PATRICIA KARVELAS:
Josh Frydenberg, welcome.
JOSH FRYDENBERG:
Nice to be with you, Patricia.
PATRICIA KARVELAS:
The Reserve Bank Governor has warned of mass job losses. How significant is this economic hit going to be?
JOSH FRYDENBERG:
Very substantial and you can just see it in the slowdown in economic activity as people go out less than they would otherwise do, as we see a rise in unemployment because of absenteeism and obviously there's anxiety across the community, not just here in Australia but across the world. But as also the Governor said today, we need to build that bridge to the recovery because we know there will be the other side of the coronavirus and we want Australian businesses and jobs to be intact on the other side and that's why today, with the RBA, we've announced over $100 billion of money being injected into the economy.
PATRICIA KARVELAS:
So explain to me, Treasurer, how that injection works. It's all about small and medium-sized businesses. There is your announcement and there's also, of course, changes that the Reserve Bank is making. What do you hope to achieve?
JOSH FRYDENBERG:
Hope to reduce the cost of credit for Australian small and medium-sized businesses and, indeed, for Australian households, but also to increase the flow of credit because at these pretty challenging times we've seen liquidity in some markets dry up or tighten, and so this is new money, new funding coming into the financial system. We've already seen the Commonwealth Bank announce, in light of today's decisions by the RBA and Government, that they will be reducing their rate of borrowing, on their interest rate of borrowing from small and medium-size businesses by a full percent and for 0.7 per cent for their fixed home mortgages.
PATRICIA KARVELAS:
Philip Lowe said the strain on businesses around the country could last months. No doubt Cabinet and ERC has considered just the quantum of this. How big is this hit going to be when we're talking about unemployment? What are the figures that have been put in front of you?
JOSH FRYDENBERG:
Well, obviously we're looking at various scenarios and what I can tell you, though, is unemployment inevitability is going to rise and rise substantially.
PATRICIA KARVELAS:
Are we talking now up to a million people could lose their jobs?
JOSH FRYDENBERG:
Look, I wouldn't want to put a number on it right this minute because obviously the situation is still evolving but as the Prime Minister said, Patricia, this could go for six months or longer until a vaccine is found and obviously today's announcement as well about non-residents not being able to come from 9:00pm tomorrow is another significant hit to the economy because it means less tourists and less money being spent across the economy but we make no apologies for putting the health interests of Australians first.
PATRICIA KARVELAS:
I'll put that question to you because when this was all unfolding, the Government was asked several times why not close down the borders full stop and a few answers, in fact, on the record from senior ministers saying, ‘We can't do that, you can't just close down the borders.’ But clearly that's exactly what you've done. Should you have done it earlier?
JOSH FRYDENBERG:
Again, we continue to take the medical advice that is put to us and that is why we've kept the schools open, for example, because the medical advice is to do so. But we've also put in those social distancing rules and people seem to be sticking to that. So we'll continue to take the medical advice as we've done all along. As you know, we've moved ahead of other countries in putting travel restrictions in place for China, for Italy, for South Korea, and for Iran. Again, that was based on medical advice and so is our subsequent announcements.
PATRICIA KARVELAS:
Should you have closed the borders earlier because clearly you've done it now, you could have done it?
JOSH FRYDENBERG:
We did that, we've made those decisions earlier and those decisions now, based on best advice to us.
PATRICIA KARVELAS:
So why did the Government keep saying you can't just close down Australia?
JOSH FRYDENBERG:
Well, obviously we haven't closed down Australia because cargo and goods still are going to move between our countries.
PATRICIA KARVELAS:
Well, flying into Australia for tourism.
JOSH FRYDENBERG:
And we have put in place these extraordinary measures reflecting the extraordinary times. But if you're an Australian citizen you can get back here and that's what we hope they do.
PATRICIA KARVELAS:
There's been criticism of Qantas standing down 20,000 workers, particularly because you've given them a $715 million rescue package. Are you disappointed by the decision?
JOSH FRYDENBERG:
Well, again, a lot of people will lose jobs and unfortunately some businesses will close their doors. Others, we hope, can trade through it and certainly all our measures that we have announced today, we're obviously working on a second package of measures, is designed to keep as many Australians in a job and as many businesses going. Now with respect to Qantas, they are a key part of not just the aviation industry, of the overall economy and, of course, this is hit hardest in that sector and the tourism sector. So they will take the decisions that they have to but I hope they keep as many workers as they can.
PATRICIA KARVELAS:
Treasurer, I want you to level with the Australian people, are we now going to enter a recession?
JOSH FRYDENBERG:
I think it's very hard to avoid.
PATRICIA KARVELAS:
Could it even be a depression?
JOSH FRYDENBERG:
Look, again, that's the language you would use.
PATRICIA KARVELAS:
I don't want to use it, I wish I wasn't, but is this the realistic truth?
JOSH FRYDENBERG:
To be honest with you, whether you enter into, two consecutive quarters of negative economic growth or not is irrelevant to the fact that this is a massive hit to the Australian economy. This is an external event beyond our control but the work that we've done to actually get the budget back in shape to make these major announcements about spending in those areas that need it, that's what's going to matter in the end. That's what's going to lead us to the recovery. And it's not just the Government who is acting and it's not just the Federal Government, it's also State Governments, but today you've seen the RBA, you've seen businesses also reach out to their customers and their clients. It's got to be a team effort, a Team Australia moment.
PATRICIA KARVELAS:
So tell me, you've closed down Australian borders and that starts 9:00pm tomorrow night. You can't close down the borders without having some idea of how long they may be closed. When will you consider lifting them?
JOSH FRYDENBERG:
Well, again, we'll take the best possible medical advice. The Prime Minister said, Patricia, this will go for six months or more and they won't be lifted until it's safe to do so, until we're on the other side of this very, very challenging period.
PATRICIA KARVELAS:
So just, again, level with us. Could this travel ban last for six months at least?
JOSH FRYDENBERG:
The travel ban will last as long as the medical experts tell us that we need to prevent the spread of the virus and one way to do that is through the steps that announced today.
PATRICIA KARVELAS:
So you accept that it could be closed. I just want to nail down a timeframe for this six month period that we're looking at.
JOSH FRYDENBERG:
You're asking me to put a date on something that not even the medical experts can put a date on.
PATRICIA KARVELAS:
No, but the Prime Minister has put a date on it. He said for six months you can expect these changes, so I expect that's the timeframe.
JOSH FRYDENBERG:
To be fair to him, he actually said six months at least.
PATRICIA KARVELAS:
Does that mean a travel ban could even be longer than six months?
JOSH FRYDENBERG:
Again, as your listeners would expect us to do, we follow the medical advice and not even the medical experts know how long the spread of the virus will continue and the date upon which a vaccine will be found. We know that the best medical researchers in the world, and some of those are in Melbourne at the Doherty Institute or at the University of Queensland, or at the CSIRO, they're working on a vaccine, so, too, their counterparts across the world. This issue is going to be solved by the medical researchers, the scientists and the doctors, not by the politicians, not by the bankers, not by the bureaucrats. It's going to be solved by the medical professionals and that's what we're hoping they do sooner than later.
PATRICIA KARVELAS:
This hit to the economy is brutal. Just last week you delivered a stimulus package and now you're about to unveil a second. Treasurer, why didn't you spend more money last week? Did you get it wrong the first time? Why have you needed to revise this within a week?
JOSH FRYDENBERG:
Well, two points. The first thing is that the initial stimulus package will do much to support the economy at this time. The fact that there are cash payments going out to hundreds of thousands of Australian businesses of up to $25,000 will deal with their cash flow challenges, particularly helping them to keep staff on. You've also got the support that we announced for apprentices, you've got the $750 that is going to 6.5 million Australians, all those measures are very, very important. Since the announcement, even just over a week ago, this economic impact of the virus has deepened. It's widened. It's going to be longer than even some of the experts initially expected and, therefore, a second package, which will be different in nature and in scope, the second package is more about cushioning the blow for those Australians who lose their job, backing small business as well.
PATRICIA KARVELAS:
Talk me through what that cushioning the blow, I mean that's political talk and I understand what you're saying, but give me a sense of what that might look like. Are you looking now to create a new welfare payment for people who lose their jobs?
JOSH FRYDENBERG:
I know you would like me to announce a second package.
PATRICIA KARVELAS:
I don't want an announcement, I want a taste of where things are going and, to be honest, it's not just because I like to know answers as a journalist, it's for the people listening right now. I'm getting text messages all the time, Treasurer, saying I've lost my job, I've lost my shifts, it's over. People are hitting the wall. The stories I'm getting are devastating. What can they expect?
JOSH FRYDENBERG:
The first thing is that they can expect that the Government will do what it takes, so too will the RBA, so too will the other key regulators across government, Federal and State, do what it takes to support jobs and to support businesses. In terms of the second package, it's yet to be finalised. But what we are looking at is how to support the income of Australians who have either lost that income or continue to do it tough if they're small business owners because we want people to hang onto their staff but we also recognise in some industries that won't be possible. So what we're looking to do is to ensure that people get through what is inevitably a really, really difficult time at so many levels for them.
PATRICIA KARVELAS:
Okay, but will these people be offered the Newstart payment or a higher payment?
JOSH FRYDENBERG:
Again, details have yet to be finalised.
PATRICIA KARVELAS:
What's your thinking, though? What do you think would be fair to keep people paying mortgages, to keep people paying rents?
JOSH FRYDENBERG:
Firstly, when it comes to the banks, I think they have a key role to play here in terms of ensuring that they're supporting their customers, whether it comes to their small business loans, whether it's their personal loans, whether it's on their mortgage.
PATRICIA KARVELAS:
So if you lose your job and you can't pay your mortgage, what should happen? How should the banks step in?
JOSH FRYDENBERG:
The banks should be absolutely understanding of that circumstance and can I say, I've been talking to the banks day and night about these various issues and they are working on some initiatives to do exactly what people would expect them to do at this situation.
PATRICIA KARVELAS:
And so how does the Government step in there? Is the Government looking at creating a rescue payment?
JOSH FRYDENBERG:
Well, all options are on the table as far as the government.
PATRICIA KARVELAS:
What are you favouring?
JOSH FRYDENBERG:
I'm not in the game of ruling in and ruling out, other than to say there will be a series of measures in the second package, it will be different to the first package and what it's seeking to achieve, but at the same time will be complementary to the first package.
PATRICIA KARVELAS:
Should the arts sector and the hospitality sector as industries also expect support in this second package?
JOSH FRYDENBERG:
Well, the arts sector, the tourism sector, aspects of the trade sector, they're all doing it really tough, international education sector. Pretty much every sector across the economy other than supermarkets and our pharmacists and a few of our retailers who are selling people televisions and freezers and the like, most of the sectors are doing it really tough and we understand that and that's why we've already announced that $17.6 billion package. That's why today more than $100 billion has been injected into the economy and that's why we're working on a second package of measures for coming days.
PATRICIA KARVELAS:
Treasurer, I know you have to go, but how well are you sleeping at the moment?
JOSH FRYDENBERG:
Well, I'm not sleeping a lot but it's not about me, Patricia. To be honest, I don't…
PATRICIA KARVELAS:
But are you up at night worrying? I mean I am, my listeners are.
JOSH FRYDENBERG:
Yes, absolutely. And my kids are going to school, as they should, and I want them to continue to do so. And like every listener, I'm worried about the state of the economy, I'm worried about people's health, I'm particularly worried about family members and friends who may be older in age and about their particular vulnerabilities. So all of these things I am worried about, absolutely. These are unprecedented times but I know that I can't lose my head because as the Treasurer of Australia, I have a responsibility to help steer the economy through it. It's not about me. It's about the people listening to your show. It's about every Australian, all 25 million Australians, all 25 million of us pulling together at this difficult time to look after our fellow citizens. To not whack them in the mouth at the local supermarket, to not talk them down, to let them get through their mortgage payments and to help keep them in a job where it's possible to do so. We all need to hang together at this time.
PATRICIA KARVELAS:
Treasurer, thank you so much for your time.
JOSH FRYDENBERG:
Great to be with you.