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17 September 2020

Doorstop interview, Parliament House, Canberra

Note

Subjects: August labour force figures; Industrial relations; JobMaker plan; Economic impact of Victoria’s lockdown; State border closures; Budget 2020;

JOSH FRYDENBERG:

Today’s job numbers shows that the Australian economy is fighting back against the virus. 111,000 jobs were created in the month of August. The unemployment rate fell from 7.5 per cent to 6.8 per cent, significantly better than market expectations. We have seen over the last three months 458,000 new jobs being created, with a particularly strong performance in New South Wales. Of those 458,000 new jobs, 60 per cent of those jobs have gone to women and 40 per cent have gone to young people. We recognise that despite this fall today in Australia's official unemployment rate, many Australians are doing it tough, and that the road to recovery will be long, it will be hard, and it will be bumpy. The effective unemployment rate which takes into account, not just those who are unemployed officially, but also those who have left the labour force or seen their hours reduced to zero, has fallen from 9.8 per cent to 9.3 per cent. But it still remains high. The situation in my state of Victoria remains very, very difficult and challenging. 42,000 jobs were lost in Victoria in the month of August. We have seen the effective unemployment rate increase from 10.5 per cent to 13.1 per cent. So while we saw jobs being created in every state, it was except Victoria where jobs were lost. Now, these numbers take into account the stage 4 restrictions that came in in early August. But, of course, by getting the virus under control, we can gradually ease those restrictions and we can get people back to work. What today’s numbers show is that the Australian economy is remarkably resilient. Overnight, the OECD upgraded its forecast for the Australian economy for this calendar year. While we saw a significant fall in GDP in the June quarter of 7 per cent here in Australia, this compares to a fall of more than 20 per cent in the United Kingdom, a fall of around 14 per cent in France and we’ve just heard from New Zealand where their fall in the June quarter has been more than 12 per cent. What these numbers show is that our JobMaker plan is working. Our focus is firmly on the Budget. The next stage of our JobMaker plan as part of our economic recovery to rebuild our economy from the single largest economic shock that Australia has seen since the Great Depression. Are there any questions?

QUESTION:

Treasurer, how does the fall in the unemployment rate change the urgency for industrial relations reform that your Government is having as a top priority?

JOSH FRYDENBERG:

It is an absolutely key focus for us, getting more flexibility into the labour market and, as you would be aware, Matt, through the JobKeeper changes that we introduced, we also brought with it more flexibility into the labour market which was important around duties, around hours, around location of work. That’s been really important to those businesses that have benefitted from JobKeeper. We’re obviously focused on reform in those five areas that have been outlined, including around compliance, casuals, simplification of awards and the like. That work is being undertaken right now. There has been numerous meetings between business and employer groups, as well as employee representative groups. Hopefully, that will produce some positive outcomes and that work is still in progress. 

QUESTION:

Treasurer, can the headline figure of 6.8 per cent be believed?

JOSH FRYDENBERG:

Well certainly it’s a fall in our official unemployment rate and these numbers are encouraging, Andrew. But we’re also focused on the effective unemployment rate. Now that remains at 9.3 per cent, a higher rate because it takes into account those who have left the labour force as well as those who are on zero hours. But what you can take from these numbers is that more people are getting back into work. 111,000 have got into a job in the month of August, significantly better than market expectations. 

QUESTION:

Is it (inaudible) than many have suggested because some sole traders have redefined themselves, got themselves an ABN and they’re now under the protection of JobKeeper? Is that reflected in the 110,000?

JOSH FRYDENBERG:

Sole traders are coming back to work and doing better, but it is across the economy that we’re starting to see improvements. 

QUESTION:

Treasurer, there has been a fall in the unemployment rate in Queensland and Western Australia, almost twice what it was nationally. Doesn’t this show that despite the disruptions from borders being closed, it has had a beneficial effect on Queenslanders and Western Australians finding jobs?

JOSH FRYDENBERG:

Well I’d point you to New South Wales, where the unemployment rate is below that national average at 6.7 per cent, and it’s significantly below where it is in Western Australia, I think it’s at seven, and Queensland, I think it’s at 7.5. So New South Wales has been a stand out in terms of its performance, both in managing the virus, dealing with the number of cases that it is on a daily basis and containing that, but also keeping its economy open. And as the single largest economy in the country it’s very important in these figures. What we do know is that closed borders cost jobs and we’ve been very outspoken about the human impact too of those closed borders.

QUESTION:

Treasury officials in the COVID Committee today said they’ve been modelling the impact of reduced tax rates, personal tax rates, and the timing of your tax cuts. How important a feature will they be in your Budget?

JOSH FRYDENBERG:

Well I’ve said publicly before that we’re considering the timing of those tax cuts, which as you know were coming out in three stages and we legislated those after the last election and they were endorsed by the Australian people at the last election. And what was rejected was the higher tax burden that the Labor Party was proposing. You’ll have to turn on at 7.30pm on October 6 to see what our tax plan is. But certainly we are focusing on lowering the tax burden for Australians.

QUESTION:

How (inaudible) do you expect the future figures for Victoria to be? And does the fact that there’s now a two speed economy with them going backwards not show the case for more economic supports or at least not cutting the existing ones?

JOSH FRYDENBERG:

Well let me be very clear. The Morrison Government is providing an unprecedented level of support to the Victorian people. Our focus is on supporting them through this crisis. Around $28 billion has already gone to Victoria through the JobKeeper program and the cash flow boost, the $750 payments to millions of pensioners as well as the coronavirus supplement and other economic support. It’s Treasury’s estimate that over the course of the December quarter and the March quarter, around 60 per cent of those who are on JobKeeper will be Victorians. So by Treasury’s calculations, this means in the December quarter, you’re going to see around $11 billion go to Victorians alone just on JobKeeper. Now JobKeeper is a national program, and we always said it was a temporary program, and we always envisaged that it would transition as our other supports would over time. And indeed, the OECD said just last night, that it was important that with those levels of support that they gradually transition, and that’s what we’re doing. We’ve extended JobKeeper out to the end of March, that’s an extra six months on what was originally legislated. So obviously the challenge in Victoria is very significant and very serious. I’m really pleased that the numbers have started to come down in Victoria, and as they come down, those restrictions, which have been very stringent indeed, can be eased, and as they’re eased more people can get back to work.

QUESTION:

Have you got any concerns or expectations that the unemployment rate will go back up once JobKeeper is scaled back?

JOSH FRYDENBERG:

Look, our focus is on getting people back into work and JobKeeper, as I said, goes out until the end of March. It comes down on a glide path and obviously it’s going to have a two tiered system, which was one of the recommendations out of the Treasury Review which was conducted at the midway point. But our focus is about getting unemployment down, and as you’ll see in the Budget, which is the next stage in our JobMaker plan, it’s all about the economic recovery. What we really want to prevent is the scarring effect which economists use regularly when it comes to situations like this COVID-induced recession. Where we want to prevent the situation where people stay unemployed for longer than they have to. And there are many ways to get people back to work. One has been to boost aggregate demand and you’ve seen that with our housing package, you’ve seen that with our infrastructure plans where we’ve brought forward nearly $10 billion worth of spending, you’ve seen it with the supports that we’re providing to the aviation sector, the tourism sector and the like. But the other way is to engage in getting more flexibility in our labour market, cutting red tape, focusing on skills, making it easier to do business and that will be a real focus in our Budget.

QUESTION:

Treasurer, you’ve had a fair bit to say about the Victorian roadmap in the past. Given the numbers are now coming down and it’s looking a bit better, what would you expect the Victorian Government to be doing? Would you like to see them ease restrictions sooner and have they been receptive to your suggestions so far?

JOSH FRYDENBERG:

Well we’ve communicated to them some suggestions about the easing of restrictions and how they could do that and obviously, you know, I maintain an open line of communication with my counterpart in Victoria, Tim Pallas, and we continue to talk. Obviously these are the sort of matters that will also be discussed in terms of the broader recovery at National Cabinet this Friday. But when it comes to Victoria, business has been very outspoken. Business has called for an easing of those restrictions and more flexibility and I would welcome that from the Victorian Government. 

QUESTION:

Treasurer, what’s your reaction to the Fin Review story this morning that the BCA and Sally McManus have struck a deal on industrial relations reform involving the (inaudible)?

JOSH FRYDENBERG:

Well, again, I will leave the finalisation of any deals through those stakeholder consultations to be announced through the normal process. I did note in your article that there were some differences of opinion, the AFR article by Jennifer Hewett, there were some differences in opinions from the various business groups. Whether it was the Mining and Metals Association, the Housing Industry Association…

QUESTION:

Do you think they should try and get behind the deal?

JOSH FRYDENBERG:

Well, I think it’s a positive development that they’re coming together, that they’re having these discussions. This is a very difficult area to get reform, like energy where the Prime Minister has made some very significant announcements in recent days, together with the Energy Minister, Angus Taylor. To get more flexibility in the labour market, Matt, we will be able to get more people back into work.

QUESTION:

Treasurer, back on Tegan’s question, you do still expect unemployment to go higher? Treasury said it was going to be 10 per cent. Given today’s surprising figures, I’m sure you were surprised by them today, is it going to be lower now, or…? 

JOSH FRYDENBERG:

Well, again Andrew, we’ll update those numbers in the Budget.

QUESTION:

But you do expect unemployment to go up?

JOSH FRYDENBERG:

We have expected unemployment to rise to around 10 per cent by years’ end. Obviously today’s data will be plugged into the Treasury models and we’ll work that through and we’ll be providing not just forecasts for the year ahead, but also forward estimate numbers, as well as our medium term predictions. 

QUESTION:

So you were pretty surprised by today’s numbers? 

JOSH FRYDENBERG:

Today’s numbers are certainly better than what the market was expecting and even many of the…

QUESTION:

Than what you were expecting?

JOSH FRYDENBERG:

Sure. It was better than what I was expecting, Andrew. The market expectation today was for unemployment to jump from 7.5 to around 7.7 per cent, and the unemployment number has fallen to 6.8 per cent. So, these are a better set of numbers than what the market was expecting, than what Treasury was expecting, than what leading economists were expecting. But Australians are doing it tough. We’re in the middle of a once in a century pandemic, and the biggest economic shock since the Great Depression. Our focus is on getting people back to work. There’s a hole in the economy created by this supply and this demand side shock. It’s like nothing the world has seen. I mean, to put it into perspective for you, the OECD had been expecting the global economy to fall by 6 per cent this calendar year, and in the GFC it fell by just 0.1 per cent. Now, they’ve made some modifications to their projections but the view of the OECD, the IMF and the proof points from the June quarter right around the world, is that this has been an economic shock like no other and the number of people who have been left unemployed has risen much more steeply than in previous recessions. And our focus as a Government is on getting people back to work. That’s our focus. Jobs, jobs, jobs. 

QUESTION:

The OECD have also predicted that Australia is going to be well behind the rest of the world in 2021 for the recovery phase. Does that play into how big a stimulus is going to be required in the October Budget? 

JOSH FRYDENBERG:

Well, as you say, the OECD is expecting the Australian economy to grow by 2.5 per cent next calendar year and this was slightly below what they had been forecasting just a couple of months ago. What they will see and what you will see in the Budget is that next stage in our JobMaker plan, with a focus on tax, with a focus on industrial relations, with a focus on cutting red tape, with a focus on energy, with a focus on skills, and a focus on infrastructure. They’re the inputs into creating more jobs, as the output. And the way to get our Budget back to where it was is to grow the economy, and that will take years. This is a long, hard, bumpy road and there are real challenges ahead, but today’s numbers were encouraging. Thank you.