LEIGH SALES:
The Treasurer, Josh Frydenberg, is with me now from Canberra.
JOSH FRYDENBERG:
Good evening.
LEIGH SALES:
Treasurer, firstly, do you think that we've hit a floor with 7.1 per cent unemployment or should we expect an even bigger drop-off next month?
JOSH FRYDENBERG:
Well the numbers are getting to get worse before they get better. Today, as you say, unemployment hit 7.1 per cent, but the Treasury Secretary has said publicly that there's an expectation that unemployment will reach eight per cent by September. But let's not forget, Leigh, that we are in a one in a 100 year pandemic. We've seen 40,000 deaths in the UK. We've seen more than 40 million jobless claims in the United States. The OECD has said that they expect the economy globally to contract by around six per cent this calendar year. That compares to a contraction of just 0.1 per cent at the height of the GFC in 2009. So we have some tough days ahead. Today's unemployment numbers, they're not just numbers by the way, they're actually people. They're our workmates, they’re our families, they're our friends, they're our neighbours. And we know there is a tough mountain to climb but we're certainly starting to see some positive signs though.
LEIGH SALES:
As you say, they are people that we care about. Against that very pessimistic backdrop that you paint, is it a fair assumption that JobKeeper and JobSeeker at their current levels will have to continue in some form beyond September?
JOSH FRYDENBERG:
Well we always made clear that the JobKeeper program, the largest such income support program Australia has ever seen, it's now supporting some 3.3 million workers at a cost of around $70 billion, is the estimate. We said that it was going to be temporary. It's not sustainable for the structural and fiscal integrity of the Budget to keep that program going indefinitely. So…
LEIGH SALES:
But what happens if you wrap that up in September and you’ve got unemployment at eight per cent?
JOSH FRYDENBERG:
So we said that we would do a review at the midway point of this program and that is what we are doing and obviously we're looking to see where the economy is going in the context of the restrictions being eased. But when JobKeeper was put in place it was designed at a time when the economy was going into hibernation. Now that the restrictions are starting to be eased, people are getting back into work, then of course those income supports can be re-evaluated. And we know from Treasury, that according to the accelerated three staged timetable that National Cabinet agreed to in terms of lifting those restrictions, we will see some 850,000 people back in work and the economy benefit by more than $9 billion a month.
LEIGH SALES:
But on your point that you’re reviewing things and having a look, surely there are some things on which you could just take immediate action. So let me give you one example, some people are being paid more on JobKeeper than what they actually earned when they were working. Why shouldn't that be amended instantly?
JOSH FRYDENBERG:
Well there are some complications in terms of the systems with the ATO, in terms of making different payments based on different sized incomes and we recognise that we would go down a route of a flat payment and we wanted to get that money out quickly because obviously many people were losing their jobs and we wanted to maintain that formal connection between employers and employees.
LEIGH SALES:
I accept that, but now you’ve got time to tweak that, why do you have to wait until 23 July?
JOSH FRYDENBERG:
And again, those are some of the issues that we are considering. But there are some technical reasons as to why it's a single flat payment.
LEIGH SALES:
But I can only imagine if Labor were in power and they were spending tax payer dollars, giving people more money than they were actually earning when they were working, the Coalition would be screaming absolute blue murder about waste and poor design and all the rest of it.
JOSH FRYDENBERG:
Well in terms of the Labor Party, they always wanted you to spend more and they always…
LEIGH SALES:
No, please address my point, which is this, what you’re doing…
JOSH FRYDENBERG:
Well Leigh, you raised Labor right?.
LEIGH SALES:
What you're doing there is waste and bad design. Why not address it now rather than wait till July 23?
JOSH FRYDENBERG:
Well Leigh, firstly, you raised Labor, I didn't. In terms of the size of the payment, some people are getting paid less than they would normally and some people are getting paid more. But actually having this money go through the economy at a difficult time has been something the Treasury has supported in the design of this program.
LEIGH SALES:
Can I take you back to first principles. We're in a recession, there's high unemployment, high household and business debt and a lot of uncertainty. Given that, do you accept that the way out has to be initially, primarily through Government spending?
JOSH FRYDENBERG:
Well there's both the demand side and then there's also the supply side. We've committed some $260 billion of economic support through a whole range of measures and it's important to understand it's not just the JobKeeper program. There's a $30 billion cash flow boost to businesses based on the size of their payroll. There’s an extended instant asset write-off…
LEIGH SALES:
So is that a yes, that you do think that Government spending is...?
JOSH FRYDENBERG:
I’m saying it's a combination of the demand side, where Government support is helping the demand side, but it's also the supply side, where we can, through red tape reductions, for example in deregulation initiatives, we can generate more supply into the economy. The flexible industrial relations system that we are pursuing and the changes that we made to accommodate the JobKeeper program have been really important in terms of the hours worked for the staff at a time that businesses have been constrained by those health-related restrictions.
LEIGH SALES:
Treasury had a story earlier about tenants who are struggling and worried what would happen when rental protections lift, a coalition of groups have sent a letter to National Cabinet asking you to take a look at that, will you be able to deliver an extension of rental protections?
JOSH FRYDENBERG:
Well the first thing to say is the National Cabinet did put in place a new system for landlords and tenants and that was legislated…
LEIGH SALES:
Can you extend it?
JOSH FRYDENBERG:
That was legislated at the state level. Now at a Commonwealth level we're providing $4.6 billion a year to rent assistance and the states have their own programs. The states no doubt will, and National Cabinet will, assess the situation in the landlord-tenant market, as we move closer to that end date for the program and, of course, the future of that program will be a matter for the states.
LEIGH SALES:
Treasurer, thanks for your time this evening.
JOSH FRYDENBERG:
Good to be with you.