ANDREW CLENNELL:
Australia's economy is now bigger than it was before COVID. The latest ABS data shows the country's economy grew 3.4 per cent during the December quarter, setting the Government up for a better‑than‑expected budget. I was joined a short time ago by Treasurer Josh Frydenberg. This 3.4 per cent figure, obviously that is a big improvement on the last quarter but it's after we came out of lockdown, so to be expected in a sense?
JOSH FRYDENBERG:
It’s a very strong result. In fact, it's the strongest quarterly growth or the equal strongest quarterly growth that we've seen in some 46 years, Andrew. What's particularly pleasing is that for calendar year 2021, Australia's economic growth has been 4.7 per cent. We have outperformed every major advanced economy since the start of this pandemic ‑ the United States, the United Kingdom, Canada, Japan, France, Germany, and Italy. And what's been particularly pleasing is that we've avoided the experience of the 1980s and the 1990s recessions in Australia where we saw labour market scarring, long‑term unemployment, nearly a decade to get that unemployment rate back to where it was pre‑pandemic. This time round our labour market has bounced back very strongly, and in that December quarter we saw 375,000 new jobs being created. We saw the unemployment rate go from 5.2 per cent in October down to 4.2 per cent in December ‑ the lowest level in more than 13 years. I think that's the real positive story out of the economic rebound that we've seen through the pandemic, is how well our labour market has held up and how many jobs are being created.
ANDREW CLENNELL:
No doubt, no doubt about that. But what sort of figure are you expecting in the March quarter after the Omicron summer hits?
JOSH FRYDENBERG:
Obviously we'll update our GDP growth numbers in the budget in just under a month's time, but we have seen the spending data come in for the first two months of this year and it's actually up 4 per cent on the equivalent period last year. We know that job ads are more than 30 per cent higher than pre‑pandemic levels. We've seen business confidence rebound early this year. I'm confident that Omicron has not derailed our economy. Sure, it's created issues around workforce absenteeism, and of course hundreds of thousands of people have contracted COVID, like myself, and today the Prime Minister. But it hasn't had the longer‑term impact on the economy that we've seen in the other outbreaks, particularly Delta.
ANDREW CLENNELL:
Now there's no question that this recovery and your comparison on economies to the rest world is a lot of it's due to the fiscal stimulus, Federal and State fiscal stimulus. We've had the Governor of the Reserve Bank say that's been the prime driver of unemployment, not just the closed international borders. But if you had your time over, would you put in a more stringent test on JobKeeper after three months, and would you have made the 750 payment slightly lower, if you had a crystal ball and could see what would have occurred in terms of the amount of spend?
JOSH FRYDENBERG:
I think JobKeeper helped saved our economy. Let's not forget the images that we saw back in early 2020 where 1.3 million Australians either lost their jobs or saw their working hours reduced to zero and literally hundreds and thousands of Australians were lining up outside Centrelink in scenes that were reminiscent for many of the Great Depression. Treasury came to me, Andrew, and said, "Treasurer, the unemployment rate could reach as high as 15 per cent". That would be more than 2 million people who are unemployed. Today we have an unemployment rate of 4.2 per cent and one of the charts I showed in today's presentation in Canberra is that other economies have actually seen their labour force numbers contract, employment contract. In the United States, there are 2.6 million fewer Americans in work today than at the start of the pandemic. In Australia, we've got more than 250,000 more Australians in work than at the start of the pandemic. So JobKeeper was a big part of that. We had to move quickly. That's why we ensured that it wasn't a percentage of a person's previous income. We did it through the Tax Office, which had a degree of integrity to it, and we were able to get the money out quickly because we were using single touch payroll and the Tax Office's systems. I think it was a great success. The Labor Party want to attack it because of its success, because it's been so important to our economic recovery. And the best proof point of that is actually what's happened to the labour market. And then I would say to the first part of your question, Andrew, which was well, Australia's outperformed other countries because we've spent more. That's not actually right. Other countries have spent a lot of money, but we've spent it in the right way, programs like JobKeeper, the cash flow boost, the payments to pensioners, to veterans, the 50 per cent wage subsidy that helped see a record number of apprentices now in a job. The work that we did to underwrite aviation routes, which was important to ensuring that freight could move freely across our country. We took around a thousand separate individual major decisions, all of which helped improve the broader economic ecosystem and lead to the result which we now have, which is one of the strongest economic recoveries in the world.
ANDREW CLENNELL:
All right. Well how should Australians view the trillion‑dollar debt that they've been lumped with out the back of this? Just a necessary evil?
JOSH FRYDENBERG:
Firstly, it's been, you know, difficult to take those decisions but we had to take them because the alternative would have been a cratering economy, higher unemployment, slower growth and long‑term structural damage. And we've avoided that, which has been a real testament, not just to the economic plan but the hard work of 26 million Australians. We can meet this higher debt burden because we obviously can manage the finances and we are growing the economy, which is seeing more people in work and less people on welfare. And again, another proof point is that when I announced the budget predicted deficit for 2021 it was $80 billion higher than what actually eventuated. That was because of the strong rebound in the labour market, and we're expecting to continue to see a strong rebound in our labour market which then helps the finances. Yes, it was difficult to spend that money. We believe we spent it right. We believe that it would, and we know that it actually supported the recovery, and it would have had a much higher impact on the economy if we didn't spend that money because it would have led to long‑term structural damage.
ANDREW CLENNELL:
You copped a headline today from the Nine newspapers suggesting that there's money in the "decisions not yet announced but taken" column which suggests a billion dollars of spending a week in the lead up to the budget. Was that a fair headline? Is that what we're going to see?
JOSH FRYDENBERG:
Absolutely not. What that money was assigned for in MYEFO was a combination of things. Firstly, decisions taken but not yet announced, some of which have been announced, for example the commercialisation initiative which is partnering industry with universities and it's worth more than $2 billion which is going to be part of our post‑COVID recovery plan. And then also is there were decisions taken and announced but the fiscal, the financial details were too commercially sensitive and that was, for example, around vaccine purchases or the building of quarantine facilities where they are commercial arrangements, competitive tender processes and those details can't be made public. But that is what that money that is being referenced by The Age and other outlets this morning.
ANDREW CLENNELL:
Will we see pork barrelling in this budget, sports grants, car park grants, community grants and the like?
JOSH FRYDENBERG:
Andrew, what you'll see in this budget is our plan to lock in the recovery, which is not yet locked in. We've seen some strong numbers today, we've seen strong labour market outcomes, we've been able to retain our AAA credit rating. In fact, we've outperformed every major advanced economy around the world. But events at home like the floods, like the ongoing pandemic, and events abroad like the Ukrainian violence and invasion by the Russians, the unacceptable invasion by the Russians, is a reminder that we can't take our economic situation for granted. We're in a very strong position going into this economic year but we need to continue to invest in the things that are important to job creation and growth, like skills packages, like infrastructure spending, like the digital transformation, like our manufacturing strategy, and of course like business investment incentives, all of which we'll continue to roll out over the course of this year.
ANDREW CLENNELL:
And just finally, you spoke about the volatile international situation. Given that, can you give us a guarantee now that we can take the stage 3 tax cuts to the bank if you're elected, and could we even see them earlier?
JOSH FRYDENBERG:
I'm very glad you asked that question because as you know we went to the last election proposing lower taxes. Labor went to the last election proposing $387 billion of higher taxes. Higher taxes on your super, higher taxes on your housing, higher taxes on retirees, higher taxes on businesses…
ANDREW CLENNELL:
Don't they support you on these tax cuts now though?
JOSH FRYDENBERG:
…and of course high‑income tax. I don't believe them, and neither should you, Andrew, because Jim Chalmers has called those stage 3 tax cuts offensive. Anthony Albanese, the leader of the opposition, the alternative Prime Minister, at the last election was talking about these tax cuts being for the top end of town. Now he wants to crawl into a corner, take himself to the election as…
ANDREW CLENNELL:
But you will guarantee them? Sorry, I just want to get back to this point.
JOSH FRYDENBERG:
Absolutely.
ANDREW CLENNELL:
You will guarantee them?
JOSH FRYDENBERG:
Absolutely.
ANDREW CLENNELL:
And will they come earlier, yes, or no?
JOSH FRYDENBERG:
Well firstly, they're legislated, they've got a timeline and that is what we have announced and that is what is our plan.
ANDREW CLENNELL:
Treasurer Josh Frydenberg.