BRIAN CARLTON:
Treasurer, good morning, how are you going?
JOSH FRYDENBERG:
Good morning, Brian. Nice to be with you.
BRIAN CARLTON:
And welcome to Triple M Hobart. Tell me, the really short version of The Intergenerational Report I was flicking through last night is we need a baby boom.
JOSH FRYDENBERG:
Well, our fertility rates have fallen, but Australia hasn’t been achieving a replacement rate of 2.1 babies per women since 1976/1977. But the fertility rate has declined, and this has also been exacerbated by Covid and the closed borders, which has seen our population growth at its lowest level in a hundred years. So one of the outcomes of the IGR is that the Australian population will get to 38.8 million by 2060-61, which is a lower population level than what was initially thought just over five years ago.
BRIAN CARLTON:
The fundamental nature of a growth economy is that it requires largely population growth to drive that growth. If we haven’t got the population growth through natural birth rate or, indeed, migration levels, where do we go? What happens to the economy that is based on growth if we’re not population growing? What do we do?
JOSH FRYDENBERG:
Well, the good news out of this report is that the Australian economy will continue to grow and that our debt levels, while they become elevated as a result of the measures taken during Covid, they do remain low by international standards. But there are three - they call them the three Ps that drive economic growth - participation, productivity and population. And with respect to participation, we had a number of measures, including the childcare reforms that we announced in the budget just a few weeks ago which is to drive more people into the workforce or to give them that choice to do so. There’s also important productivity-enhancing reforms that we’re currently investing in. For example, the incentives to get more businesses to buy a share in equipment, the JobTrainer program which creates 160,000 new training places, a 10-year $110 billion infrastructure pipeline that we continue to roll out as well as digital transformation strategy and others micro economic reforms we’ve undertaken. All of those measures are designed to boost our productivity of the nation. And once we have a stronger economy then we can continue to guarantee essential services people rely on.
BRIAN CARLTON:
Just if I can hark back to the Fair Work Commission and the raise of minimum wage a week or so ago, one of the thrusts of the budget was to not budget repair but to continue to stimulate the economy with a range of stimulus measures, some of which you’ve just mentioned. Did Treasury broadly or did you broadly support the minimum wage rise?
JOSH FRYDENBERG:
Well, the federal government doesn’t actually specifically recommend an increase.
BRIAN CARLTON:
No, I understand that. It’s an independent thing.
JOSH FRYDENBERG:
We welcome the increase, which is at two and a half per cent, which is higher than what the business groups were asking for and slightly less than what the unions were asking for. And those decisions have always been independent, and that is why, you know, we make submissions as to the economic factors to take into account, but the final decision rests with the Fair Work Commission. But I just take issue with something you said, Brian, with respect to the budget. We did provide additional funding and support. We ended those emergency measures like JobKeeper, but we increased support for infrastructure and for business investment incentives and tax relief, but was designed to move to the next stage of our economic recovery, which is to see the private sector, not government, leading that recovery. And we were criticised by some at the time for ending JobKeeper, but it was the right call because…
BRIAN CARLTON:
…I know, Treasurer, the doom and gloom that came out of some of the senior opposition people, senior Labor people who should have known better, really, was all doom and gloom as soon as you pulled off JobKeeper and JobSeeker the economy was going to collapse and everybody would be out of work and it clearly didn’t happen.
JOSH FRYDENBERG:
That’s right.
BRIAN CARLTON:
Clearly. Okay. So the coronavirus impact on the economy over the next many decades, we’re not seeing what budget back under control until what, 2060?
JOSH FRYDENBERG:
Well, a couple of things. Firstly, the projections in this IGR are based on existing policy settings. And as you and I know, policies change, particularly over a long period of time like 40 years. So they’ve always been sobering. And if you look back at the two IGRs that Peter Costello delivered or the one under the Rudd government, they also forecast that there would be deficits at the end of the period. And that just reflects the ageing of the population. But the economy does continue to grow and our debt remains low by international standards. But there are warning signs about the population size, about the productivity gains that we need to make as well as the pressures that come from an ageing population.
BRIAN CARLTON:
Treasurer. I need to talk to you about the current lockdowns in Greater Sydney, the Central Coast, Blue Mountains, Illawarra and obviously there are various border restrictions in place right around the country now as a result. What sort of impact is this going to have on the - because we’re effectively shutting down the biggest city in the country for a couple of weeks. Are you concerned about the economic impact of the outcomes in New South Wales at the moment, Sydney?
JOSH FRYDENBERG:
Well, the economic impact is real. But when it comes to what is important for the economic recovery more broadly it is that we are successful in suppressing the virus. And that’s one of the reasons why, Brian, our unemployment rate has fallen and our economic growth has increased - because we’ve been successful in suppressing the virus. So these restrictions that have been put in place are hopefully temporary and hopefully lead to a containment of the virus. And you have to say New South Wales has been a standout performer over the course of this pandemic because they’ve avoided the statewide lockdowns that we’ve seen in other states even though they’ve had outbreaks of cases. So let’s hope that their health workers and Gladys Berejiklian and her team can get on top of this quickly.
BRIAN CARLTON:
The vaccination messages that are coming out of the federal government are, in my view, just a little confusing. They’re equating a fully vaccinated population with Covid safe, which is the phrase we have all attached to zero coronavirus presence. Okay, that’s what we hear. Covid safe means no virus. The vaccine won’t do that, and yet that’s the umbrella it’s being sold under. Have we got the messaging right for the vaccine? Because the impression being given is that we the population are reluctant to get it. There’s a view out there that we would if there were supplies of vaccine available. So there’s a bit of a double-bunger question there but are we getting the messaging right?
JOSH FRYDENBERG:
Well, it’s not realistic to expect that we can eliminate the virus; what we need to do is successfully suppress the virus.
BRIAN CARLTON:
With respect, Treasurer, that’s exactly the message that’s coming out of the federal government at the moment. If we all get vaccinated, we can say Covid safe. And, as I say, Covid safe is code for virus free.
JOSH FRYDENBERG:
Well, what I would put to you, Brian, is that by getting the vaccine you reduce substantially the chance of serious illness, hospitalisation or even death.
BRIAN CARLTON:
But not catching it or transmitting it.
JOSH FRYDENBERG:
And I think you make an important point, because in the United Kingdom they’ve had over 80 per cent of their population receiving a first dose, over 60 per cent of their population receiving a second dose yet just yesterday they had 18,000 new Covid cases. Now here in Australia 28 per cent of our eligible population has received their first dose, and we have focused on the more vulnerable cohort. So for the over 50s more than 50 per cent have received their first dose. For the over 60s, almost 60 per cent have received their first dose, and for the over 70s almost 70 per cent have received their first dose. So more than 7.3 million doses have been distributed, but, as you know, there have been issues with supply, particularly the AstraZeneca vaccine, which we’re making under licence here in Australia because of the impact that it may have on some of those younger cohorts.
BRIAN CARLTON:
We’re going to end up with a lot of AstraZeneca left over, aren’t we? What’s going to happen to that?
JOSH FRYDENBERG:
Well, again, AstraZeneca is still a safe vaccine for those eligible age groups that the health experts have designated it for.
BRIAN CARLTON:
And yet it’s going to be withdrawn from use as early as October. Is that not in itself a mixed message? “We’re not going to use this anymore, but in the meantime go back for your second dose, or even your first”?
JOSH FRYDENBERG:
I think the message is very clear - that for those age groups where the AstraZeneca vaccine is safe, then people should go out and get it as quickly as possible. For those other age groups where the Pfizer vaccine is the one for them to receive, then they should go out there and get it as quickly as possible. We’ve got more than 5,000 contact points designated across the country.
BRIAN CARLTON:
Okay.
JOSH FRYDENBERG:
We’re working with GPs and working with state governments.
BRIAN CARLTON:
What sort of vaccination rate of the broad Australian population are we going to need to see no further economic lockdowns as we are in Sydney at the moment? When can we - will they stop when everybody’s properly, fully vaccinated? Is it 80 per cent, 90 per cent, 70? At what point can we stop the lockdowns because we’re all vaccinated?
JOSH FRYDENBERG:
Well, two things to say: firstly, we’re not giving a specific number on that other than to say we need to roll out the vaccine as quickly as possible. The second point is we’re going to have to learn to live with the virus because the new Delta strain has shown itself to be more dangerous, more contagious and more difficult to contain. And that is what we’ve seen in the outbreak in New South Wales with the Delta virus. So we’ve got to ensure that all our measures are in place - the vaccination strategy, the quarantine systems, the contact testing and tracing - but we’re going to have to learn to live with the virus because it’s going to be around for some time yet.
BRIAN CARLTON:
The reality is once we are vaccinated to a reasonably high level - you’ll never get a hundred per cent - but once we get to a reasonably high level, if we get Covid outbreaks, which are inevitable, we’re going to be going back into more lockdowns, even though we are all fully vaccinated? You can see there’s a momentum building up here which is causing people for a couple of reasons to doubt the efficacy of the vaccines. And I really don’t want us to go down that path. Treasurer, we’ve basically run out of time. You’ve been generous with yours this morning. I very much appreciate it. We’ll talk perhaps about the change of position in terms of Covid in Singapore over the past few days, which is perhaps a bit of a road map for us into the future. Thanks for your time today. Appreciate it.
JOSH FRYDENBERG:
Always a pleasure, and very best wishes to your listeners.
BRIAN CARLTON:
Thank you.