LISA MILLAR:
Treasurer, thank you for joining us. We realise it is a very busy day. You’re a busy man. Can I ask, first of all, just with this breaking news we’ve heard coming out of Italy that they are now locking down the entire country, telling everyone to stay home. Is Australia now going to look at extending the travel restrictions that it has put in place?
JOSH FRYDENBERG:
All the time we are assessing our travel restrictions and we continue to adjust them based on the best possible advice that we receive, particularly in this case from the Chief Medical Officer. So no doubt, the National Security Committee will look at the developments in a range of countries, including in Italy and make judgements based on the evidence that is before us. But, obviously we were one of the first countries, Lisa, to put travel restrictions in place and that has slowed the spread of the virus here within Australia compared to other countries like Italy or South Korea.
LISA MILLAR:
It has been a wild ride on the markets both in Australia and the US. How bad is it going to get?
JOSH FRYDENBERG:
We are going to continue to see volatility on markets, not just equity markets but also in debt and credit markets. I think that is reflecting the fact that there is a great deal of uncertainty here. This is a global health crisis which is having a significant economic impact both here in Australia, but also much more widely around the world. Australia is very well prepared economically for the challenges ahead. As you know, the Australian economy was strengthening in the back half of last year. And you heard from the Reserve Bank Governor saying the Australian economy’s fundamentals were very strong. So too has the Secretary of the Treasury has told Senate Estimates that the Australian economy has been strengthening and, obviously, we’ve seen monetary policy move, we’ve made some announcements around cost sharing the health expenditure related to the virus with the states and the Prime Minister has foreshadowed a larger substantial package of measures that will be out sooner than later.
LISA MILLAR:
Treasurer, on one of the things we have noted with the markets is the oil war that is going on between Saudi Arabia and Russia. It is having a bit of an impact on petrol prices here. There is someone charging $1.70 for petrol in Sydney today. That’s just outright gouging, isn’t it?
JOSH FRYDENBERG:
That is extraordinarily high. That does sound well above the market rate. It will take, according to the ACCC, maybe up to two weeks for the lower wholesale price to flow through to the bowser because you will have retailers who will be running down existing stocks that they purchased at a higher price. But obviously, the ACCC - which is our cop on the beat - continues to monitor the behaviour of oil retailers. In my conversation yesterday with the head of the ACCC, Rod Sims, he made very clear that he would be calling out activity by oil retailers who do not pass on the benefits of a lower wholesale price to consumers.
LISA MILLAR:
What is the biggest lever you can pull in this stimulus package?
JOSH FRYDENBERG:
We want the alignment between fiscal and monetary policy. As you saw the Reserve Bank did reduce the cash rate by 0.25 basis points and that was passed on in full by the big banks. Our fiscal response will be designed to support businesses remain in business and, of course, Australians to remain in jobs. We will be trying to assist with the cash flow, encourage more investment, and of course, we want people to be able to spend through this cycle because, clearly, there is disruption to the economy which is quite significant, well beyond those immediate sectors that were hurt by the travel restrictions, namely tourism and international education.
LISA MILLAR:
From the excerpts we’re seeing from the Prime Minister’s speech this morning that he is due to deliver very shortly, it sounds like we can now say that the surplus is dead and buried.
JOSH FRYDENBERG:
Obviously, the forecasts and the numbers are updated twice a year; the Mid-Year Economic and Fiscal Outlook in pre-Christmas and the Budget in eight weeks’ time. But, the key point here is the surplus is not our focus; our focus is about getting money out the door, whether it was for bushfire related damage and victims of those bushfires and, now, in terms of the virus. Our package will have an immediate impact across the economy. It will be targeted, it will be responsible and measured and it will be designed to not only ensure we get through this, but we’re stronger on the other side. That’s why our initiatives will be productivity linked as well.
LISA MILLAR:
You know what is in the kitty, you know what you’ve got to spend. When do you think you might be able to get back to a surplus if you’re going to have to rule one out for now?
JOSH FRYDENBERG:
Again, that is not our focus. Our focus is on ensuring that these measures are responsible, that Australia does live within its means, that we don’t affect the structural integrity of the Budget. We’ve done a lot of work, Lisa, over the last six and a half years to actually deliver the first balanced budget in eleven years. That’s actually been achieved and that has given us the fiscal buffers, that’s given us the flexibility to respond, to spend in the areas that need it most. The OECD have singled out Australia and Germany as two countries that have that financial flexibility. Because of our budgetary position, we’ve got that financial flexibility to respond to the Coronavirus like many other countries do not have.
LISA MILLAR:
Treasurer, really appreciate you joining us on a busy day, thank you.
JOSH FRYDENBERG:
Thanks, Lisa.