LEON BYNER:
Treasurer Frydenberg thanks for joining us today.
JOSH FRYDENBERG:
Good morning Leon.
LEON BYNER:
…and I’d like to start off talking with you about the landlord tenant issue. First of all, will you honour rent relief deals already done between landlords and tenants that acted very swiftly and in good faith?
JOSH FRYDENBERG:
Well ultimately what the framework announced by the Prime Minister does yesterday, is it provides an opportunity for landlords and tenants to come together and agree on a way forward. So obviously, the agreements reached between landlords and tenants is a matter for them, but ultimately what we’ve done yesterday is provided a very coherent and comprehensive framework going forward.
LEON BYNER:
So what was announced yesterday won’t interfere with agreements already made between landlords and tenants?
JOSH FRYDENBERG:
Well it provides an opportunity for landlords and tenants to go forward together to ensure that their interests are aligned. Because ultimately what we’ve seen particularly in the retail sector is that many businesses have closed, through no fault of their own, because of these health conditions and health restrictions that have been put in place and the economic impact that that has created. So we needed to provide this framework so that rent tenants could receive relief and that landlords would do their part.
LEON BYNER:
Alright, this is something that would be good to find out the answer to, and that is, how did you land on a business with an annual revenue of up to $50 million? And I’ll tell you why I ask that, because many regulators use the Australian Bureau of Statistics definition which is a business that employs fewer than 20. Fair Work Australia defines small business as one that has less than 15 employees, and the Australian Tax Office defines a small business entity as having less than $10 million aggregated turnover. So, where did we get the $50 million from?
JOSH FRYDENBERG:
Well the definition of a small and medium sized business with a turnover of under $50 million is a well-used one, and you’re right, there are a number of different definitions for small business, but it’s pretty accepted that for small and medium sized businesses, and I want to emphasise the medium sized businesses, that that definition is the right one. If you look at our previous announcements in previous budgets about the instant asset write-off for example, that applies to businesses such as those, so what we’ve tried to do is reach out to hundreds of thousands of Australian businesses employing millions of people, and that definition does the job.
LEON BYNER:
Alright, does small landlords, not the big funds and institutions, have any exemption here given that they’re totally reliant on this income, or a self-managed super fund, that completely rely on this income to live?
JOSH FRYDENBERG:
Well what we’re not trying to do here is have the tenant avoid their obligations. What we’re trying to do here is get the tenant through the hibernation period which is required as a result of the coronavirus. I mean, ultimately, it’s in the landlord’s interests that the tenant can open its doors on the other side of this pandemic, and by providing this type of relief, which is proportionate to the reduction in trade that the tenant has seen, provides I think a sensible way forward that aligns the interests.
LEON BYNER:
But if you’ve got a deal where let’s say a person’s turnover has dropped 90 percent and you’re saying, look you’ve got to give 90 percent rent relief, where does the owner of the building and the asset get any assistance here because they’ll just go broke?
JOSH FRYDENBERG:
Well a couple of things. They’re going to get assistance from the State Government with land tax relief and no doubt the Marshall Government will be making its announcements in due course, but all governments at the state level that are responsible for land tax relief have signalled that they’re going to be providing that. The second point I’d make is that the banks are also a party to this approach because the banks provide loans to landlords and they’ve said that they will not be requiring interest payments over the course of the next six months understanding that the landlords will also see their cash flow be reduced because the tenant’s inability to pay.
LEON BYNER:
Alright, I want to focus a little bit now on JobKeeper. Now, the legislation for this, where do we stand? Is it now law or will it shortly be?
JOSH FRYDENBERG:
Well the intention is to have it passed through the Parliament today, and I think today’s not a day for politics. Today is a day that we pass one of the most important pieces of legislation this Parliament has seen since the war. At $130 billion, and a flat payment of $1,500 a fortnight, this will save millions of Australian jobs across South Australia and across the nation. You’ve got part time workers, full time workers, casuals who’ve been connected to their employer for 12 months or more, sole traders and of course the not-for-profit sector that employs so many Australians, all benefitting. Some six million workers we believe will be able to access this scheme.
LEON BYNER:
Now just a point I want to clarify, first of all, there have been calls from some that we should give international students financial help. I suspect that’s not going to happen?
JOSH FRYDENBERG:
Well what we have said is that this program will apply to Australian citizens, we’ve also said it will apply to New Zealanders who are on a 444 visa, there are reciprocal arrangements with New Zealand. And as you know, there are permanent residents on the pathway to citizenship who can also access the welfare system. We have to draw the line, and at $130 billion, this is a very substantial call on the public’s purse, but I think it reflects the nature of the threat that we face.
LEON BYNER:
Alright, there is another issue here with regards to foreign acquisition, I deliberately don’t use the word investment. The very famous arcade, Regency Arcade in Adelaide, has been recently purchased by Chinese interests for $50 million. It was a very fast purchase because you’d recently announced that the FIRB will now examine potentially anything over $0 value, is this to make sure that our businesses and assets don’t get picked off by people who are cashed up internationally?
JOSH FRYDENBERG:
It’s a precautionary measure, and it reflects the fact that many Australian businesses are doing it tough and have seen their market capitalisations, their market values, fall significantly, which means that those traditional thresholds, for example that we have with China or the United States or other economies where we have a free trade agreement, the threshold is normally $1.2 billion under which investments, not by state owned enterprises, but investments by private sector players, do not necessarily need the approval of the Foreign Investment Review Board. We’ve got rid of that threshold because we say at this particular time, over the course of the next six months, we want to scrutinise every single transaction to make sure it’s in the national interest, because ultimately foreign investment must always be in the national interest.
LEON BYNER:
That’s the Treasurer, Josh Frydenberg.