FRAN KELLY:
Now, we will be coming to Warwick Hadfield with sports news in a moment, but first let’s head to the federal Treasurer. There’s a new round of support payments flowing from today, to help lower income earners cope with the financial pain of the pandemic. As you heard on AM, about five million pensioners and other social security recipients will receive the second $750 payment, which will inject close to $4 billion into the economy. The rollout coincides with warnings from business leaders that the economy can’t afford any more hard lockdowns, such as the one in Victoria, which is shattering business confidence and killing jobs. New South Wales is now on high alert for its own widespread outbreak. The federal Treasurer, Josh Frydenberg joins us now. Treasurer, welcome back to Breakfast.
JOSH FRYDENBERG:
Nice to be with you, Fran.
FRAN KELLY:
This $750 payment will go into bank accounts from today. What’s your message to the people receiving it? Spend, spend, spend, for the sake of the nation?
JOSH FRYDENBERG:
Well, the first thing I’d say is that this is important economic support to people who are doing it tough. As you know, it’s going to pensioners, to veterans, those who are eligible concession cardholders, like Commonwealth Seniors Health Card holders, carers, and it will come at a cost of around $4 billion. Now, some people will save it, some people will spend it. It’s not for me to tell them how best to use their money. But, what previous experience shows is that the money does go towards meeting the daily bills that people are incurring, whether it’s food and groceries, their rent, or other expenses.
FRAN KELLY:
Can you tell us more about that? The first payment rolled out in March and April, I think $5.6 billion, do we have a breakdown, or any evidence, that the money was pumped back into the economy or was saved?
JOSH FRYDENBERG:
There was some ABS data that showed those who are under 65, only about 37 per cent of them were likely to add it to their savings, whereas those who are over 65, were going to save proportionately higher amounts. So it does depend sometimes on the age of the cohort and the particular expenses that they’re incurring in their individual circumstances.
FRAN KELLY:
One quarter of the economy, Victoria, is in hard lockdown now, which makes it hard for people to go out and spend the money, for a start. But lockdown in Victoria makes it hard for the economy all round. Your job is to manage the economic recovery of the nation. How much harder is that now with one quarter of the economy effectively crippled?
JOSH FRYDENBERG:
Significantly harder. This is a real setback to the nation’s economic recovery, there’s no secret in that. Victoria, has around a quarter of the Australian economy. I said to the Parliament, back in May, that were Victoria to go down to a full lockdown, it could cost up to $1 billion a week and that still remains the case. But it does remind us all that we’re living in one country with two different stages. I mean, New South Wales, Queensland, other states have started to open up. There’s been a rise in economic activity in those states, whereas Victoria has been closing down. That’s why we must stay on top of the health aspects of the virus, because economic support packages can only go so far. The best economic support one can provide is to get the health consequences of this under control, and that’s why people need to follow the social distancing requirements. We need to have effective quarantine measures and we obviously need to also have effective testing and tracing mechanisms in place.
FRAN KELLY:
Well, what do you make, then, of the call from some business leaders today, including Graham Turner from Flight Centre, but also some of our peak bodies, they’re calling for a more consistent policy approach from the Government to virus outbreaks. You know, do they have a point? Do we need a better system for managing outbreaks? Or are they just not actually recognising that, if they don’t want a stop-start approach, is that not recognising this is a health crisis that needs to be managed?
JOSH FRYDENBERG:
Well, the first thing I’d just say is they’re absolutely right that we need to maintain confidence across the business community, because businesses that open up tend to eat into their working capital and incur a cost in doing so, and they want to know that they’re going to be operating in a COVID-safe environment, as far as they can. Now, we have seen mistakes in Victoria, and the Premier has been upfront about that, there’s a judicial inquiry for example, into the quarantine issues. It’s important that other states learn from the Victorian experience, and that’s why the Prime Minister put these issues on the table at National Cabinet last Friday. That’s why Jane Halton, the former Health Department Secretary at the federal level, is going to be working on getting a consistent approach. But I would say to the business leaders of Australia that we have been successful, previously, in dealing with a spike in cases. We saw a spike in March and we were able to successfully flatten the curve, and that produced an improvement in both business and consumer confidence, it saw very strong retail numbers coming back, manufacturing activity got restored to their pre-COVID levels, and even ABS payroll data was showing improvements in wages and jobs. So, we are better placed than any other nation around the world. I mean, in the introduction to your story…
FRAN KELLY:
Is it a bit rich, then? I mean, do you get frustrated at business leaders saying, ‘You’ve got to manage this better, this stop-start way of doing things is no good?’ Does that frustrate you?
JOSH FRYDENBERG:
Well, in my private discussions with them, and indeed, I’ve seen public comments to this effect, they’ve been very praiseworthy of what the federal Government has done and they’re constructive partners for us, because, on the other side of this pandemic, Fran the private sector, business, has got to be the centre of the recovery. They’re the creators of nine out of every 10 jobs in this country. But in the introduction to this segment with you right now, I heard that in Florida they had 15,000 cases in the last day. So, we’ve got to keep a sense of perspective about what we’re seeing in the rest of the world. America has had more than 130,000 deaths, more than 45 million jobless claims. We’re seeing a second wave of cases in a number of countries right now, and we have to bear that in mind, because we’re not through the woods yet.
FRAN KELLY:
But, given a vaccine is still some years off, we’re led to believe, is the country just going to have to get used to more shutdowns and border closures to manage any outbreaks? Is that your message?
JOSH FRYDENBERG:
We certainly have to live with the pandemic, and that’s going to mean a second wave of cases, it’s going to mean spikes from time to time, and it’s how we effectively manage those spikes that will determine the speed and the trajectory of our economic recovery.
FRAN KELLY:
Let’s go to the recovery. We get the June unemployment figures this week. The jobless rate currently sits at 7.1 per cent, I think. Where would that rate be if you included all the people who are on JobKeeper, who are working zero hours right now, should we be including all of those to get an accurate sense of the scale of the problem?
JOSH FRYDENBERG:
Well, you’re right that the official unemployment rate is at 7.1 per cent, and we’re going to get an update later this week on that ABS data. But if you use the term ‘effective unemployment’, which is not just the unemployed on the official statistics but also those people who have left the labour force and those who are working zero hours, the number is more likely like 13.3 per cent, is what we think right now and it was even higher back in April, around 15 per cent. So that just indicates the size of the challenge that we’re facing, as a lot of people have left the workforce, a lot of people are down to zero hours who are receiving the JobKeeper payment, and a lot of people are on the unemployment queues.
FRAN KELLY:
And how many more will be when we get the June figures? How bad will unemployment get?
JOSH FRYDENBERG:
Well, we’re going to provide an update on the overall unemployment forecast on July 23. The market is expecting and their guess is as good as yours, or indeed we have some understanding, but we don’t have any definite numbers until they come out…
FRAN KELLY:
But it will be higher….
JOSH FRYDENBERG:
On Thursday. But the expectation from the market is that they will be marginally higher, and that the unemployment rate will continue to rise over the course of the next few months.
FRAN KELLY:
Alright, Labor has crunched the numbers. It’s come up with 13 jobseekers for every single job that’s vacant. Given that lack of jobs, does the Government still claim that the $550 Coronavirus supplement is acting as a disincentive to find work? Surely the lack of jobs is the villain here.
JOSH FRYDENBERG:
Well, what we don’t want to do is dull any of the incentives for people to move between jobs and there’s certainly some evidence…
FRAN KELLY:
Well, I don’t know there’s a lot of moving going on, is there? If there’s 13 jobseekers for every single job that’s vacant.
JOSH FRYDENBERG:
Well, for example, one of the banks has weekly data, and it did show that there was a 42 per cent increase in the jobs that were advertised between May and June. So, it was up from about 62,000 in May to around 89,000 in June. Now to put that in perspective though for your listeners, back in February, pre-COVID, it was 150,000. So, it’s certainly off a low base, but as people start getting back to work in the key sectors like hospitality, for example and retail, as a result of the restrictions being eased outside of Victoria, you will see more people get back into jobs.
FRAN KELLY:
And speaking of getting back and needing support, you’re a Victorian, will Victoria get special economic support? You’ve indicated there’s another phase of income support after the JobKeeper wage subsidy ends in September, but how much of it will be targeted in proportion, to use your description, to Victoria?
JOSH FRYDENBERG:
Well, our approach will continue to be a national one, and of course it’s targeted in the sense that it will be demand-driven, it’s effectively an automatic stabiliser, that those who need that support will get it, and obviously in Victoria there’s going to be a greater need. So, many people in Victoria will benefit from what we’re announcing on July 23. But our focus is absolutely on ensuring people get support to get to the other side of this crisis because it’s a once in a century pandemic that has a huge economic as well as health cost.
FRAN KELLY:
And could I just ask you, finally, about that health cost more broadly. You’re a Melburnian. How’s life feeling there on the streets in recent days and are you worried about the impact of this second lockdown on people’s mental health?
JOSH FRYDENBERG:
Absolutely. You know, it’s pretty eerie, at times, actually, down here. The streets are not as busy, either with foot traffic or cars. You know, people are rightly following the medical advice, a lot of people are walking through the streets with masks on. You know complacency is the enemy here, but patience is a virtue, and people need to follow that medical advice. Victoria will get through it, we’re very resilient down here and it could happen to any other state, and that’s why everyone has to follow the medical advice and recognise there’s a long way to run in beating this pandemic.
FRAN KELLY:
Josh Frydenberg, I know you’ve got a busy morning, thank you very much for joining us.
JOSH FRYDENBERG:
Good to be with you.
FRAN KELLY:
Federal Treasurer, Josh Frydenberg. You’re listening to RN Breakfast. It’s 17 minutes to eight.