fiscal support is extremely important because we don’t have the luxury that the previous Government had during the GFC where monetary policy was able to move so substantially to put more money into the economy. So, in the event of the GFC, the interest rate, the cash rate fell by 425 basis points. That was the equivalent of injecting $100 billion into the Australian economy over a 12 month period. There hasn’t been that luxury within this crisis because monetary policy has been largely exhausted. Our focus has been on income support to cushion the blow for Australians, but our focus going forward is on our JobMaker plan to get more Australians back to work.
QUESTION:
Is there no economic case for business tax cuts? Or is it purely for political reasons that you’re not pursuing that?
JOSH FRYDENBERG:
As you know, we have cut taxes for small and medium sized businesses, coming down to 25 cents in the dollar. When it comes to some of the larger businesses, our focus is on more incentives for business investment. That’s what the business community has also been calling for. What we saw in yesterday’s numbers was a dramatic fall in business investment. Again, it’s mainly outside the mining sector. The mining sector continues to see good investment. But, outside of the mining sector, investment is down, reflecting the difficult economic conditions that we have. Now, we’ve already extended the instant asset write off out to the end of the year and up to purchases of $150,000. We’ve put in place a 50 per cent accelerated depreciation allowance for businesses with a turnover under $500 million. They’re helping to stimulate and bring forward investment, but there are more options for the Government to consider and we’re doing that in the context of the Budget. Thank you.