PETER STEFANOVIC:
The Treasurer joins us live. Great to see you, Josh Frydenberg, out of Canberra.
JOSH FRYDENBERG:
Nice to see you, Pete.
PETER STEFANOVIC:
Yeah, good to see you too. Now, Australia's going to avoid a second recession, Treasurer. That is the good news this morning. The bad news, though, you had to shell out a lot of cash.
JOSH FRYDENBERG:
Well, we've certainly had to spend in an unprecedented fashion because we've faced the biggest economic shock since the Great Depression. I mean, if you remember back last year, Pete, Treasury thought that unemployment could reach as high as 15 per cent, more than 2 million Australians unemployed, that the economy could see a contraction of 10 to 12 per cent, even higher, if the restrictions were in for longer. But we responded with JobKeeper, with the JobSeeker coronavirus supplement, with $750 payments to veterans, to pensioners, to others on income support. And that full‑court press enabled Australia to have one of the strongest recoveries of any advanced economy across the world. And the unemployment rate is now below 5 per cent for the first time in a decade – now 4.6 per cent. So today's numbers do show that the economic come back is on. They are an improvement of around $8 billion to the budget bottom line for those three months to September. And it's off the back of more people getting into work and off the back of more businesses reopening. And that is a positive sign for our economy, particularly as we come out of these lockdowns into New South Wales and Victoria.
PETER STEFANOVIC:
How much has resources and coal underpinned that economic windfall?
JOSH FRYDENBERG:
Well, about half the increase in tax receipts has been income tax receipts and the other half for company tax receipts. And so obviously company tax receipts are driven not just by small businesses but also some of those larger businesses, as you say, reflecting higher commodity prices. But it's been more people in work. It's been more people working more hours. It's been a stronger labour market, which is helping to drive our economic recovery. And that's what should give a lot of people confidence about the coming months and, indeed, the economic recovery into next year, because we know that the Australian economy is very resilient. We know that households and businesses have stored more than $300 billion on their balance sheets that was not there at the start of the pandemic. We know that job ads are up by more than 30 per cent compared to the start of the pandemic. And we also know that Australia has maintained its AAA credit rating. So we're not without challenges, but we also can go forward with a lot of confidence.
PETER STEFANOVIC:
Okay, well, on that, on those challenges, you've got an issue with inflation that's coming. You've got an issue with wage growth that continues to nag and has been nagging for some time. What are your biggest concerns going forward?
JOSH FRYDENBERG:
Well, in terms of wage growth, the best way to lift wages is to get a tighter labour market – that is to drive the unemployment rate down so you get businesses competing for labour. And that's what we're seeking to do. The other way to drive wages up is to boost productivity, and that's why we're investing in skills. That's why we're investing in infrastructure. That's why –
PETER STEFANOVIC:
But wage growth has been flat for a long time, even before the pandemic.
JOSH FRYDENBERG:
We actually have seen real growth in wages, higher than it was under Labor. What we have seen, though, across the board, you know, challenges for the economy as we face this biggest economic shock since the Great Depression. No one is making a secret of that. Australia has endured a COVID recession, the first in nearly three decades. But our response has been to put money into the economy in a targeted, in a measured way, designed with programs like JobKeeper that have kept that employment relationship between employer and employee. We've put unprecedented amounts of economic support to encourage businesses to invest. We've seen about a 20 per cent increase in machinery and equipment purchases. You know, that's farmers getting a new harvester, that's tradies getting new tools, that's a café getting a new coffee machine. All of those pieces of equipment and machinery are going to drive productivity and ultimately drive a stronger economy going forward. So I think Australians understand the challenges that we have faced as a country, but they are also very proud of the fact that everyone has been responding, getting the vaccine and, of course, getting back to work.
PETER STEFANOVIC:
Victoria is united from this evening, Treasurer. You've been one of Daniel Andrews highest profile critics. Any regrets about pushing so hard against your own state?
JOSH FRYDENBERG:
Well, in fact, I've been pointing out some very clear facts about the need to reopen. So I welcome the fact that the Victorian government has listened to those calls and is now starting to reopen. Of course, we need to stay open and we need to, you know, follow what New South Wales did in moving very quickly at 70 and 80 per cent. But these are certainly welcome moves, and I note that in my call, Pete, for Victoria to enjoy the same freedoms that New South Wales did, I was joined by Nick Coatsworth, a former Deputy Chief Medical Officer, who said the medical evidence pointed to the fact that there was no reason that Victoria couldn't enjoy the same freedoms as New South Wales. Now Daniel Andrews eventually came on board to that conclusion, just as he came on board to the idea that you couldn't eliminate the virus. We welcome that. But the fact is, I have stood up every single day to support the people of Victoria. And the fact is we've provided more economic support as a federal government to the people of Victoria on a per capita basis than any other state. That's a remarkable thing – that the Morrison government, whether it's the COVID disaster payment, whether it's the business support payments, whether it's the JobKeeper program, whether it's the other incentives we've put in place, we have provided more economic support from the federal government to the state of Victoria than to any other state on a per capita basis. That is a sign of our deep commitment and our enduring commitment.
PETER STEFANOVIC:
Okay. Just finally, Treasurer, the French government says it's now up to the Australian government to propose tangible actions that embody the political will of our highest authorities to redefine the basis of our bilateral relationship. So what are the things that we need to do to make it right? Because it wants us to cease consumption and production of coal at national level and abroad. What do you make of that? Is that a non‑starter?
JOSH FRYDENBERG:
Well, Australia has just outlined its plan for net zero by 2050. That's a significant step forward. And as you know, we've reduced our emissions by more than 20 per cent since 2005 and at the same time our economy has grown by more than 40 per cent and an additional 3 million people are in work compared to back in 2005. So we've shown it's not a binary choice between reducing our emissions and growing our economy. We've also installed renewable capacity in our country faster than you've seen in other comparable nations. We've reduced emissions faster than Canada, faster than New Zealand, faster than Japan, faster than the United States. So we're actually, you know – we're walking the talk when it comes to reducing our emissions, and the Prime Minister will spell that out in Glasgow.
PETER STEFANOVIC:
Well, Treasury revealed this week that it hadn't modelled the effects of climate change and emissions reductions, had limited involvement in the net zero plan.
JOSH FRYDENBERG:
Well, Pete, firstly, Treasury officials were seconded to the Department of Industry, who did the primary modelling. Secondly, we did provide input in relation to particular issues like risk premiums, cost of capital were no action taken on a net zero target by 2050. Also there was also some long‑run assumptions that you take into account in the modelling, like population growth and so forth. And we did provide that advice. So we were involved. And, of course, you know, this is the Department of Industry, which is the responsible department for energy policy. They have put out the plan. The Prime Minister announced it with the Energy Minister, and it's been welcomed by business groups. I saw the Business Council of Australia says it gives confidence going forward. I've seen the Australian Chamber of Commerce and Industry talk about it being an important plan, a practical plan. And I've also seen the Australian Industry Group talk about it as well. So the various business groups have come in behind the plan. I think it's a possible step forward. There's still obviously a lot of more investments to make, but we'll make those investments we'll make those announcements in due course.
PETER STEFANOVIC:
Treasurer Josh Frydenberg, thanks for your time. Talk to you soon.