PETER STEFANOVIC:
Well joining me now is Treasurer Josh Frydenberg. Treasurer, good morning to you, thanks so much for joining us.
JOSH FRYDENBERG:
Nice to be with you Pete.
PETER STEFANOVIC:
So first of all, this code of conduct that you’re working on, to take on two of, perhaps, the most arrogant and powerful companies in the world. I’m sure most of the media industry here in Australia is right behind you on this one, but how much teeth will it have?
JOSH FRYDENBERG:
Well it’s going to be a mandatory code and that will ensure that the Googles and the Facebooks, these media titans, the social media giants if you like, they will be paying for content and Australia is seeking to be the first country in the world to successfully do that. You see, what we’ve seen Pete over recent years with the evolution of technology is the rise of these social media giants. It’s delivered enormous consumer benefits to people across the world and indeed here at home, but it’s also been the source of major disruption and its brought into question the viability of traditional media outlets and also the inadequacy of the current regulatory framework. So when Scott Morrison was the Treasurer, he tasked the ACCC to prepare a ground breaking report, it took them 18 months to prepare that report into the digital platforms, they made a number of recommendations, we accepted many of those recommendations and we tasked the ACCC to engage in discussions with the media industry about a voluntary code of conduct. Well the progress on that voluntary code of conduct has been very limited, so the Government’s taken the decision to set in place a mandatory code of conduct which will be prepared by the ACCC, released by the end of July and then brought into force thereafter.
PETER STEFANOVIC:
Okay, well you just touched on that. So by moving from voluntary to a mandatory code, is that because they weren’t playing ball?
JOSH FRYDENBERG:
Essentially so. It was going to be very difficult to reach agreement between the parties to ensure that the traditional media businesses that prepare the content, that they get rightly and fairly paid for it. And this is really a question of fairness, Pete. If you prepare the content and the digital platforms are using it to bring traffic to their websites then they should pay for it.
PETER STEFANOVIC:
Okay and what is the appropriate remuneration for media companies?
JOSH FRYDENBERG:
Well again, that’s to be worked out by the ACCC through the preparation of the Code. There are a number of different methods. You could have a cost method, i.e. a fraction of the cost of preparing that journalistic content, or you could have a value method; the value to the particular digital platforms of using that journalistic content on their websites. Again, that detail is to be worked out. We know that France and Spain have tried to go down the path or requiring these media titans to pay for the content but that hasn’t been as successful, so we’re very conscious of the challenges ahead.
PETER STEFANOVIC:
These companies are so big, they’re so powerful…
JOSH FRYDENBERG:
They are.
PETER STEFANOVIC:
…what sort of fines would they be looking at? I mean, is it something that is designed to hurt them? Or can you elaborate on that?
JOSH FRYDENBERG:
Well again, the penalties, the sanctions, the method of enforcement will be outlined within the Mandatory Code and that is work to be done. As you know, in relation to other breaches by some of those media companies, there’s been multi-billion dollar fines put in place, for example in the United States and across Europe there have been very large fines. I think you do need to have a set of fines that is commensurate with the conduct, and again that’s to be worked out by the ACCC in conjunction with the Government in the weeks ahead.
PETER STEFANOVIC:
Okay so when will this begin?
JOSH FRYDENBERG:
Well work is already underway and the idea is to have a draft mandatory code out for discussion by the end of July.
PETER STEFANOVIC:
Okay. There’s a similar kind of story out at the moment Treasurer, it relates to Malcolm Turnbull. It’s about Hardie Grant Books, I mean, just like the media industry I suppose, the publishers need their income as well. Do they, in your opinion, have a legal case in seeking damages given Malcolm Turnbull’s book was leaked by the Prime Minister’s office?
JOSH FRYDENBERG:
Look I’m not a lawyer Pete. I mean, sorry, I did do law and I did get admitted but I’m not currently practising the law and my job is to be the Treasurer of Australia, it’s not to opine on these matters by proffering legal advice.
PETER STEFANOVIC:
Okay, but moving away from legal cases then, I mean, you’re fighting for the media industry today and taking on Google and Facebook but, I mean, publishers should be given their money as well right?
JOSH FRYDENBERG:
Look I’m not going to go into the specifics of that because I’m not aware of the details. But in terms of what we’ve sort to do with our announcement today, is to put in place a mandatory code that leads the world, that is an example to the world, that ensures that journalists who produce content and the media businesses that they work for are properly compensated by these tech giants, by these social media giants, that have become bigger and bigger and as you say more powerful every year.
PETER STEFANOVIC:
Just one more on Malcolm Turnbull, should he be expelled from the Liberal Party?
JOSH FRYDENBERG:
Look my view about this is that we must respect the Office and indeed those who have held the Office regardless of their political persuasion. I vehemently disagree with some of the free character assessments that he’s handed out in this book, but I do respect the Office and I do respect those who hold it. This is a distraction, the Government and I have to say, the Party, have many other major issues to focus on, namely continuing to protect lives and livelihoods in what is a very, very challenging time with the coronavirus.
PETER STEFANOVIC:
Okay. Yes, well just on that, a couple of quick ones before you go, the Grattan Institute has released a report today suggesting that upwards of 3.4 million Australians will be out of work because of this, what are your thoughts on those figures?
JOSH FRYDENBERG:
Well as you know Treasury have prepared forecasts on the unemployment rate and we expect it to peak at around 10 per cent. It would’ve risen to 15 per cent, Pete, if it wasn’t for the JobKeeper package. As we saw with the most recent labour force data, unemployment ticked up from 5.1 to 5.2 per cent, but that wouldn’t have really reflected some of the conditions we’re now seeing on the ground. What we do know is that the Australian economy approached the coronavirus crisis from a position of economic strength, we saw growth rising at the end of last year, unemployment falling at the beginning of this year and we delivered the first balanced budget in 11 years. This has given Australia the financial flexibility and the financial firepower to respond to this crisis in a way that many other countries can’t.
PETER STEFANOVIC:
But Grattan says 3.4 million, so slightly higher than your projections, is that possible?
JOSH FRYDENBERG:
Again, there’ll be projections from a number of different groups. What we do is rely on the Treasury numbers and of course we’re doing everything to keep Australians in jobs and Australian businesses in business and that’s why the JobKeeper package was so important because it maintained that formal connection between the employer and the employee, so that once we get to the other side of this crisis, Australia and its economy can bounce back stronger than ever.
PETER STEFANOVIC:
But could that be right, or is it wrong?
JOSH FRYDENBERG:
Again, the best forecasts we have are from Treasury and as I say they have unemployment peaking at around 10 per cent.
PETER STEFANOVIC:
Okay. Just finally, Virgin, it appears a bit of a State of Origin battle is looming here because the Queensland Government wants to pitch in $200 million, the NSW Treasurer was here on Sky last night saying that he wouldn’t mind having them based out of Western Sydney and helping them out, where do you stand on this?
JOSH FRYDENBERG:
Well I think that reflects the importance people place on having two airlines in Australia and we would like to see Virgin survive, it’s going through a very challenging period, just as Qantas and the other airlines are as well. It will go through its commercial processes, it’s obviously got some very significant shareholders with some very deep pockets, that should be the first point of call for the business. But of course we’re watching this issue very closely, we continue to retain an open door to the parties and we would like to see Australia maintain its situation with two major airlines operating in the domestic routes.
PETER STEFANOVIC:
There is, it seems, a bit of a pickle that you’re in because you do need a buyer for Virgin Australia. You got China Southern Airlines that’s interested, which is of course controlled by the CCP, which is kind of why you changed foreign ownership laws. So what’s the balance here, is it anyone but them?
JOSH FRYDENBERG:
Look we don’t comment on individual Foreign Investment Review Board matters, whether they are before the Board or whether they are not, we just don’t add to that speculation in the media. We have a very strict national interest test and as you know, during the course of this coronavirus crisis we have removed that threshold on foreign investment so that every dollar of foreign investment is appropriately scrutinised and I think that’s been a welcome announcement.
PETER STEFANOVIC:
Okay. High speed rail, is that a chance Treasurer, linking, you know, if it’s not going to be the airlines, then linking Brisbane, Melbourne, Sydney, Canberra? Is that possible in a post-corona world?
JOSH FRYDENBERG:
Well I know there’s been lots of talk about high speed rail, my Dad for one is continuously in my ear about it between Melbourne and Sydney…
PETER STEFANOVIC:
…well it’s a great idea!
JOSH FRYDENBERG:
Again, they would be commercial decisions that would need to be taken, but there’s been lots of speculation. Our focus is rolling out our 10 year $100 billion Infrastructure Pipeline, which is the most significant Australia has ever seen. And when it comes to rail Pete, you’d be familiar with the Melbourne to Brisbane Inland Rail, which is a multibillion dollar commitment from the Federal Government, 1,700km of track, effectively doubling the freight capacity on those important routes, creating thousands of jobs in the process, that’s our rail priority right now.
PETER STEFANOVIC:
I reckon your Dad’s on the money Treasurer.
JOSH FRYDENBERG:
He often is.
PETER STEFANOVIC:
Good to have you, thanks for your time, appreciate it.
JOSH FRYDENBERG:
Thank you.