ANNELISE NIELSEN:
Treasurer, thank you for your time.
JOSH FRYDENBERG:
Good morning.
ANNELISE NIELSEN:
Now, we have this historic legislation coming through today, $130 billion, it really is one for the history books. But there has been concern from companies with turnover over $1 billion that they have to show a 50 per cent drop in income, as opposed to 30 per cent for smaller companies. Is that fair?
JOSH FRYDENBERG:
Well larger companies are better able to withstand the external economic shock that we’re facing. They’ve also got greater access to capital markets. But we’ve also taken into account that the threshold for a company that is over $1 billion in turnover, the threshold of more than a 50 per cent reduction in its turnover, will be applied at the entity level. So, if you’ve got a conglomerate, which has one retail shopping business and another business which is a supermarket, well of course the supermarket is doing pretty well but the retail shopping business will not be because of the social distancing laws that are in place. So, that shopping business will be able to access the JobKeeper whereas the supermarket, based on its turnover, is unlikely to.
ANNELISE NIELSEN:
There is a lot of concern casuals are missing out on this if they haven’t had that one year continual relationship with an employer, if they’ve worked multiple jobs. Also, freelancers who might have had lucrative contracts are missing out as well. Do you think that is fair?
JOSH FRYDENBERG:
I believe this program is extremely fair. At $130 billion, it is unprecedented in scale and scope. Part-time, full-time workers, sole traders, casuals who have had that continuous relationship with one employer for more than 12 months which is based on a definition within the Fair Work Act, will all have access to this scheme. Also not-for-profits as well, and many workers are employed in that particular sector. So, this is a very substantial wage subsidy scheme at $1,500 a fortnight, a flat payment, it will provide an economic security blanket for millions of Australians. Today is one of the most important days in the history of the Australian Parliament. It’s a day we come together to support and save millions of Australian jobs. The JobKeeper payment is so substantial and I think today the People’s House will deliver that payment for millions of Australian workers.
ANNELISE NIELSEN:
If I can turn to the prudential regulators who have warned banks that they need to potentially stop paying dividends. It’s not as strong as the direction we’ve seen from European banks or to New Zealand against Australian banks working there. But should this be a cause for concern for Australians?
JOSH FRYDENBERG:
Well this is guidance provided by the regulator and, ultimately, the decision around dividends will be one for the banks. But the regulator has provided pretty strong guidance here, saying that banks should strongly consider deferring the payment of dividends until there is greater economic certainty and in the event that a bank does decide to pay a dividend, it should be materially lower than what otherwise be the case. So this will be up to the boards and the management of the particular banks to decide, but I think APRA has provided pretty strong and clear guidance.
ANNELISE NIELSEN:
Would you be disappointed if they did pay those dividends?
JOSH FRYDENBERG:
It is not a decision for me, it will be a decision for the particular banks in question.
ANNELISE NIELSEN:
Can I ask you about the tenancy agreement that came out yesterday from Cabinet. This is supposed to provide guidance for commercial tenancies and landlords in particular. Should the Government have forged ahead with this when we don’t have a clear direction from the states and territories what they’re going to be doing in respect to land tax?
JOSH FRYDENBERG:
The states and territories have made clear that they are going to provide a waiver of land tax, and I think that’s going to be welcome. What we do know is that tenants, through no fault of their own, as a result of the health restrictions, have seen either their doors close or their customers coming through those doors significantly reduce. So it’s a bit of give and take from both the landlord and the tenant and the Prime Minister has been able to work through a solution following consultation with the key stakeholders, and of course the decision that was taken by the National Cabinet to put in place this framework, which I think reflects the very difficult times that we are seeing in the retail and commercial sector.
ANNELISE NIELSEN:
Why wasn’t it spelled out in the code of conduct though? We saw it pretty clearly about what kind of relief that the landlords have to pass on to tenants if they’re having trouble with their income. Why wasn’t the same requirement put on the state and territory governments to make it proportional?
JOSH FRYDENBERG:
Again, I’m sure they’ll be providing that level of detail in the period ahead. I’ve discussed those issues with the state treasurer’s and they made it very clear that there will be land tax relief coming the way of landlords. Also, the Prime Minister announced yesterday that as a landlord, the Commonwealth Government will be a model landlord and will provide that rent relief for its tenants and those tenants range from childcare providers to cafes to other community service providers. So, both the Commonwealth and the state governments are also landlords in their own right, and it’s important that we provide the relief that tenants need.
ANNELISE NIELSEN:
Superannuation funds have complained about this policy allowing people to access their superannuation early if their income has been hit, saying it threatens liquidity of super funds. In particular, Hostplus CEO, David Elia, says the Treasury estimate of the policy costing $27 billion is too conservative by half. Is he right?
JOSH FRYDENBERG:
Well I believe that the policy that we have announced and passed through the Parliament is absolutely the right one for millions of Australians. This is the people’s money and ultimately they need it at times like this and there are already hardship provisions that allow Australians to withdraw money from superannuation in those very difficult times. So we’ve merely extended that existing program. As you would be aware, there is around $3 trillion inside superannuation. Last year, there was about $300 billion of cash within superannuation. So the Treasury estimate that $27 billion will be withdrawn, is less than 1 per cent of the overall total amount of funds under management within superannuation. That Treasury estimate was done before the JobKeeper payment was announced. That’s really important because, of course, the JobKeeper payment, the $130 billion program from the Federal Government, will help support people, keep them in jobs and indeed, probably make it less likely that they withdraw money from their super.
ANNELISE NIELSEN:
Just finally, can you rule out any increase to the GST?
JOSH FRYDENBERG:
We have no plans to do that. What our policies that we took to the last election, saw the tax burden being reduced, we legislated that through the Parliament, that was really important. And I think it’s also important for Australians to understand that through our disciplined economic management over the last six years, we’ve brought the books back into balance for the first time in eleven years. That’s given Australia the fiscal flexibility to respond during this crisis. We have been able to spend in a much more targeted way and in a much more substantial way than many other countries because we had got our books into shape before this crisis hit.
ANNELISE NIELSEN:
We didn’t really foresee though this particular event in the economy. I mean, some estimates have us facing a trillion dollars in debt once coronavirus has passed through. Surely, you would be looking at increasing some kind of taxes to get the budget back into balance at some point? Why wouldn’t that include GST?
JOSH FRYDENBERG:
The Prime Minister and I have made it very clear that the spending that we have announced will be in place no longer than it has to be. We do not want that spending in place for a day longer than it has to be. Now, we’ve prepared the nation for the pandemic and the challenges that we face by saying that it will go for at least six months. But our spending has been very targeted and very temporary and has been using existing systems. So, of course, we’re focused on the other side and on the other side of the coronavirus, the spending commitments that we have made are lifted, Australians can get back to life as normal and the economy can continue to grow on the trajectory that it was prior to the crisis hitting.
ANNELISE NIELSEN:
Treasurer, Josh Frydenberg, thank you for your time.
JOSH FRYDENBERG:
Good to be with you.