LEIGH SALES:
Treasurer, welcome. We have no idea when or how this pandemic is going to end. How is it even possible to formulate a recovery plan in the Budget or discuss a possible way out of this recession?
JOSH FRYDENBERG:
Well, Leigh, you're absolutely right. It's very difficult in this environment to act with any certainty about some of the economic numbers. I mean, if you go back to March, the Federal Treasury was expecting the June quarter to fall by around 20 per cent. Back in May they said it would fall by around 10 per cent. Today we saw the June quarter GDP numbers fall by their largest amount on record, namely 7 per cent.
LEIGH SALES:
So, how do you frame the Budget then?
JOSH FRYDENBERG:
It's a very difficult environment. And no less an authority than the Governor of the Reserve Bank has said how difficult it is to forecast in this period. But the key part of our policies have been to ensure that they're demand driven and they can respond to needs. So, take the JobKeeper program, at $101 billion, it can respond and it can flex where there is greatest need. So, in the case of Victoria, we're going to see more people on JobKeeper in the subsequent months than from all the other States and Territories combined. That's a reflection of the economic hardship being experienced by Victorians right now.
LEIGH SALES:
Are you going to go ahead with the planned tapering of income support from this month?
JOSH FRYDENBERG:
Well, the program was always meant to be transitioning over time. Initially JobKeeper was legislated for six months...
LEIGH SALES:
But circumstances have changed quite a bit since then.
JOSH FRYDENBERG:
And that's why we responded by expanding and extending that scheme for another six months and at $101 billion it’s the biggest economic support program that's ever been undertaken.
LEIGH SALES:
But, is it the time to start tapering?
JOSH FRYDENBERG:
Well, I think it's important to transition because outside of Victoria, the jobs are coming back. Seven out of our eight jurisdictions are actually opening up and easing restrictions. Of the 1.3 million Australians who lost their job or saw their hours reduced to zero since the start of this crisis, we're now seeing 700,000, or more than half come back, and of the 340,000 jobs that were created in the last two months, importantly 58 per cent of those have gone to women and 44 per cent have gone to young people. So there is some hope. There is a light at the end of the tunnel. We just need to get the virus under control.
LEIGH SALES:
Of the 657 COVID deaths in Australia, four have been under the age of 50. That means that the majority of the working population is being asked to take a huge and indefinite hit to their economic wellbeing, their social wellbeing, their mental health, when their own personal risk is very low. So far Australians are, by and large, on board with that policy approach. But has the Government done any modelling as to how long that compliance will last, particularly once you start to remove income support?
JOSH FRYDENBERG:
Well, our belief is that Australians will follow the medical advice. And that has been our experience to date. But every life is important. I don't think you should be comparing the life of an elder Australian to a younger one. We need to do everything we can to save both cohorts of our population. That's why we've invested record amounts in the health response. That's why we've deployed 1,700-plus personnel from the Australian Defence Force to Victoria. We've set up AUSMAT teams and other medical professionals. Because everything we are doing is designed to get this health crisis under control. Because only when you get the virus under control can you get the economic recovery.
LEIGH SALES:
Some states with negligible coronavirus cases are, as we heard in Laura Tingle’s piece, keeping their borders shut and they can do that partly because their populations aren’t feeling the full economic pain of the pandemic because of the income support payments. Should states keeping their borders closed now stump up for those payments themselves?
JOSH FRYDENBERG:
Well, States need to spend more and they're not my words, they're the words Governor of the Reserve Bank. He told National Cabinet, he told the State and Territory Treasurers they could contribute an extra $40 billion or 2 per cent of GDP over the next two years. Because so far our response has totalled $314 billion or equivalent to 15.8 per cent of GDP, whereas, the States’ response has been $48 billion or around 2.4 per cent of their Gross State Product. So, there's been a big difference what we've invested in and what they've invested in. So, I think all States, regardless of whether their borders are open or shut, should be doing more, investing in infrastructure, investing in social housing, providing payroll tax and land tax relief.
LEIGH SALES:
Since there is no vaccine yet or cure for coronavirus, doesn't the former Prime Minister, Tony Abbott, have a point that there are difficult conversations that need to be had about what is a manageable number of cases and, by inference, deaths, in the community at any one time?
JOSH FRYDENBERG:
I look forward to you getting all the hate mail for making that comment about Tony Abbott. I mean, the reality is, you know, Tony Abbott's entitled to his own views. We heard from two other former Prime Ministers this week from the other side of politics. We need to just manage the health response as best as we can. That's what we're doing.
LEIGH SALES:
But with Tony Abbott's remarks, regardless of how he framed them, at the core of it is the point that if we wanted zero deaths from coronavirus, we could lock everyone up indefinitely. If we didn't care you could let everyone out and they can do whatever and go for herd immunity. Presumably we have to land somewhere in the middle of it. Isn't that a conversation that needs to be had about what it looks like?
JOSH FRYDENBERG:
We've never been seeking to eliminate the virus. That's an important point to make. Our strategy is all about suppression. That's why the contact tracing and testing is so critical. In the last 24 hours, you've seen 17 cases in New South Wales. But you haven't seen their border closed like you've seen in Queensland or Western Australia. They've managed to deal with the virus much better than I think other jurisdictions have. You need to take into account the economic impacts of your policies and that's why I’ve been so vocal, as well as the business community, in calling for Victoria to provide a roadmap out of stage 4.
LEIGH SALES:
The public is constantly told we're all in this together but the burden is unequal, particularly when you look at the evidence of the death toll in aged care; hundreds of people. Those Australians in care are paying a higher price than any other group in society because they're weak, they don't have a voice, they're out of sight. Since 2017 alone there have been twelve reviews into the quality of aged care in Australia and few of the remations have been implemented. How can anybody in Government live with that?
JOSH FRYDENBERG:
Well, as you know, there's a royal commission under way. We've already announced an investment of more than $1.5 billion in aged care in response to this pandemic...
LEIGH SALES:
But, Treasurer, what I'm pointing to is the problems in aged care have been highlighted for a really long time and politicians on both sides seem to have sat back and not done much about it and we're paying the price now?
JOSH FRYDENBERG:
I would accept there are real challenges in that sector and that's why the Royal Commission is under way and we await its findings early next year...
LEIGH SALES:
Why has it taken that for something to happen? Twelve reviews since 2017?
JOSH FRYDENBERG:
There's been a number of changes that have been introduced over that time. When you look at the aged care sector we have been increasing our funding. We will be spending more within this year's Budget. Just this week alone, Leigh, we announced $560 million of additional funding for aged care with support for those providers and directly to the workforce to provide greater support to them because they're so critical in this pandemic. And, of course, after we receive the Royal Commission report, I think there will be a very substantial response from the Government which will be contained in the Budgets there after.
LEIGH SALES:
Thank you.
JOSH FRYDENBERG:
Good to be with you.