DAVID KOCH:
With the Reserve Bank predicting a strong bounce back in the economy over the next few months as cities start to reopen up, joining me now Treasurer Josh Frydenberg, who’s in isolation, Treasurer, is the worst over? How closely are you going to be watching New South Wales?
JOSH FRYDENBERG:
Well very closely. But this is a very big positive step forward, Kochie, to see New South Wales open from Monday and people get back to work. And obviously, this is the reward that people are getting for getting the jab. No jab, no joy. But if you have the jab, as so many people in New South Wales have – indeed across Australia – then you’ll start to get your freedoms back. And I think that’s really important. But as for the economy, we’re confident that it will bounce back as it has done before when we’ve gone into lockdowns previously, and as the Reserve Bank itself has said, the Delta strain has delayed but not derailed the economic recovery.
DAVID KOCH:
Yep. All right, before we get on to the economy, just on the health side of opening up, obviously cases are going to go up. A lot of the states are saying they want more funding for hospitals. They have a point. Are you going to open the purse strings for them?
JOSH FRYDENBERG:
Well, I tell you what a bigger point is, is that we have increased our funding since coming to government for hospitals by around 92 per cent. So, we’ve nearly doubled the funding for hospitals under the Coalition Government. And if you look at the individual jurisdictions from New South Wales to Queensland down to Victoria, we have increased funding by more than the states themselves have. So, I know they always like to come to us asking for extra resources, but we have been providing that. Through this pandemic we’ve been providing enormous support for our health system through telehealth, through hospital systems, for pathology and obviously the vaccine procurement as well. So, we have really dug deep to provide that extra funding already.
DAVID KOCH:
Okay, so you’re saying, “Fund it yourself if you need any more money”?
JOSH FRYDENBERG:
We’re saying we have been providing funding. If they want to put more funding in, we’d welcome that as well.
DAVID KOCH:
Let’s talk about jobs with a bounce‑back in the economy. Official unemployment rate, four and a half per cent – pretty misleading, though, isn’t it, because it doesn’t count the 2 million people who are working fewer hours and those who’ve stopped looking for work. How confident are you that the jobs are going to be around?
JOSH FRYDENBERG:
Well, again, experience is a very good guide here, Kochie, and it has shown that the economy is very resilient. You’re right, four and a half per cent unemployment rate does not reflect the fact that some people have left the workforce, so there’s been a reduction in the participation rate, as well as many people have been stood down on zero hours, and that’s where our $750 COVID disaster payments have been very effective as well as our business support. But what we saw in Victoria in July, for example, was after they had eased restrictions and come out of lockdown, we saw nearly a 10 per cent increase in the number of hours worked after falling around 8 per cent the month prior. So once restrictions are eased, people get back to work very quickly. We’ve seen that in the past and we’re confident we’ll see that again.
DAVID KOCH:
Yeah, and a lot of businesses facing labour shortages at the moment because we don’t have skilled migration coming in to fill the gap, do we?
JOSH FRYDENBERG:
That’s an important factor.
DAVID KOCH:
So, are you expecting almost to get to full employment?
JOSH FRYDENBERG:
Well, again, four and a half per cent is a 12‑year low and many of the doubters never thought that we’d see such a recovery in our labour market as we’ve seen. This is why programs like JobKeeper actually saved the economy. They kept that formal connection between employers and employees, and they’ve now seen more people in work in Australia today than before the pandemic began.
DAVID KOCH:
Yep.
JOSH FRYDENBERG:
And we saw a V‑shaped recovery ahead of any other advanced economy, a better bounce back than Canada, Japan, the United States, the United Kingdom. So, there’s still a lot of work to go, but Australians watching your show this morning can be confident about their economic future.
DAVID KOCH:
Okay. I know we’ve got to let you go shortly, just the property market.
JOSH FRYDENBERG:
Yeah.
DAVID KOCH:
Overheating at the moment. APRA, the banking regulator, brought in tougher rules yesterday on how much you can borrow to try and cool the market down. Is it enough?
JOSH FRYDENBERG:
Well, we have welcomed this move by our prudential regulator. We think it’s targeted, we think it’s prudent. And if you do a bit more you have to do, therefore, less later, and that is the idea – to prevent the emergence of risks across the economy. We have a $10 trillion housing market. We’ve seen strong growth over the last year off the back of historically low interest rates. Other countries, Kochie, are seeing similar growth in their housing market. And what the regulator has sought to do here is to assess loans at an interest rate that is slightly higher than you would otherwise pay and so, therefore, if your individual circumstances change there is a bigger buffer there to provide that level of economic support.
DAVID KOCH:
Yeah, that buffer is double what you’re paying now. So it’s more than a little buffer – it’s a flaming big buffer. And state governments have been the big winners in this, haven’t they? Because as property prices increase their stamp duties go through the absolute roof. Do we need reform in stamp duty from the states?
JOSH FRYDENBERG:
Well, New South Wales has taken steps in that direction. The stamp duty‑land tax tradeoff, and I’ve welcomed that in the past. But obviously when states move to change their own tax system – because it’s not a federal tax; it’s a state tax – they’re the ones that have got to find the balance sheet support to do that.
But with respect to the housing market, what has been pleasing in this cycle compared to previous cycles, Kochie, is that more first homeowners, more owner occupiers are coming into the market. And this move will affect investors more than it will affect first home buyers.
DAVID KOCH:
Okay. All right, Treasurer, I know you’ve got other obligations. Thanks very much for your time.
JOSH FRYDENBERG:
Nice to be with you, Kochie.