LEIGH SALES:
Thank you for your time, Treasurer.
JOSH FRYDENBERG:
Nice to be with you, Leigh.
LEIGH SALES:
Is it a fair reading of these numbers to say the most pain for Australian workers and families is yet to come?
JOSH FRYDENBERG:
Well, we're actually starting to see some positive signs across the Australian economy. That's obviously outside of Victoria and that has played out in the recent ABS data for the month of June, which showed 210,000 jobs were created. That was double what the market was expecting. 60 per cent of those jobs were women, and 50 per cent were young people. But we're under no illusions, Leigh. If you look at the situation in Victoria, that makes up a quarter of the national economy. My fellow Victorians, more than five million of them, are in lockdown. So, what it does show is a very painful reminder that the effectiveness of our health response will determine both the speed and the trajectory of our economic recovery.
LEIGH SALES:
These forecasts come with extreme domestic and global uncertainty. Victoria, as you point out, illustrates that.
JOSH FRYDENBERG:
They do.
LEIGH SALES:
These numbers, as bad as they are, most likely represent the best case scenario, don't they?
JOSH FRYDENBERG:
Well, they do based on this situation, obviously, currently in Victoria, and that six week lockdown ending, the restrictions still being in place until the end of December in various forms, and then outside of Victoria, it's based on the easing of the restrictions as agreed by the Premiers and Chief Ministers and Prime Minister at National Cabinet back on May 8. But you're right, these are very, very uncertain times. If you wind the clock back one month, just one month to this very day, Australia had 20 new cases and today we've had more than 20 times that number just in Victoria alone. And I think that's a very stark reminder of the uncertainty that we face in modelling and forecasting the economic future.
LEIGH SALES:
Well, on those forecasts. The Government wants the economy to grow at around 3.75 per cent for the next five years. That's above trend. How is that not overly optimistic for an economy in the midst of a pandemic and one that hasn't seen major productivity reform in a couple of decades?
JOSH FRYDENBERG:
Well, we’re obviously very determined to continue to create the jobs that we had done pre-COVID, and the Prime Minister and his various Ministers and myself have outlined our priorities for reform, and just the other week…
LEIGH SALES:
But that's my question. Aren’t you being overly optimistic? We're not pre-COVID?
JOSH FRYDENBERG:
Well, we’re being very determined in what is a very uncertain environment. And so the roadmap forward, the JobMaker plan, involves a couple of billion dollars in skills; underwriting with a wage subsidy 180,000 apprentices; creating 340,000 new positions for training and reskilling; bringing forward $4 billion worth of infrastructure spending; cutting red tape so businesses spend less time filling in forms and more time growing their business; and of course tax reform continues to be a priority. And maintaining the flexible workplaces that we were able to achieve with the JobKeeper reforms.
LEIGH SALES:
On that tax reform question, is the Government planning to go ahead with the second phase of its income tax cuts due in 2022?
JOSH FRYDENBERG:
Oh look, we'll make decisions about that legislated timetable in the context of our Budget which will be handed down on October 6. But, I do point out to you...
LEIGH SALES:
So, sorry to interrupt, there will be a decision about those income tax cuts in that Budget?
JOSH FRYDENBERG:
Look, we're obviously constantly looking at our options. But when it comes to that tax timetable, it will set out very clearly to the Australian people, and that was endorsed by the Australian people. We successfully legislated it after the election and what it will see is a major reform to the tax system where 94 per cent of taxpayers will pay a marginal rate of no more than 30 cents in the dollar...
LEIGH SALES:
But, Treasurer. On that point, sorry to cut you off there.
JOSH FRYDENBERG:
You're not really sorry, but that’s okay!
LEIGH SALES:
I'm not actually. Things have changed since you took the policy to the election. Drastically. If you go ahead with income tax cuts, they favour the wealthy, just because they earn more money. The people least likely to need more help. And you’re forgoing income to the Government at a time when you need to spend more and you need to target that spending very carefully at the sectors of the economy that have been most disadvantaged, not spread the money all around like income tax cuts do?
JOSH FRYDENBERG:
Well, our progressive tax system is actually maintained with that tax reform that we've put in place. And what we have ensured and, already, stage one has been implemented. And Australians who earn between $48,000 and $90,000 are getting the full benefit of those tax cuts with $1,080 in their pockets.
LEIGH SALES:
But you’re not addressing my point that income tax cuts are a pretty blunt instrument. What you need in the wake of the pandemic is very targeted spending to specific sectors.
JOSH FRYDENBERG:
Well, we’re not talking about just one particular measure. We're talking about a whole suite, a comprehensive range of economic measures that we're putting in place. Now, when it comes to tax cuts, obviously what they do is put more money into people's pockets. That boosts aggregate demand and boosting aggregate demand at a time when consumption, which is 60 per cent of GDP has fallen quite substantially, is actually a good thing for the economy. Now, of course, the JobKeeper program, which we announced the 6-month extension to just a few days ago, together with the Cash Flow Boost which is putting money into businesses' pockets, based on the size of their payroll, together with our payment to households and particularly those on income support, including millions of pensioners. All of those things are designed to keep people in jobs and businesses in business and those policies are actually being quite effective.
LEIGH SALES:
The Victorian Premier yesterday pointed to job insecurity and the casualisation of the workforce as reasons why people can't afford to take time off work to isolate if they have corona symptoms. Do you agree that that's a driver of those low rates of self-isolation in Victoria?
JOSH FRYDENBERG:
Well, I don't think anyone has an excuse to not be following the medical advice. I mean, what we’re talking about here are life and death issues…
LEIGH SALES:
But, is the casualisation of the workforce and the fact that people don’t get paid leave, a lot of people, one of the reasons?
JOSH FRYDENBERG:
That is not what is driving people's disobedience in relation to some of the restrictions.
LEIGH SALES:
What do you think is driving it?
JOSH FRYDENBERG:
Well, I think Victorians, the ones that I've been seeing, are actually following the medical advice and I think Victorians are being...
LEIGH SALES:
Yeah, but the Premier said half the people being tested aren't even isolating after they're being tested. So, what's driving that? Frustration, or?
JOSH FRYDENBERG:
Well, I'll leave those observations to the Premier. What I would say to you is that Victorians are absolutely focused on suppressing this rise in the number of cases and getting out of lockdown as fast as possible based on the medical advice. Now, there are some people quite clearly who are not following those instructions and those people should be dealt with accordingly.
LEIGH SALES:
Treasurer, thanks for your time today.
JOSH FRYDENBERG:
Good to be with you.