JOSH FRYDENBERG:
It’s not about my achievements, it's about Australia's national interest. And certainly it’s been advanced by the passage through the Parliament, Kieran, of this mandatory media code which will see Australian journalists and Australian media companies paid for generating original content by the digital platforms. This is a world first, if this was easy, other countries would have done it long ago. It’s been very difficult, it’s been the subject of protracted negotiations in recent weeks, but also more than three years of work by the ACCC with the key stakeholders, putting together this code which is now law.
KIERAN GILBERT:
There has been immense international interest. This is really a precedent, you’ve been in contact with I know the Canadian Deputy Prime Minister and others, would you expect a similar move from like-minded nations in terms of how they respond to the tech giants?
JOSH FRYDENBERG:
Well you’re right, there is a lot of interest and other countries have already indicated that they want to move in a similar way. This was always a proxy battle here in Australia for the rest of the world. And more was at stake than just a few commercial deals with these major companies, Facebook and Google. What was at stake here was Australia’s sovereignty. Our ability to make laws that affected those companies that operated within our borders. They might operate across borders, but they also operate within our borders. And as the Prime Minister and I and Paul Fletcher and others have continuously said, the rules of the digital world need to replicate the rules of the physical world and this is very important legislation and it has certainly been in Australia's national interest.
KIERAN GILBERT:
So it’s modernising essentially our sense of sovereignty, in a way?
JOSH FRYDENBERG:
Well we’re living through the digital revolution. There has been other revolutions prior, particularly the Industrial Revolution with the steam engine, the development of electricity, the arrival of the computer. But now we are talking about big data. And we are talking about the proliferation of information technology and it is changing, Kieran, the way we shop, the way we work, and certainly the way we communicate. And so we need regulation to resolve some of the issues that have arrived as a result of this new technology. And what the ACCC found in their groundbreaking report, was that there was very much an unequal bargaining position between the digital platforms and news media businesses. News media businesses had an unavoidable partner in the media platforms, but they weren’t getting remunerated for the content that they generated. And the Australian online advertising market is worth about $9 billion a year and for every $100 that is spent on online advertising, $81 goes to Google and Facebook so this very much levels the playing field.
KIERAN GILBERT:
You had several conversations, many conversations with Mark Zuckerberg. One of the most powerful businesspeople in the world, successful, $100 billion or thereabouts net worth, was he aggressive in his style?
JOSH FRYDENBERG:
No. They were respectful conversations, they were very detailed conversations as well about the intricacies and the interpretations around the code itself. I found them very constructive discussions…
KIERAN GILBERT:
So he knew the implications, didn’t he?
JOSH FRYDENBERG:
He was well briefed. And for him, as the leader of his company, the founder of his company to pay so much attention to what is going on here in Australia, is pretty unusual. But that again speaks to the global ramifications of what this code was all about. I also had lengthy conversations, and numerous conversations, with the head of Google and Sundar was equally constructive, equally polite. At some stages, I thought that all was lost, because I took their threats very seriously. We weren’t intimidated by them, but we didn't dismiss their threats.
KIERAN GILBERT:
So if you failed in getting this deal, they would have walked?
JOSH FRYDENBERG:
I think they would have, absolutely. I think Google was very serious. When it said that it could turn off its search engine here in Australia and with respect to Facebook, we saw that immense market power that they had when, without any prior warning to the Australian Government, they pretty much blacked out Australian news media from their platform completely and…
KIERAN GILBERT:
What was your reaction when that happened?
JOSH FRYDENBERG:
Well in the process, they took charities and government websites and everything from 1800RESPECT to New South Wales Fire and Rescue, the Bureau of Meteorology...
KIERAN GILBERT:
But what was your personal reaction, were you shocked about it?
JOSH FRYDENBERG:
Absolutely. Shocked, I was pretty appalled actually by it. And I made those views and so did the Prime Minister and other ministers, made those views very clear on the day. It was unnecessary, it was heavy-handed and it was wrong. But by the same token, we got back to the negotiating table. I made pretty clear to Mark Zuckerberg that we were disappointed, not just in what they had done here in Australia, Kieran, but the way they had done it, in not giving us advanced notice. But I have to say that the discussion since then took us into the right direction and now I think Australia can be pleased with where we are and we just wait for these commercial deals to be put in place.
KIERAN GILBERT:
What was the clincher that got the deal across the line, that saw him say, okay, we will sign on?
JOSH FRYDENBERG:
Well there was lots of detailed issues but we put in place clarifications and technical amendments that gave them more comfort about the workability of the code. We put in place a new mediation step that goes after negotiation, but before the final offer arbitration kicks in. That’s for a period up to two months. I also said as Treasurer, and the person responsible for designating one of the digital platforms, to which the code would apply, that I would give them one month notice as well. And there were other changes that we put in place that we worked through together.
KIERAN GILBERT:
And good news in the end. Let's look at some other news because that was really the bright spot for the Government over the past fortnight by a long way. It has been a difficult period, the Brittany Higgins…
JOSH FRYDENBERG:
Politics is never dull.
KIERAN GILBERT:
Well it’s certainly not. We have seen these allegations, the rape allegations from Brittany Higgins. Linda Reynolds has been hospitalised, the Defence Minister, under enormous stress. If this does become too much, can you see her quitting?
JOSH FRYDENBERG:
Well Linda has done a very good job in that portfolio, as you know, she has been a senior serving military officer and she has the Prime Minister’s confidence and that is all that counts.
KIERAN GILBERT:
But it is a tough job, I mean you know…
JOSH FRYDENBERG:
A very tough job.
KIERAN GILBERT:
… the scrutiny in a position of Cabinet Minister, let alone someone who has to deal with major defence industry and then now this personal stress. There is a chance she might have to go, it becomes all too much for her?
JOSH FRYDENBERG:
That is your speculation. What is really important is that she is looking forward to getting back to work and that the Prime Minister retains the utmost confidence in her and he made that very clear during the week.
KIERAN GILBERT:
A few other matters, we have seen Qantas with its really, understandably terrible half-year result, more than a $1 billion loss, over $460 million in JobKeeper went to Qantas. What happens when JobKeeper stops, surely Qantas and the airlines have to have a commensurate level of support if they are going to stay viable?
JOSH FRYDENBERG:
Well there is no doubt that the aviation industry has been hit and hit hard and Qantas having a 75 per cent reduction in their revenue is testament to that. The domestic tourism market is going to pick up, particularly as the vaccine is rolled out. Confidence comes back, and we don't see those borders closing as frequently as we saw over the course of last year. When I last spoke to Alan Joyce, he told me, for example, in one month, in the month of January, he cancelled 1,500 flights into Queensland alone. That was 200,000 passengers that would have otherwise have gone into Queensland. That would have been hundreds of millions of dollars spent on tourism, so the fact that we will see, I think, less border closures, less frequent border closures and the vaccine rolled out will be good news for their business. Internationally, those borders are remaining closed, effectively for some time, because obviously the world is still grappling with the virus. And with respect to the Government support, we are looking at other measures that we can put in place, post JobKeeper, to support a range of industries including the aviation sector.
KIERAN GILBERT:
On the superannuation guarantee, it sounds like the Government is leaning towards pursuing the scheduled increase to 10% per cent mid year. Is that fair to say?
JOSH FRYDENBERG:
Well I’m not going to comment on what the Government may or may not do in this space. The scheduled increase is not occurring until mid this year and what we have frequently said is that we will make a statement before that increase takes effect about what will happen.
KIERAN GILBERT:
But 10 per cent, that’s the next scheduled increase.
JOSH FRYDENBERG:
Correct.
KIERAN GILBERT:
You’d be in for one hell of a fight if you don't go ahead with that.
JOSH FRYDENBERG:
Well a couple of things. The first thing is there is an obvious trade-off between wages and the superannuation guarantee. It has been stated repeatedly by the Reserve Bank Governor, by the Grattan Institute, and by many other leading economists. And we have been through a once in a century pandemic, and we have seen wages hit as a result. Our focus as a Government, with respect to superannuation, has been about getting the fees down and one of the reforms that we have before the Parliament at the moment is to prevent the creation of duplicate accounts for people who move jobs, because with duplicate accounts, they are paying unnecessary fees. We’ve also capped fees on low balance accounts, we’ve banned exit fees and made a number of other reforms which are saving hundreds of millions of dollars for Australians.
KIERAN GILBERT:
Treasurer, Josh Frydenberg, thanks, appreciate it.
JOSH FRYDENBERG:
My pleasure.