PETER STEFANOVIC:
Treasurer, good to see you. Thanks for joining us as always.
JOSH FRYDENBERG:
Good morning Pete and welcome back.
PETER STEFANOVIC:
Thank you very much. Good to be here. Now, I mean, I've just come from the US. As you know, it is a basket case when it comes to COVID and they can only look on with envy, surely, at what we're doing here in Australia at the moment and, in fact, Dr Anthony Fauci today has said as much. Are you even surprised by Australia's rapid rate of recovery?
JOSH FRYDENBERG:
Well, Australia is certainly performing far better than so many other nations around the world. Both the health front but also on the economic front, Pete, and these latest JobKeeper numbers are very encouraging. They indicate that Australia's economic recovery is well underway and is gaining momentum. That preliminary data from the ATO for the month of October shows that there are two million fewer workers who are on JobKeeper in October compared to the September quarter and 450,000 fewer businesses that are on JobKeeper in October, compared to the September quarter. And Pete, this builds on earlier positive data that we saw. We saw 178,000 jobs that were created in the month of October. We've seen the effective unemployment rate across the country come down from 9.3 down to 7.4 per cent. We've seen improvements in Victoria as the virus has been suppressed. And we’re seeing right across the country strong jobs growth, confidence is coming up, and we've seen, in 11 out of the last 12 weeks, consumer confidence rising. So we're certainly trending in the right direction but we know that the road ahead will still be hard, it will be bumpy, it will be long. There's a lot of damage that has been done, not just to the national economy but to the global economy, and we've got to make up a lot of ground. That's why the JobKeeper program will remain in place to the end of March and that's why in this year's Budget we put in so many measures to support a private sector led recovery.
PETER STEFANOVIC:
But that difference that we're talking about here goes to show, doesn't it, that you were expecting things to be a whole lot worse than what they are now. So what specifically is that down to?
JOSH FRYDENBERG:
Well, it's down to a combination of factors. Firstly, it's the suppression of the virus across the nation. This is ultimately and principally a health crisis with devastating economic consequences. So the fact that we have been successful in containing new outbreaks, the fact that in Victoria that second wave, which was so damaging, has now come under control augurs well for the economy going forward. But certainly our initiatives at the Federal Government level, the initiatives at the State Government level have combined to provide significant stimulus to the economy but also to give business confidence to continue to invest, to hire and to grow. And the fact that of the 1.3 million Australian workers who either lost their jobs or saw their working hours reduced to zero at the start of the crisis, 80 per cent of those, Pete, are now back at work with some hours at work.
PETER STEFANOVIC:
So effectively what does that make Treasury's unemployment rate at the moment?
JOSH FRYDENBERG:
Well, we'll update that in the context of MYEFO in December. What we do know is that originally Treasury was forecasting unemployment to reach around 10 per cent by the end of this year. The latest forecast was around eight per cent. Then we'll obviously update that in the context of the Budget, but certainly…
PETER STEFANOVIC:
Getting better though, right?
JOSH FRYDENBERG:
Certainly it's looking better than initially forecast.
PETER STEFANOVIC:
Okay. But, and how does Victoria weigh into things at the moment?
JOSH FRYDENBERG:
Well, in terms of Victoria, their effective unemployment rate, so that's those people who either lost their jobs, seen their working hours reduce to zero or left the workforce altogether, that rate hit 14 per cent which was the highest across the nation. It's now come down to 10.5 per cent, so it's trending in the right direction but, as you saw in the latest budget numbers from Victoria, they're expecting their economy to contract by four per cent this year. That compares to a national average of 1.5 per cent. So clearly their economy has a lot of work still to do.
PETER STEFANOVIC:
Will it lose its AAA rating?
JOSH FRYDENBERG:
Well again, they're not decisions for government. They're decisions for the independent credit rating agencies, but every state will respond to their own economic circumstances with the budget that they see fit. But certainly what we're seeing in Victoria is those economic consequences from the devastating second wave.
PETER STEFANOVIC:
Yes, okay. Well, you're moving on from one problem, being the pandemic, to another which is China and it only appears to be intensifying at the moment. Is it straight‑up discrimination what's going on at the moment?
JOSH FRYDENBERG:
Well, clearly China's being more assertive, and you've seen in that list of 14 demands or grievances that they issued that they go to the heart of who we are, our free press, our parliamentary democracy, and, of course, we've taken other measures that have been designed to protect the national interests, whether that's around foreign investment or in other related security matters. We do that not because of any one particular country but because it's in Australia's national interest and we don't walk back from that, we don't make apologies for that, and Australians would expect us to stick to our national interest and to uphold it. At the same time, what we're seeing with China is, you know, a pretty challenging environment on the trade front and, you know, and we're trying to work through those issues.
PETER STEFANOVIC:
Okay. What sort of targeted support measures are you looking at at the moment for those industries that are getting clobbered by China?
JOSH FRYDENBERG:
Look, again, I'm not going to preempt outcomes in those areas. All I'd say is that, like every other challenge that we've faced during in this pandemic, we've methodically worked through those issues. We've stuck to our key principles, when it comes to targeted support and temporary support and again we'll work through, whether the trade challenges or other challenges that come up time to time across the economy.
PETER STEFANOVIC:
But there's got to be something, right? I mean, this is a situation that is not of their doing.
JOSH FRYDENBERG:
Well, clearly there's many in those trade‑affected industries who are going to be impacted by China's actions here. But China understands it's a mutually beneficial trading relationship worth more than $200 billion a year.
PETER STEFANOVIC:
Well, they're not behaving like that at the moment, Treasurer.
JOSH FRYDENBERG:
Well, it's certainly a challenging time. But they understand that our iron ore has helped underpin their economic growth. Our produce is amongst the best in the world. Our services, whether its tourism or education, has been of great benefit to the people of China. So this is a challenging time. We'll work through it. We're always ready to have a mutually beneficial and respectful dialogue with China, but again we just have to deal with these issues as they arise and that's what we're doing.
PETER STEFANOVIC:
You must be getting cheesed off though about what's going on at the moment, particularly when it comes to the wine industry here, it's looking at a $1.2 billion loss?
JOSH FRYDENBERG:
Well, I certainly feel for those exporters and I'm certainly focused on those jobs in those industries. We've got a great story to tell, Pete, when it comes to our trade‑exposed sector. I mean, when we came to Government two‑way trading relationships covered 26 per cent of our free trade agreements, covered 26 per cent of our two‑way trading relationships. Today it's more than 70 per cent. And as you know we've expanded into other markets like Korea, like Japan, like Indonesia with free trade agreements. So we've continued to diversify our export markets and promote Australia's, you know, wonderful exports, whether they're goods or whether they're services.
PETER STEFANOVIC:
Okay. Treasurer Josh Frydenberg, good to see you. Chat to you again soon.
JOSH FRYDENBERG:
Good to be with you.