DAVID SPEERS:
Treasurer, welcome to the program.
JOSH FRYDENBERG:
Good morning David.
DAVID SPEERS:
And happy new year.
JOSH FRYDENBERG:
You, too.
DAVID SPEERS:
Look, we'll get to the tourism sector and what's on the cards for them in a moment. Let's just start more broadly with the economic outlook. It was a very tough year, of course, last year, for nearly all Australians. We still, in fact, have more than 900,000 people out of work and just over one million who need more work. What should Australians expect in 2021?
JOSH FRYDENBERG:
Well, 2021 is unlikely to be like 2020. That was a year like none other, David. We were staring into the abyss of double digit falls in economic growth and the tripling of the unemployment rate. This year, it's all about maintaining the momentum of the economic recovery. Now, that involves keeping the virus, which is stubborn and deadly, under control. Rolling out the vaccine. But also getting people back to work as millions graduate off JobKeeper. Now, I'm the first to acknowledge that there are regions and there are sectors of the economy that are right now doing it tough. And there's a lot of uncertainty out there, both domestically and globally, and the job is far from done. But Australia starts this year from a very strong economic position, a position we wouldn't trade with any other country in the world. 90 per cent of the 1.3 million Australians who either lost their jobs or saw their working hours reduced to zero are now back at work. We've seen quarterly growth have its biggest increase since 1976 and consumer and business confidence are back to a pre-pandemic level. So that's why Chris Richardson, David, who is a very noted economist, has said here in Australia, the glass is more than half full and filling fast.
DAVID SPEERS:
Still a way to go to get back to where we were.
JOSH FRYDENBERG:
Sure.
DAVID SPEERS:
Unemployment is still at 6.6 per cent. Do you still think it will reach the 7.5 per cent, which was your most recent…
JOSH FRYDENBERG:
It was.
DAVID SPEERS:
…Budget forecast?
JOSH FRYDENBERG:
That was the MYEFO forecast, and that was at the end of the March quarter. The next forecasts will be in the Budget itself in May. But I acknowledge, too, that the labour market has outperformed expectations. We've seen 320,000 jobs being created in the last three months. What will determine the trajectory, in terms of the unemployment rate, is going to be how much household consumption will increase going forward. We've seen that around $200 billion plus has been accumulated on household balance sheets and business balance sheets…
DAVID SPEERS:
People saving.
JOSH FRYDENBERG:
Yes, that was not there last year and Government support. So that money is to be spent. But also, the Morrison Government's JobMaker program, which is the hiring credit, infrastructure spending that we brought forward, tax investment incentives…
DAVID SPEERS:
So will unemployment still get up to 7.5 per cent?
JOSH FRYDENBERG:
Let's wait and see. Those forecasts were put in the Budget based on the best advice to Treasury, but we have seen improvements in the labour market, even since MYEFO.
DAVID SPEERS:
So it may not get that high?
JOSH FRYDENBERG:
Again, I don't want to be Nostradamus here. I do want to say that I want to take a wait and see attitude to that, because we have always been pretty conservative with our forecasts generally across the economy.
DAVID SPEERS:
Do you still think debt’s going to get up to over $1 trillion?
JOSH FRYDENBERG:
Yes.
DAVID SPEERS:
So that won't change?
JOSH FRYDENBERG:
That is the trajectory we're on, because obviously we’ve made significant spending commitments.
DAVID SPEERS:
But it if things are a little better than forecast, unemployment in particular. You're going to save a bit of money?
JOSH FRYDENBERG:
Yes, we've seen improvements in the Budget bottom line, of course. And let's not forget that going into this crisis, we saw welfare dependency at a 30-year low because we’d got that unemployment rate down.
DAVID SPEERS:
Well that means you could, that you could have a bit of extra cash to spend on Newstart, for example?
JOSH FRYDENBERG:
Well, I want to remind you that every dollar we've been spending through this crisis has been a borrowed dollar, and that’s really important to understand. So we have to be very cautious about what we spend on. Our spending has been sticking to a set of principles. It's been targeted. It's been proportionate. It's been using existing systems and we haven't built in structural spending for the longer term. It's been short-term money that has been designed for that.
DAVID SPEERS:
My point is that you may have a bit extra based on what you've forecast to spend, that you could allocate to the unemployed. As I say, there's a lot of unemployed. JobSeeker is meant to stop at the end of March and go back to the old…
JOSH FRYDENBERG:
Not JobSeeker, the coronavirus supplements and that…
DAVID SPEERS:
Called JobSeeker. Going back to the old Newstart rate.
JOSH FRYDENBERG:
Again, we'll make determinations and decisions and announcements prior to that ending in March.
DAVID SPEERS:
What about for those in work? Wages are flat. And yet, during the pandemic, we've seen billionaires considerably increase their wealth. Are you worried about growing inequality coming out of this?
JOSH FRYDENBERG:
Well that's not what the Productivity Commission has shown when it looked at inequality in Australia. And what we have seen is household…
DAVID SPEERS:
I'm talking about during the pandemic.
JOSH FRYDENBERG:
And what we have seen through this pandemic is household disposable income has increased. So the bottom 10 per cent decile, in terms of income earners, have seen their income increase by 20 per cent through this crisis.
DAVID SPEERS:
Well you've had JobSeeker in place. What I'm saying is that...
JOSH FRYDENBERG:
We have, and JobKeeper also.
DAVID SPEERS:
...coming out of the pandemic, is inequality going to increase?
JOSH FRYDENBERG:
Well again, the best way to deal with inequality is to get people into work, and disposable income, particularly for the lower income workers, has increased. So I'm confident that we can continue to take on the inequality issue.
DAVID SPEERS:
Let's talk about JobKeeper. And the tourism sector in particular are worried about what happens when that ends at the end of March. Just to be clear, will JobKeeper end at the end of March?
JOSH FRYDENBERG:
Based on what we know today, there should be no expectation that JobKeeper will extend beyond the end of March. It was always a temporary program. More than $80 billion is already out the door, and it's helped to support more than 3.5 million Australians.
DAVID SPEERS:
What does that mean, though, for tourism businesses, given international borders are likely to remain closed, possibly for another year. What does that mean for them?
JOSH FRYDENBERG:
Well, David, I saw Annastacia Palaszczuk cheekily, that’s to put it lightly, suggest that we should extend JobKeeper. The Morrison Government has delivered more than three times the amount of money to Queenslanders than the Palaszczuk Government has even committed to. And so I'd welcome the State Government in Queensland making more of a commitment.
DAVID SPEERS:
Well some of your colleagues agree with her.
JOSH FRYDENBERG:
What we've done, in terms of the tourism industry, is not only put in place those economy-wide supports but targeted programs, for example for travel agents, for the airlines, in terms of infrastructure programs and what we put in the Budget. Now, Treasury is analysing the data in the tourism industry. The Minister, Dan Tehan, is talking to the industry leaders and we'll consider whatever future targeted assistance may be required. But the key for the tourism sector in Australia is going to be consistency and clarity around border closures. Because more than 70 cents in the dollar that is spent in tourism is driven by domestic-related tourism. And I was speaking to Alan Joyce...
DAVID SPEERS:
A lot of those ones in Queensland, North Queensland rely on international tourism. You talk about consistency on borders. Your Government shut the border to New Zealand based on one case over there?
JOSH FRYDENBERG:
Well again, that was based on the advice of the AHPPC…
DAVID SPEERS:
Sure.
JOSH FRYDENBERG:
And it was a unified approach by the central body involving the states as well. But when it comes to domestic tourism and those borders, I was speaking to Alan Joyce. He told me that in January, and for that January period, Qantas and Jetstar cancelled 1,500 flights, 200,000 passenger bookings. That's more than $200 million, into Queensland alone, that's Maroochydore, Gold Coast, Cairns, Hamilton Island. These are tourist destinations in Queensland where more than 200,000 passengers had their bookings cancelled because of those border restrictions that the Premier put in place at the end of December.
DAVID SPEERS:
Okay. But coming back to these businesses, though, just to be clear, you're not going to continue JobKeeper, so no wage subsidy ongoing for…?
JOSH FRYDENBERG:
There is no intention to extend JobKeeper. We'll look at what targeted assistance is required based on…
DAVID SPEERS:
But is the messaging this could be another year, or even more, before international tourism really gets back to what it was?
JOSH FRYDENBERG:
Well you've heard the Chief Medical Officer, the Prime Minister, the Health Minister…
DAVID SPEERS:
Exactly.
JOSH FRYDENBERG:
Talk about international borders.
DAVID SPEERS:
So, should they consider getting out of that game?
JOSH FRYDENBERG:
Well again, they will be decisions that commercial operators themselves take.
DAVID SPEERS:
What's your message to them? I mean, they're looking for consistency and certainty from the Government. What should they do?
JOSH FRYDENBERG:
Well firstly, when you talk about tourism, it’s a complex supply chain. So it's everything from accommodation and hospitality, to the tourism operators, there's the airline, to many others along that supply chain. Now we have been there for them and we'll continue to support the tourism sector with targeted support, as we have done for other sectors that have needed it.
DAVID SPEERS:
Okay. But if you only rely on international tourism for your business, time to think about something else?
JOSH FRYDENBERG:
Well again, I think there's been great ingenuity, great flexibility shown by Australian businesses and Australian workers through this crisis to adapt and to identify other areas where they can be profitable.
DAVID SPEERS:
On JobKeeper, just while we're talking about it, can you clarify, were any payments made to dead people?
JOSH FRYDENBERG:
Well, I saw Jim Chalmers on Friday puff himself up and go out like a puffer fish and saying all these cheques were sent out to dead people and JobKeeper payments were made to dead people. Well, he was contradicted by the ATO who put out an official statement saying to the best of their knowledge, they're not aware of any successful payments to deceased persons or other fictitious employees. You see, the ATO have a very comprehensive system of compliance. And this has been an enormous program. They check every ABN Number and they check every Tax File Number against those databases. We saw the Auditor-General, and you've asked me lots of times about the Auditor-General, complete a very comprehensive report about the ATO's running of those programs, which was delivered on December 14. And it said that they had been very effective. That's the Auditor-General comments, ‘very effective in managing risk and in planning for the rollout.’
DAVID SPEERS:
What about businesses who took JobKeeper, but then increased their profits, even paid big executive bonuses. Some of them have volunteered to repay the money.
JOSH FRYDENBERG:
Some have.
DAVID SPEERS:
Why don't you require them to do that? If they increased their profits?
JOSH FRYDENBERG:
Because that was never the legislated purpose of the program. The purpose of the program was designed to stem that tide of hundreds of thousands of our fellow Australians lining up outside Centrelink. And it was to end that fear we saw across the community at the height of the pandemic.
DAVID SPEERS:
Sure, but if…
JOSH FRYDENBERG:
If we keep that formal connection between employers and employees. Now, in the legislation, that supported this program and the rules that were made, you had to show a projected decline in phase one JobKeeper program…
DAVID SPEERS:
So if they increased their profits, why can't you now say that you have to pay the money back?
JOSH FRYDENBERG:
I would welcome any business that decided to pay that money back. But they’re not all…
DAVID SPEERS:
Yes, it relies on their good will.
JOSH FRYDENBERG:
But they’re not legislated to do so.
DAVID SPEERS:
Why don't you require them to do so?
JOSH FRYDENBERG:
Because again, that was not what they signed up to when they took the JobKeeper payments in phase one. Phase two, it was based on actual decline in turnover. They’re the rules of the time.
DAVID SPEERS:
Sure. But are you saying that it is too difficult? I mean, you go after other payments in welfare through Robodebt with no trouble…
JOSH FRYDENBERG:
Well what I'm saying is we passed legislation, dare I say it, supported by both sides of the House, to introduce the biggest and expansive wage subsidy to get Australia through this pandemic.
DAVID SPEERS:
Should companies do it?
JOSH FRYDENBERG:
It has worked effectively.
DAVID SPEERS:
Should companies do it? Is it the right thing for companies to do?
JOSH FRYDENBERG:
Companies that have the ability to do, should do it.
DAVID SPEERS:
OK. Let's talk about big tech and your plans to make Google and Facebook pay media companies for journalism. Google threatened to stop making its search engine available in Australia all together. Do you take that threat seriously? Or do you think it's a bluff?
JOSH FRYDENBERG:
I don't dismiss the threats but I'm not intimidated by them either. The Government…
DAVID SPEERS:
So they could do it?
JOSH FRYDENBERG:
Well, they've made that threat, but again, we're in detailed discussions with Google, with Facebook, with the other players across the industry because this has not been a short conversation that we've had with these companies over these issues. This has been the product of an 18-month inquiry, world-leading inquiry, by the ACCC, and at every step of the way, these businesses have been consulted. Now, the goalposts seem to be shifting because originally, they had a concern with the algorithm requirements of notification. Then it was about value exchange and then it was about a final arbitration model. Now we're told that if we go ahead with this, we're going to break the internet. What I do know is that media businesses should be paid for content. And what I do know is that the Morrison Government, whether it's on this issue, whether it's on cyber bullying or terrorist content on the internet, we have been prepared to take on the digital giants.
DAVID SPEERS:
And who have you, have you engaged with them directly?
JOSH FRYDENBERG:
Sure.
DAVID SPEERS:
The digital giants?
JOSH FRYDENBERG:
Absolutely. Well even last week, the Minister, Paul Fletcher and I, had a meeting with Mark Zuckerberg from Facebook, who reached out to talk about the code and the impact on Facebook.
DAVID SPEERS:
They must be taking it pretty seriously?
JOSH FRYDENBERG:
They do. Zuckerberg, Frydenberg, what's the difference, except a few billion dollars I suppose. It was a very constructive discussion, and the Prime Minister has spoken to the CEO and President of Microsoft. As you know, they’ve got Microsoft Bing, which is another search engine. And they’re looking…
DAVID SPEERS:
So they're watching this for market share?
JOSH FRYDENBERG:
They're watching this very closely, and no doubt, see opportunities here in Australia to expand, too. So this is world leading what we’re doing…
DAVID SPEERS:
But Mark Zuckerberg didn't convince you to shift the policy at all?
JOSH FRYDENBERG:
No, Mark Zuckerberg didn't convince me to back down if that's what you're asking.
DAVID SPEERS:
Finally the vaccine rollout, Europe is, as you know, threatening to block exports, wants to keep more of the vaccine for its own citizens. Will this delay the arrival or the rollout in Australia at all?
JOSH FRYDENBERG:
Well, David, I've spoken to Greg Hunt this morning, the Health Minister. And he has said that we are on track for the rollout of the vaccine. Now, the Pfizer vaccine, as you know, is expected to be rolled out in February. The AstraZeneca vaccine, subject to approval by the TGA and shipping, is expected to be rolled out from March. We've always adopted a portfolio approach. AstraZeneca, Pfizer, NovaVAX and the COVAX facility, and we’ve done so based on the best medical advice to us. But it's important for your viewers to understand that when it comes to the 54 million doses of the AstraZeneca vaccine, more than 90 per cent of those doses are going to be manufactured here in Australia by CSL. This is a great asset for Australia that we don't have to rely on the rest of the world. We're going to be manufacturing the vaccine here at home.
DAVID SPEERS:
Final one just on the vaccine and making it available is certainly important, but getting people to take it seems to be the most important.
JOSH FRYDENBERG:
It's going to be voluntary.
DAVID SPEERS:
Well indeed. What does success look like? How many need to actually take the vaccine? What percentage of Australians?
JOSH FRYDENBERG:
Well obviously, you'd want everybody who is in a particularly vulnerable position to take it, and as you know, we've staged that rollout. But if you look at the success that we've had as a nation in vaccinating our 5-year-olds, and we’ve released some recent figures from the end of last year, it's been world leading. More than 97 per cent of vaccinations across Aboriginal and Torres Strait Islander…
DAVID SPEERS:
Do you need that with COVID?
JOSH FRYDENBERG:
Well again, it's going to be slightly different because of the nature of the vaccine. But we've seen a very strong record here in Australia with delivering a vaccine rollout which shows the confidence people have in our TGA and our ability to deliver.
DAVID SPEERS:
Alright, Josh Frydenberg, thanks for joining us.
JOSH FRYDENBERG:
Good to be with you David.