LEIGH SALES:
The Treasurer, Josh Frydenberg, joins me now from Canberra. Treasurer, before we get into the big picture on the mid economic forecast, why is an area like Western Sydney suffering from a such comparatively high unemployment, and it’s always higher out there, especially for young people?
JOSH FRYDENBERG:
It could be a variety of factors, it could be access to infrastructure, it could be the various economic conditions in the particular local area. But what we saw Leigh today was that 366,000 jobs were created over the course of the last month. The highest on record. And around half of those jobs were in New South Wales which has roared back after the extended lockdown. Today's news about jobs is very positive indeed. There are 180,000 more people in work today than at the start of the pandemic. And what was also particularly pleasing about today's job numbers for the country is that around 60 per cent of those jobs that were created in the month of November went to women and about a third went to young people. We've actually had the strongest labour market recovery in the world.
LEIGH SALES:
When the Coalition was elected nearly nine years ago you promised to end "Labor's debt and deficit nightmare." In all that time you've only taken the nation further into debt. To use the PM's words today, is this what you mean by “shaking and baking’ the economy?
JOSH FRYDENBERG:
You will remember that we delivered the first balanced Budget in 11 years which actually put the Government and the economy in a position to respond as required to the pandemic. And it was because of that economic strength that we were able to put in place programs like JobKeeper which saved 700,000 jobs…
LEIGH SALES:
Yes, but please, of the last day of this program for the year, address the question which is about debt and taking the nation further back into debt without a clear plan to get out of it. Where is your Budget repair plan?
JOSH FRYDENBERG:
Leigh, let me answer that question. We've been hit with the biggest economic shock the Great Depression. The first pandemic in a century. It has required the spending that's been unprecedented. Over 16 per cent of GDP, over $300 billion, and the Federal Government has done the bulk of the heavy lifting when it comes to economic support. There was no alternative, or we could have done nothing and unemployment could…
LEIGH SALES:
I'm not arguing about that.
JOSH FRYDENBERG:
Yes, but know…
LEIGH SALES:
What I'm asking...
JOSH FRYDENBERG:
But that is why…
LEIGH SALES:
I’m asking…
JOSH FRYDENBERG:
But that is why Leigh, there is extra spending. Now you asked about the Budget repair job. Can I say to you we've seen an $80 billion improvement in the Budget from what I announced last October to what...
LEIGH SALES:
But there's no long‑term plan that's visible to claw back this huge debt that the nation is in and the structural deficit we've got there.
JOSH FRYDENBERG:
I completely reject that characterisation of what we've seen today. There was an $80 billion improvement in the final budget outcome for 2021. What we saw today was that net debt peaks at 37.4 per cent. Whereas it was previously at Budget peaking at 40.9 per cent. We see the deficits halving over the forward estimates. We see unemployment getting into the fours and sustainably so for only the second time in 50 years. What is going to drive a stronger budget bottom line is going to be a stronger economy where more people are in work. That is our clear fiscal strategy…
LEIGH SALES:
But do you really reckon that you can claw back all of that debt simply by what tax receipts, income tax receipts from more people in work? That will do all the job, will it?
JOSH FRYDENBERG:
I can tell you by getting more people in work, less people on welfare, you improve significantly the budget bottom line. But’s let's also not forget we're still in this pandemic as the Omicron variant has reminded us, Leigh. We have had to spend an unprecedented amount of money but that has been what has been required. Our political opponents wanted us to keep going with the JobKeeper, keep going with the COVID disaster payments ‑ but we took the difficult decision to end those payments. And it was the right decision and since then we've seen the labour market rebound strongly. We're working to a clear fiscal strategy, going for growth, growing the economy, driving unemployment down, and getting net debt as a share of the economy coming down as well.
LEIGH SALES:
But say, going for growth and you mentioned the Omicron variant, everything in MYEFO could turn to dust couldn’t it if people get spooked?
JOSH FRYDENBERG:
The forecast from Treasury in the budget update today are based on the best medical advice to us. And the Chief Medical Officer has said while Omicron is highly transmissible, early signs are that it's a milder variant than other variants. The other point is from the Chief Medical Officer, that our vaccines are an effective defence against serious illness from these variants, as well as our other treatments. That has given us cause for encouragement but we don't, there's no complacency. We do understand that Omicron is the latest variant and probably not the last one. But we did also account in this Budget Leigh, for two different scenarios. One scenario was a downside scenario where there would be a variant of concern. That could affect the economy by $20 billion in reduced GDP and see unemployment otherwise 1 per cent higher. And another scenario which had actually an upside that if the savings ratio went down faster, and more people spent more money across the economy, then that could have a $30 billion improvement to the economy over the next two years.
LEIGH SALES:
You said…
JOSH FRYDENBERG:
We did take into account various scenarios.
LEIGH SALES:
You've set aside $16 billion for spending measures that you've not yet announced. Is that all going to be pork‑barrelling going to marginal seats in the election campaign?
JOSH FRYDENBERG:
Well with the greatest respect, that's not the accurate characterisation of that $16 billion.
LEIGH SALES:
What is that $16 billion then?
JOSH FRYDENBERG:
Let me explain that to you. It’s decisions taken, but not yet announced but also measures that have been announced, where the actual financials are not made public because they are commercial in confidence. A significant amount of that relates to vaccines and particularly boosters that we've entered into contracts for and treatments. It's for aviation support where we'll work with the airlines to continue to keep regional and domestic routes in place so that there's a level of connectivity across the country. As well as new quarantine facilities that we’ve engaged to build.
LEIGH SALES:
And is that the whole $16 billion?
JOSH FRYDENBERG:
That's a significant proportion of it. There are also some decisions that have been taken but not yet announced. And that's consistent with what has occurred under both sides of politics for budgets and budget updates.
LEIGH SALES:
And will that money be going to marginal seats that the Coalition is hoping to retain or win in a federal election?
JOSH FRYDENBERG:
That money is for important projects that once we're in a position to announce we will.
LEIGH SALES:
Josh Frydenberg, thank you very much for your time. You've always been very available to the program this year and we wish you the best for 2022. Thank you.
JOSH FRYDENBERG:
Thank you, Leigh.