KIERAN GILBERT:
Treasurer, thanks very much for your time. Will you support Labor in those amendments?
JOSH FRYDENBERG:
No we won’t. JobKeeper is a remarkable program, Kieran. It’s the single largest economic support measure that any Australian Government has ever undertaken. A key part of the success of JobKeeper has been these IR flexible arrangements and around 80 per cent of JobKeeper businesses have said they’ve been able to maintain their business through this crisis because of those IR flexibilities. So we want them to continue.
KIERAN GILBERT:
Yeah, but why wouldn’t you support this greater safety net because under this situation you’ve got proposed to the Parliament at the moment, you could have a recovering business, a business doing better, but the employee receiving less than, say, a business that has been flattened, and yet, the employee would still get the $600 JobKeeper subsidy.
JOSH FRYDENBERG:
So under the reforms, if you are continuing to be a JobKeeper business after the end of September, you’ll maintain those IR flexible arrangements around duties, hours worked and location. If you’re coming off JobKeeper, but your turnover is down between 10 and 30 per cent, you’ll be able to maintain those flexible arrangements but you won’t be able to reduce the hours worked below 60 per cent as they were on the 1st of March. It is critical to understand that these are still distressed businesses, so they can’t keep all their employees fully employed because their doors are not necessarily fully open. If we were to force those businesses to keep their staff working at 100 per cent of hours, then ultimately that would cost jobs.
KIERAN GILBERT:
You could have some workers, though, do you concede, there could be some workers under that arrangement who would earn less with those reduced hours than if they were on JobKeeper?
JOSH FRYDENBERG:
But you’re not comparing two of the same businesses. Ultimately those businesses that those people are working for have seen their turnover fall between 10 and 30 per cent, but they’re no longer on JobKeeper. So they’re still distressed, they’re still coming back to work. Then there are the other set of businesses that maintain Jobkeeper that are obviously more distressed and will continue to receive the full IR flexible arrangements.
KIERAN GILBERT:
So for the worker, it’s better to be with the more distressed company.
JOSH FRYDENBERG:
But it’s not about ensuring that the worker is getting exactly the same pay as they were previously. It’s about ensuring that they can maintain their job. We have worked through these reforms with the unions and with the business groups and they’re an appropriate response.
KIERAN GILBERT:
It seems to make sense though, the Labor amendment, to the effect that you would provide the minimum $600 JobKeeper to everyone. Why not, given how distressed, not just the businesses are, but the workers are too?
JOSH FRYDENBERG:
Well we are maintaining JobKeeper for those businesses that have seen their turnover fall over the December quarter by more than 30 per cent or by more than 50 per cent, depending on the size of those businesses…
KIERAN GILBERT:
But not the recovering businesses.
JOSH FRYDENBERG:
But the recovering businesses are not receiving JobKeeper because they’re recovering, but they’re still distressed.
KIERAN GILBERT:
But shouldn’t you put then, just to finish on this issue, why not put that safety net for those workers? Because ultimately if they’ve had their hours reduced, they are going to be earning less than JobKeeper reduced.
JOSH FRYDENBERG:
Ultimately, Labor’s proposal could cost jobs because if you were to force an employer to pay someone even though there was not the work for them, then ultimately that could lead to more sackings.
KIERAN GILBERT:
The Treasury numbers suggest another 400,000 workers, or thereabouts, will lose their jobs by Christmas. Is this the time to be tapering JobKeeper at all?
JOSH FRYDENBERG:
Ultimately, what we’ve done is extend JobKeeper by another 6 months. Originally, it was legislated for six months and we’re extending it. At $101 billion, it’s the single largest program that Australia has ever undertaken...
KIERAN GILBERT:
Why reduce it?
JOSH FRYDENBERG:
Because ultimately, we are seeing businesses come back. Outside of Victoria, the recovery is seen, and restrictions are being eased and businesses are coming back. Labor themselves have said that this payment should transition, recognising it’s not going to be there forever. So ultimately, they were complaining, Labor, that people were being paid too much, now they’re saying they’re not paid enough. Before they complained about the debt levels, now they’re saying we need to spend more. Before they said we should transition, now they’re saying we shouldn’t transition. They want to have a bet each way.
KIERAN GILBERT:
But aren’t we still in the teeth of the economic crisis?
JOSH FRYDENBERG:
Absolutely.
KIERAN GILBERT:
We saw the Herald Sun numbers today, up to $400 million a day, the stage 4 lockdown is costing Victoria. If we’re in the teeth of the economic crisis, why wind back the supports?
JOSH FRYDENBERG:
The reason for extending this program by another six months is because there is still a long way to go in coming out of COVID-19. What we announced recently was effectively an extra $30 billion Kieran, of spending on JobKeeper with changes around the employer turnover test as well as the employee eligibility test.
KIERAN GILBERT:
But just to clarify that issue though, because if we’re in a situation we’re it’s costing Victoria $400 million every day, we’re in the teeth of the economic crisis, the recession continues. Why not sustain the supports longer, at the levels that they’re at?
JOSH FRYDENBERG:
Well we are providing additional support, we’ve extended that support. JobKeeper is transitioning…
KIERAN GILBERT:
Tapering.
JOSH FRYDENBERG:
...over time and so too has been the coronavirus supplement. When it comes to Victoria, that is obviously a devastating economic situation and it’s our estimates that up to nearly half of the private sector workforce in Victoria will be on Jobkeeper.
KIERAN GILBERT:
National Accounts are due this week, what should be expect, how bad will these numbers be?
JOSH FRYDENBERG:
Well the first thing to say is that Australia has been hit by an economic shock like no other Kieran, and it’s a hit on both the supply and the demand side. We’ve seen for the June quarter numbers in the UK GDP down by more than 20 per cent, we saw in France down by around 14 per cent, we saw in the United States and Germany down by around 10 per cent. The median market expectations here in Australia is for GDP to be down between 6 and 7 per cent and that’s obviously based on lower household consumption, lower dwelling investment, lower business investment and overall less economic activity.
KIERAN GILBERT:
So in terms of that economic activity, what was the message from the RBA Governor when you met with the State Treasurer’s on Friday?
JOSH FRYDENBERG:
Well we talked about the various levers that we as Treasurer’s and Government’s can control as part of this recovery. First there’s the income support, and it’s fair to say there’s been a huge focus on income support, whether it’s through JobKeeper, the 50 per cent apprentice wage subsidy or other initiatives that have been undertaken. The second part of what we can control relates to aggregate demand, for example bringing forward infrastructure projects, a housing package and the like. And the third is making it easier for business to hire people and to grow and to innovate, and that’s cutting red tape for example. Now what the Governor made very clear is that the states need to spend more. We as a Commonwealth have made commitments of around $314 billion, or about 15.8 per cent of GDP. In comparison, the state contributions are around $48 billion or just 2.4 per cent of GDP. So he was reiterating what he had said previously at National Cabinet, which is that the states need to spend more.
KIERAN GILBERT:
The fundamental problem though at the moment is, undermining all of that, are the state border closures. Is JobKeeper allowing the states to keep their borders closed? I mean, is this having a perverse impact where the Federal support is allowing some of the states to keep the borders shut?
JOSH FRYDENBERG:
Well JobKeeper is absolutely necessary to maintain that formal connection between employers and employees and to get them to the other side. With respect to borders, I think there’s too much confusion and ultimately too much cruelty in the way the borders have been closed. What we need is more compassion, what we need is more common sense. It’s just inexplicable that a school teacher from Victoria which is two kilometres away from the South Australian border is deemed not to be an essential worker. It’s inexplicable that a mother can lose their child because of confusion as to how they can access a hospital in Brisbane. Reports today of a young four year old boy with a relapse of cancer who has been separated from their mother. A couple who are going through IVF treatment and are at risk of losing their eggs. There is some terrible stories of hardship, that’s why the Prime Minister has made it very clear that we will be proceeding with a definition of hotspots, of what a hotspot is…
KIERAN GILBERT:
And
so what should define a hotspot, what sort of number are we talking about? Andrew touched on it earlier in the program. To reopen the borders, what are you looking at, what sort of frame?
JOSH FRYDENBERG:
Well it’s going to be based on medical advice, it’s going to have clear metrics, it’s going to be transparent and it’s obviously going to lead to a more targeted response. And that’s being worked through by the Chief Medical Officer and ultimately through the AHPPC and it will be looking at what is the number of cases, what are the location of those cases, what is the source of that particular outbreak.
KIERAN GILBERT:
What happens if you come up with a target and Queensland and WA still don’t sign up. What then?
JOSH FRYDENBERG:
Well ultimately, those jurisdictions have questions to answer when it comes to the operation of their borders because what we can’t see is people being denied medical treatment, what we can’t see is our economic recovery being hindered by that very strict interpretation around borders by the states.
KIERAN GILBERT:
Speaking of strict interpretation, what about Daniel Andrews, the idea of a 12 month extension of the emergency, the state of emergency. You expressed concern about that, we’re seeing now the other toll, $400 million every day, what do you want to see from Daniel Andrews in terms of the way out of this thing?
JOSH FRYDENBERG:
I want to hear more about a message of hope for the people of Victoria. Daniel Andrews and the Victorian Government need to be talking more about the road out, than about a longer road in. It was real overreach when it came to the 12 month extension of emergency powers that he was seeking. There’s been a litany of failures in Victoria. Obviously quarantine is the most graphic of that and we’ve heard expert evidence to the enquiry that 99 per cent of cases in the second wave in Victoria can be traced back to those quarantine failures, the rejection of the ADF support, testing and tracing which is not as good as it is in other states and of course now, the overreach with emergency powers. And you’ve heard from no lesser body than the Australian Medical Association that what has transpired in Victoria has been like a slow car crash that everyone has been witnessing as it is occurring. It is devastating what is happening in Victoria and we’re only two weeks away Kieran, we’re only two weeks away from the end of the so-called stage 4 restrictions and businesses are in the dark as to how they’ll get their workers back and their doors open. Kids need to know when, and if, they are going back to school. In Victoria, families are subject to lockdown 23 hours a day, you can’t move more than five kilometres from your home, there’s a curfew at night. These are the strictest of restrictions taking a huge toll on people’s mental health, but also on the economy.
KIERAN GILBERT:
So did Daniel Andrews essentially have a complete tin ear when he suggested 12 months when people are already going through this sort of turmoil…
JOSH FRYDENBERG:
It was a very bad call and I think it ignored the pleas of Victorians…
KIERAN GILBERT:
But there are health concerns on the other side of this as well aren’t there, from adolescent mental health right through. Is he not getting the full picture here?
JOSH FRYDENBERG:
Well as I said, there’s been a litany of failures in Victoria, there are lots of questions that need answered. Unfortunately, Victorians are being told the enquiry will not come back with its findings until November. In the meantime, hundreds of people have lost their lives and hundreds of thousands are expected to lose their jobs.
KIERAN GILBERT:
There’s a broad consensus that the status quo on tax, on industrial relations, that it’s just not going to work in terms of the recovery. You’re working on the budget now ahead of October. There’s also some doubt whether this Government has the stomach for reform. Will you be bold, do you have the determination to be delivering bold reform, to help deliver this recovery? Because as Dominic Perrottet, I’ve quoted him before to you, he says it’s not an opportunity, it’s an obligation to undertake reform.
JOSH FRYDENBERG:
Well, the first thing to say is the Budget is about getting people back to work. We’re, as you say, we’re still in the middle of a once in hundred year crisis. We’re seeing unemployment expected to reach around 10 per cent by the end of the year, and according to the RBA and Treasury remaining elevated for some time. So we’ve got to help get people back to work while guaranteeing the essential services that people rely on while ensuring the resilience of the country, be it national security, be it supply chains, be it a sustainable environment. Now when it comes to reforms, we already have very significant reforms underway. We’re abolishing a whole tax bracket. We’re going to see 94 per cent of Australian taxpayers pay a marginal rate of no more than 30 cents in the dollar. We have seen just the other day, reach agreement with the states around harmonising occupational licencing, something that we’ve been talking about for more than a decade which will be key to labour mobility as part of the recovery.
KIERAN GILBERT:
You need to go bigger than that though, don’t you?
JOSH FRYDENBERG:
The Budget will continue to have more reforms in it. But obviously what we are focusing on is getting people back to work. That’s our key focus.
KIERAN GILBERT:
So people shouldn’t doubt you in terms of your determination, to pursue the sort of reform, once in a generation reform really, that the country needs.
JOSH FRYDENBERG:
Well those reforms are occurring all the time, right now. Whether it’s on tax, whether it’s on superannuation, whether it’s on skills, whether it’s on infrastructure. We are undertaking significant reforms right now.
KIERAN GILBERT:
But Treasury Secretary’s, past and others, many others, are saying that you need to change the whole structure of the tax system for example. You’re not talking anything like that.
JOSH FRYDENBERG:
Well again, tax is a focus for us, but when it comes to the tax system, what we are doing right now is implementing the most significant reforms in more than 20 years.
KIERAN GILBERT:
On China, you have blocked the sale of Lion Dairy to the Chinese company Mengniu Dairy. They already own Bellamy’s, Burra Foods in Victoria. Why did you block that sale? Because apparently Lion Dairy is already owned by a foreign company, a Japanese company.
JOSH FRYDENBERG:
Well to be clear, they have withdrawn their offer after I made it initially clear to them that I didn’t consider it to be in the national interest and I had some concerns about it. Now when it comes to the national interest, we don’t talk about the details and specifics of individual cases. But there are lots of factors that a Treasurer takes into account in determining the national interest. That can be the tax implications, competition implications, national security implications, the character of the investor, and of course the impact on both the economy and the community. But the business in question, had a very significant market presence. You would know many of it’s labels, whether it’s Pura, Big M, Yoplait, Berry Juices, Daily Juice and the like.
KIERAN GILBERT:
But do you need to provide more clarity in order to not have a cooling effect on foreign investment?
JOSH FRYDENBERG:
Well there are some foreign investment deals that I approve and others that I don’t…
KIERAN GILBERT:
So, it’s not just because it was from China?
JOSH FRYDENBERG:
They are dealt on individual cases, they are based on the facts before me. I have approved many investments from China, so it’s not country specific. It’s about the individual facts around a particular case.
KIERAN GILBERT:
On the Belt & Road agreement between the states and China, that announcement by the Prime Minister and the Foreign Minister this week, does that risk further antagonising China at a time when obviously there is a lot of tension between the two nations?
JOSH FRYDENBERG:
Well Kieran we’ve made very clear from the start, with respect to Belt & Road, that we haven’t supported it as a Federal Government. Now the expertise sits within the Department of Foreign Affairs in Canberra. It doesn’t sit in Spring Street or other capital cities, and so it’s only appropriate that we continue to make decisions around foreign relations. And I saw that a distinguished figure, none other than Dennis Richardson, the former head of the Department of Foreign Affairs, saying that it was a sensible approach, and we would expect bipartisan support on this.
KIERAN GILBERT:
Last issue I want to ask you before you go, is the Government committed to the increase in the superannuation guarantee next year? Will you deliver that, as legislated?
JOSH FRYDENBERG:
Well we are considering the issue, bearing in mind that we are in the middle of a crisis, and we have heard from a range of figures including the Governor of the Reserve Bank recently, when he said that ultimately, an increase in the superannuation guarantee will mean lower wages. Lower wages means lower income, lower income means less spending, less spending means less jobs. And so ultimately what we have to consider is the timing of that particular issue…
KIERAN GILBERT:
Sounds like you will delay it further?
JOSH FRYDENBERG:
Well we are considering it, and you’ve heard, whether it’s from ACOSS, whether it’s from the Grattan Institute, whether it’s from the RBA, whether it’s from the Small Business Association, you’ve heard their concerns about the superannuation guarantee issue. But let me say, superannuation is a good thing, and it is a massive asset for the nation. But what the superannuation guarantee is expected to do is increase next year, and that is not a decision that is to be made right away.
KIERAN GILBERT:
The early access though, hasn’t it wiped out many people’s super?
JOSH FRYDENBERG:
Early access has been a wonderful success. 2.8 million Australians have reached into their super at a time of hardship. It’s an expansion of an existing scheme, and there are many great stories about how it’s helped people get through COVID-19.
KIERAN GILBERT:
Treasurer, as always, I appreciate your time. A busy time for you, it doesn’t stop. Thank you.
JOSH FRYDENBERG:
Thanks.