PETER STEFANOVIC:
Treasurer, good to see you.
JOSH FRYDENBERG:
Good to see you.
PETER STEFANOVIC:
Had any sleep?
JOSH FRYDENBERG:
Had a few hours, but obviously it’s a busy time with Budget night and Budget day, and it’s an important time for the country. It’s a challenging time for the country, but last night we set out our economic plan to rebuild the economy and to secure Australia’s future.
PETER STEFANOVIC:
To use a gambling parlance here, is the Government all in here? Have you moved all of your chips to the centre of the table?
JOSH FRYDENBERG:
The Government is putting every effort into getting people back to work. This Budget was all about jobs. Because the experience, Pete, of previous recessions in both the 1980s and the 1990s, is it takes a long time to get people from the unemployment queues back into work. So in the 1980s it took about six years to get the unemployment rate down below six per cent from where it started. In the 1990s, it took 10 years to get the unemployment rate back below six per cent. We want to move faster than that, and that’s why we’ve put in place a whole series of measures designed to boost business investment, to put in place a JobMaker hiring credit to get young people into the workforce, tax cuts, because that is money that can be spent across the economy and create tens of thousands of jobs.
PETER STEFANOVIC:
But the reason I put it to you in that way, because it is a bit of a gamble here because you don’t know what’s going to happen in the months and perhaps even years ahead. You don’t know really, what’s going to happen with a vaccine or further shutdowns which may well mean the Budget could be out of date very soon.
JOSH FRYDENBERG:
Well, this is a very uncertain economic climate, and not just here in Australia, but also globally. And primarily this is a health crisis that is having a very severe economic impact. But vaccine or not, these business investment incentives are the right policies at the right time. Vaccine or not, this JobMaker hiring credit is the right policy at the right time. We have some assumptions in that Budget, but what we do know is we have to live with COVID-19 until a vaccine is found, and Australia’s success in suppressing the number of new cases is helping people to get back to work right across the country as the restrictions are eased.
PETER STEFANOVIC:
Okay, critics are about, I’ll lay them out in single form. First of all, we had Ian Henschke on the show a little earlier. Very critical of what has been applied to aged care. He said there’s no way near enough. What’s your view on that? Home care packages are still way short.
JOSH FRYDENBERG:
Well, 23,000 last night, $1.6 billion, a significant investment –
PETER STEFANOVIC:
But that’s still a long way short. That’s still a lot of people waiting for –
JOSH FRYDENBERG:
– and it builds on a record commitment from this Government about home care packages. We are awaiting the aged care Royal Commission report, which I mentioned last night in my speech, which will come down next February. And we will have, again, a comprehensive response which will include more investment following that report. But we’ve constantly put money into aged care and aged care funding is at a record amount. Now there’s obviously also seniors and pensioners who are going to benefit from these two $250 cash payments – one later this year, one early next year. That builds on the two $750 payments that we’ve previously announced, which has helped cushion the blow of COVID-19.
PETER STEFANOVIC:
And what about child care? A lot of people say – critics are out this morning as well – Labor's saying, the unions are saying, no love for child care.
JOSH FRYDENBERG:
There’s a record investment in child care in this Budget. And what we saw pre-COVID-19 was that female workforce participation increased substantially off the back of our investments in child care, which were able to allow more people to put their children in child care and work at the same time. So we are focused on supporting people who use child care and getting that balance right.
PETER STEFANOVIC:
Okay, a lot of incentives for people aged under 35. There are critics again, who suggest, well, where are the incentives for people over the age of 35? Do you see that argument? Where are the incentives there for people over 35?
JOSH FRYDENBERG:
So, again, JobMaker hiring credit should not be seen in isolation, Pete, from the range of other measures which are designed to boost jobs and economic activity. We have programs like the JobTrainer program, which is 340,000 training places, which is able to get people who are beyond the age of 35 into those places to re-skill and to retrain. We have also got a range of other measures designed to boost infrastructure spending, which is creating jobs right across the economy.
The economy is a complex ecosystem and every measure in this Budget is seeking to work together. The loss carry-back measure works very neatly together with the immediate expensing allowance so that businesses can write off the cost of new machinery and equipment in year one. All these measures interlink and they’re designed to do one single thing; namely, to create jobs, to get that unemployment rate down.
PETER STEFANOVIC:
It’s going to cost business a lot, though, to train people over the age of 35.
JOSH FRYDENBERG:
Well, again, we’re helping to support those training measures. I mean, take the JobTrainer program, take the 50,000 new places that we announced, funded in last night’s Budget to help people in those areas, that there is a need in the workforce.
PETER STEFANOVIC:
On stage two tax cuts – and I know this from a lot of people I’ve been speaking to – you want them to spend. That’s fair enough. But what if people are too afraid to spend because they fear that they are eventually going to lose their jobs, so they’re going to save that money and not spend it anyway?
JOSH FRYDENBERG:
Well, the first thing to say is it’s not for me as the Treasurer of Australia to tell you how to spend your money…
PETER STEFANOVIC:
But you’re hoping that people do spend the money.
JOSH FRYDENBERG:
And experience will tell you that they will. And the savings ratio has gone up. But that’s as a function as much of the health restrictions as a function of anything else. Because you can’t go out to your local café or your restaurant, or you can’t travel across the border to your favourite tourist spot, you’re saving more money or you’re paying down your mortgage. Now they’re choices that you will make. But what Pete, we are enabling Australians to do is have more of their own money, and as the restrictions are eased, more money will be spent across the economy and it again, is Treasury’s forecast that that measure alone - bringing forward stage two of our tax cuts, putting in place an additional lower middle income tax offset - that will see someone watching our show, your show this morning at home who’s on $60,000, pay $2,160 less tax this year compared to before our plan was rolled out. That is going to create 50,000 jobs.
PETER STEFANOVIC:
You didn’t bring forward stage three tax cuts, though. Is that because you weren’t up for the political fight?
JOSH FRYDENBERG:
We’re maintaining a watching brief. Bringing forward stage two tax cuts…
PETER STEFANOVIC:
What does that mean?
JOSH FRYDENBERG:
...Bringing forward stage two tax cuts is what the economy needs. That’s what the economy needs right now. We’ve legislated stage three. We took it to the Australian people at the last election. They rejected our political opponents’ high taxes. They voted in favour of our lower taxes. So we’ll maintain a watching brief to see what the economy needs going forward.
PETER STEFANOVIC:
So it might happen?
JOSH FRYDENBERG:
Well, again, it’s not coming forward as stage two is.
PETER STEFANOVIC:
When it comes to JobSeeker, no changes around that just yet. You’re going to wait, a watching brief on that one too. Would you suggest that that will stay where it is beyond December, though?
JOSH FRYDENBERG:
Well again, the Prime Minister and I have spoken about leaning in on the JobSeeker credit supplement. As to the rate, that is a decision that is yet to be taken. We want to see where the labour market dynamic is between now and closer to the end of the year.
PETER STEFANOVIC:
You’re going to have one million fewer Australians by 2022. What sort of an effect is that going to have? I mean that’s a lot of people not spending?
JOSH FRYDENBERG:
Well, if you’re talking about the population and net overseas migration numbers, Pete, that has a big impact on the economy. There are three drivers of economic growth. There’s the participation in the workforce, there’s the productivity of our economy, and then there’s the population. And for the first time in 46 years, we’re going to see net overseas migration go negative and population growth is going to be its lowest in more than 100 years. I mean that’s a remarkable statistic. But again, it reflects the remarkable times that we’re in with the closed borders. People can’t travel as they otherwise should, and people are feeling uncertain too, about their economic climates. So the fertility rate has actually declined as well.
PETER STEFANOVIC:
As you know, it’s been well documented, a year ago you promised a surplus. You thought it would be a surplus. Will you ever see one?
JOSH FRYDENBERG:
Again, I’m not putting a date on it for obvious reasons, but we have battled and the nation has battled through the drought, the floods, the fires, and no-one certainly was expecting a pandemic like COVID-19 at the beginning of this year. But Australians and Australia is remarkably resilient and all your viewers watching us this morning should have hope. They should be optimistic as they go about their day, standing around the kitchen table, going off to school, going off to work. They should be optimistic about where Australia is placed compared to the rest of the world. We will get through this. And we will get through this together.
PETER STEFANOVIC:
Okay. Treasurer Josh Frydenberg, appreciate your time this morning. Thanks for joining us.
JOSH FRYDENBERG:
Always a pleasure.