ALAN JONES:
Josh Frydenberg and Scott Morrison will be announcing a big package today but I’m sure we can get a bit of detail out of them now and the Treasurer is on the line, Treasurer good morning thank you for your time.
JOSH FRYDENBERG:
Good to be with you Alan.
ALAN JONES:
Can we just take them one at a time, simple things, I know you’ve been arguing and I mean there’s two issues here we’ve got to keep business in business and those in work at work. So those who are likely to spend are the pensioners and those on Newstart Allowance and so on. And so firstly you’ll be giving something to them?
JOSH FRYDENBERG:
We will be making an announcement about certain targeted payments that’s right, and that will boost consumption across the economy.
ALAN JONES:
Right. Secondly we don’t want people to be put off if it can be avoided. Often the last on is first off, that is an apprentice. So what are you going to be doing about that?
JOSH FRYDENBERG:
Well we’ve got a very substantial wage subsidy of up to 50 per cent for 120,000 apprentices and that will be very significant because whether you’re an apprentice chef, carpenter, plumber, sparky, we don’t want you to be laid off at this challenging time so the Government is stepping in, providing the employer with a subsidy and that will be substantial.
ALAN JONES:
Excellent. Thirdly then take the employer, because I mean you’re getting it, I’m getting it, stacks of stuff, there’s no foot traffic, they’ve got the door open, no one’s coming in the door, they try to stay open, they try to keep people in employment. So you’re going to recognise that with a cash boost for employers as I understand it.
JOSH FRYDENBERG:
That’s exactly right Alan. What we’re designing is support for cash flow for the businesses with a cash payment of up to $25,000 using the existing tax system. They won’t have to put in any form it will all be automatic.
ALAN JONES:
The last bit’s really important. Won’t have to put in any forms. And then of course there are significant opportunities through all of this because while the curtain is drawn on China there are businesses here that can take advantage of that. I spoke to Jerry Harvey about it. Those who buy Australian, furniture manufacturers, a whole heap of people and so those businesses may not have the capacity to expand when in fact expansion would be very beneficial to them and to the economy. What are you doing there?
JOSH FRYDENBERG:
Well we’re supercharging the instant asset write-off. That’s about saying to businesses who want to purchase something up to $150,000 Alan, and if their turnover’s under $500 million, that’s 90 per cent of businesses, they can go out, buy that product and then write it off straight away. So, no doubt Harvey Norman will have a few extra customers coming their way for various things for their businesses. And no doubt people will be buying trucks and tractors, doing office fitouts because they’ll know they’ll be able to write it off straight away.
ALAN JONES:
100 per cent. This is good stuff and it’s very, very measured. The Government is doing very well here. Now look, Peter Costello entered the debate two days ago in relation to deeming rates because we’re now looking at the people who don’t want welfare, self-funded retirees and others. They’re looking after themselves, they can’t get any more than 1.5 per cent with the Commonwealth Bank for anything over $51,800 where they’re then charged and deemed to have three per cent. Peter Costello said we don’t want our deeming rates to push people back into riskier investments and we’ll have to change the deeming rates. Are you going to give any consideration to changing the deeming rates?
JOSH FRYDENBERG:
Well I can tell you Alan that we are going to change the deeming rates at a cost of about $600 million. We’re going to reduce the deeming rates by half a percentage point. That means the lowered level deeming rate will come down to, from one per cent down to half a percentage point and that is a very significant change.
ALAN JONES:
What about the three per cent though for after $51,800, you can’t get three per cent anywhere?
JOSH FRYDENBERG:
That’s coming down to 2.5 per cent but that reflects the fact that you tend to have assets above $51,800 across different ranges of asset classes, whether that’s in superannuation, whether that’s a managed fund. But the important point is that we are substantially reducing these deeming rates to reflect the changes in the interest rates that have come down. This is not part of the stimulus package per say, this goes to the fairness and this goes to the support for those who need it.
ALAN JONES:
Will the deeming rate ever, while you are Treasurer, be greater than the cash rate?
JOSH FRYDENBERG:
Well as you know, it’s coming down from one down to half and that’s where it is with the cash rate today, we’ll continue to evaluate as interest rates move.
ALAN JONES:
Yeah if the cash rate comes, it should never be greater than the cash rate. One final thing before you go, I’m disturbed at a story today that the Auditor General, this is unrelated to this announcement, we’ve got to get to it while we’ve got you, because out there they’re battling away, the Auditor General’s found public service departments spent about $400 million on consultants last year. The previous year, $1.2 billion, and that was spent on eight consulting firms, the bulk of it went to PricewaterhouseCoopers, KPMG, Deloitte, Ernst & Young, I mean how, this is $21,900 a day now when people have got their backsides dragging on the ground out there and you know the battlers, they’re in your electorate, in every electorate it’s over the odds isn’t it? $400 million on consultants in 2009-2010, $1.2 billion last financial year, come on, what’s going on?
JOSH FRYDENBERG:
Well it’s all obviously, all that is publically available information Alan, we do use consultants just as they do at a state level. You’ve got to use them wisely, you’ve got to use them in a targeted way. They do provide a, sometimes a different skillset than you may get from the public service. But you’ve got to use both and obviously we work in a very considered manner to ensure the public get the best possible advice so that…
ALAN JONES:
…But isn’t $21,000, cuts out Josh $21,900 a day, I mean out there that doesn’t pass the smell test, that’s over the $21,900 a day, come on.
JOSH FRYDENBERG:
Well of course we continue to assess all of that to ensure that the public is getting value for money.
ALAN JONES:
Ok well look, thank you for that. Just summing that up so we’re saying there’s something to be, you’ll be announcing for the apprentices, cash handouts, that’ll be people on Newstart allowance too isn’t it?
JOSH FRYDENBERG:
It’s going to be targeted for those who need it.
ALAN JONES:
Right and then a cash boost to the employers and then the instant write off, instant asset wrote-off and changes to the deeming rates?
JOSH FRYDENBERG:
Yes…
ALAN JONES:
Look I think politicians, you blokes come in for a lot of criticisms. I think you and the Prime Minister and Greg Hunt have done an outstanding job here in very, very difficult circumstances. If we could lower the temperature on the panic button we’d be doing a lot better wouldn’t we? But that’s not your fault. So thank you for your time.
JOSH FRYDENBERG:
Well Alan, thank you, I thank you and the public needs to be reassured that the Government is putting their safety first so these package of measures will keep the economy strong. Everything is targeted, everything is temporary, everything is proportionate and it is designed to boost investment, to help keep Australians in a job, and to maintain the public’s confidence in our economy.
ALAN JONES:
Good on you, well done. Thank you for your time. I mean the two key things, trying to keep business in business and trying to keep those at work in work. And I’ll be talking to the prime Minister about the detail of that tomorrow.