KIERAN GILBERT:
Treasurer, Josh Frydenberg. Thank you very much for your time. The unemployment rate down from 5.8 to 5.6 per cent. The strengthening continues. But is it inevitable that with JobKeeper removed now, next month it will be measured, that that number will rise?
JOSH FRYDENBERG:
Well this is jobs data for the month of March, so we don’t have the definitive data as to what happens in the labour market post-JobKeeper. But these are certainly very positive numbers. It’s another proof-point that our economic plan is working; employment is up, participation is up, hours worked is up and there are more Australians who are now in work than ever before. And what we saw, Kieran, is 77,700 new jobs created, more than 2,000 new jobs being created every day in the month of March. This is better than twice what the market was expecting and we’ve also seen around 80 per cent of those new jobs going to women, and around half those jobs going to younger people. So we’re certainly seeing a very resilient labour market and the speed of the labour market’s recovery after the COVID recession is 4.5 times faster than Australia’s experience after the 1990s recession,
KIERAN GILBERT:
It is very encouraging, no doubt about it. But can it remain at this level post that wage subsidy support? Because that has obviously played a big part for many industries in keeping people on the books.
JOSH FRYDENBERG:
JobKeeper has been remarkably successful as a program, at its peak, it was supporting more than 3.6 million Australian workers and around one million Australian businesses. But we tapered the rate and we also brought in a two-tiered payment. We saw millions of Australian workers graduate off JobKeeper, but it had to come to an end. And we’ve now moved to the next transition phase of our Economic Recovery Plan which is more targeted support, be it the arts sector, be it the aviation sector, be it the tourism sector. So that program had to come to an end and that was the advice of Treasury. There are characteristics in the JobKeeper program that if you left in place, it would have a perverse outcome across the economy, particularly preventing people moving more freely between jobs. Now the Labor Party, of course, they always want to spend more, couple of billion dollars extra a month if they were spending that on JobKeeper, it’s nothing to them. But for us, we realised that that emergency support program needed to come to an end and we needed to move to different types of economic measures.
KIERAN GILBERT:
And those economic measures, we’ve been reporting that there will be a post-JobKeeper economic support and will it be more of the same, essentially, in targeting industries and providing that targeted support?
JOSH FRYDENBERG:
You’ll have to tune in on Budget Night...
KIERAN GILBERT:
Give us a hint.
JOSH FRYDENBERG:
Let there be no mistake that our economic support continues, that we are very much focused on getting Australians to the end of this pandemic. And we’re not out of it yet. We’re still in the middle of a COVID-crisis. Now Australia has outperformed other major economies. We’ve successfully suppressed the virus compared to the United States, the United Kingdom, Canada and many others. But we’ve also seen a rebound in our economic settings and particularly in our labour market, which was so much better than what Treasury and the Reserve Bank were forecasting in even their most optimistic assessments last year. Indeed, Treasury said to me at the height of the pandemic, Kieran, that we could see an unemployment rate at around 15 per cent. That’s more than two million unemployed.
KIERAN GILBERT:
With that, optimism and the RBA also targeting a lower unemployment rate, you’re saying you’re not going to look at budget repair until unemployment is comfortable below 6 per cent. Respected budget watcher and economist, Chris Richardson, says he would like to see that line in the sand move to comfortably below 5 per cent unemployment before you start to do the budget repair. Are you open to that?
JOSH FRYDENBERG:
We’re not comfortably below 6 per cent. At 5.6 per cent, we’re not comfortably below 6 per cent. So we still have some way to go. I’ll make a speech about the fiscal strategy ahead of the Budget. The best way to repair the Budget is to repair the economy. There was this huge hole that was created by the pandemic. We saw many Australians lose their jobs or saw their hours reduced down to zero. What we did not want to happen is a scarring of the labour market like we’d seen in the 80s and 90s. And we were very much motivated, the Prime Minister and I, and, indeed, our whole Government, were very much motivated by this desire to prevent a scarring in the labour market. And wiith the unemployment rate coming down to 5.6 per cent, and the recovery that much faster than previous recessions, that certainly looks like what is happening.
KIERAN GILBERT:
Well, that is good news, but so much of this economic success, and the jobs’ market strengthening is based on the strong health story…
JOSH FRYDENBERG:
Sure.
KIERAN GILBERT:
The health story hasn't been as strong in the sense that the Government’s been slow on the vaccine rollout. Would you like to see that sped up to ensure that growth continues?
JOSH FRYDENBERG:
America is seeing tens of thousands of new cases every week and indeed, a thousand plus deaths. In Australia, we have avoided that fate. Now, while we want to get the vaccine rollout as quickly possible, we’ve also got to follow the health advice. And with respect to the AstraZeneca vaccine and its application to people who are under the age of fifty, there is now that cautionary note that we’ve seen adopted not just here in Australia, but around the world. So we’ve got to follow the medical advice, we do have a sovereign manufacturing capability, that’s an advantage. We have got more Pfizer vaccines coming to Australia, they've proven to be effective...
KIERAN GILBERT:
Should we look at spending on...
JOSH FRYDENBERG:
...and so let’s rollout….
KIERAN GILBERT:
...that Pfizer technology, which the experts say is more nimble, can adapt to new strains and so on.
JOSH FRYDENBERG:
Well again, we’ve always adopted a portfolio approach when it comes to the vaccines and, you know, we continue to get as much of the Pfizer vaccine as we can and that extra 20 million vaccines will be very helpful to our rollout. But we are not in the same position as other countries where the virus has run rampant. We’ve successfully suppressed it and are now seeing the economy show the positive signs of what that recovery looks like.
KIERAN GILBERT:
Warren Hogan, another respected economist, he’s been arguing that the Government needs to look post the instant asset write off at the end of June 2022, and look at an investment allowance for SMEs to try and kick start the non-mining investment, is that something that you would consider? How important is non-mining investment from SMEs in terms of the strength of our economy?
JOSH FRYDENBERG:
Extremely important, investment right across the board gives you a double benefit. It boosts productivity, for the longer term, but it also creates jobs in the process of installing or building those new investments. And whether it’s equipment or machinery, whether it’s office fitouts, we’ve seen a big jump in those type of investments with the support from the Government. And that Government support has seen immediate expensing available to businesses with a turnover of less than $5 billion on an annual basis. And we’ve seen in the most recent National Accounts, Kieran, business investment jump, and we want that to continue, because previously it hadn't been as strong as we’d hoped. These incentives are working.
KIERAN GILBERT:
Okay. And no doubt, that sector would be hoping it continues for the foreseeable future, let’s look at the housing market, it’s flying at the moment, are you relaxed about where the house prices are at?
JOSH FRYDENBERG:
This is a global phenomenon, so what we’ve seen globally is historically low interest rates and that’s fueling an increase in house prices in Australia, but obviously in Canada, in the United States and elsewhere. With the labour market also coming back, as well as Government incentives, both federal and state, in our case the HomeBuilder program, we’re seeing more first home owners come into the market, and that’s a good thing, first home buyers in terms of their numbers are up to the highest level in a dozen years. We’re also seeing owner occupier loans be the vast bulk of what the banks are providing. So we are seeing some positive implications of the activity in the housing market. But we do watch it closely. I recently spoke to the head of APRA, the prudential regulator, Wayne Byres, as well as the Governor of the Reserve Bank, Phil Lowe to take their temperature on what they were seeing...
KIERAN GILBERT:
Have they got measures they can undertake because rates are so low?
JOSH FRYDENBERG:
They do...
KIERAN GILBERT:
...What can they do?
JOSH FRYDENBERG:
Well, in previous times they’ve put some hurdles there on the banks and put some restraints as to the types of loans they’re providing as a percentage of their overall loan book. They’ve shown that they can do that in the past, no doubt that they will consider what is necessary in the future. But right now, they’re watching it closely but with household assets far greater than household debt, it’s not a bad thing that more first home owners are coming into the market.
KIERAN GILBERT:
You’ve got a big Budget day today, all the best, thanks for your time.
JOSH FRYDENBERG:
All the best.