KARL STEFANOVIC:
Thank you for your time this morning.
JOSH FRYDENBERG:
Nice to be with you Karl.
KARL STEFANOVIC:
As we just heard, business across the country, Sue's business there, I mean, what a mess. Well, some sectors like tourism and aviation and hospitality are doing it tough as a result of the borders being closed. But we are starting to see jobs gradually come back across the economy. Outside of Victoria that is particularly so as the restrictions are eased. And last week's job numbers Karl, showed that in the month of June, 210,000 jobs were created. That was double what the market expected, 60 per cent of those jobs were women, 50 per cent were young people. And it just reflected the fact that in states outside of Victoria the virus is being getting under control, and as a result jobs are coming back.
KARL STEFANOVIC:
Two million workers taken off the JobKeeper by Christmas is a hell of a punt on a recovery. Jobs that just aren't there right now.
JOSH FRYDENBERG:
Well businesses that are struggling will gradually become more viable. And the basis of the JobKeeper program is that it's demand driven. Right now it’s supporting 960,000 businesses, 3.5 million workers, that's about 30 per cent of the pre-COVID private sector workforce. But again, those businesses that meet the turnover test will be eligible for this program. We haven't capped the program, what we have set is a turnover test and that will obviously take into account what is happening with the spread of the coronavirus.
KARL STEFANOVIC:
Josh, how can you calculate on a recovery with any kind of certainty when we are smack bang in the middle of a second wave?
JOSH FRYDENBERG:
Well that is a harsh reality of what we face. There is great uncertainty. You are absolutely right Karl. I don't think we have seen uncertainty like this in a global and indeed a national economy in living memory. And forecasting is difficult at the best of times, let alone in a once in a century pandemic. But that's why the programs are demand-driven, they take into account need, the test will be reapplied, it's a gradual transition. I mean, right now Karl, we’re spending $11 billion a month on JobKeeper. That is unsustainable if we kept that program going indefinitely. So we’re tapering it down, we are taking into account the circumstances across the country. And we are ensuring that people who need the money most, get it.
KARL STEFANOVIC:
I get all that and get the need to pay it back at some point. But the point is, this only works if jobs return. If there is another outbreak, another lockdown or another state gets jammed, all bets are off, aren't they?
JOSH FRYDENBERG:
Well this is the real test for the nation, and for state and territory governments, how effectively will they deal with new cases as they arrive. We know that there will be more cases. Whether that is through people who are coming in from overseas or whether that’s through community transmission, fortunately we haven't seen widespread community transmission outside of Victoria. We can't see mistakes like we saw in Victoria in quarantine. We need to learn from those mistakes, move forward as a nation, and ensure we can handle effectively those outbreaks because if we can do that that will be best thing you can do for the Australian economy and for people's jobs.
KARL STEFANOVIC:
Okay Treasurer, a Budget update is coming on Thursday. I guess you need to prepare us for it. What are we going to see?
JOSH FRYDENBERG:
You are going to see eye watering numbers around debt and deficit. Numbers that Australians have never, ever seen before. That's the harsh reality of this pandemic. The coronavirus has required the Government to spend unprecedented amounts of money to support people in need. We have done that with a comprehensive range of measures. Whether that's $750 cash payments to pensioners, whether that’s business investments to keep them investing and creating jobs, or whether it’s the JobKeeper payments or whether it’s the JobSeeker payments. We have also taken a big hit Karl, on the revenue side because obviously businesses are not making the profits that they were, people are not in jobs in the same numbers that they were and as a result the revenue coming in to the economy is not what it was previously.
KARL STEFANOVIC:
Okay so you are saying you are preparing us for eye watering numbers, the worst since World War II, probably before that. How can you bank on any recovery then? Are you sure you haven't buried your head in a house of sand?
JOSH FRYDENBERG:
Well far from that, in fact to the contrary. We remain optimistic about what the Australian economy can do, and is doing to recover from this unprecedented economic shock. We know that the Australian economy is remarkably resilient. We know that we entered into this crisis from a position of economic strength. Our debt to GDP ratio was a quarter in Australia of what it was in the US and the UK, a seventh of what it was in Japan. That gave us the financial firepower to respond as we have. But we are not out of woods yet. There is a long way to go, every dollar that we spend is a borrowed dollar, and that's why it will take some time to pay back the debt, but the way to pay back the debt is not through higher taxes, that's never been the Coalition's plan. We have been the party of lower taxes. The way to pay back the higher debt is through growing the economy with the reforms that we have outlined, whether it is in skills, cutting red tape, to the tax system or to creating a more flexible labour market.
KARL STEFANOVIC:
Big Job. Josh, thank you for your time, appreciate it.
JOSH FRYDENBERG:
Thanks Karl.