DAVID SPEERS:
Treasurer Josh Frydenberg, welcome.
JOSH FRYDENBERG:
Good morning.
DAVID SPEERS:
This is a big step to close the border, essentially, with those visitors from China. Why have you taken this step?
JOSH FRYDENBERG:
Well this is a precautionary measure to protect Australians based on the best medical advice that we have from the Chief Medical Officer. But David…
DAVID SPEERS:
And has that changed from a week ago? Or a few days ago?
JOSH FRYDENBERG:
It has, it’s evolved, just as the virus has evolved. There's around 12,000 people that have been infected now. 40% of those are outside Wuhan. So it's a very serious virus, but Australians should not panic. We should support the Australian-Chinese community, and we should know that as a Government, as a country, we are very well prepared. We've mobilised the incident response centre. We've mobilised our medical assistance teams. We’ve got good cooperation with the states. The National Security Committee has met four times in the last week, and importantly, David, our top medical researchers like at the Doherty Institute for Immunity and Infection here in Melbourne are working with the University of Queensland and the CSIRO on a vaccine.
DAVID SPEERS:
Does it mean though, this step that’s now been announced, does it mean if a Chinese student or a tourist arrives in Sydney or Melbourne they will be turned around and put back on a plane?
JOSH FRYDENBERG:
Normal detention arrangements will apply. If they've provided false information, then they'll go either into quarantine or put back on a plane from where they came.
DAVID SPEERS:
I want to come to the economic impact of this in a moment but just on a couple of other logistical issues here. The Government’s plan to evacuate Australians who are trapped in Wuhan and take them to Christmas Island, has China given permission for this to go ahead yet?
JOSH FRYDENBERG:
We’re still talking to the Chinese, we hope approval is imminent…
DAVID SPEERS:
This has taken a few days now.
JOSH FRYDENBERG:
It has, but…
DAVID SPEERS:
Would you like to have the agreement approved already?
JOSH FRYDENBERG:
Of course, we'd like to have Australians have this assisted departure but…
DAVID SPEERS:
Is there some hold up with Beijing on this?
JOSH FRYDENBERG:
Look, we're working through these issues, but we hope that approval is imminent. And obviously, this is the support that the Australian Government is providing.
DAVID SPEERS:
What about the plan to charge them $1000 each for the flight to Christmas Island. Why do you have to do that?
JOSH FRYDENBERG:
We're not.
DAVID SPEERS:
You’re not going to do that?
JOSH FRYDENBERG:
We’re not doing that. The Department of Foreign Affairs have said publicly that they provided the incorrect information originally, particularly about the arrangements that were in place when people came out of Cairo during the Arab Spring.
DAVID SPEERS:
Well the Prime Minister was saying this just the other day at a press conference that this is the standard rule, this is what happened when people were evacuated from the Middle East. So he was wrong?
JOSH FRYDENBERG:
Well he was provided with incorrect advice about those commercial arrangements. We won't be charging. Those people will be able to come to Australia without a cost incurred.
DAVID SPEERS:
Because it’s not just the Prime Minister, just on Friday, Peter Dutton, your colleague, this morning on TV was saying they’d still be charged.
JOSH FRYDENBERG:
Well they’re not going to be charged.
DAVID SPEERS:
So that decision’s just been announced?
JOSH FRYDENBERG:
No, it's very clear that the advice that we got originally was incorrect. That’s why…
DAVID SPEERS:
How does that happen though? It sounds like a stuff up.
JOSH FRYDENBERG:
They do a fantastic job, the Department of Foreign Affairs. We had an NSC meeting (inaudible) and in light of that information, that correct information, there won't be a charge.
DAVID SPEERS:
Alright. Let’s talk about the economic impact of the coronavirus. It is going to have a significant impact on tourism and obviously higher education as well. Are you able to say what the economic impact is likely to be?
JOSH FRYDENBERG:
Well obviously China is a critical economic partner for us, David. I mean they’re the greatest source of foreign students, over 200,000 into Australia, 1.4 million tourists. Together, those two sectors provide about $16 billion to the Australian economy. And they are the recipients of around 30 per cent of our trade. But it's too early to give a definitive view about the economic impact because we don't know how severe and how sustained the virus outbreak is. But if you look back at SARS, which is obviously from the same family as the coronavirus, and about 8,000 people were infected then, what we did see was that the student numbers came down, but also that the tourist numbers fell about 11 per cent in the June quarter. We also, back in 2003, we also saw trade numbers affected, but it rebounded in subsequent quarters.
DAVID SPEERS:
That was a long time ago, SARS. I mean, nowadays we’re a lot more intertwined with the Chinese economy so the impact’s going to be greater. Is there any estimate at the moment around a percentage hit this might mean for the economy?
JOSH FRYDENBERG:
The Department of Treasury is looking through this, they’re looking at low and high impacts...
DAVID SPEERS:
And what are they saying, what are they telling you?
JOSH FRYDENBERG:
Well they’re saying it is too early to tell because we don't know what the impact, direct and subsequent, impact could be.
DAVID SPEERS:
Could we see a negative quarter of growth?
JOSH FRYDENBERG:
I'm not going to speculate on that, other than saying the economy has been very sustained. But you'll see both direct and indirect...
DAVID SPEERS:
Sorry, the economy’s been sustained? The economy has been weakening Treasurer. The economy in your own numbers, in the mid year budget update, shows its been weakening before all of this.
JOSH FRYDENBERG:
The economy has been very resilient through pretty tough circumstances that we can't necessarily control. But the key point here is that you'll see direct impacts, so trade, tourism, students. You'll see indirect impacts on confidence and investment…
DAVID SPEERS:
What I’m asking is we could see a negative quarter here?
JOSH FRYDENBERG:
Well I’ll leave that to you to commentate on…
DAVID SPEERS:
Well you’re the Treasurer…
JOSH FRYDENBERG:
And I’m not going to speculate about that. What I will say is that the economy has been very resilient. There are things that we can control and things that we can't control. When it comes to the outbreak of the virus, when it comes to the fires, when it comes to the floods, when it comes to the trade tensions between the United States and China, we can't control those factors. But it does underline David, the importance of our disciplined economic management because we’re now going into this crisis…
DAVID SPEERS:
Well let’s talk about that…
JOSH FRYDENBERG:
Yeah, we are going into this crisis having balanced the Budget, not with a $48.5 billion deficit like we inherited.
DAVID SPEERS:
So on the budget, are we still going have a surplus?
JOSH FRYDENBERG:
Well again, the forecasts are updated twice a year at MYEFO and on Budget night…
DAVID SPEERS:
And the MYEFO update was a $5 billion surplus for this financial year?
JOSH FRYDENBERG:
That was, but as you know we’ve made significant commitments since then in terms of the fire response. We don't know what the impact will be on household consumption and what the full impact will be on trade and in fact, investment as well, as a result of the uncertainty of these crises.
DAVID SPEERS:
Well you talk a lot about uncertainty and unknowns. But can I remind you what you said on budget night. "Tonight, I announce that the budget is back in the black." Was that a little premature?
JOSH FRYDENBERG:
Well, our first and primary focus is on delivering the support to the Australians who need it. And as you said in your introduction, David, we've had a devastating summer with these fires…
DAVID SPEERS:
But you said on Budget Night, "It is back in the black." Was that wrong?
JOSH FRYDENBERG:
Well, we've got a balanced budget, and that's the first time in 11 years. As for delivering the surplus, our first focus is on delivering the support to the people who need it most. That's why the Prime Minister in an unprecedented response announced a $2 billion bushfire recovery…
DAVID SPEERS:
I know that, but I'm asking you, were you a bit carried away in the lead-up to an election in saying, "The budget is back in the black?"
JOSH FRYDENBERG:
In terms of having a balanced budget, that's a significant achievement. In terms of a surplus, you'll have to tune in on Budget night.
DAVID SPEERS:
Alright, so no guarantees that we're going to see that surplus?
JOSH FRYDENBERG:
What we do know is that these events outside of our control are going to have a significant impact on the Australian economy.
DAVID SPEERS:
Let's turn to climate change, Treasurer. The Prime Minister wants a greater focus on adaptation and land clearing and so on, and fair enough. But a lot of this is the realm of the states. Can I ask you about emissions reduction. You're the guy who designed the National Energy Guarantee. You accept the need to do our bit on emissions. Should Australia do more than achieving the target that Tony Abbott set five years ago?
JOSH FRYDENBERG:
Well, it's important to understand our 26 to 28 per cent target to reduce our emissions by 2030 on 2005 levels is a floor not a cap, and we hope to beat our target.
DAVID SPEERS:
Could you lift the target?
JOSH FRYDENBERG:
We took to the Australian people a very clear target, so we're not about to lift that target. What we are endeavouring to do is to meet our commitments. Now, if you look around the world, Australia has been performing well. We've reduced our emissions by nearly 13 per cent on 2005 levels. At the same time, David, Canada has only reduced their emissions by 2 per cent, New Zealand have increased it by 4 per cent, China by 67 per cent and India by 77 per cent.
DAVID SPEERS:
Okay but let me tell you about what your own Government, the department, is saying about emissions right now. It's saying that emissions this year are going to be 534 mega tonnes. In 2030, they’re going to be 518 mega tonnes. That doesn't sound like a big reduction?
JOSH FRYDENBERG:
And when we came to Government in 2013, they said that we'd miss the 2020 target by 700 million tonnes. Now the department is saying that we'll beat it by 400 million tonnes.
DAVID SPEERS:
A lot of that is thanks to Labor's efforts, though, isn't it?
JOSH FRYDENBERG:
No.
DAVID SPEERS:
A price on carbon.
JOSH FRYDENBERG:
And increasing electricity prices.
DAVID SPEERS:
No but I’m talking about emissions, that's when they came down and then they plateaued when you got rid of the carbon (inaudible)…
JOSH FRYDENBERG:
One of the real success stories has been the transition to more renewable energy. So, in fact, the estimate is that we'll get a 26 per cent reduction in the electricity sector which is about a third of the overall carbon footprint for the country by 2022, 8 years ahead of schedule. But David, can I just say - it's really important for the Australian people to understand how significant the uptake of renewables has been in this country. We saw over $7 billion invested last year…
DAVID SPEERS:
But investment halved last year?
JOSH FRYDENBERG:
On a per capita basis, it's more than the US, more than the UK, more than Japan and more than double Germany and France.
DAVID SPEERS:
But on a per capita basis Treasurer, emissions were 21 tonnes last year and under the Government's own predictions will still be 17 tonnes per capita in 2030. 17 is not half of 21.
JOSH FRYDENBERG:
Emissions are actually about on average 50 million tonnes lower per year under us than they were under the Labor Party. 1 million tonnes is the equivalent…
DAVID SPEERS:
On average across (inaudible), one point is they inherited high emissions and did a lot to reduce them.
JOSH FRYDENBERG:
David, on average about one million tonnes is the equivalent of taking about 300,000 cars off the road. But I want to make the point that our emissions policies are not set and forget. We're investing in technology…
DAVID SPEERS:
Can I ask you this - these fires have brought enormous destruction and sharpened people's minds on this climate question. Do you think that we're facing a climate emergency?
JOSH FRYDENBERG:
I think we're facing a significant climate challenge, we need to be part, that's not the terminology I use…
DAVID SPEERS:
So you won’t agree that we're facing a climate emergency, despite what we’ve just witnessed?
JOSH FRYDENBERG:
I think climate change is a significant challenge…
DAVID SPEERS:
But not an emergency?
JOSH FRYDENBERG:
… its a global challenge that needs a global solution. We're doing our bit and we're also working on the international stage and I think that’s…
DAVID SPEERS:
How is this not an emergency?
JOSH FRYDENBERG:
It's an important issue. But as the Prime Minister has outlined, there are a lot of things that we can do with mitigation and adaptation to try to reduce the impact of climate change on the Australian community.
DAVID SPEERS:
Ok, let's move on to the sports rorts saga. Do you admit the Government misused taxpayers’ money for blatant pork barrelling with this sports grants scheme?
JOSH FRYDENBERG:
Well, David, we take the Auditor-General's report very seriously. The Minister had a discretion to make the approval of grants. That's set out very clearly in the guidelines. The matter has been referred, as you know, to the Secretary of the Prime Minister and Cabinet. So I'm not going to pre-empt that inquiry.
DAVID SPEERS:
But we don’t even need to wait for that to see what the Auditor General found. The Auditor General, let me just read from his report, "the award of funding reflected the approach documented by the minister's office of focusing on marginal electorates held by the Coalition as well as those to be targeted by the Coalition. Applications from projects located in these electorates were more successful in being awarded funding than if funding was allocated on the basis of merit."
JOSH FRYDENBERG:
And it might be an inconvenient truth for you to know that of the recommended projects by Sports Australia were 66 per cent in Coalition seats, what ended up happening was it was reduced to 60 per cent and in Labor seats it was recommended by Sports Australia to 26 per cent and went up to (inaudible)..
DAVID SPEERS:
Labor seats you were trying to win. I mean Treasurer, I'll just bring you back to what the Auditor-General said. 73 per cent of the approved projects had not been recommended by Sport Australia. Will you, now, admit this was wrong?
JOSH FRYDENBERG:
Well, what I will say is that the Auditor-General made it very clear in their four recommendations that things need to change. The Government has accepted those recommendations, so what it will mean going forward...
DAVID SPEERS:
Including the pork barrelling?
JOSH FRYDENBERG:
What it will mean for the Government going forward is that when you have a corporate Commonwealth entity like Sports Australia and the decision maker is the Minister, then the reasons will have to be documented for decisions, and that includes reasons for approving projects that weren't recommended and that’s a good development.
DAVID SPEERS:
So that would stop this happening again? What you're talking about here - the Minister, if they're approving grants, has to document the reasons for them, would that stop a repeat of this?
JOSH FRYDENBERG:
Well, it will be a very different approach to what we've seen here and I think that it will increase transparency.
DAVID SPEERS:
But you still (inaudible) concede, Treasurer, that there was wrongdoing here?
JOSH FRYDEBERG:
Well, we've got a report...
DAVID SPEERS:
Why can't you do this?
JOSH FRYDENBERG:
Because there's a report that’s coming out from the Secretary of the Prime Minister and Cabinet.
DAVID SPEERS:
But we don't need to wait for that to see what the Auditor-General found. The Auditor-General found this was pork barrelling, right?
JOSH FRYDENBERG:
Well, the Auditor-General found that there was a lack of transparency and accountability around this.
DAVID SPEERS:
Is this what you had in mind in the Expenditure Review Committee when you approved this grants scheme?
JOSH FRYDENBERG:
What we had in mind was to support community projects that are in need. What we saw in the first round of this scheme…
DAVID SPEERS:
But did you have in mind that they would be targeted at marginal electorates like this?
JOSH FRYDENBERG:
We had in mind that they would go to communities that were in need. The program was initially...
DAVID SPEERS:
But not based on political need?
JOSH FRYDENBERG:
The program was initially 13 times over-subscribed. In the Auditor-General's report, they make the case of real social and economic benefit going to community-funded sporting projects. What we've seen across the country is a large number of eligible projects receiving grants.
DAVID SPEERS:
This was used for political purposes, taxpayer’s money used for political purposes in the lead-up to an election?
JOSH FRYDENBERG:
This was to support eligible projects, where there was real need. Now the criteria was set out…
DAVID SPEERS:
I've read to you what the Auditor-General found. This is what I'm asking, this was a pork barrel.
JOSH FRYDENBERG:
This was focusing on directing support to those projects across the country that were in need.
DAVID SPEERS:
You don’t think, sorry Treasurer, you don't think voters see what has happened here and would appreciate a bit of honesty?
JOSH FRYDENBERG:
Well, what they would appreciate I think is more transparency and accountability, following up the recommendations of the Auditor-General's report, and as I've said, we've accepted those recommendations. But what we won’t do…
DAVID SPEERS:
What about the clubs who missed out? The ones who were found by Sport Australia to be deserving, actually meritorious, in need of this money? Will they see any funding?
JOSH FRYDENBERG:
Well, we're not going to fund unsuccessful projects in this particular program.
DAVID SPEERS:
So you're not going to…
JOSH FRYDENBERG:
We're not going to do that. What the Prime Minister has foreshadowed is given the strong community need and the importance of supporting these sporting organisations, we would, in the context of the Budget, revisit a program of this type.
DAVID SPEERS:
Another grants program?
JOSH FRYDENBERG:
A support, to support the actual sporting clubs.
DAVID SPEERS:
And would that be run like this one was run?
JOSH FRYDENBERG:
As I said, we'll be accepting the Auditor-General's recommendations, which would mean that there would be a change in the process where there is a discretion from a Minister, and it also involves a corporate Commonwealth entity such as Sports Australia.
DAVID SPEERS:
So, that will clean up these sort of problems?
JOSH FRYDENBERG:
You will see more accountability, more transparency, more explanation of reasons, and they will be documented.
DAVID SPEERS:
What about Bridget McKenzie? Should she survive?
JOSH FRYDENBERG:
Well again, the report from the Secretary of the Prime Minister's Department will be with the Prime Minister, and of course...
DAVID SPEERS:
Today, will that be with him today?
JOSH FRYDENBERG:
Look, I don't know the exact timing of that. One would assume it will be shortly.
DAVID SPEERS:
If she does go, can you think of a good replacement?
JOSH FRYDENBERG:
Asking a deputy leader of the Liberal Party to opine on who should be the leader of the National Party is a bit like asking a rabbi to be in the conclave choosing the Pope! I don't think that’s going to happen.
DAVID SPEERS:
Alright, Treasurer Josh Frydenberg, thank you.
JOSH FRYDENBERG:
Thank you.