Laura Jayes:
Josh Frydenberg the Treasurer joins us. No doubt Treasurer, counting the cost of the coronavirus, do you have a clear idea what it is at the moment?
Josh Frydenberg:
We’ve got more than 20,000 people who have been infected globally, more than 400 deaths so it’s clearly evolving in quite a dangerous way. We’ve put in place the travel restrictions to ensure the Australian people are protected, these are precautionary measures and we’re taking the best possible advice from our Chief Medical Officer. But when it comes to the economy, it will have a significant impact because China is our number one trading partner, it’s the number one source of foreign students, it’s the number one source of tourists and while the epidemic of SARS back in 2003 had an impact on our economy and provides us with a bit of a guide, we’re more integrated economically with China today than we were back then. In fact the Chinese economy is four times bigger today than it was in 2003 so that means that what happens in China has a larger effect on the global economy too. So we’ll be watching it very carefully and Treasury are undertaking some analysis.
Laura Jayes:
What analysis do you have back from Treasury, do you have a worst case scenario?
Josh Frydenberg:
No I don’t, what they have told me is it is actually too early to tell what the full impact will be but going back to SARS in 2003, we saw a nine per cent drop in tourists in the months of of 2003 but it did rebound after that. Likewise with students and likewise with trade. But again, since 2003 Laura, the number of foreign students from China to Australia have doubled, the number of tourists has increased by sevenfold, and the amount of Chinese investment in Australia has increased by twentyfold so there’s been quite a significant development and that’s been a good thing in terms of the Australia-China economic partnership since 2003.
Laura Jayes:
Some estimates put it at a cost to the economy, about $1 billion a month, is that around accurate?
Josh Frydenberg:
Look I wouldn’t speculate on that, I would leave that sort of analysis to the Treasury and obviously that’s work that is underway. At the same time the Governor of the Reserve Bank, Phil Lowe made a speech yesterday at the Press Club in which he was asked the specific question about the economic impact of the virus and he said it was too early to tell, but I do point out that speech yesterday by Phil Lowe did say that the fundamentals of the Australian economy were very strong. Australians can be optimistic about their future, that’s no surprise Laura, with unemployment now falling to 5.1 per cent whereas it was 5.7 per cent under Labor, the Budget back in balance for the first time in 11 years and the IMF estimating that the Australian economy will grow faster this year than the US, Japan, Germany and other economies. So we can be optimistic about our economic future and they’re the words of the Governor of the Reserve Bank.
Laura Jayes:
Well the RBA, you’re right, did say he sees the coronavirus as a short term problem for the economy. But I can’t help but detect you seem much more pessimistic today about the economic impacts of this virus than you were on the weekend. Does that tell us that this has the potential to get much worse very quickly?
Josh Frydenberg:
Well we don’t know how sustained and how severe the virus outbreak will be. What we do know is that the number of people who have been affected, the number of fatalities has continued to rise. But we have put in place the travel restrictions and we are obviously taking the best possible advice from the Chief Medical Officers. What we do know Laura is that we have a very close relationship economically with China, we have a large number of students, more than 200,000 from China last year, we have more than 1.4 million tourists from China and so what the outbreak of the virus in China today is obviously having an impact over there, having an impact in the global economy and we will be impacted here at home.
Laura Jayes:
The Government is also looking at now mainland quarantine centres. Do you know how many and when they might be ready?
Josh Frydenberg:
Well look we are working through all those scenarios and Peter Dutton as the responsible Minister is looking into that but obviously what we are ensuing is that those travel restrictions are in place and that there is quarantining of Australian citizens who have been in China.
Laura Jayes:
Let’s go back to the RBA now, we did hear from Philip Lowe as you say yesterday, he was quite optimistic about the fundamentals that’s exactly spot on. He said publically and privately once again that he wants the Government to spend more. He sounds like he’s getting kind of desperate Josh Frydenberg.
Josh Frydenberg:
Well we are spending more on important areas like infrastructure where we have a 10 year $100 billion rolling infrastructure program, you are hitting some capacity constraints in some states and we’ve heard that from Labor treasurers not just from the Federal Government so we are spending money in areas of need, we’re also…
Laura Jayes:
I’m pretty sure he’s well aware of your plans, I think he’s asking for something new. Are you frustrated, do you think he needs to be more specific?
Josh Frydenberg:
Well I think what we do have is a plan that’s delivered 1.5 million new jobs and unemployment, like I said, was 5.7 per cent under Labor, it’s been 5.1 per cent under us according to the last numbers. What we’ve seen over the last reported year is that 75,000 small businesses have been created, whereas in Labor’s last year 62,000 small businesses closed their doors. We’ve got real wages that have risen higher under us than they did under Labor and obviously these trade agreements that we’ve put in place has led to the first current account surplus in 40 years, we’ve got the lowest welfare dependency in 30 years, the biggest tax cuts in 20 years and the first balanced Budget in 11 years. So Laura, I put it to you, that when Labor went to the last election they were talking about $387 billion of higher taxes, could you imagine with the bushfires, with the drought, now with the virus, their plan to whack retirees and superannuants and family businesses and income earners with higher taxes, could you imagine what the impact would be right now? It would’ve been a disaster. We’ve got the economic plan that’s delivering more jobs and also we’ll continue to invest in the areas most of need.
Laura Jayes:
Are you back in black though?
Josh Frydenberg:
We’ve got a balanced Budget for the first time in 11 years. As you know, the most recent numbers were announced in MYEFO just before Christmas. They projected a surplus in 19/20, that was obviously before the full extent of the fires had played out, and that was obviously before the virus was top of mind for anyone so there are some factors out there, some events that are outside of our control. What we do know is because of our disciplined economic management we’ve now got the flexibility to respond, for example with the $2 billion National Bushfire Recovery Fund that the Labor Party or previous governments wouldn’t have had that ability to do so because they would’ve had higher deficits and higher debt and they would’ve had to introduce new taxes, whereas we’re not introducing new taxes…
Laura Jayes:
So this Budget coming up in May, Treasurer, it will be almost be back in black. Is that right?
Josh Frydenberg:
You’ll have to tune in on May…
Laura Jayes:
I’m just worried about your advertising. You’ve spent all this money on Back in Black and you might have to do some editing?
Josh Frydenberg:
Well I’m very proud of the fact that we’ve got the first balanced Budget in 11 years, that we’ve now legislated through the Parliament against the wishes of the Labor Party the biggest tax cuts in more than 20 years. But Laura we inherited a budget deficit of $48.5 billion and what we’ve done is turn that around through hard work over the last six years and that’s given us the flexibility to respond without increasing taxes.
Laura Jayes:
Okay we’ll wait to see the new advertising campaign around the May Budget. We’ll speak to you a lot between now and then. Treasurer, thanks so much…
Josh Frydenberg:
We certainly will. Thank you.