LAURA JAYES:
Let’s go live now to Canberra. The Treasurer Josh Frydenberg joins us. Treasurer thanks so much for your time.
JOSH FRYDENBERG:
Morning Laura.
LAURA JAYES:
History now sees you as the Treasurer who designed the biggest wage subsidy plan we’ve ever seen. How do you feel about spending $130 billion in one hit?
JOSH FRYDENBERG:
Well we make no apologies for spending what is required. This is a global pandemic. The economic impact has been severe following the health restrictions that we have put in place. And I believe that the legislation that passed the Parliament last night will actually save millions of jobs Laura. It will give hope to millions of Australian families. It was a historic day, but the Australian Parliament delivered for the Australian people.
LAURA JAYES:
You’ve always said it will be temporary, targeted and scalable. Do you think you will need to scale this up even further in the months ahead?
JOSH FRYDENBERG:
Look I think this $130 billion commitment for the next six months with a flat $1,500 payment a fortnight which will support casuals, sole traders, the not-for-profit sector, part-time and full-time workers will be very very important in ensuring that the employees can stay in a job and that employers and businesses can continue to operate. So while I’ll never say our policies are set and forget because they're not, and we will continue to reassess the situation, I think last night’s legislation and the JobKeeper package will be very significant indeed.
LAURA JAYES:
When’s the next milestone? If we haven’t returned to some kind of relative normalcy by Christmas, will you need to look then at scaling this up or before that time?
JOSH FRYDENBERG:
Look I think right now, we’ve got a number of months to go between now and Christmas. But what is clear is that the social distancing laws, the quarantining, the isolation rules that we’ve been putting in place have been having a desired effect, namely that we are starting to see a flattening of the curve. We’ve got one of the highest testing rates in the world and one of the lowest mortality rates in the world. But still the coronavirus is a global pandemic. The health impacts are very severe, the economic impacts are very severe so we will continue, Laura, to take the best possible medical advice and that will determine the future course of action.
LAURA JAYES:
So you believe that the bulk of the spending might be over then?
JOSH FRYDENBERG:
I think $130 billion is going to be hard to top but it’s also important for your viewers to understand that this was the third tranche, the third package of economic measures that we have announced. We’ve already put a significant cash flow boost to hundreds of thousands of small businesses, we’ve provided cash payments to over six million Australians including pensioners, those on carer payments, family tax benefits, those on a Commonwealth Senior’s health card, we’ve injected more than $100 billion into the financial system to help maintain the flow of credit and there’s a whole range of other actions that we have taken to support the economy at this time. But $130 billion will be hard to beat.
LAURA JAYES:
The speed of this was necessary, you’ve always said that, getting the money into people’s pockets as quickly as possible. You do have provision to expand it, that is in the legislation. You don’t need to return to Parliament to do that. Will you consider extending it to those on special visas who fill a critical skills shortage?
JOSH FRYDENBERG:
Well we believe the legislation got the balance right and that’s the way it will be implemented. And as you say we’ll be working with the Australian Tax Office to ensure that money flows to the Australian people as quickly as possible with the first payments starting in the first week of May. Let’s not forget around six million Australian workers are expected to benefit from this scheme. From a work force of just over double that size, that’s an enormous number of people and I think this will be a really important economic lifeline for millions of Australian workers. And it will maintain that formal connection between the employer and the employee, so that once the coronavirus is over, we can as an economy, as a society, bounce back stronger than ever.
LAURA JAYES:
Yes and it is all about bouncing back and most Australians do support this idea that you do support Australians first, not visa holders. But can I put to you one example that has cropped up in the childcare sector. This is an area that does have a critical skills shortage. Many of those jobs are filled by people on temporary visas. Is that perhaps one of the unintended consequences you could look at? Because if it’s about keeping this infrastructure in place and these childcare centres going on the other side of this thing after the hibernation period is over, you might not have those workers available.
JOSH FRYDENBERG:
Well as you know we’ve made previous announcements of cash payments of up to $100,000 to small businesses. That could include childcare small businesses, that could include small businesses in other sectors. The whole intention of those payments which were connected to the size of that wages bill for that particular business, is to provide them with additional cashflow support so that they could meet the cost of their staff, so that they could meet some of the fixed costs in their business. Now that will be up to those particular businesses, but we’re absolutely focused on supporting the small businesses and the larger businesses get through this challenge.
LAURA JAYES:
Okay so you expect those grants, those companies and small businesses, to use those grants to pay workers who have, are here on visas, for example. So can we say this morning that you’re ruling out perhaps considering and expanding JobKeeper to even those visa holders that do fill critical skills shortages?
JOSH FRYDENBERG:
We believe that we got the balance right with the legislation that passed through the Parliament last night. I want to acknowledge the constructive role played by the opposition and the passage of that legislation in just one day. But what we do know is that at $130 billion, this is a very substantial call on the public purse and affecting some six million Australian workers, it’s a very broad-based wage subsidy program. It’s different to that in the United Kingdom, New Zealand or Canada. It’s an Australian solution for an Australian challenge and I think we got it right.
LAURA JAYES:
Okay so you’ve drawn the line there. Self-funded retirees writing to this station quite frequently, they are being squeezed. They're not getting dividends from the companies they’ve invested in, particularly the banks. And they’re also not getting income from tenants because they own investment properties. Can anything be done there for self-funded retirees?
JOSH FRYDENBERG:
Well as you know many self-funded retirees are also able to access the Commonwealth Seniors health care and we’ve just provided $750 cash payments to millions of Australians, including in that cohort. We’ve also changed the draw down rates by halving them which gives self-funded retirees more control over their savings at a time of volatility in equity markets. We’ve made some changes to the deeming rates. So there have been some changes which will affect self-funded retirees. But self-funded retirees like you or I Laura, benefit from having a stronger economy, an economy that is resilient and gets through this economic crisis. And all our actions have been targeted, have been temporary, have been scalable, have been based on existing tax and welfare systems and have been designed to get this country and its workers and its businesses to the other side.
LAURA JAYES:
Is it too early Treasurer to talk about how we pay this back?
JOSH FRYDENBERG:
Well we’ll be paying it back for years to come, there’s no doubt about that. This is a significant debt burden, but it is a result of the significant times that we find ourselves in. And as you’ve heard me say before, extraordinary times call for extraordinary measures, and I didn’t foresee a situation where I’d be announcing a $130 billion wage subsidy. But I do believe it’s necessary given the severe economic impact that we have seen as a result of the coronavirus. And the Prime Minister who has shown outstanding leadership through this crisis, and working with the Finance Minister and my other parliamentary and ministerial colleagues, we believe that this JobKeeper payment will make a lasting difference to millions of Australian families.
LAURA JAYES:
And Treasurer I know that John Howard gave you the advice that ideology is completely sidelined at a time like this. Will that continue into the future and perhaps, higher taxes might be on the agenda?
JOSH FRYDENBERG:
Look I'm not going to get into that level of speculation. As you know we are a party of lower taxes and we actually legislated through the Parliament over $300 billion of tax reductions and it was through our responsible fiscal management that we were able to put the economy into a position of economic strength as it approached this economic crisis. And the fact that we were able to deliver the first balanced budget in 11 years and get the books back on track meant that Australia had more financial firepower and flexibility, Laura, to respond to this crisis compared to other countries. I mean our debt to GDP, which is the debt that we have to the size of the economy overall, going into this crisis was about a quarter of that in the United States and the United Kingdom and about one seventh of what it is in Japan. And I think it’s been that responsible economic management that the Australian people know that we will deliver. These are times and these are shocks that we did not expect, nor did anyone else around the world, but we’ve had to respond, and I think we’ve responded decisively and comprehensively.
LAURA JAYES:
Treasurer Josh Frydenberg live from Canberra, thank you.
JOSH FRYDENBERG:
Good morning, nice to be with you.