FRAN KELLY:
Treasurer Josh Frydenberg, welcome back to Breakfast.
JOSH FRYDENBERG:
Good morning, nice to be with you.
FRAN KELLY:
We’re 18 months into this pandemic. Why has it taken until now to come up with a template for dealing with lockdowns, this new national approach that will apply to other states and territories, as the Prime Minister puts it?
JOSH FRYDENBERG:
Well, Fran, we are 18 months into the pandemic. There are more people employed today than before the pandemic began. Our economy is bigger today than before in the pandemic began.
FRAN KELLY:
Sure, but my question is, why haven’t you come up with this template before? There’s been lockdowns aplenty until now.
JOSH FRYDENBERG:
But underlining your question, the premise of your question is about Australia’s ecnomic response. And our economic response has been better than nearly any other country in the world. And we’ve put to task more than $300 billion from the Commonwealth Government, dwarfing what has been put to the task by the state and the territory governments. And now we have seen our economy rebound strongly. So what we’ve seen in New South Wales…
FRAN KELLY:
Sure, but when you see the states in lockdown, they’re not rebounding….
JOSH FRYDENBERG:
Sorry, I was just going to finish.
FRAN KELLY:
Okay, yes, go.
JOSH FRYDENBERG:
Sorry, I was just going to finish. What we’ve seen in New South Wales is a lockdown due to the spread of the Delta variant, and the Government has responded not with a nation-wide program like JobKeeper but with a targeted program that is designed to boost support for business, to provide them with the working capital to meet their utilities costs and their rent costs and the other costs that they still incur even though customers are not coming through the door, and also income support through a disaster payment, which we’ve elevated to $600 or $375 per week per person depending on the hours lost. And I see…
FRAN KELLY:
Now that’s my question. My question is, why haven’t, I mean, I’m not asking you why you don’t have a national thing. I’m asking you why you haven’t come up with a targeted template before? The Victorian Government asked you for it a month or so ago. The New South Wales Government asked you for it a week ago, I think it was. You’ve got it now. The Andrews Government said that, “If you’d bothered to think about this and worked with Victoria, you would have already had a practical framework in place when Sydney went into lockdown.”
JOSH FRYDENBERG:
Well, the Victorian Government, unfortunately, is being petulant, childish and playing politics here. Because the facts tell a very clear story. What we offered New South Wales for the first two weeks of the lockdown is exactly what Victoria received. Victoria when they went into their extended lockdown last year received more than $750 million a week from the Commonwealth Government and, indeed, under JobKeeper have received more on a per capita basis than any other state. We offered the Victorian Government a 50-50 split when it came to business and income support. They rejected it and they were too smart by half. But now we have put in place….
FRAN KELLY:
But is there any wonder, though, is there a perception you’re playing favourites with fellow Liberals when Melbourne workers who lost 20 hours or more just last month were given $500 a week and their counterparts in Sydney are going to be given $600 a week? Sydney businesses will receive up to $10,000 a week in cash flow support, which the Melbourne firms didn’t receive. How do you think this is going to go down with employers and workers in your home state?
JOSH FRYDENBERG:
Well, I hope your listeners would look at the facts, not the politicking that’s coming out of the Victorian Government. Because the facts are very clear. We provided Victoria with more support on a per capita basis than any other state when they went into their extended lockdown last year. That’s when JobKeeper was in place. Now New South Wales…
FRAN KELLY:
That’s when JobKeeper was still in place. Now we’re in a different sphere, right?
JOSH FRYDENBERG:
Correct. And New South Wales is going through an extended lockdown. We’re now going into its fourth week. It could go for longer. Victoria’s lockdown went for two weeks. And so the actual support is of a different nature because the lockdown is for a longer period. And now we’ve got a template that we can apply not just in New South Wales but in Victoria or in other states as it applies and as, indeed, if those other states go into extended lockdown. I note that in The Conversation this morning there’s an academic from the ANU, Steven Hamilton, who’s pointed out that this is actually more fit for purpose than the JobKeeper program and is actually the support that New South Wales needs. And the support New South Wales needs and receives is actually in the national interest because if New South Wales can get on top of this virus and this outbreak, then that will be to the benefit of the national economy, something I think that the Victorians, indeed, would accept themselves.
FRAN KELLY:
Of course. And I want to move to the package now, but just one thing clear, this template that this New South Wales package will be, will only kick in if a lockdown goes four weeks and beyond, is that true? It won’t kick in before that?
JOSH FRYDENBERG:
So it goes in different stages. In the first week we don’t provide support, and we neither did that in, and we didn’t provide support in New South Wales…
FRAN KELLY:
Okay.
JOSH FRYDENBERG:
and neither did we in Victoria. In the second week we provide that disaster payment. And then in the third week we remove the liquid assets test, and now in the fourth week and beyond we provide a 50‑50 split on the business support payments as well as we extend that individual income support for households and families from $500 to $600.
FRAN KELLY:
Okay. Let’s go to the package. Many businesses who have been forced to close are hanging on by a thread. How quickly will they receive the cash flow support if their turnover has fallen by more than 30 per cent? What dates will those cheques start to arrive?
JOSH FRYDENBERG:
So registrations will begin today, and Services New South Wales, who will be administering these payments, have told us that they aim to have those payments starting to flow from the end of the month.
FRAN KELLY:
Up to half a million businesses in New South Wales will be eligible for weekly payments of up to $10,000 under your plan. But they must keep their workers on their books to be eligible. But where’s the compliance mechanism to guarantee that no worker loses their job? How do you make sure of that?
JOSH FRYDENBERG:
So in terms of their head count that they’re required to maintain, whether it’s full-time, part-time or long-term casuals, it’s established as of the day of announcement yesterday. And there will be a term and a condition as part of receiving this payment that they keep that head count in place. Now at the end…
FRAN KELLY:
But do you just take their word for it? I mean, the Prime Minister said yesterday he expects employers to honor their commitments. Is this a trust basis?
JOSH FRYDENBERG:
So Services New South Wales and the New South Wales Government will be putting in the appropriate compliance mechanisms. When we issued JobKeeper and delivered JobKeeper we had criminal penalties that attached, including fines. And no doubt there will also be significant penalties that would apply for businesses that don’t adhere to the condition of receiving that payment, and that is what would be put in place by the New South Wales Government.
FRAN KELLY:
The cash flow, I think I’m right in saying, is based on payment up to 40 per cent of the payroll. One listener this morning has asked how they keep their staff on when their revenue has dropped by 90 per cent? How can they give that guarantee?
JOSH FRYDENBERG:
Well, firstly, there’s two different payments, and that’s really important to understand. And they work in tandem. There is the cash flow boost, which is centred around an average of 40 per cent of the size of the payroll. There’s a minimum payment of $1,500 per week and a maximum payment of $10,000 per week, and it will apply to businesses that have a turnover between $75,000 a year and $50 million a year. And that, as you say, leaves about half a million businesses eligible employing just over 3 million people in New South Wales. Then there’s also an income support payment. And that is the $600 and the $375. So they work in tandem. The cash flow boost can be used to pay some staff, but also to meet those other costs out of the fixed costs that the business has incurred, but it’s the income support payment that the workers can also now receive.
FRAN KELLY:
Okay. And the ACTU has said that the income support program is an inferior one to JobKeeper when it comes to keeping workers tethered. The disaster payments are no guarantee that jobs will be kept. Given JobKeeper was so successful in the economic snapback, and there’s pretty wide agreement about that , why haven’t you reintroduced it for Sydney? I know it’s not nationwide, but why couldn’t the same formula apply? The same principle?
JOSH FRYDENBERG:
Well, a couple of points. The first, as you say, is that JobKeeper was a nation-wide plan…
FRAN KELLY:
Yeah, but that doesn’t matter, does it?
JOSH FRYDENBERG:
But now we’re applying more targeted responses based on the experience in different states as well as, and that’s taking into account the hotspot definition, but also targeting at different sized businesses. The second point is that the economy is actually at a different stage than it was last year when we introduced JobKeeper. When we did so Treasury told me that the unemployment rate could reach as high as 15 per cent with more than 2 million people unemployed. Now the unemployment rate is down to 5.1 per cent and we’ve helped create a million new jobs. And you’ve actually got job ads that are at a 13‑year high and that have increased consecutively for 13 months. So the economy’s is at a different stage…
FRAN KELLY:
Yeah, but what’s that got to do with whether you have JobKeeper or this emergency payment if JobKeeper has built into it keeping workers tethered?
JOSH FRYDENBERG:
Well, what we’ve done here is not only provided an income support payment but we’ve also provided a cash flow boost. And so we’ve come up with a program, and, like I say, academics are out there today saying it’s a better response to what the situation in New South Wales requires, and it’s very targeted and it deals with both business support as well as income household support.
FRAN KELLY:
And can I ask you specifically how the payment works, the emergency payment? If a worker is being employed for fewer hours but, do they still get their pay packet and the $600 payment if they’re eligible? They get both payments?
JOSH FRYDENBERG:
They can receive this payment if they have lost between 8 and 20 hours a week, that’s the $375 payment. And if they’ve lost more than 20 hours per week they can receive the $600 payment. The criteria is that they’re not receiving other income support from the Government, so, for example, the JobSeeker payment, and that they’ve actually lost those hours and that’s as a result of these COVID restrictions. We are paying people who are in the designated hotspot areas; the New South Wales Government will be paying those people who are outside those designated hotspot areas within New South Wales.
FRAN KELLY:
And, Treasurer, can people get these payments now? What do they have to do to prove, what do they have to provide to Centrelink to get the payment, and will the payment come almost immediately?
JOSH FRYDENBERG:
The payments are being processed very quickly. Over 134,000 payments have already been processed for the people of New South Wales. They go on to the Services Australia website, provide the necessary information and we look to process as quickly as possible.
FRAN KELLY:
Treasurer, thank you very much for joining us.
JOSH FRYDENBERG:
My pleasure.