NEIL MITCHELL:
Previously anything over $1.2 billion needed approval, now everything will, as from today. On the line Federal Treasurer Josh Frydenberg, good morning.
JOSH FRYDENBERG:
Nice to be with you, Neil.
NEIL MITCHELL:
Will this cover commercial and private real estate as well?
JOSH FRYDENBERG:
Look, this will cover all foreign investment in Australia…
NEIL MITCHELL:
So if I'm going to buy a factory, I'd have to get approval.
JOSH FRYDENBERG:
You'd have to get it through the Treasurer because what we want to do now, in these extraordinary times, is have greater scrutiny and visibility of all transactions. As you said, countries that Australia has a free-trade agreement with, there's currently a threshold of $1.2 billion, but many Australian companies are now in distress as a result of the coronavirus. They've seen their share prices diminish, they've seen their market capitalisations diminish and we want to stop any predatory behaviour that is not in the national interest.
NEIL MITCHELL:
Okay, so really you're protecting them. When they come out of it and start to re-establish themselves, you're trying to keep them in Australian hands?
JOSH FRYDENBERG:
What we're wanting to ensure is that everything is in the national interest. Now in defining the national interest, you take into account national security considerations, you take into account the character of the investor as well as tax implications and competition implications.
NEIL MITCHELL:
How long will it continue? I mean, not exactly, but obviously once we get through the health crisis, you've then got an economic crisis which could go on for years, will you maintain this restriction for years?
JOSH FRYDENBERG:
Well, we'll maintain it as long as it is reasonable to do so and what we have specified is for the duration of the crisis. As you know, the Prime Minister has prepared the nation for a six month challenge, at least, because you and I are not going to solve for the coronavirus, it will be the medical researchers, the doctors and the scientists who will come up with a vaccine. But we're really fighting a war on two fronts, Neil. We're fighting the health challenge and we're fighting the economic challenge and that's why we are doing everything to protect Australians in relation to both those challenges.
NEIL MITCHELL:
So if I was an American or a Canadian or a Chinese company or a French company and I came to you and I said, "I want to buy this tomorrow", what would your consideration be?
JOSH FRYDENBERG:
Well, like I said, the character of the investor, the competition, the tax implications as well as the national security implications. I want to make it very clear that foreign investment has served Australia well. One in ten Australians work for companies that have benefitted from foreign investment. Take our resources sector, if it wasn't for Japanese and Chinese investment and other investors, then we wouldn't have some of the developments that we do today, any important export income. But by the same token, we do need to always run the ruler over these applications and that's what we will be doing in an enhanced way with today's announcement.
NEIL MITCHELL:
Well China's responsible for almost half the number of applications, is this aimed at China?
JOSH FRYDENBERG:
It's not aimed at a particular country but, as you point out as well, our number one investor by value has been the United States, last year $58 billion worth of foreign investment. Last year China was fifth with about $13 billion worth of investment. Singapore, Canada, Japan were all larger investors than China on the basis of value. And what we need to do here is apply the test to any company, any country, that is seeking to invest in Australian (inaudible).
NEIL MITCHELL:
Are you concerned there could be retribution?
JOSH FRYDENBERG:
No. I think many other nations will take similar actions. I've seen comments from the European Commission along these lines as well, as well as from the Germans because we're facing a global pandemic which has seen equity prices on stock markets fall materially around 30 per cent from the highs in February and this is just prudent, sensible temporary measures.
NEIL MITCHELL:
Temporary, you couldn't see this being permanent?
JOSH FRYDENBERG:
Not this particular measure because we have bilateral agreements with other countries which have served Australia well. Australian companies like to invest elsewhere as well, and having free access to those markets is important, just as like having access to the Australian market is important. But, Neil, we're in extraordinary times and I think the Australian public would, you know, expect their Government to be putting in measures like we’ve announced today.
NEIL MITCHELL:
The reports that in January and February two China-owned property developers, I think it was Greenland Australia and Risland Australia, got their staff to send 100 tonne of medical supplies from Australia to China. Did the Australian Government know about that at the time?
JOSH FRYDENBERG:
I didn't know about it at the time but obviously I've seen those reports. It didn't seem to be in breach of the law but obviously what I would appreciate is that that equipment, those masks, those gloves, those other important medical equipment are used for Australians because we face the impact of the coronavirus like any other country and our assets should be used for Australians.
NEIL MITCHELL:
You can't get them back, can you?
JOSH FRYDENBERG:
Well, we're sourcing new product from around the world, to be honest, because, like many countries, we are having to do lots of tests, we're having lots of people who need this protective equipment that didn't need it before and that's why we're looking at every avenue to source this material.
NEIL MITCHELL:
I see there's talk of needing a charter flight. Would you fund a charter flight if necessary to pick up medical equipment?
JOSH FRYDENBERG:
We'll do what is necessary.
NEIL MITCHELL:
Okay, just quickly on the restriction rules, because you're part of the National Cabinet, asking people not to go out, two is a crowd. Is it up to the states to enforce that?
JOSH FRYDENBERG:
Well, firstly, states are enforcing it and they've put in place significant fines and Daniel Andrews has made comments to that effect. The National Cabinet is actually made up of the Premiers, the Chief Ministers and the Prime Minister. I'm a member of the National Security Committee of Cabinet at the Federal Government level, which we make decisions in relation to us that feed into the National Cabinet. So obviously all of these issues I have been privy to and I discuss on a regular basis with the Prime Minister. But, again, we have taken these actions based on the medical advice which is the way it should be.
NEIL MITCHELL:
You've got another package coming up, an assistance package, when and how much?
JOSH FRYDENBERG:
Today we'll be making a very significant announcement about wages support, a wage subsidy, in effect. As you know, we've announced over $180 billion, Neil, of measures to date. They have been focused on keeping Australians in a job and businesses in business, including cash payments up to $100,000 for small businesses, depending on the size of their wages bill, also making loans available to small businesses to get to the other side. We've doubled the Newstart payment, effectively, which is enhancing the safety net. Today we'll go one step further with a very, very significant announcement.
NEIL MITCHELL:
Okay, the Premier, by the way, speaking at the moment, has just announced Victoria's going onto stage 3 restrictions.
JOSH FRYDENBERG:
Well obviously that is a decision for him…
NEIL MITCHELL:
But it's tougher than the Federal line, though, isn't it?
JOSH FRYDENBERG:
Well, the stage 3 announcements can be taken at a state level. Not all states will, no doubt, follow that lead. Some may, some may not, I don't know as to what they will do. But what I understand is Daniel Andrews is, again, making the judgments that he thinks is best for his state and everyone should adhere to those restrictions and the medical advice.
NEIL MITCHELL:
Well we get the detail of the restrictions but they are tougher than what the Federal Government's announced, aren't they?
JOSH FRYDENBERG:
Well, again, the whole purpose of the National Cabinet is to come together, discuss these issues, to share perspectives and, as you know, some states have taken measures that other states have not.
NEIL MITCHELL:
Okay, just quickly, I know you need to get away, can the banks be doing more? This six month freeze on home loans sounds like it's frozen but people are being told the interest will compound and adds to their mortgages. Is that enough?
JOSH FRYDENBERG:
Well again, these are discussions that we're having with the banks but I do welcome their announcements to date. We're talking $250 billion worth of loans that have, effectively, they freeze the interest payments on and the principal payments on. This is significant not just for landlords but for SMEs who don't have customers coming through the door…
NEIL MITCHELL:
But is that right, it compounds? So when it stops for six months and when you come out in six months you've got compounded interest there?
JOSH FRYDENBERG:
There are arrangements that the banks will do on an individual basis in terms of extending the term of a loan. You know, for example, if you've got a mortgage, that could be a 30-year payment time, if you've got a small business loan, it would be truncated from that. It will depend on everyone's individual arrangements but I think as part of the hibernation strategy, it's critical to have the banks involved because we've worked with the energy companies, we've worked with the insurance companies, we've got no evictions taking place over the next six months for retail tenants as well as residential tenants and, of course, the banks not charging interest for the next six months is important.
NEIL MITCHELL:
Thanks for your time. Just finally, though, the Victorian Government's paying public servants a loading to work from home, is the Federal Government doing that as well?
JOSH FRYDENBERG:
No, we're not.
NEIL MITCHELL:
Why?
JOSH FRYDENBERG:
Well, we'll make our decisions based on what we think are the needs of the public service here. They're all dedicated professionals, but I don't believe this is the right time for that additional loading to be provided.
NEIL MITCHELL:
I agree with you. Thank you very much for your time.
JOSH FRYDENBERG:
Always good to be with you.