LAURA JAYES:
Let’s go live to the Treasurer now, Josh Frydenberg joins us. Treasurer thanks so much for your time, how much is this package worth?
JOSH FRYDENBERG:
Well I think those estimates that have been floated this morning are certainly in the ball park, and we’ll be announcing that figure later today. But what is clear Laura is that this is a substantial package in response to a significant challenge. All our measures are temporary. All our measures are targeted. And all our measures are proportionate to the challenge we face. They’re designed to boost confidence across the economy, to encourage investment and to support jobs. There are three specific measures that are out there already this morning with more to be announced later today.
LAURA JAYES:
So what portion of that $18 billion will be spent by the end of this financial year?
JOSH FRYDENBERG:
The vast majority of that, and it’s obviously designed to get that support into the community as quickly as possible. For example, today we’ve announced that we’re supercharging the instant asset write off, taking it from its current level of $30,000 up to $150,000 and extending it from businesses with a turnover of up to $50 million to businesses with a turnover of up to $500 million. That means 99 per cent of Australian businesses can go out, buy a truck, buy a tractor, do a shop fit out and write it off all straight away. That is very significant. Together with the support that we’re giving to apprentices, about 117,000 apprentices will be receiving this wage subsidy through their employers, that’s good news because that will obviously support them as well as this cash payment using the existing system for businesses that employ people and that cash payment will be up to $25,000 and that will be really important for the cash flow of these businesses at this challenging time.
LAURA JAYES:
How many jobs do you expect this package to save?
JOSH FRYDENBERG:
Well we want to keep people employed, that’s our clear goal and as you know, at the end of last year, unemployment Laura was actually coming down but we can’t control the virus, we can’t control the bushfires, we can’t control the drought. But what we can control is our response. This response is very substantial, it’s very decisive, and it’s designed and targeted to support investment, jobs and boost confidence.
LAURA JAYES:
You require this to be passed by Parliament when it returns which is the week of 23 March. Does this show that you are deeply worried about the June Quarter?
JOSH FRYDENBERG:
We’re of course concerned about the June Quarter, we’re concerned about the March Quarter, because what we’ve seen across the economy is disruption to end-to-end supply chains. We’ve seen the tourism industry hit, we’ve seen the education sector hit, and obviously parts of our trade exposed businesses have been hit so this is a global pandemic, this is a global health crisis with a very significant economic impact. Now, the crisis in the health sector will not be solved by economists, it will be solved by scientists and researchers Laura, but what we can do as a Government is take the best possible advice from Treasury officials, that’s what we’ve done, we’ve worked through this in a very deliberate way and it’s designed to support investment and jobs.
LAURA JAYES:
What is the advice from Treasury officials then? Is the Treasury warning the Government you could see a drop of about one per cent in growth in the June Quarter?
JOSH FRYDENBERG:
Well again, to determine what’s going to happen in the June Quarter, they actually say it’s too early to be specific about that and we’ve seen the Deputy Governor of the Reserve Bank also say something equivalent just yesterday because things are moving very fast, this virus is obviously spreading…
LAURA JAYES:
…Well how do you whether this $18 billion is undershooting or overshooting then if Treasury are saying they just don’t know? Have they given you a ballpark figure? Is it about one per cent?JOSH FRYDENBERG: Well what Treasury have said is that this will support growth in not only the March and the June Quarters, but this will support growth beyond. This whole package is designed to encourage investment, and also to help businesses maintain their existing plans. So our focus Laura is very much on jobs, it’s very much on investment, it’s very much on backing business because they’re going to do it tough with their cash flow in particular, and we want them to keep people employed and that’s what’s been a focus of our announcements to date, as well as of course the very substantial $2 billion plus package of measures in the health space to ensure that we’re well placed and well-resourced to deal with the increasing need.
LAURA JAYES:
Treasurer, will this keep us out of recession?
JOSH FRYDENBERG:
This package is designed to support the Australian economy and give us our best shot of keeping the Australian economy growing into the future and that is based on the advice...
LAURA JAYES:
So that’ a yes, so you guarantee that this kind of money, this advice from Treasury, this is all designed to keep Australia from going into recession which would be the first time in almost 30 years?
JOSH FRYDENBERG:
Well Laura, our focus is on ensuring that the Australian economy continues to grow. What we’ve done with this package today, and of course some measures are out there and some are yet to be announced, what we have designed this package to support the Australian economy to continue to grow. What happens into the future and what happens with the spread of the virus, of course that is going to continue to evolve. But what we do know is that these measures are very targeted, they are temporary and the hard work that we have done as a Government to maintain fiscal discipline over the last six and a half years, to actually deliver the first balanced budget in 11 years, that’s helped prepare us for this very moment. We have the financial firepower, we have the fiscal flexibility to respond, and that is what we’re deploying today.
LAURA JAYES:
Treasurer you’ve just said that these measures will be temporary, the Prime Minister said last night that you will have an exit strategy. If that is the case, why are you subsidising wages over the forward estimates? That’s a cost of $6.7 billion over the forwards, so that’s four years down the track?
JOSH FRYDENBERG:
No this money is going to wage subsidies now and it is designed to obviously support the cash flow of these businesses. And we’re using the existing tax system, so these businesses, with a turnover under $50 million, Laura, they won’t have to put in a new form, they actually won’t have to do anything…
LAURA JAYES:
So what is the exit strategy though, what is the exit strategy? Will we see those details in the Budget? Do all these announcements that you’re making today have an end point, an expiry date?
JOSH FRYDENBERG:
Yes they do.
LAURA JAYES:
And what is that expiry date?
JOSH FRYDENBERG:
Well it depends on the different measures and again, you’ll see all of that today, but these measures are temporary and they’re targeted and what they’re trying to do is to ensure that the Australian economy continues to grow without undermining the structural integrity, Laura, of the Budget, without undoing all the work that we have done over the last six and a half years to get the Budget back into balance. This is an economic plan for all Australians. This is delivering support to those who need it most, this is the Government responding with the financial firepower as a result of the work that we’ve done over the last six and a half years to get the books back in balance.
LAURA JAYES:
You’ve been saying for weeks that this package will be targeted, I can’t see anything today from what’s in the newspapers and what we’ve seen already that goes towards the industries hurting the most, that is tourism and education. Is there something we’re missing here or is there more to come?
JOSH FRYDENBERG:
Well obviously when you’re talking about the cash flow of businesses and grants, and cash payments of up to $25,000 that includes businesses in those sectors that are hit most, whether it’s tourism, whether it’s education, whether that’s in trade, but also there’ll be other measures that we’ll be announcing later today. This is a comprehensive package. It’s very substantial and it’s very much designed to support the Australian economy through this challenging time because we want to, not only get through this, we want to be stronger on the other side.
LAURA JAYES:
You said you won’t make the mistakes of the past, in fact you said it on this program just last week, by splashing cash around like Labor did, in your words, during the GFC. How do you reconcile that statement with the cash payments you’re dolling out to both pensioners and Newstart recipients today?
JOSH FRYDENBERG:
Well there’s a couple of clear differences from what we saw under the previous Labor Government. This package is designed to back business. Overwhelmingly, the money is going to supporting businesses because businesses employ people. The second key feature of this…
LAURA JAYES:
…But they’re still cash payments aren’t they, it’s still a bit of cash splash.
JOSH FRYDENBERG:
Let me keep going. The second key feature of this is that it’s using the existing tax and transfer system. We’re not creating new schemes like the pink bats and the overpriced school halls, what we’re doing is using the existing tax and transfer system. And the third is that our payments are very much targeted. They’re not splashed around the economy. They’re very much targeted to those who need it most and you’ll see that all very much later today. But this is different to what we’ve seen in the past, we’re not repeating the same mistakes of the past. This is targeted, temporary and proportionate.
LAURA JAYES:
You’re never going to deliver a surplus in this term are you?
JOSH FRYDENBERG:
Well look, I know that the work that I’ve done to help deliver a balanced budget so too with Scott Morrison, Mathias Cormann and the rest of the Coalition team, that’s put us in a position to respond now. But Laura, whether it’s the extended drought, whether it’s the bushfires, whether it’s the floods, whether it’s this spread of the Coronavirus, these events have been outside of our control. But this response is within our control and as you’ll see today, it’s very substantial indeed.
LAURA JAYES:
Josh Frydenberg, thank you for your time.
JOSH FRYDENBERG:
Good to be with you.