NEIL BREEN:
Good morning to you Treasurer.
JOSH FRYDENBERG:
Good morning to you, how are you?
NEIL BREEN:
Yes we’re very well, we keep fighting the good fight here. We’re doing the best we can for all these people with medical cases who don’t seem to be able to get the Government to see sense. But anyway, that’s a different issue. Can I start with you with JobKeeper? Looks like it will be wound up when the Federal Government does the Federal Budget on October 6th, it will be wound up in March, that’ll put pressure on states to get their own act together with regards to their finances and their economies?
JOSH FRYDENBERG:
Well the states should be doing more and they’re not my words, they’re the words of the Reserve Bank Governor, when he’s called for an extra $40 billion worth of spending or equivalent to around two per cent of GDP over the next couple years. You see, the Federal Government has contributed some $314 billion of support across the economy. That’s nearly 16 per cent of our GDP. Whereas the states have contributed just over $50 billion which is around three per cent of their gross state product. So there’s a big difference between the lifting that the Federal Government has done and the lifting that the state government have done and we would welcome more support by the state governments around the country, whatever their political persuasion, to back small business and to support households.
NEIL BREEN:
We’re in Queensland here, I’d be interested to know from you has Queensland’s Government done enough?
JOSH FRYDENBERG:
They need to do more just like all the state governments need to do. Now they have taken some initiatives and we welcome that and we will continue to work with them cooperatively on a range of fronts and you will see in the Budget extra spending initiatives to support Queensland projects. But of course, there’s more that can be done given the size of this economic shock. When you look at the most recent job numbers, we saw about 18,000 jobs created in Queensland over the last month but they were overwhelmingly part time jobs and we would like to see more full time jobs and we know that obviously that closed borders cost jobs. We know that it hit particularly hard in the tourism sector and the hospitality sector.
NEIL BREEN:
Well we know the tourism sector is being hit. You can’t get a hotel room in northern New South Wales, but you can easily get one on the Gold Coast at the moment. I was very interested in this story on page one of The Australian today. The Government, yourself, will be announcing changes to insolvency laws and that will be to try and help businesses, protect them from being wound up if that in the future when this is over, they could trade their way out of trouble.
JOSH FRYDENBERG:
Well Neil these are the most significant changes to insolvency laws in nearly thirty years and they are all designed to help small businesses get to the other side of this crisis. So many small businesses have done it tough and because of the health restrictions they’ve had to close their doors. But while their doors have been closed the bills have continued to rack up. Be it insurance, be it energy, be it water, be it their rent, be it even their interest on their loans with the bank. Now instead of those businesses going to the wall and a liquidator being appointed and those assets being used up to pay the fees of lawyers and accountants, we have said that we want these small businesses to stay in control of their business, to come up with an alternative plan to restructure those payments, those liabilities, to put that plan to the creditors and the creditors have 15 business days to vote on it and if they vote 50 plus one in favour of that plan then the business, their owners, their management will stay in control and they’ll be able to trade out of this crisis. We know that there are thousands of business including so many across Queensland, who will benefit from this new process which takes the best aspects of America’s Chapter 11 system.
NEIL BREEN:
Because a lot of businesses right now, will have appalling turnover, but in 12 months’ time might be ok, and might be trading well. So this is deigned, this Chapter 11 like system, to help them?
JOSH FRYDENBERG:
Exactly right Neil. It’s designed to get them to the other side. It’s designed to give room for those viable businesses to trade out of this crisis, instead of being wound up. Because we know that today some 60 per cent of the businesses that go into the insolvency process don’t come out the other side. We also know that 76 per cent of those businesses that are going through the insolvency process have liabilities of less than $1 million. Now nearly all of those businesses, some 98 per cent of those businesses, have less than 20 employees. So overwhelmingly they are your small businesses which are the backbone of our economy, whether they’re in hospitality, whether they’re in retail, whether they’re in tourism, whether they’re in manufacturing, these small businesses are the heart and soul of the economy and we want them to continue even after this economic shock.
NEIL BREEN:
Treasurer, before you go, just one last question for you. As the Queensland Government said, that the Federal Government has deliberately pulled the Australian Defence Force off our borders to try and damage their border policy, did the Federal Government do that?
JOSH FRYDENBERG:
That sounds like rubbish. I mean, seriously. We have used the Defence Force to support the states at every opportunity, as you know, we’ve deployed them in multiple states to help the states deal with whether it’s the quarantine issues, whether it’s testing and tracing, whether it’s logistics. Just like during the bush fires, our Defence Force have done a remarkable job helping the community through a crisis.
NEIL BREEN:
Treasurer Josh Frydenberg, thanks for joining us on 4BC Breakfast.
JOSH FRYDENBERG:
All the best.