PETER STEFANOVIC:
Thanks so much for joining us.
JOSH FRYDENBERG:
Nice to be with you.
PETER STEFANOVIC:
New figures are out today showing how bad things are in Victoria, following its lockdown. Is it as bad as you feared?
JOSH FRYDENBERG:
It is worse. It is a terrible situation in Victoria. Up to 400,000 people will lose their job or see their hours reduced down to zero. The hit to the national economy is somewhere between $10-12 billion. The figures that we’ve put out today indicate that spending is down by 30 per cent in Victoria, whereas around the rest of the country it is down by just 3 per cent. We’ve seen thousands of people added to the unemployment queues in Victoria, whereas we’re seeing a recovery in other parts of the country. This is obviously the proof point for what happens when you have blunders like what we’ve seen in hotel quarantine, the testing and the tracing in Victoria has not been up to the standard of other states. What businesses are looking for and what Victorian families are looking for now, are messages of hope. Messages to explain the road out as opposed to a longer road in. They want to know when can their businesses re-open, when can people get back to work, when can families be reunited and when can kids get back to school?
PETER STEFANOVIC:
Probably the figure that surprised me the most, Treasurer, and want to get your thoughts on is for the March quarter, where Treasury suggest that 60 per cent of 1.75 million JobKeeper recipients will be from Victoria. That is a long way away, why are you expecting things to be so bad so far away?
JOSH FRYDENBERG:
Because what we’re seeing right now is a huge hole being created in the Victorian economy with the stage 4 lockdowns. They are very significant and the impact will be felt for some time. That’s why the quicker we get a plan from the Victorian Government to ease the restrictions as the virus has gotten under control, the better that our economy, nationally and in Victoria, will be.
PETER STEFANOVIC:
So, it’s going to need some serious repair work here. Might you have to extend JobKeeper again?
JOSH FRYDENBERG:
We have extended it and we have expanded it, with a commitment of around an extra $30 billion. At $101 billion Pete, this is the single largest economic support program that any Australian Government has ever undertaken and in the words of the Governor of the Reserve Bank, it’s a remarkable program. It is helping to keep employees and employers together and that is vitally important, not just in Victoria, but also around the rest of the country, particularly in those sectors that have been hardest hit by the closure of the international borders like aviation and tourism.
PETER STEFANOVIC:
If things are still going to be bad at the March quarter next year, might you need to expand beyond March next year?
JOSH FRYDENBERG:
We’ve always said it was a temporary program, it’s a targeted program. It is demand driven but with changes to the employer turnover test, as well as the employee eligibility tests, we’ve allowed more people to come on the program and, as you know, there will be more people from Victoria on JobKeeper than from the rest of the country combined.
PETER STEFANOVIC:
Should the Victorian state government have to chip in more?
JOSH FRYDENBERG:
They do need to spend more. That is the unequivocal message from the Governor of the Reserve Bank. The Governor has made it clear that the states need to spend more to boost aggregate demand, to help the recovery. To put it into perspective for you, Pete, we at the Commonwealth level have committed $314 billion. That is around 15.8 per cent of GDP. In contrast, the states have contributed some $48 billion, or around 2.4 per cent of gross state product, they need to spend more. They know it. Whether it is on infrastructure projects, whether it is assisting local government, or whether it is in more payroll and land tax relief. They need to step up here and support their communities just as the Federal Government is.
PETER STEFANOVIC:
This just might be a curtain raiser to the National Accounts coming out on Wednesday. What are you expecting there?
JOSH FRYDENBERG:
A significant fall in GDP; the largest single quarterly fall that Australia has seen. That is a result of both the demand and the supply shock as a result of COVID-19.
PETER STEFANOVIC:
The Australian Industry Group today is calling for tax cuts that are slated to begin in 2022, Treasurer, to be in place from January 1 next year. Is that an option?
JOSH FRYDENBERG:
We’re working through our options, whether it is in tax or other areas. What we have before the Parliament right now is an important piece of legislation to extend the JobKeeper payments, but particularly to ensure there is industrial relations and workplace flexibility that goes alongside JobKeeper. It is important that that legislation passes the Parliament this week because we know from JobKeeper recipients, namely the businesses who are supporting their employees through JobKeeper, that those flexible IR arrangements have been critical to them being able to keep their doors open.
PETER STEFANOVIC:
Just finally briefly Treasurer. The Health Services Union, they want to increase the Medicare levy to be able to increase funding to the aged care sector. Would you be open to that at all?
JOSH FRYDENBERG:
We have no plans to do that. Our focus is on lower taxes, as your previous question indicated. We do commit to spending more on aged care by the tune of an extra $1 billion a year. That is what we’ve been doing. We’ve been spending by more than $1 billion extra a year with aged care. Of course, we recognise this is a continued area of importance to the economy and to the community.
PETER STEFANOVIC:
Treasurer, Josh Frydenberg, appreciate your time. Thanks for joining us as always.
JOSH FRYDENBERG:
Bye bye.