PATRICIA KARVELAS:
Treasurer, good morning.
JOSH FRYDENBERG:
Good morning, Patricia. Nice to be with you.
PATRICIA KARVELAS:
We’ll get to the economy and Omicron in a moment, but there’s no ignoring today’s Newspoll. The Coalition has slumped to 8 points behind Labor – 56 to 44 per cent two‑party preferred. The election is just in four months’ time. Has the government blown it?
JOSH FRYDENBERG:
Well, the answer to that will be determined on election day. And, as you know, that’s the single poll that counts. And before the 2019 election there were many in the media, indeed, many political pundits who had called it for the Labor Party and then were proven to be wrong. Ultimately the Australian people make that decision, and there’s a long way to go between now and election day. That being said, there is a message in this Newspoll, that is, that Australians continue to do it tough through COVID. The pandemic has gone on for some two years. Omicron disrupted many people’s summer plans, holiday plans, and there is that frustration out there. So we’ll continue to work hard for the public, both on the health front and on the economic front.
PATRICIA KARVELAS:
You say there is a message in this Newspoll and it’s been a summer of frustration for many people over the lack of rapid antigen tests, the food shortages in supermarkets, the high death toll from Omicron. A lot of this can be sheeted home to poor planning by your Government. Why would voters give you another chance at the election in May?
JOSH FRYDENBERG:
Well, if you look at the key numbers in response to this pandemic; where we are now with our vaccination rates at over 95 per cent single dose and more than 93 per cent double dose; the rollout of the booster program that has already gone to more than two‑thirds of the people who are eligible; schools now reopening in term 1, more than 4 million students over the next two weeks going back to school in a COVID‑safe way; one of the lowest mortality rates anywhere in the world, indeed, per head of population, Patricia, in the United States the death toll through COVID has been more than 24 times what we’ve seen in Australia and the United Kingdom 21 times; and then of course, the economic recovery, in the United States there are more than 3 million fewer people in work today than there were at the start of the pandemic, in Australia there’s more than 250,000 more people who are in work today than at the start of the pandemic. So, yes, there are challenges. Yes, people are doing it tough. We’re not through it. We haven’t locked in the recovery. But if you look at the key statistics; vaccination rates, mortality rates and the unemployment rate, there is reason to be positive about the year ahead.
PATRICIA KARVELAS:
But, Treasurer, on delivery and competence, the Australian public waited in lines for many hours for testing over the summer, can’t get their hands on a rapid antigen test, they can’t run businesses. There is another story, too. Do you concede that that story is deeply troubling to people and they blame your Government?
JOSH FRYDENBERG:
I absolutely acknowledge the frustrations that Australians have been feeling over the summer and, you know, the issues that you talked about, the long queues to get tested, the fact that there weren’t tests on shelves at a time that some people needed them, all of that is a fact. But at the same time, we have been working with the states to meet some of those challenges. We’ve stood up the state clinics so if anyone’s got symptoms, if anyone’s a designated close contact they can go and get a test and get the result very quickly. We’ve got more supply of the rapid antigen tests coming online, more than 7 million have already been distributed through to Victoria and more than 6 million to the aged‑care sector. So there is no rule book to what we face, and there are real challenges right now. And I acknowledge that many people have, you know, faced those challenges over summer.
PATRICIA KARVELAS:
Are you pinning your election hopes on the economy? Because Newspoll shows that the Coalition has actually lost its usual strong advantage over Labor as the better economic manager. Is that a surprise? Is that any surprise really, given the cost of living pressures that many households are feeling? Wages just aren’t keeping up with inflation.
JOSH FRYDENBERG:
Well, you’re right about inflation being on the rise. It’s at 3.5 per cent today, and that was higher than what had been expected. And we’ve seen through global supply chains real pressures on the price of construction materials. We’ve seen petrol prices rising as well. And they’re real cost of living pressures that people face. What we’re trying to do is to put more money into people’s pockets through tax cuts, and that’s been very successful with billions of dollars flowing. But if you look at the headline unemployment rate, that’s a key statistic. It’s today at 4.2 per cent, the lowest in 13 years, with hundreds of thousands of job ads that now are available. And the Shadow Treasurer, Jim Chalmers, himself said six months into this pandemic, the single biggest test of the Coalition’s management of the recession will be what happens to the unemployment rate. We took that challenge on and today we’ve seen unemployment significantly lower than when we came to Government.
PATRICIA KARVELAS:
These new figures showing the extra $420 billion on balance sheets, are you relying on all this cash to do the heavy lifting when it comes to supporting the economy through the pandemic? Because, by and large, there’s little the Government can do to prop up the recovery. It will all be up to households and businesses.
JOSH FRYDENBERG:
Well, that $424 billion is a war chest, and it’s been accumulated in a number of ways. Firstly, people have been more cautious and, therefore, their savings levels have risen during the pandemic. The second is the tax cuts that the Coalition has delivered and put more money into people’s pockets. Thirdly, people haven’t been able to travel, either interstate or overseas, as they otherwise would, not go to cafes and restaurants at the same rate that they otherwise would, and that is money that they’ve put into their mortgage or put in offset accounts or businesses have put away as well through various means. And, of course, our COVID economic support has focused on lower and middle‑income earners, and that has boosted household disposable income. So it is actually Federal support that has helped contribute to that big war chest that is now available to support the recovery.
PATRICIA KARVELAS:
But, Treasurer, rather than going on a spending spree, there’s evidence that households are using their savings to pay down their mortgages. Isn’t that a more prudent approach given how highly leveraged many borrowers are and the very real prospect of interest rate rises?
JOSH FRYDENBERG:
Well, families will decide what is the best way to use the money that they’ve saved…
PATRICIA KARVELAS:
Yeah, but it will have implications on stimulus, right?
JOSH FRYDENBERG:
Well, in terms of the overall economic recovery, that money will be spent over time. Families are ahead of their mortgage repayments, and that is obviously going to help build resilience in the system. But there is money on business balance sheets that will help support investment and will help drive productivity gains into the future. I mean, unlike previous recessions, Patricia, what we’re seeing now is investment, business investment, in both the mining and the non‑mining sector rising. And that’s off the back of some of the tax incentives that we’ve also provided. But, you know, the thing that I come back to in terms of the economic settings right now is that the fundamentals are very strong.
PATRICIA KARVELAS:
The New South Wales Government has announced another $1 billion package for businesses crunched by Omicron. The outbreak is far from over, Treasurer. Why didn’t the Federal Government step in and match the funding?
JOSH FRYDENBERG:
Well, the first thing to say is that State Governments are making announcements about their small business packages, and so we welcome what New South Wales has done, but just yesterday South Australia did as well, yet they didn’t ask the Commonwealth to go 50‑50, they went alone and we welcome that. And other states may make their own decisions. But every day of this pandemic we’ve been supporting New South Wales households and businesses with more than $60 billion of economic support, and we currently have programs that is continuing to support them. So, for example, the pandemic leave disaster payment is paid fully by the Commonwealth. That provides up to $750 to people in New South Wales who have to isolate because they’ve either tested positive or they’re a designated close contact. More than 200,000 people…
PATRICIA KARVELAS:
Okay, so they’re existing programs and existing support, which we know is on the record. But we know business is crunched because of the Omicron wave. It continues. That’s why the State Government in New South Wales has stepped in. Isn’t it an obligation also of the Federal Government to help at this crucial time?
JOSH FRYDENBERG:
Well, we do provide right now…
PATRICIA KARVELAS:
But you didn’t step in when they asked you for help, and they’re pretty cranky about it, Treasurer.
JOSH FRYDENBERG:
Well, again, I point out to you that South Australia didn’t ask the Commonwealth for the support. We have done the bulk of the heavy lifting with respect to business support and for household support. And we have a number of programs that are still in place for small business, including the loss carry back measure which enables a small business that incurs a loss as a result of COVID to go to the Tax Office, get a cash refund based on the taxes that they’ve already paid. At the same time there’s a small business loan guarantee scheme. But we’re very conscious that we have already delivered around $300 billion in overall health and economic support to the Australian community. That’s an unprecedented amount of money, and what I’m looking to do is to normalise those economic settings and to move off emergency economic support.
PATRICIA KARVELAS:
Okay, let’s talk about that normalisation, as you describe it. Is this a signal to all other States and Territories that there is no more Commonwealth support, that they must stand on their own two feet now?
JOSH FRYDENBERG:
Well, we’ll continue to provide economic support through various initiatives that we have in place. But I do want to move away from those emergency settings which saw a record amount of spending at a time when the economy really needed it. So, for example, the cash flow boost, the JobKeeper program which the Reserve Bank said saved over 700,000 jobs and underpinned the economy at the very worst of the time. But we do need to move back to normalised settings, and so, therefore, off those emergency support payments.
PATRICIA KARVELAS:
Okay, so you say we need to move, yet we’re still in the pandemic, Treasurer. We’re in a wave, still, which we’ve seen to be quite deadly already this year. There could be further strains. Will you revisit that thinking if things get worse?
JOSH FRYDENBERG:
Well, again, we are always watching to see how the pandemic evolves. But what we do know as well is that the Omicron variant is 75 per cent less severe than the Delta variant and previous variants. The lockdown that we saw during Delta where 13 million Australians were confined to their homes is not what we’re seeing right now. Yes, over summer we saw a reduction in some spending, but when you actually look at the aggregate credit card data, it’s still above where it was with Delta, still above where it was pre‑pandemic. And as the Treasurer, you know, I’ve got to take some tough decisions. You can’t just keep writing the cheques. You actually have to take some tough decisions. And now with the vaccination rates well over 90 per cent, Australia is well placed, I think, to live safely with COVID, despite the challenges it poses.
PATRICIA KARVELAS:
Treasurer, many thanks for your time this morning.
JOSH FRYDENBERG:
My pleasure.