LEIGH SALES:
Treasurer, let me start with a question in your capacity as a member of the National Security Committee of Cabinet, why is the current decision not to close Australia’s borders or to cancel mass events?
JOSH FRYDENBERG:
Well as you know when it comes to travel restrictions Leigh, we’ve moved ahead of the rest of the world in putting in place restrictions on travel from China, from Iran, from South Korea and also from Italy. The best possible medical advice to us is that those travel restrictions should stay in place but they shouldn’t be extended to other countries including to broader Europe. So we’ll continue to take the best possible advice. When it comes to mass gatherings again, we take the advice of the Chief Medical Officer at both the federal level but also at the state level and that advice has not been forthcoming. Of course, states can make their own decisions, but right now the advice is not to avoid those mass gatherings.
LEIGH SALES:
You’re a Victorian MP; do you think that the Grand Prix in Melbourne should go ahead this weekend given the risks?
JOSH FRYDENBERG:
Well again I come back to the medical advice and I’d say just as the Federal Government has stuck to the medical advice and implemented its recommendations, so too the Australian people should follow the best possible medical advice from our Chief Medical Officers and right now, they say, when it comes to an event like the Grand Prix, that people should go along. Until a decision is taken differently, either by the Medical Officers or by the State Government, the people should do that.
LEIGH SALES:
Given how quickly this situation is evolving, is it possible that your stimulus package you’ve announced today could be the first of a number of them for the Australian economy?
JOSH FRYDENBERG:
Well this is a very substantial package and it’s obviously in response to a pretty significant economic impact. These measures, and as you referred in the opening to your, to your package, it’s $17.6 billion, $11 billion of which is actually before June 30, so the money is overwhelming front loaded. Now, we’ll continue to maintain a watching brief, we’re getting additional information from the ADS, we’re talking to the banks about getting access to some real time data and we’ll monitor the impact of the stimulus package. But of course the Budget is in eight weeks’ time and the coronavirus is not going away, so we’ll continue to do what is necessary to support the Australian economy.
LEIGH SALES:
You’ve made, you mentioned the Budget, you’ve made these measures temporary so they’re not baked into the Budget. Bit isn’t this a time to use the Budget to also make some structural changes. For example bringing forward your planned income tax cuts across all brackets?
JOSH FRYDENBERG:
Well again, we’ve shown our mettle when it comes to reducing taxes we’ve passed through the Parliament over $300 billion…
LEIGH SALES:
… I didn’t ask what you’ve done, I asked what you might do.
JOSH FRYDENBERG:
Yes but in terms of what we announced today, there’s substantial incentives through the tax system for businesses to invest, that continues to be a priority for us. But the Prime Minister set out very clearly Leigh, what are our priorities and what are our principles when it comes to our stimulus package and that is that the actual initiatives are targeted, that they’re temporary and that they’re also proportionate. I think we did that today.
LEIGH SALES:
But that doesn’t address my question which is shouldn’t the Budget be used to make some structural changes that can help the countries’ fiscal position going forward?
JOSH FRYDENBERG:
We continue to undertake structural reform and that includes our tax legislation that passed through the Parliament but today’s announcements have pretty substantial changes…
LEIGH SALES:
You’re still not addressing, sorry Treasurer, what I’m asking.
JOSH FRYDENBERG:
In terms of what comes forward in the Budget, you’ll have to switch on in May for that outcome. But, you know, we continue to look for options and policies that will strengthen the Australian economy. But, Leigh, we’ve done the hard yards over the last six and a half years to bring the Budget back into balance which has given us now the flexibility to use this financial firepower at a time when it is needed most.
LEIGH SALES:
You’ll only be able to tell in hindsight if you’ve made the right decision about the size of today’s stimulus package and the way money is directed. Will its success be judged on whether or not Australia avoids recession?
JOSH FRYDENBERG:
We’ve taken the best advice from Treasury and what we will see is $11 billion go into the economy before June 30. That is over 2 per cent of GDP…
LEIGH SALES:
But how do you judge the success of it, Treasurer?
JOSH FRYDENBERG:
How I judge the success of it is that it supports the Australian economy. It keeps people in a job and it keeps businesses in business. That’s why our measures are designed, for example, to support the cash flow of small and medium sized businesses and to support apprentices. Now, as for what actually occurs in the June quarter and the real economic impact of the coronavirus, the Reserve Bank has said, and so has Treasury, that it’s too early to tell. The spread of the coronavirus continues to evolve, there are new challenges everyday but what Treasury have advised me is that our package of measures could contribute 1.5 per cent to GDP growth in that June quarter. That is a significant and substantial impact reflecting the weight of money that is going into the economy.
LEIGH SALES:
Last year you were claiming credit for a surplus you had not yet delivered, saying the Budget was ‘back in black’. You were warned that global events could derail that prospect which they now have. What does your premature rush to claim credit for a fantast surplus say about your political maturity and judgement?
JOSH FRYDENBERG:
We took the best possible advice and based on the forecast at the time and we have delivered a balanced budget. And as for the surplus, we’ve made it very clear and the Prime Minister made that very clear today that it would now take these major spending decisions and the surplus won’t arrive in 19-20 as a result of some of these circumstances we’ve seen.
LEIGH SALES:
But Treasurer, you claimed credit for something that you hadn’t yet delivered and I’m wondering why you did that when at the time you were warned that events could derail it and they have.
JOSH FRYDENBERG:
We made our presentation based on the forecast at the time and, clearly, when it comes the bushfires, the floods, the extended drought, now the coronavirus; the economy has been hit by a number of external economic shocks that have been beyond our control. When it comes to our response, we can control that.
LEIGH SALES:
You did know things could happen?
JOSH FRYDENBERG:
Well we maintain that those were the forecasts at the time. We were pretty conservative when it came to, for example, our commodity price assumptions, they’re even tracking below today, the prices are above today what we actually forecast back then. Bit what we could not foresee, you couldn’t foresee, the global economy could not foresee was this one in a century event, namely the spread of the Coronavirus which is putting the shutters up on the global economy.
LEIGH SALES:
Treasurer you had a very busy day today, you’ve got some busy ones ahead, thanks for making time to speak to our audience.
JOSH FRYDENBERG:
Always good to be with you.