LISA MILLAR:
Good morning, Treasurer. Welcome to Breakfast.
JOSH FRYDENBERG:
Good morning, Lisa. It is damn cold here!
LISA MILLAR:
We can see you jumping on the spot, so we'll warm you up with some questions. First of all, this HomeBuilder project, it seems like you've gotta spend a lot to get a bit?
JOSH FRYDENBERG:
Well, there is a real hole in the housing sector as a result of the coronavirus. It's a critically important sector to the economy overall. It contributes more than $100 billion to GDP. It is also employing hundreds of thousands of people, including sparkies and plumbers and carpenters, people that we want to put back to work, to get them off the income supports that they have been getting through the crisis. And this initiative we're announcing today, it's temporary, it's targeted, people have to meet the income test, they have to earn less than $125,000 a year if they're a single, or $200,000 if they're a couple. And that they are going to engage in a new build of up to $750,000, or a renovation of more than $150,000. And we'll work through the existing state systems, and it will complement existing state programs that are already supporting first home buyers.
LISA MILLAR:
So, it's going to cost, what, about $690 million. Could it go over, as we've seen with so many of these projects?
JOSH FRYDENBERG:
It is a demand-driven program, but we're expecting between 25,000 and 30,000 new builds, or significant renovations. And it's temporary, it's going to run until the end of the year from the day of announcement, namely right now, and that's going to be important to fill that void we see in the economy as a result of the pandemic.
LISA MILLAR:
Treasurer, after almost 30 years, is the "R" word a bit hard for you to say?
JOSH FRYDENBERG:
It's always hard to say, but we did see a contraction in the March quarter of 0.3 per cent. This was a function of the economic consequences of the health restrictions that we had to put in place. Lisa, in this month, in the month of March but also in the March quarter more broadly, we did see the restrictions come into place, we did see the travel ban start from the 1st February with China. We saw a significant impact on consumption, a big fall in people using cafes and restaurants and travelling on transport and booking hotels. That was reflected in the biggest drop in consumption in 34 years…
LISA MILLAR:
And it’s going to get worse…
JOSH FRYDENBERG:
And on top of that we had the fires as well. It is going to get worse.
LISA MILLAR:
And it’s going to get worse. I mean, we are in recession even though you are studiously avoiding saying that word yourself?
JOSH FRYDENBERG:
Well, I did say that yesterday, because the advice to me is that the June quarter will be significantly worse than the 0.3 per cent contraction we saw in the March quarter. But if you compare that to other countries, the United States fell by 1.3 per cent in the March quarter, France by 5.3 per cent, China by 9.8 per cent. So, not only have we avoided the fate of other nations on the health front, but we're also making much more progress on the economic front. And with the easing of restrictions, it's Treasury's belief that we'll see 850,000 people come back to work, and more than $9 billion a month added to the economy.
LISA MILLAR:
Everyone is still worried, though, about this cliff in September when JobKeeper, JobSeeker, they all change. I mean, you have said that you're open to perhaps extending it, but how do you assure people that we're not going to run off this cliff?
JOSH FRYDENBERG:
Well, we're undertaking a review in the month of June. And in the economic update that I and the Finance Minister will provide in July, it will include any changes that come out of the review into the JobKeeper program. But we do recognise that some industries, some sectors, will recover more slowly than others, and that will be a function of the restrictions that may need to stay in place because of the threat from the coronavirus. I'm talking particularly about the tourism sector and the impact of the international borders being closed. But we are responding. We're looking at the arts sector, and a package of measures building on what we've already announced there already. Today we're making an announcement about the housing sector. And we'll continue to do what is necessary to get the economy to the other side of this pandemic.
LISA MILLAR:
But, Treasurer, we knew the arts sector was going to be impacted really badly immediately. I mean, the Labor Party has said you went too slow, too narrow, and that's why we're in a worse shape now?
JOSH FRYDENBERG:
Well, the Labor Party is just seeking to be politically opportunistic on a number of fronts. We're not listening to them. What we're doing is consulting with key stakeholders. We've already announced a $27 million package for the arts sector, including support for Indigenous arts organisations, regional arts organisations, a group called Support Act received $10 million providing support to financially cash-strapped artists. And we also know that the JobKeeper program is providing really good support to a number of art organisations throughout the country, whether they're orchestras, whether they're theatre companies, ballet companies, and the like. So, our package of measures is supporting the arts sector, but we're continuing to examine our options for doing more.
LISA MILLAR:
Treasurer, we're running out of time, and I'm aware that a lot of people have fallen through the JobKeeper gap, and you've been asked about that. But the airline industry as well, help for that runs out on Monday. What are you going to do about it?
JOSH FRYDENBERG:
Well, we have put in, again, a sector-wide approach to the aviation sector. And many people are receiving the particular income support payments that we are providing. But, again, we're looking at all the sectors, how they're recovering as a function of the restrictions being eased, and we'll take what action we can.
LISA MILLAR:
Alright. Treasurer, thank you for joining us this morning.
JOSH FRYDENBERG:
Good to be with you.