ALISON LANGDON:
Josh Frydenberg joins us now in Canberra. Treasurer, a very good morning to you. Did you sleep well last night?
JOSH FRYDENBERG:
Good morning. I didn’t sleep enough, but I did know when I went to bed that my family was still with me in Canberra, which is the main thing and that, you know, the Budget we delivered last night will help make the Australian economy stronger and see that the momentum that we’ve seen in the jobless recovery so far continues.
ALLISON LANGDON:
I’ll tell you what, everyone won last night. And, of course, that doesn’t come cheap. If our economy’s roaring back to life, we’ve got more people working than ever and consumer confidence is as high as it is, why do we need to be spending so much for so long?
JOSH FRYDENBERG:
Well, we need to lock in and secure the recovery, Ally. We’re still in the middle of the pandemic. You see more than 800,000 COVID cases a day. You’ve seen those terrible images that have been coming out of India. We know that Europe has gone into a double-dip recession, and here in Australia only recently we saw a statewide lockdown in Western Australia. So we can’t afford to be complacent. We know that the jobs are coming back, but we’ve got to keep investing in skills, in infrastructure, in providing tax relief for families as well as business investment incentives. And if we can lock in that recovery and drive the unemployment rate down, then that will be good news for all of us.
ALLISON LANGDON:
I think everyone agrees this needed to be a big spending budget, but there’s no plan to even start paying it back for at least a decade. What are we lumping our kids and our grandkids with?
JOSH FRYDENBERG:
Well, actually, the deficit’s coming down by two-thirds over the next four years. And you also see that the net debt to the size of the economy, which is a key indicator of the financial sustainability, financial stability of the country, actually comes down each and every year compared to what was forecast at last year’s budget in last October. So the trajectory is in the right direction, but –
ALLISON LANGDON:
So you’re not worried about the size of the debt?
JOSH FRYDENBERG:
Well, I’m very conscious of the increased spending that’s been required as of our plan to stabilise the economy. But to put it in perspective for you, the impact on the economy from COVID-19 has been more than 30 times what we saw during the GFC. This has been the biggest economic shock since the Great Depression. It’s created a huge hole in the economy. 1.3 million of our fellow Australians either lost their jobs or saw their working hours reduced to zero. And that required an unprecedented economic response, programs like JobKeeper and the JobSeeker Coronavirus Supplement and the Cash Flow Boost. All of those measures have been really important in helping people get back into work, but the job is not done. There’s still more to do.
ALLISON LANGDON:
This budget relies on a scenario where everyone is vaccinated, there are no major outbreaks, no state border closures, and international travel resuming by mid next year. It’s a lot of assumptions, isn’t it?
JOSH FRYDENBERG:
Well, the key assumption is that we will continue to be successful in suppressing the virus, because first and foremost this is a health crisis, Ally, with a very severe economic impact. Now there will be new outbreaks. We can’t eliminate the virus, and no-one is seeking to do that. But what we can do is ensure a proportionate response when those outbreaks occur. And that’s why we’ve made Australian assumption, based on the best medical advice, that we can contain those outbreaks and that we won’t see another repeat of a Victorian-like lockdown. That’s what we’re seeking to avoid, and the economic recovery does require us to continue to be successful on that front.
ALLISON LANGDON:
As you know, a huge issue for many families is the cost of living. Housing is skyrocketing. Wages haven’t budged for years. When will we see meaningful wage growth?
JOSH FRYDENBERG:
Well, what both Treasury and the Reserve Bank of Australia have said is that in order to see an acceleration in wages you need to see a tighter labour market. So the unemployment rate today is at 5.6 per cent. We’ve said we want to get down to where it was pre-pandemic at 5.1 per cent and even lower, under 5 per cent, if we can. And, actually, we printed a number in the Budget last night which suggests that Treasury’s expecting unemployment to get below 5 per cent by the end of next year. And that will start to generate improvements in wages. It’s that competition for labour, a tighter labour market, which will actually be good news for wages.
ALLISON LANGDON:
An issue you’ve got, of course, is finding workers with the required skill sets. But just look at the funding that we’ve seen you announced last night. Record funding for mental health, aged care, childcare, all very welcomed. What are you going to do to ensure that operators don’t use a good chunk of that cash to line their own pockets?
JOSH FRYDENBERG:
Well, when it comes to the residential care sector, we’re putting in place a much stronger regulator, 1,500 more audits a year, the ability to work closely with the sector to ensure that the money that is being spent is getting to where it’s needed most, namely, to the residents, and that a higher quality of safety and quality of service is being provided. These reforms around aged care are not just about more funding, they’re actually about significant reform in the service delivery, ensuring that people in their latter years are treated with the dignity and the respect that they deserve and that we do not see a repeat of some of the shocking and terrible revelations out of the royal commission into aged care.
ALLISON LANGDON:
I tell you, it felt like a real election sweetener last night. Will we have another budget before the next election?
JOSH FRYDENBERG:
Well, Ally, the Prime Minister has indicated it’s his intention to hold the election next year. But this was very much a pandemic Budget. This was a Budget to secure our economic recovery. It was all about our economic plan to create jobs. And for those families and Australians listening and watching your show this morning, they know that there’s going to be tax relief, they know that we’re going to be backing the private sector to do what they do best, hire, to innovate and to grow, they know that we’re going to be spending more money on infrastructure and skills, and they know that we are putting in place systems with respect to the digital economy to ensure that Australia stays ahead of the pack. That’s what the budget last night was all about.
ALLISON LANGDON:
Well, it has been overwhelmingly well received. I mean, it was lovely to see your wife and the kids in Parliament last night. I noticed the kids looked riveted. Didn’t they understand that this was your big moment?
JOSH FRYDENBERG:
Well, it’s very funny you say that. My little four-year-old boy, Blake, said to me after, “Daddy, Daddy, did you see? I stood there so quiet and so still.” And he told me three times. He was very proud of the fact. But, look, it’s been a hard year for a lot of Australian families over the course of this pandemic. I’ve spent a lot of time away from home, and my family’s been a rock for me. And it was really special to have them share the moment in the Parliament, even though my kids probably would have been much happier watching Peppa Pig.
ALLISON LANGDON:
No, look, it was lovely to see them. There is no way my four-year-old would have kept his bottom on that chair for that long. So well done. A lovely family. And good job last night. Thanks, Treasurer.