CHRIS UHLMANN:
Josh Frydenberg, good morning.
JOSH FRYDENBERG:
Good morning, Chris. Nice to be with you.
CHRIS UHLMANN:
Here in this Chamber, prime ministers and treasurers and MPs battled a Great Depression and a World War. Do you feel the weight of history in putting together this Budget?
JOSH FRYDENBERG:
Well, if only these walls could talk, Chris, they would tell the story of the very best of Australia. We've seen the very best of Australia during COVID-19, from our health workers on the frontline, to our Defence Force on our borders, to all the parents who are working from home and home-schooling. This has been a very difficult time and it is a hard road ahead but there is a pathway out and on Tuesday night we will be laying out that pathway through the Budget.
CHRIS UHLMANN:
So what is the plan? How do we get out of this?
JOSH FRYDENBERG:
Well this Budget is all about jobs. This Budget is helping those who are out of work get into work, helping those who are in a job stay in a job. We have faced the single biggest economic shock this country has ever seen. It's happened on both the supply and demand side. 10 per cent of our workforce have either lost their job or seen their hours reduced to zero. The Morrison Government responded with a very comprehensive plan, more than $300 billion of support. That's helped cushion the blow and kept employees and employers connected. We now move to the next phase of our plan with this Budget and you have already seen a number of announcements to date.
CHRIS UHLMANN:
We've been talking about skills this morning. That's part of it. You are looking at upgrading skills, pouring money in the economy through tax cuts and giving business incentives. Let's look at the tax cuts side of that. Why would you drag forward these tax cuts to middle and high income earners?
JOSH FRYDENBERG:
Well, as you know at the last election there were two competing narratives around tax. We were for tax cuts and the other side were for tax increases. The Australian people voted for our policy and we legislated it. Already it started to deliver for Australians...
CHRIS UHLMANN:
Sure, but you are dragging it forward. Why would you do that?
JOSH FRYDENBERG:
We believe people should keep more of what they earn. We also believe more people having more money in their pockets right now will help economic activity across the economy. More spending will mean more jobs.
CHRIS UHLMANN:
You don't want them to keep it in their pockets you want them to spend it and given it's going to middle and high income earners how can you be certain they will spend it?
JOSH FRYDENBERG:
Well I wouldn't speculate what is in the budget on Tuesday night...
CHRIS UHLMANN:
You've been telegraphing it for a month now, so why would they spend it?
JOSH FRYDENBERG:
Our tax cuts have been focussed on low and middle income earnings. We know there is a high savings ratio at the current time. That's been a reflection of the health restrictions that have been put in place, Chris. That's the fact people can't go to the local restaurant or travel to the local tourism spot or go out to the local pub. Once those restrictions are eased, and we are seeing that happen outside of Victoria, more money will be spent and that savings ratio will come down.
CHRIS UHLMANN:
The high income earners will get tax cuts if you earn over $200,000 a year of $11,000. Why would someone earning that kind of money spend it and how is that fair?
JOSH FRYDENBERG:
Well Chris our tax system is fair and has been a progressive tax system and will remain progressive tax system. The top 5 per cent of taxpayers pay about a third of the total tax bill. If you're on $200,000 you pay ten times as much tax as someone who is on $45,000. Our tax plan will continue to remain progressive, and it’s part of a broader tax reform where we're creating one big tax bracket between $45,000 and $200,000; 94 per cent of taxpayers will pay no more than 30 cents in the dollar.
CHRIS UHLMANN:
You are working on skills as well, trying to get people training so they can go into the new workforce. What kinds of skills do you want?
JOSH FRYDENBERG:
Well, we want the skills of today and tomorrow. We want people to be working in the trades, because that's going to be critical to our construction sector, but we also want people working in IT. You’ve heard the Prime Minister lay out our manufacturing plan because there's a real comparative advantage for us in that place. But today we're announcing $1.2 billion to help create more apprenticeships and traineeships. This builds on the $2.8 billion we've already announced, bringing to $4 billion the total amount that we are providing to create more apprenticeships and our announcement today will help create 100,000 apprenticeships; whether you are a baker or a butcher, whether you are a sparkie, whether you are a plumber or a carpenter, you are getting support from the Morrison Government.
CHRIS UHLMANN:
The question for all of them and us will they have jobs. The big problem you have got is you are now doing a very difficult dismount. You are going to pull money out of the economy by way of the JobKeeper plan. Come March, will we see a surge in unemployment as that money goes?
JOSH FRYDENBERG:
Well Chris, we will print the unemployment numbers in the Budget, but what we have seen is the unemployment rate…
CHRIS UHLMANN:
It will rise, won’t it?
JOSH FRYDENBERG:
Unemployment has come down. It will go up before the end of the year. That’s a function of...
CHRIS UHLMANN:
What happens in March when you pull the money out?
JOSH FRYDENBERG:
It's a function of what's happening in Victoria. But over time, that unemployment rate will come down, particularly as restrictions are being eased, more people are going back into work. We have seen in the last three months 458,000 jobs being created; 60 per cent of those jobs have gone to women, 40 per cent have gone to young people. Australia has turned the corner and the recovery is underway.
CHRIS UHLMANN:
I understand all of that, but you are going to withdraw an enormous amount of money over time, but specifically by March, is it your expectation when we hit that point that unemployment will rise?
JOSH FRYDENBERG:
Our expectation is that next year unemployment will come down. And that includes it's tapering off of the JobKeeper program. The JobKeeper program has been a remarkable program. It's right now supporting more than 3.5 million Australian workers. It's helped keep that formal relationship between employer and employee. It's been the single largest program that any Australian government has ever undertaken...
CHRIS UHLMANN:
It's a form of triage. So right now the economy is in casualty, people being kept alive by this blood pumping through their system. You will take it out and hope what you do next will create jobs. That's a gamble, isn’t it?
JOSH FRYDENBERG:
We're transitioning to the next phase. What you will see in the Budget is other initiatives, other economic support programs designed to spur activity and investment across the economy. That will create jobs because this Budget is all about jobs.
CHRIS UHLMANN:
And you are not going to take out money from the economy completely until you see unemployment drop below 6 per cent? You are going to keep spending from now on?
JOSH FRYDENBERG:
Well the history of previous recessions - and bearing in mind Australia has had a record run of economic growth, nearly 30 years long, better than any developed nation- the history of previous recessions unemployment went up the elevator but came down the stairs. We saw in the 1980s it took six years to get unemployment down below 6 per cent where it started. We saw in the 1990s it took a decade, ten years. Obviously we want to move quicker than that. That is why we're engaged in a full court press.
CHRIS UHLMANN:
You are going to keep spending, you’re going to deliver a budget deficit above $200 billion. If I'm in the Labor Party, why wouldn't I say you are now presiding over a debt and deficit disaster, that puts anything they did into the shade?
JOSH FRYDENBERG:
The fact is, the Labor Party is calling for more spending. So, I don't think they have solid ground there. But...
CHRIS UHLMANN:
Why wouldn’t some people brand this a debt and deficit disaster?
JOSH FRYDENBERG:
This crisis dwarfs the GFC. You have seen the OECD say they expect the global economy to shrink by 4.5 per cent this year. In contrast, during the GFC, it shrunk by 0.1 per cent. But the Labor Party when they were in Government, baked in spending for years. Our spending as announced up to the July Economic Update was 98 per cent in the first two years…
CHRIS UHLMANN:
You say it's temporary, but you also say you won't stop spending until you get unemployment below 6 per cent. So, you don't know when that’s going to be.
JOSH FRYDENBERG:
Our spending is targeted, our spending is temporary, our spending is proportionate and our spending is designed to create jobs.
CHRIS UHLMANN:
How is any of this fair? In the way that we’ve dealt with this crisis, we've essentially asked the young people of Australia to make a sacrifice. Mostly, we now know, the older generations, we’re saying to them your future is going to be crimped, there will fewer jobs, there will be less opportunity for you and you’re going to have to pay for all of this. Isn’t this one of the great intergenerational inequities of all time?
JOSH FRYDENBERG:
Well the heavy debt burden is the price of protecting lives and livelihoods today. Every day when I get up in the morning I think about my two children. I think about creating a better Australia for them and many our millions of other children across the country. We had to do what we did, that has helped save 700,000 jobs.
CHRIS UHLMANN:
Look at the children of Australia today and tell them the way we've gone about dealing with this crisis and the fact they will be paying for this for generations through higher taxes in the long run and through less services, because this has to be paid back one day, doesn’t it? There are only one or two ways you can do that; cut services or lift taxes.
JOSH FRYDENBERG:
It can be paid back by growing the economy, by creating more jobs. There is no economic recovery without a jobs recovery and there is no Budget repair without a jobs recovery. We're focused on getting more people in to jobs. But I’m very optimistic about the future. I'm hopeful about the future. I look at our young people and I think that they can have better opportunities than what I even had growing up myself.
CHRIS UHLMANN:
In a year's time and ten years' time and 100 years' time when historians look back on this, how would you measure success? How would you like it to be remembered?
JOSH FRYDENBERG:
By getting people back to work faster than previous recessions. Helping people who are in a job stay in a job. This economic shock has been like no other. Around 500 million people have lost their jobs around the world. But Australia has performed better than any other developed nation and because we came into this crisis from a position of economic strength we were able to spend through this crisis as required. So our focus is on keeping people in work and creating more jobs for those out of work.
CHRIS UHLMANN:
For all our sakes, good luck.
JOSH FRYDENBERG:
Thank you.