LEIGH SALES:
The Treasurer, Josh Frydenberg, is with me now from Canberra. Thanks for coming in.
JOSH FRYDENBERG:
Nice to be with you.
LEIGH SALES:
When a welfare recipient gets their income forecast wrong, they have to repay the government. When the big companies got their income forecast wrong, the government let them keep billions. Why the double standard?
JOSH FRYDENBERG:
Both the ATO and Services Australia pursue payments that are not in accordance with the law. In the case of the ATO and JobKeeper, around $200 million has been recouped. In the case of Services Australia, it's a fundamental principle of our welfare system that someone who receives welfare has to disclose their other assessable income, in this case, JobKeeper. When it comes to the broader issue of businesses turnover decline being above or below 30 per cent, the program was set up based on an anticipated decline in turnover if we didn't do that, if we went for a percentage of a person’s income, if we had gone for an actual decline in turnover, we wouldn't have got the money out the door, and it turned out that JobKeeper was a very successful program that was well targeted and it actually delivered the strong economic recovery.
LEIGH SALES:
But to go to your points you were making, why didn't you include a claw back feature in the original JobKeeper plan?
JOSH FRYDENBERG:
If businesses had to show an actual turnover decline, then we wouldn't have got the money out the door…
LEIGH SALES:
But, the same as welfare. You would have looked at it later.
JOSH FRYDENBERG:
It's a very different approach.
LEIGH SALES:
How is it a different approach? It's exactly the same thing.
JOSH FRYDENBERG:
In both cases, we pursue people who break the law. If you go back, Leigh, to March of last year when we introduced JobKeeper, we were staring into the economic abyss. Treasury said the unemployment rate could reach as high as 15 per cent. That the economy could contract by at least 20 per cent in the June quarter. This was economic Armageddon. In response, we put in place JobKeeper, it was supported by the Labor Party at the time, 3.8 million people received it, and the Governor of the Reserve Bank said it was a remarkable program. In the Treasury review, they found it was well targeted and a very important data point there, is the average decline in turnover of businesses that received JobKeeper in that first quarter was 37 per cent in April, whereas the turnover decline in businesses that didn't receive JobKeeper was just 4 per cent. That shows it was well targeted.
LEIGH SALES:
You point out the economic benefits of JobKeeper, that no‑one disputes, the jobs saved and all the rest of it. Those jobs weren't saved in companies that increased their turnover. Those companies didn't need help saving jobs. They were making money hand over fist to pay their staff.
JOSH FRYDENBERG:
I put it to you a lot of businesses were doing it tough...
LEIGH SALES:
Not the ones that got increased turnover.
JOSH FRYDENBERG:
Well, in many circumstances, the businesses that received JobKeeper desperately needed it and without it we wouldn't have seen the strong economic recovery. The unemployment rate today is at 4.6 per cent. We have seen again in the National Accounts today, the economy show its remarkable resilience. A big part of that recovery has been the success of JobKeeper.
LEIGH SALES:
But, it brings me back to the original point, why didn't you include a clawback provision in the original plan? You could have foreseen that companies would have to estimate what they thought their turnover would be, there were going to be some companies that wouldn't have a downturn. Why wasn't there a claw back provision, like there are, as you point out, for individual welfare recipients?
JOSH FRYDENBERG:
If you go back to the mindset of businesses back then, when there were thousands of people lined up at Centrelink, if they were going to have to pay back that money, they wouldn't have necessarily taken it in the first place. You would have seen jobs being lost...
LEIGH SALES:
Who doesn’t pay back money if they don’t need it? If I asked you for 20 bucks and I didn't need it, I would pay it back to you.
JOSH FRYDENBERG:
I put it to you the businesses that received JobKeeper were in the face of one of the biggest economic crises this country has ever seen. Immediately once JobKeeper was put in place, confidence boosted, both business confidence and consumer confidence. Workers knew that they would hold onto their jobs, employees kept them on, and the recovery and the turnover of the businesses you're talking about was actually helped by the fact that they kept their staff on, through JobKeeper. We had a review, undertaken by Treasury, I made it public last July, it recommended that we keep that anticipated decline for those first two quarters, as you know, the program went for 12 months, and for the second six months of that program, we had a tapered rate and it was based on an actual decline in turnover.
LEIGH SALES:
You mention national accounts that came out today. Your Budget relies on annual growth of 4.25 per cent to meet targets. So that’s at least 1 per cent a quarter. The June quarter is 0.7 per cent, so it’s tracking under that. The September quarter, which is going to take into lockdowns in your two biggest states, will obviously be bad. Come early next year, the economy is not going to be anywhere near the shape that you hoped it would be in, is it?
JOSH FRYDENBERG:
Well, I’d actually challenge that, the premise of your question. Because what we saw in the June quarter today was both nominal GDP and real GDP better than what we had forecast in the May Budget. And when you look at the labour market, we now have unemployment under 5 per cent, at 4.6 per cent, the lowest in 12 years, we weren't forecasting an unemployment rate that low until at least the end of this year, or even into next year. So the economy has shown its resilience. What was particularly pleasing is that housing investment is up off the back of programs like HomeBuilder, machinery and equipment is up by more than 20 per cent since the October Budget last year, off the back of our immediate expensing, expanded instant write‑off provisions and consumption bounced back as restrictions eased. Travel, tourism, cafes, restaurants, it shows what the economy can do Leigh, when restrictions are eased.
LEIGH SALES:
There was a significant reversal today from the Victorian Premier, who abandoned COVID zero, joining New South Wales in the transition to living with COVID. How are you going to manage a two‑tier economy? If you have Victoria and New South Wales opening up substantially at 70 to 80 per cent, while the other states, in particular, Western Australia, and Queensland, stick to their lockdown mentality?
JOSH FRYDENBERG:
That's why all states and territories, whether they're Queensland, Western Australia, or the southern states, need to stick to the plan that was agreed at National Cabinet.
LEIGH SALES:
But they're not showing signs of that. How are you going to manage that if they don’t?
JOSH FRYDENBERG:
Well again, we are hoping to get the vaccination rates up in those particular states because they're well behind where New South Wales and Victoria are. There's an economic imperative for those the states to open up as one country. We're hearing the Western Australia about labour force shortages in their booming construction and resources sector. In Queensland, the tourism businesses, Gold Coast, the Sunshine Coast, Cairns, are doing it really tough. They rely on open borders. What is really pleasing though is to hear those words from Daniel Andrews today, it's an acknowledgment that zero COVID, which you and I have discussed previously, is a fallacy, you can't eliminate the virus, and stringent lockdowns need to come to an end as soon as it's COVIDsafe to do so.
LEIGH SALES:
Treasurer thank you for your time.