CHRIS SMITH:
Josh Frydenberg is the Federal Treasurer; he joins us from our studio at Parliament House in Canberra. Treasurer, good morning.
JOSH FRYDENBERG:
Good morning, Chris, and good morning to your listeners.
CHRIS SMITH:
Let's start with borders, as it relates to what's going on in the Northern Beaches at the moment. You're in dangerous territory because your numbers assume that state borders will stay open all of next year. Annastacia Palaszczuk and Mark McGowan are incredibly trigger happy when it comes to borders.
JOSH FRYDENBERG:
Well, they have, as you say, put in place border closures previously. But we also know that the New South Wales Government, the New South Wales health authorities have been very effective with their contact tracing and their testing regime. The question has never been, Chris, whether there will be new Coronavirus cases, the question has always been how will we respond to them; and yesterday we saw a very swift and a very immediate response. There was a hook-up of Chief Medical Officers from around the country yesterday. We do know that more than 10,000 tests were carried out yesterday. More than a quarter of a million Sydney-siders have been asked to stay at home for a few days. And the authorities will work very hard, and I have great confidence in their ability, to get to the bottom of these cases and to try to suppress them, because the only way we can see the momentum in our economic recovery continue is if we are successful in suppressing the virus.
CHRIS SMITH:
So, your message to the likes of Premier Palaszczuk and McGowan would be: hold your fire, keep posted on what's going on inside the New South Wales Health Department, how contact tracers are going, before you start closing borders?
JOSH FRYDENBERG:
Well, closed borders cost jobs, and that has been our consistent message. And what we did see yesterday with the Budget update is that the unemployment rate was lower, the growth rate was higher, and we saw improvements to the bottom line because the economy has been opening up, because restrictions have been eased, because we have been successful in suppressing the virus, and people getting back to work. Of the 1.3 million Australians who either lost their jobs or saw their working hours reduced to zero at the start of the crisis, 85 per cent of those are now back at work. And we've seen, in the last month, 90,000 new jobs being created, 84,000 of them being full-time.
So, your listeners, whether they're working in a café, whether they're working in a pub, whether they're working on a manufacturing line, they are starting to see their jobs come back and be more secure because of Australia's success in suppressing the virus, and we want that to continue.
CHRIS SMITH:
Would you agree though that we won't have an accurate picture of the job status of Australians until about the second quarter of next calendar year, when you stop JobKeeper?
JOSH FRYDENBERG:
Well, there will be a transition across the economy over the course of next year, but the labour market has been stronger than we expected just even at Budget, 10 weeks ago.
CHRIS SMITH:
Yep.
JOSH FRYDENBERG:
And one of the reasons is because the virus has been suppressed. So, in those sectors like hospitality, like accommodation, like recreation, where many jobs were lost early on in the crisis, those jobs are coming back and the Government has provided, the Morrison Government has provided an unprecedented level of economic support. And we've seen around 2 million fewer Australians on JobKeeper in the month of October, compared to the month previously in September, and that is because of the economic recovery.
And Chris, your listeners should know that we are continuing to provide very substantial support into the economy next year – whether it's the tax cuts, whether it's the two $250 payments to pensioners and others on income support, whether it's the infrastructure projects that we have brought forward, whether it's the JobMaker hiring credit to get unemployed young people back into work – we are continuing to provide that level of support well into next year and beyond.
CHRIS SMITH:
Absolutely no extension of JobKeeper after March?
JOSH FRYDENBERG:
JobKeeper was always meant to be a temporary program. We extended it for an extra six months out to the end of March. As I said, we are now seeing that taper off. When I was last in New South Wales, I was out in Western Sydney and I met a crane driver who had used JobKeeper, but he had now graduated out of JobKeeper. I went down to Five Dock and went down to Papa's Patisserie, a great bakery down there, which many of your listeners will know. Again, they used JobKeeper. He has more than 100 staff. But now he's graduated off JobKeeper as people have got back to work. They are the personal stories behind these numbers. The numbers are just statistics, but what's behind every number is a family, is a worker, and that's who we're backing.
CHRIS SMITH:
That debt level is lower than what you expected but it is massive, $952 billion in 2024. You wouldn't want to see an increase in interest rates, would you?
JOSH FRYDENBERG:
Well, we've heard from the Reserve Bank that interest rates are likely to remain low for some time to come, and that's a global phenomenon, not just an Australian one. But we had no option other than to spend through this crisis.
Treasury told me, Chris, early on in the pandemic that the unemployment rate would reach around 10 per cent in their view, or 15 per cent if we didn't put in place JobKeeper. Yesterday, the unemployment rate was down at 6.8 per cent.
CHRIS SMITH:
Great stuff.
JOSH FRYDENBERG:
So, the measures that we have put in place have helped stop some of the damage and to cushion the blow for millions of Australians. We know that JobKeeper, according to the Reserve Bank, has saved at least 700,000 jobs. The road ahead will be hard, it will be long. There's a lot of uncertainty as we're seeing just play out today on the Northern Beaches, but what we do know is that Australia is better placed than nearly any other country in the world, not just on the health front but also on the economic front.
CHRIS SMITH:
Your numbers have been buoyed also by the price of iron ore and China's insistence in taking our iron ore. There's no likelihood that that will stop?
JOSH FRYDENBERG:
Well, we supply the bulk of China's iron ore imports, around about 60 per cent.
CHRIS SMITH:
But they could take iron ore from Brazil?
JOSH FRYDENBERG:
Well, they can't get the same quality or the same volume, and one of the reasons why the iron ore price has elevated is because of that supply/demand equation. As you may know, Brazil had a serious dam collapse that affected their iron ore production. Australia is a world-class reliable producer and our iron ore has helped underpin China's economic growth story where they've taken hundreds of millions of people out of poverty. It not only underpins their domestic steel production but also their major exports of steel, which are a big income earner for the country. So China does rely on our iron ore. It's mutually beneficial. We've had some challenges in other aspects of the trading relationship. We would obviously like to resolve them bilaterally, but we also reserve the right to use multilateral forums where we can't get the right result.
CHRIS SMITH:
You might be lucky with coal actually because we hear today that the fact that they're not taking our coal from those 70 ships, which are anchored off the coast, is sparking a stack of blackouts and people are left shivering in freezing cold temperatures in China. They won't contend with that for too long, will they?
JOSH FRYDENBERG:
We are a major coal exporter not just to China but to other countries as well and we have very high-quality coal. The two major types of coal are the metallurgical coal and the thermal coal: the thermal coal being used for electricity production, and the metallurgical coal for steel production. They are both needed by China for their industrial development.
I also want to point out that Australia has many other markets other than China as well, and we have not only explored those markets, we've encouraged our exporters to develop relationships in those markets and we've done that by providing a legal framework for the free trade agreement.
So, our exporters, whether they're in the resources sector, whether they're in the agricultural sector, they do have a very bright future; and what we saw in yesterday's numbers was that in the year 21/22 we will see growth in both those sectors of exports.
CHRIS SMITH:
I want to talk about another very important budget. You're responsible for managing the nation's purse strings but who looks after the finances in the Frydenberg household?
JOSH FRYDENBERG:
My wife, and she does it very well.
CHRIS SMITH:
Would she do a better job as Treasurer do you think?
JOSH FRYDENBERG:
Well, I'm not sure she would like the time away from our family because, as you know, I've spent more time in this building than anywhere else this year.
CHRIS SMITH:
You have.
JOSH FRYDENBERG:
It's been a trying year for all Australians, but the heroes out there are those listeners of yours who worked on the front lines during the bushfires, those horrible bushfires earlier this year, and we hope they all remain safe through the Christmas period. But also the heroes are the health workers, who have been on the front line doing that contact tracing and testing.
CHRIS SMITH:
I hope you get a break, Josh. I hope you get a break, and we'll talk again in the New Year. Thank you for this morning.
JOSH FRYDENBERG:
Thanks Chris, all the best to you and your listeners.
CHRIS SMITH:
The Treasurer, Josh Frydenberg.