KIERAN GILBERT:
Treasurer Frydenberg thanks for your time. The first two economic support packages have gone through the Parliament. We’re seeing these massive lines at Centrelink’s around the country. Has the Government done enough and quickly enough?
JOSH FRYDENBERG:
Well last night the Parliament was decisive and united, Kieran and the package of measures that we’ve announced over the last ten days equal $189 billion worth of support for the Australian economy. That’s unprecedented. That’s around 10 per cent of GDP. There’s an enormous amount of support for households to cushion the blow, for people who may have tragically lost their job or seen their hours worked or their income fall as a result of the coronavirus, as well as very strong and significant support for small and medium sized businesses because we know the best way to keep Australians in a job is to keep businesses in business. So of course those queues outside Centrelink are very sad and it’s a very harsh reality of the challenges that we’ve faced. But I say to all those people the Government stands with you and will continue to do what is necessary to support the economy at this time.
KIERAN GILBERT:
Is there any way to get the payments out there sooner? Because obviously a lot of people are falling on hard times with the loss of jobs, the loss of income and therefore struggling to pay their mortgages or their rent.
JOSH FRYDENBERG:
Well we’ve actually waived the assets test, we’ve waived the waiting periods, so people need to go online and if they have lost their job that will be processed very quickly. At the same time, the first payment of $750 that we announced for 6.5 million Australians, people who are pensioners, people on disability support pension, people who are on carer’s allowance, on family tax benefits, people on Commonwealth senior’s health card and a range of other income supports will receive that from that 31st of March and that is very shortly. At the same time Kieran, the package of measures were very broad in scope. There’s also this new Coronavirus supplement which is an additional $550 a fortnight which will be also available to sole traders and casuals who may still be working but again has seen their income cut. We’ve changed the deeming rates because that reflects the recent interest rate cuts. We’ve halved the draw down rates to give retirees greater control over their savings. And we have allowed people the ability to access their superannuation tax-free up to $10,000 this year and up to $10,000 next year and those people will need to be able to access their own money at this time because of the difficult challenges that they’ve faced. And of course when it comes to businesses, we are giving cash payments of up to $100,000 to hundreds and thousands of businesses based on the size of their wages bill, as well as giving access to those cash payments to 30,000 not-for-profit organisations. We’ve provided a 50 per cent wage subsidy to support 117,000 apprentices and we’re partnering with the banks on a 50-50 split to guarantee around $40 billion of new lending to small and medium sized businesses which will be interest free for the first six months and there will be three loans of up to $250,000. This is all about building a bridge to recovery while cushioning the blow for this very difficult time.
KIERAN GILBERT:
It is a substantial package there’s no doubt about it. But are you confident the structure of the business support will maximise the number of businesses that can keep their doors open through this terrible period?
JOSH FRYDENBERG:
Well of course this is not a set-and-forget. We’re already looking at what will be required in a third package. So that work is currently underway. But these two packages, the first being $17.6 billion and being focused on stimulus, and the second being $66 billion being focused on enhancing the safety net and providing increased welfare support. These packages are unprecedented in their scope and they build, Kieran, on the $105 billion that have been injected into the economy between us and the RBA. And they build on the announcement by the banks that we work very closely with, to ensure that their small business customers do not pay interest or principal for the next six months. Because we know that we have to be prepared for at least six months to whether this storm.
KIERAN GILBERT:
Would you encourage people where they can to avoid tapping into their superannuation at what is basically the bottom of the market or close to it?
JOSH FRYDENBERG:
Well I think people need to use their savings as well as obviously rely on the safety net where they need to. In terms of their savings, you can already access superannuation for hardship, for example if you’re going to lose your home, you can access up to $10,000. But in that case, under the existing provisions, you would normally be taxed at around 22 per cent. We’re providing access to people’s super that is tax free. And I know that there has been a great deal of interest and support for this measure. The superannuation funds have around $300 billion of cash and we know that this measure will put around $27 billion into the economy. So this represents less than one per cent of the $3 trillion in superannuation and we went to the prudential regulator before making this announcement and they said that this should not have a negative impact on the industry overall. So we believe this measure is very considered, it’s proportionate and it will provide welcome relief for many Australian families.
KIERAN GILBERT:
As part of the third package that you said you’re already working on, would you look at a UK style wage guarantee? Is that something you’re open to given you have got now a $40 billion envelope which has passed the Parliament for additional spending in this third package when it’s necessary?
JOSH FRYDENBERG:
Well we had a look at the UK experience and the UK were very clear that they were making a new program here. We’ve sought to use our existing tax and transfer system and it’s not been Treasury’s advice to adopt the UK model. What we are focused on is enhancing the support for small businesses by linking the cash payments to their wages bill Kieran, which will encourage them and enable them to keep more people employed, but at the same time enhancing that safety net by effectively doubling what was Newstart which is now called the Jobseeker payment, by adding this $550 supplement each fortnight and that will cushion the blow for many people, particularly as we’ve waived the assets test and we’ve waived the waiting periods.
KIERAN GILBERT:
That’s the safety net, but isn’t it better to keep the connection between the employee and the employer? And why isn’t that wage guarantee the better approach?
JOSH FRYDENBERG:
Because that would be creating a whole new system. And in terms of the speed and the efficiency of the response, using the existing tax and welfare system is much more optimal. The UK model doesn’t apply for example to sole traders. We have more than a million sole traders here in Australia, but under our coronavirus supplement, you can see a sole trader being able to access that full $550 if their income falls below $1,086 a fortnight Kieran. So we are giving the sole trader access to increased amounts of support as a result of our measure which is not covered in the UK model.
KIERAN GILBERT:
You’ve held talks with your G20 counterparts in the early hours of this morning. Is there any further coordination you can share with us and basically the state of play internationally is quite dreadful right now?
JOSH FRYDENBERG:
You’re not wrong about that. We have agreed to continue to have regular calls and there will also be a leaders meeting in coming days. What was very clear from that call is from the IMF, that they’re not expecting growth in this year. They’re expecting it to be negative. They’re also saying that around eighty or more countries have already gone to the IMF for help. We are seeing cash being taken out of some of those developing economies as people are taking their money into safe havens. So there is quite a lot of volatility in global equity debt and credit markets and that is why the Reserve Bank here has injected significant liquidity in to our system.
KIERAN GILBERT:
Tonight, we’ve got the National Cabinet meeting. As I understand it, rent assistance is something that would be considered. Can you give us any sense of where that is heading in terms of how governments can cooperate in providing people with rent assistance?
JOSH FRYDENBERG:
I’m talking to my colleagues from the state treasuries about this particular matter. We had a hook up of state treasurers just a couple of days ago. This morning I have had more calls with them. The states have the ability to waive their various land taxes that may be charged on landlords. And of course, landlords need to be generous too about understanding that their tenants are going through a very difficult time when customers are not coming through the door. So, Kieran, there is going to be a bit of give and take here and I know the state governments are focused on it. We’re also talking to the banks because it is important that the banks treat those landlords who may have loan exposures very generously at this time as well.
KIERAN GILBERT:
Just finally, I know you’re busy. What is your message to the Australian people at a time when the PM talks about the bridge across this period but it is hard to see the other side right now?
JOSH FRYDENBERG:
This is a one in a hundred year event. This is a global pandemic, a global health crisis which is having a very severe economic impact. It’s going to be a long haul, but people need to respect each other and look after one another. And by working together, we will get through this. We’ve already done a lot but there is also a lot more also to do. But the Australian people need to be reassured that last night their Parliament worked effectively and quickly and decisively to provide the financial support that they need, as well as the regulatory relief that they need. We will continue as a Government to put in place the health measures and the economic measures to support the community at this very, very difficult time.
KIERAN GILBERT:
Treasurer, as always, I appreciate you making some time for us and our viewers. I know they very much appreciate that on a busy day in a busy period for you. Thanks so much.
JOSH FRYDENBERG:
Thank you, Kieran.