NEIL MITCHELL:
He’s on the line, Federal Treasurer Josh Frydenberg, good morning.
JOSH FRYDENBERG:
Good morning, nice to be with you, Neil, and your listeners.
NEIL MITCHELL:
Thanks for your time. Look, it’s not a criticism, but it’s out of your control, isn’t it? Your Budget only works if our quarantine system works, if contact tracing works, if we keep the pandemic under some sort of control?
JOSH FRYDENBERG:
Well, you’re certainly right that this is primarily a health crisis with a very severe economic impact, Neil. Our ability to continue the momentum of our economic recovery does depend on our ability as a nation to successfully suppress the virus. That’s why there will be new outbreaks. We’re not seeking to eliminate the virus. We can’t eliminate the virus. But what we can do is be very vigilant around contact testing and tracing and where there are outbreaks try to contain them and not lead to long extended state-wide lockdowns like we saw in Victoria last year.
NEIL MITCHELL:
But it is fair to say that the Budget is fragile if things go wrong with the pandemic? You’ve got to go back to the drawing board?
JOSH FRYDENBERG:
Well, this is a pandemic Budget. It’s one that I’ve announced in the middle of a once-in-a-century event. That’s why Australia’s economic recovery does need to be secured, those gains need to be locked in. Last night’s Budget was our plan to create more jobs across the economy with record investments in skills, in infrastructure, tax relief for more than 10 million Australians as well as new investment incentives for businesses to put more money back into the economy.
NEIL MITCHELL:
But do we have to accept it's fragile?
JOSH FRYDENBERG:
We do have to accept that the global situation is fragile, that Australia’s recovery is not yet locked in, and that’s what we sought to do with last night’s Budget. I mean, for your listeners to understand the global context in which we’re operating in, Europe has just gone into a double-dip recession. There are more than 800,000 new COVID cases a day. We’ve seen the horrible images out of India, and even here in Australia we saw Western Australia go into a state-wide lockdown only weeks ago. So that’s why it is a very delicate situation.
NEIL MITCHELL:
It is a delicate situation, a fragile situation. If it goes backwards, could you ever see us being in a situation of having to re-introduce JobKeeper?
JOSH FRYDENBERG:
Well, that program was always a temporary emergency measure and it’s come to an end and there’s no plans to re-introduce it.
NEIL MITCHELL:
No, no, but, I mean, if it erupts again, you’d have to look at those sort of measures, wouldn’t you?
JOSH FRYDENBERG:
Well, again, I’m not looking back, I’m looking forward. What I can see is that the economy is recovering strongly, but you raised JobKeeper, and so I’ll mention it, which is that 3.8 million Australians were kept in a job through JobKeeper. It’s been the most successful Government support program arguably in Australia’s history. You’ll remember that there were some in industry and certainly our political opponents who said that JobKeeper needed to continue beyond 12 months. We held firm. We didn’t extend it. That saved the Budget money and, as a result, we’ve seen over 100,000 people come off income support in the weeks after JobKeeper ended.
NEIL MITCHELL:
One of the key parts of the Budget seems to me is the vaccination program. You’re aiming to have everybody vaccinated by the end of the year. The figures have been done, that’s 200,000 people a day every day. We’re not going to make that, are we?
JOSH FRYDENBERG:
Well, the Budget assumption, and I point out, it is an assumption, is that there is assumed that a population-wide vaccine program is likely to be in place by the end of 2021. Over the last week we’ve seen more than 400,000 doses dispensed, and that’s a big increase on the week prior…
NEIL MITCHELL:
Yeah, but it’s not 200,000 a day.
JOSH FRYDENBERG:
And more supply is coming on, and we want to roll it out as quickly as possible. We’ve got 5000 contact points through GPs and other state and territory clinics, but we’re seeking to roll out that vaccine as quickly as possible.
NEIL MITCHELL:
I understand that, but are you confident you’re going to make it by the end of the year? I repeat, it’s 200,000 a day, every day.
JOSH FRYDENBERG:
Well, again, that assumption in the Budget was based on the best medical advice that a population-wide vaccination program is likely to be in place by the end of 2021.
NEIL MITCHELL:
You need to keep state borders open as well. Have you talked to the Premiers about this?
JOSH FRYDENBERG:
Well, what the Budget again assumes is that there are no extended or sustained state border restrictions. I want to underline extended or sustained. That’s what we saw in Victoria. That was very costly in lots of ways. We don’t want to see a repeat of that, and that’s not what we’ve assumed in this Budget.
NEIL MITCHELL:
So if these assumptions, and I repeat, they’re brave assumptions, if these assumptions are not met, what happens?
JOSH FRYDENBERG:
Well, again, these are assumptions based on the best available evidence at the moment...
NEIL MITCHELL:
Yeah, but if it does, look, if we got the assumptions wrong in the right sense last year because it was better than we thought. But if these forecasts and assumptions are wrong, what happens?
JOSH FRYDENBERG:
Well, again, it just underlines the uncertainty that is out there in the global economy and the difficulty on making forecasts and predictions in the middle of a pandemic. But what I can point to is the evidence which is in. The indisputable evidence that the Australian economy has outperformed all major advanced economies over the course of the last 12 months, that the unemployment rate is now back at 5.6 per cent, even lower than when we came to Government, and that we have now got more Australians who are in work than before the pandemic began.
NEIL MITCHELL:
The hotel quarantine system has failed again and we’re in the middle of a scary time in Victoria. Are you confident it can work, or do we need to build a purpose-built facility?
JOSH FRYDENBERG:
Well, as you know, the Victorian Government has put to the Morrison Government a proposal, and that is going through its normal processes and we’ll give that proper due consideration.
NEIL MITCHELL:
It’s got to be, well, do you agree the system is not working well?
JOSH FRYDENBERG:
Well, I think that there has been a large number of people who have come through our quarantine system, and outside of Victoria, it has worked very effectively. Victoria was unfortunately a disaster with the quarantine failure. Improvements have been made since then. Jane Halton did her review, and the states have had the primary responsibility on quarantine.
NEIL MITCHELL:
The iron ore price is a big part of helping keeping the deficit down, and we’ve predicted $55 US a tonne and it went to $220. Do you accept we’re very much in control of China here? If relations deteriorate with China, if they cut back what they’re buying, we’ve got problems?
JOSH FRYDENBERG:
Well, the iron ore price has certainly surprised on the upside, and it’s been sustained there for a period of time. And for the Budget that is obviously good news. We actually got a bigger boost to the Budget bottom line from having more people in work than we did from a higher iron ore price. So, we got higher income tax receipts and lower welfare payments. Notwithstanding that, we’ve been pretty cautious and conservative around the iron ore price, expecting it to glide down towards $55 a tonne by March of next year. We’ve always, Neil, been conservative and cautious with respect to the iron ore price.
NEIL MITCHELL:
You did make your point in the speech, we had to look for more stable markets or more reliable markets.
JOSH FRYDENBERG:
Yes.
NEIL MITCHELL:
We do accept that we still could have a problem with China, which would be a pretty serious one.
JOSH FRYDENBERG:
Well, my view about the China economic partnership with Australia is that it’s mutually beneficial and there’s no better indicator of that than iron ore. China can’t replicate the quality and the quantity of Australian iron ore from other sources. They’ve tried to develop mines in Africa. That’s at its very early stages. Brazil have had significant supply problems. They had a dam collapse and they’ve also had major COVID outbreaks. So, Australia is the most reliable and the most important supplier of iron ore into China. And China is the world’s largest steel exporter, so our iron ore is underpinning tens and tens of thousands of jobs inside China, and they know they rely on us for that.
NEIL MITCHELL:
China needs us?
JOSH FRYDENBERG:
They certainly do with respect to iron ore.
NEIL MITCHELL:
A couple of quick ones, I know you need to get away. I don’t understand the situation with wage growth. We’ve got a shortage of workers. I thought when there’s a shortage in the marketplace prices went up. People tell me they can’t get staff, but wages aren’t growing.
JOSH FRYDENBERG:
Well, that’s where the Treasury and the Reserve Bank analysis is important. They say that unemployment actually has to go below 5 per cent to see a tighter labour market and to see more competition for labour and, therefore, higher wages. And that’s why I said in a speech before last night’s Budget that we want to drive the unemployment rate below 5 per cent.
NEIL MITCHELL:
Okay. A million years ago when Paul Keating was Treasurer and saying there was no recession, I remember arguing with him. I walked down the street and see closed shops boarded up. You tell me things are booming. I still see more and more shops boarded up in the local shopping centre. Is the real world benefitting from this resurgence or is it not? Why are these shops boarded up?
JOSH FRYDENBERG:
Well, there’s two things to say. Firstly, we have been through a recession, and that was the first recession in nearly 30 years here in Australia. But now we’re coming out of it and we’re coming out of it strongly, but those gains have not been locked in and there are regions and sectors across the economy and the CBDs within our capital cities are still doing it very tough. There is a bit of a lag effect with respect to the COVID crisis and it will take some time to repair the hole that was left in the economy as a result of COVID-19. But we are heading in the right direction. The job’s not done, though.
NEIL MITCHELL:
Big spending Budget, and a bit of catch-up going on in social areas like aged care, mental health, women. A bit of a Labor smell about the Budget, isn’t there?
JOSH FRYDENBERG:
Well, we’re responding to a Royal Commission in aged care which found that older Australians were getting services that fell below community standards and we responded not just with increased funding of $17.7 billion but significant reform around governance, around workforce issues, around residential care. With respect to disability support, under the Coalition, the NDIS will always be fully funded, and we’ve seen 100,000 people come on to that program in the last year. And finally, on mental health, Neil, all of us know people who have struggled with those conditions, particularly through the pandemic. There’s been a greater need for those services. This is a really important investment and also follows a Productivity Commission report.
NEIL MITCHELL:
Yeah, but all these things, not a lot for small business. Not a lot for small business, is it?
JOSH FRYDENBERG:
Well, in the Budget we’ve got big tax breaks for small businesses...
NEIL MITCHELL:
Temporary ones.
JOSH FRYDENBERG:
Well, they can go and write off in day one...
NEIL MITCHELL:
Temporary.
JOSH FRYDENBERG:
Well, out to 2023. It’s quite substantial. So if you’re a small business and you want to go and buy a ute or a van, if you’re a tradie who wants to go and buy new tools, if you’ve got a shop that wants a new fit-out, you can go and write that all off in year one. That’s substantial. We also made some technical changes, around the ATO and the AAT, the Administrative Appeals Tribunal, and a number of other things to cut red tape.
NEIL MITCHELL:
Okay. There’s a strong suggestion, no, I want to ask you, 2022 was the prediction for international borders. Any chance earlier, do you think?
JOSH FRYDENBERG:
Well, again, it will be based on the medical advice. But what’s important there for the Chief Medical Officer is what’s happening with the virus globally because we’ve seen the situation in India, we’ve seen new variants of the virus, and it’s a very fluid situation. The virus is stubborn, it’s deadly, it’s all around us, and we have to be very, very careful.
NEIL MITCHELL:
Your advisers are having kittens, which is fair enough. Thank you for your time. Have you heard the rumour that Melbourne might get the Brazilian Grand Prix as well our own? You’d welcome that, wouldn’t you?
JOSH FRYDENBERG:
I haven’t heard those rumours. I’ve been too busy in the books.
NEIL MITCHELL:
What about Comrade Josh? Left wing Budget, Labor light?
JOSH FRYDENBERG:
This is a Liberal Budget, and I want you to know, Neil, and your listeners to know that this Budget delivers for small business, it delivers for families, it delivers for regions, it delivers for retirees and it gets more Australians into a home. That is fundamental Liberal philosophy and Liberal values.
NEIL MITCHELL:
Thank you for your time. Josh Frydenberg, the Federal Treasurer.