MICHAEL ROWLAND:
The Treasurer, Josh Frydenberg, joins us now from Parliament House in Canberra. Treasurer, good morning to you.
JOSH FRYDENBERG:
Nice to be with you, Michael.
MICHAEL ROWLAND:
Now, the Prime Minister said yesterday, stating the obvious I guess, that a lot of businesses will have to make a difficult decision in September when JobKeeper is wound back as to what staff they keep on and what staff they keep off. It's going to be rather hard for many businesses, isn't it?
JOSH FRYDENBERG:
It's going to continue to be hard for some time and indeed until we find a vaccine, I think we'll feel the economic impacts of the coronavirus. But we are starting to see the economy opening up outside of Victoria, the jobs numbers last week showed that 210,000 people found a job over the course of June: 60% of them were women, 50% were young people, and it was about double the new job numbers compared to what the market was expecting. So it is a difficult labour market but restrictions are being eased, jobs are coming back, and these tiered payments reflect the fact that people will continue to need support.
MICHAEL ROWLAND:
You say the effective jobless rate is roughly around 11%, that's taking into account people on JobKeeper. We know 2 million will be off JobKeeper according to your figures by the end of the year, how much higher do you fear the jobless rate will climb?
JOSH FRYDENBERG:
Well, you’ve got the official unemployment rate which is 7.4% and that number will climb and tomorrow we'll outline the economic and fiscal update which gives Treasury's best forecast of where that
unemployment rate will end up. At the same time the effective unemployment rate takes into account those who are on zero hours and those who have left the workforce altogether. That number is, as you say – 11. 3%. That number, I think, will steadily come down over time. So, what we're trying to do is get more people into a job, albeit a very difficult time to do so.
MICHAEL ROWLAND:
Is there scope and we know this pandemic is going to be with us sadly for some time and the impact on the economy will linger as you say, is there scope to extend JobKeeper after March next year?
JOSH FRYDENBERG:
Well, let's focus on the fact that the $1,500 flat payment will stay in place until the end of September. What we have announced is those tiered payments in a transition phase over the course of the 6 months after that, to the end of March. I don't have a crystal ball, Michael. I can't tell you where the jobs market will be at that time. What I do know is that the recovery will be gradual but we are seeing positive signs. The economic response and the economic recovery will very much depend on how effective states and territories and our health officials are in dealing with new outbreaks of cases. In Victoria there were some mistakes made obviously around quarantine, we need to learn from those mistakes and ensure they're not replicated around the country. What we need to do is to quarantine effectively, test and trace effectively, and ensure that those outbreaks do not spread beyond those initial numbers.
MICHAEL ROWLAND:
I'm after really, I guess, an in-principle answer to the question: would you be prepared, would the government be prepared to extend the program after March if the situation doesn't improve?
JOSH FRYDENBERG:
Well, they’re decisions I’m not taking now and they’re decisions I don’t need to take now.
MICHAEL ROWLAND:
Even though the RBA governor says it’s entirely manageable, that the extra debt the government is going into, to help the economy out?
JOSH FRYDENBERG:
Well, the RBA actually positively welcomed the government's announcement yesterday and the governor said that the jobs market and the labour market had turned the corner. Again, that's a reflection of the restrictions being eased gradually outside of Victoria. So, let's wait and see how the labour market dynamic develops. What we do know is between February and May 2 million Australians either lost their jobs, or had their hours reduced. There have been improvements since then, but we are not out of the woods yet.
MICHAEL ROWLAND:
Let's turn to JobSeeker and I want to play you part of an interview we did with Mandy Weber, she lives in Bacchus Marsh in Victoria. She says the extra coronavirus supplement has enabled her family to eat three meals a day. This is what she told us about the impact on her family when that supplement is wound back.
MANDY WEBER:
If you drop it, I then have to make the tough decisions on what to pay each fortnight. Whether I pay the full amount for the power, and the gas and the water, or whether I buy medication for my children. Whether my daughter gets her dental work, whether she gets a new laptop, all the things that she needs to further her career, so she is not stuck on JobSeeker payments.
MICHAEL ROWLAND:
Choices no family wants to make, what do you say to Mandy and why not consider leaving JobSeeker where it is at the moment?
JOSH FRYDENBERG:
Well I say to Mandy, we really understand how difficult it is for many families during this coronavirus pandemic. Through no fault of their own, they have either lost their job, or they’ve continued to be on hard times. The doubling of the safety net with the $550 payment will be in place until the end of September. As you know, it will go down to $250 to the end of December and the Prime Minister, Michael, was very much leaning in at the press conference yesterday when he said that there can be a genuine expectation that that supplement will be continued in some form over some period of time. But what we want to do is give ourselves the flexibility to know where the labour market is. We want to see more flexibility overall between employers and employees, and that will enable us to get more people back into work as quickly as possible.
MICHAEL ROWLAND:
When you joined us earlier in the week, I asked you about whether universities would be included in JobKeeper – you said no. The Prime Minister took that further last night when he spoke to Leigh Sales on 7:30 and he described universities as, in his words, "large corporates." Is that the way you see universities?
JOSH FRYDENBERG:
Well, I said in my first speech, education is the first defence of the nation, quoting Thomas Jefferson and universities are very much a big part of that, and they play a wonderful role across our community and strong universities and a strong education system is not only important to our economic prosperity, it’s also important to our harmony as a nation and our success as a nation. So, we continue to support universities with record funding. I mean, some $18 billion, Michael, has been guaranteed to the universities, based on their pre-COVID enrolments and I think domestic enrolments. But they’re going to be hit by the closure of the international borders, just as aviation is, just as tourism is, just as a number of other sectors, they’ll have to make modifications accordingly.
MICHAEL ROWLAND:
You’re clearly very fond of universities, care of your speech you refer to there. But I ask you again, do you see universities as large corporates, akin to a say a big bank, or a big resource company?
JOSH FRYDENBERG:
Well, they are not like a big bank and they’re not like a big resource company, but they have big
balance sheets and I watched that interview the Prime Minister had with Leigh Sales and that was exactly the point he was making. The vice chancellors have very large salaries, they do have reserves of cash and the government is providing additional support for them. Now every university will be different in terms of its own balance sheet, but everyone is taking a hit to their bottom line. Universities are no different to every other business – big and small – across the economy.
MICHAEL ROWLAND:
Finally, the Victorian government has approved a 2% pay rise for Victorian public servants saying they are working round-the-clock, as they clearly are trying to beat this pandemic. What do you make of that?
JOSH FRYDENBERG:
Well, governments will make their own decisions about their economic priorities, what I would like to see from the Victorian government, and indeed from state governments around the country is continued support for their communities. Whether it’s their businesses, or whether they’re households, to use every dollar they can, just as the Federal Government is doing. Let's not forget, every dollar we spend today is borrowed money. The Commonwealth is increasing its debt very substantially and you will see those eye-watering numbers tomorrow. We are increasing that debt very substantially because the public needs it, the Commonwealth needs the states as well to be side by side. Now, Victoria has already made some announcements, and we welcome that but anymore that they can provide to those in need including those without a job is, of course, welcome.
MICHAEL ROWLAND:
Josh Frydenberg in Canberra, thank you so much.
JOSH FRYDENBERG:
Thank you.