FRAN KELLY:
Well, Australia’s border battles have escalated with two states stepping up their criticism of the national plan to reopen the country from COVID lockdowns. Queensland is demanding the health modelling be reworked to include the vaccination of children, while WA accuses the Morrison government of being on a mission to infect West Australians with the virus with the insistence that restrictions start to ease once vaccination targets are reached. The deepening divisions could increase the chance of a double dip recession this year despite the better than expected GDP figures yesterday showing the economy was still growing before New South Wales and Victoria plunged back into lockdown. The Federal Treasurer, Josh Frydenberg, joins us now. Treasurer, welcome back.
JOSH FRYDENBERG:
Nice to with be you, Fran.
FRAN KELLY:
Annastacia Palaszczuk says Queensland won’t be following the road map out of COVID until “every child is vaccinated”. The WA border will stay shut with the Premier saying that if you had your way you would “introduce COVID-19 to Western Australia and cost thousands of jobs and some lives.” Are we back to square one with the national plan to reopen?
JOSH FRYDENBERG:
Well, it’s deeply disappointing that those Premiers have taken the positions that they have because the road map out of this crisis, the national plan, was agreed by them at national cabinet. It was based on the world-leading advice of the Doherty Institute, that we would see an easing of restrictions between 70 and 80 per cent vaccination rates, and if not 70 to 80 per cent vaccination rates when you ease restrictions, then I put to you, Fran, when is it? And that is really important for the economy, for small businesses, for larger businesses to be able to plan. It’s so important for families to know that there is hope, that they can be reacquainted with loved ones either over borders or within their own states, that these stringent lockdowns can come to an end. Every other country around the world is learning to live with COVID, and it seems that in Queensland and Western Australia there’s a denial of the reality that we need to do that. Yesterday –
FRAN KELLY:
Well, the reality is, though, that –
JOSH FRYDENBERG:
– Daniel Andrews agreed that we would.
FRAN KELLY:
Let’s talk about the plan – 70 to 80 per cent vaccination rates of adults, of over 16s.
JOSH FRYDENBERG:
Correct.
FRAN KELLY:
The reality is that both these states are digging in because they think that the Doherty modelling needs to include children for one thing. I mean, is the reality, if these states remain on this path, the country will still be divided until every person aged 12 and over is double dosed or at least offered the vaccine, and when will that be? How far into next year?
JOSH FRYDENBERG:
Well, firstly, the Doherty modelling did take into account the impact of the virus on children. They very clearly said that.
FRAN KELLY:
Yes, but it doesn’t count vaccination rates of children in that 80 per cent.
JOSH FRYDENBERG:
And they have not provided advice that it should. What they’ve said is that young kids 12 to 15 should get vaccinated, and Sharon Lewin, the head of the Doherty Institute, has been very clear – that in her words, will they make a big difference to the modelling opening up plan? They don’t make a big difference. That’s her words as the head of the Doherty Institute. And we’ve seen studies being conducted by paediatricians and medical researchers at the Murdoch Children’s Institute in Melbourne that’s made it very clear when they’ve looked at kids who have had COVID that the severity of the illness is nothing like that is seen – or the transmissibility of the illness is nothing like that they’ve seen in older-aged cohorts and there is not the medical advice –
FRAN KELLY:
No, but it’s not nothing, either. I mean, isn’t the reality, Treasurer, that many parents, including parents in your state where you are in Victoria, New South Wales or the ACT, are worried about letting their kids go back to school and into broader society while they’re unvaccinated, and we’re only this month going to start vaccinating kids 12 and over. There can’t be a plan for under 12 because there’s no vaccine approved yet for that age. Isn’t the Queensland Premier voicing the concerns of a lot of parents?
JOSH FRYDENBERG:
Well, Fran, let’s be very clear: neither you or I are a medical expert –
FRAN KELLY:
No.
JOSH FRYDENBERG:
– so we should be taking the advice of a medical expert. I’m a parent –
FRAN KELLY:
But should we not be listening to parents, too?
JOSH FRYDENBERG:
– hang on. I’m a parent, and I care deeply about my children –
FRAN KELLY:
Of course.
JOSH FRYDENBERG:
– and other people’s children. And I only want the best for them. But this is what Dr Sarah McNab, who is the Director of General Medicine at the Royal Children’s Hospital has said. She looked at 170 children who were infected with the virus last year and she said, “COVID is a terrible illness in adults and particularly in the elderly, but in children we’ve seen very mild illnesses and the vast majority of children with coronavirus, including Delta, are doing really well.” So we don’t have the medical advice today that backs up what Annastacia Palaszczuk has said. What we do have is a world-leading report from the Doherty Institute saying that restrictions should ease at 70 to 80 per cent. And I’d put to you, Fran, that Queensland or Western Australia may not have the number of cases we’ve seen in the southern states. But whether it’s a week or whether it’s a month, they will see Delta outbreaks in their states. And it’s important that they encourage their population to get vaccinated and to follow this pathway out of living with the virus. It’s absolutely important that we stick to the plan and we give people hope. And we should be very conscious that preventing COVID in kids is not our only health outcome that we should be focused on. It’s a critical one, but the other important one is the mental health issues that are caused by these lockdowns and restrictions and people being apart. Patrick McGorry, a noted psychiatrist and former Australian of the Year, has talked about the shadow pandemic. There are more than 340 teenagers a week in Victoria who are turning up at hospitals with mental health issues. It’s a 163 per cent increase on the numbers we saw pre-pandemic. So it’s a very, very important issue in terms of stemming the tide of these mental health challenges for our young kids to get them back into the classroom, to open up in a COVID-safe way.
FRAN KELLY:
Sure. But if WA and Queensland do abandon the national plan, are you saying they’ll be to blame if the country falls into another pandemic recession, they’ll be to blame if this shadow pandemic gets worse? Are you setting them up to take the fall? Is that what’s happening here?
JOSH FRYDENBERG:
It’s not about getting into a blame game here. What it is, is focusing on what’s best for the country, and what they have agreed to is a national plan based on the medical advice. And I can tell you, if the borders remain shut and if all states don’t follow the plan, jobs will be lost, businesses will close, the wellbeing of Australians will suffer, our debt burden will increase, and our recovery will be slowed. That’s the reality if they don’t follow the plan.
FRAN KELLY:
We’ve only got a couple more minutes with you, I know. So a couple of issues: yesterday’s GDP figures shows 0.7 per cent growth in the three months to June, which was almost double expectations. But Treasury context the economy will contract by 2 per cent in the September quarter. Some private economists believe it will be twice that – 4 per cent. How bad is it going to get?
JOSH FRYDENBERG:
Well, Treasury say at least 2 per cent, and that’s a function of the fact that our two largest states – New South Wales and Victoria – are in lockdown. And it’s another reason why we need to see an easing of the restrictions in accordance with the plan. But yesterday’s numbers with a solid result. They were better, as you say, than the market was expecting. What was particularly pleasing was that household consumption was back up off the tax cuts that we’ve been providing, that we saw very strong machinery and equipment purchases. They were up more than 20 per cent since last October’s budget, which is nearly the best result in 20 years in that category. And we also saw housing investment up with a very strong pipeline of construction activity off the back of programs like HomeBuilder. So the economic plan that we laid out in the budget is working, but obviously these lockdowns, which took place, by the way, during the June quarter, 29 nine days out of the June quarter actually saw lockdowns in one part or another of our country, it is hurting the economy, lockdowns, but our economy remains very resilient.
FRAN KELLY:
Well, you’re banking on a strong bounce back once restrictions were lifted. We’ve seen that before. But we’re unlikely to hit 80 per cent vaccination rates until November at the earliest, later in some states, probably. So the December quarter is unlikely to be that positive. A double dip recession some economists are saying is all but inevitable. And it comes back to the government not moving fast enough on the vaccine rollout, doesn’t it?
JOSH FRYDENBERG:
Well, I’d put to you that we did source vaccines from a variety –
FRAN KELLY:
Slowly. We still don’t have enough at the moment.
JOSH FRYDENBERG:
Well, there is more supply coming online, and we’ve seen that –
FRAN KELLY:
Yeah.
JOSH FRYDENBERG:
– with not just the Pfizer vaccines that the Prime Minister was able to secure from Singapore and from Poland but we’ve got the Moderna vaccines coming in. We’re obviously manufacturing AstraZeneca. There were issues early on with respect to the cohorts who could receive the AstraZeneca vaccine. I think some of that vaccine hesitancy has now dissipated.
FRAN KELLY:
Sure.
JOSH FRYDENBERG:
It’s pleasing to see the record numbers of people who are getting the jab, and those 70 and 80 per cent targets are very much in sight now, Fran.
FRAN KELLY:
Okay. Can I ask you about JobKeeper before I let you go?
JOSH FRYDENBERG:
Sure.
FRAN KELLY:
New data that the ABC has put to air reveals nearly 80,000 companies that received the wage subsidy increased their turnover in the three months to June last year and around 35,000 of those companies doubled or tripled their takings. Why are you letting them off the hook? I mean, the inequity is stark here. People overpay the Centrelink benefit have to pay it back – let’s not forget robodebt – and here in plain sight are tens of thousands of businesses making significant profits, receiving millions of dollars of JobKeeper payments and no pressure to pay it back. How is that fair?
JOSH FRYDENBERG:
Well, with the greatest respect, Fran, that is a misleading analogy.
FRAN KELLY:
Why?
JOSH FRYDENBERG:
Because the ATO chase down people who have broken the law, just as Services Australia chase down people who have broken the law. When we established JobKeeper for the first six months it was based on an anticipated decline in turnover, and we took that advice from Treasury at the time because the economy was standing on the edge of an abyss. Treasury thought that the unemployment rate would reach as high as 15 per cent – more than 2 million people unemployed – and that the economy could contract in the June quarter by more than 20 per cent. What we saw was tens of thousands – indeed, hundreds of thousands – of our fellow Australians lining up outside Centrelink, and there was a fear that what we were seeing was reminiscent of the Great Depression. We needed to respond forcefully, and we did. If we had delayed and if we had waited to provide JobKeeper based on an actual decline in turnover or as a percentage of someone’s income, we wouldn’t have got the money out the door. JobKeeper automatically and immediately saw business confidence and consumer confidence rise. It meant that employers could hold on to their workers, and it not only stemmed the tide of job losses but actually supported the recovery because we’ve now seen the unemployment rate reach a 12-year low. So I’ll defend JobKeeper –
FRAN KELLY:
Okay, but there’s no argument with that.
JOSH FRYDENBERG:
– every day and every night.
FRAN KELLY:
There’s no argument with that. There’s no argument with the design of getting it out the door quickly and what we anticipated would happen. It didn’t happen. The argument is that 35,000 companies would double or triple their takings, as it happened, as the pandemic played out, received millions and millions and billions of dollars of JobKeeper and there’s no pressure on them to pay it back. Why not? Don’t we need every dollar we can get?
JOSH FRYDENBERG:
Well, firstly, it was an anticipated decline because that’s what was required –
FRAN KELLY:
Sure.
JOSH FRYDENBERG:
– to have the desired intended effect. So that was the law at the time. And businesses abided by it, and it gave them confidence to keep on their staff. Secondly, after the first six months of the program we moved to the second stage where it we did base it on actual decline in turnover, and we did have a tiered system of payment depending on the number of hours worked. I haven’t heard the Labor Party say on your program or others that they now want to go and get that money back from small businesses. If they do, we’ll oppose it because it was a program that businesses adhered to at the time based on the law at the time – a law that the Labor Party voted for. I think there’s a lot of politics, unfortunately, being played here. JobKeeper saved the country and it saved more than 700,000 jobs, and we saw the country avoid a scarring of the labour market that has been so reminiscent of – or had occurred in the 80s and the 90s recession. We saw people stay unemployed for years and years and years after those recessions. We’re not seeing it in this recession. One of the reasons is because of the success of programs like JobKeeper.
FRAN KELLY:
Treasurer, thank you very much for joining us again.
JOSH FRYDENBERG:
Good to be with you.