PETER STEFANOVIC:
Treasurer, good morning to you. Thanks so much for joining us.
JOSH FRYDENBERG:
Nice to be with you Pete.
PETER STEFANOVIC:
So how did the Government get it so wrong?
JOSH FRYDENBERG:
Well the forecast for the number of people who were to be covered by the JobKeeper program at 6.5 million, and the cost at $130 billion, was undertaken by Treasury in the midst of the pandemic. We announced the program on the 30th March and in the week leading up we saw the number of cases increasing in Australia of coronavirus by 22 per cent in a single day. Now as you know Pete, we’ve had great success in flattening the curve, in reducing the number of coronavirus cases to an increase of less than half a per cent for 35 days straight. This health miracle has had a real economic benefit, and that has meant that more people have been able to stay in jobs without that level of Government support. So the JobKeeper program, while not supporting 6.5 million workers as initially forecast, is going to support around 3.5 million workers, and at $70 billion this still remains the largest temporary program of its kind Australia has ever seen, and a very substantial investment in Australia’s economic situation.
PETER STEFANOVIC:
So was it an overreaction based on health advice that was too pessimistic?
JOSH FRYDENBERG:
Well it was pessimistic because that was the scenario that we were facing at the time. As you know, Europe went into lockdown and Treasury thought that if we went into lockdown the economic impacts would have been very severe. We could have seen GDP fall by some 24 per cent in the June Quarter, which would have been equivalent to a $120 billion drop which is just a phenomenal amount to consider that we were facing. At the same time on the health front, as you know, we went out and sourced 5,500 ventilators in the belief there was going to be an increased demand for those ventilators. But today, only five Australians are on those ventilators as a result of the coronavirus. So we’ve had much more success than we initially thought and that’s a good news story for Australia and it’s also good news for the Budget and for the bottom line because it means that our borrowings will be $60 billion less than otherwise would’ve been the case and it means more people have been able to stay in a job without that level of Government support.
PETER STEFANOVIC:
But when you were initially told about those JobKeeper figures, did you question them and if so, did you doubt them?
JOSH FRYDENBERG:
No I’ve always supported Treasury in their forecasts and continue to do so. But this is a one in a century pandemic and it’s obviously very uncertain times economically and therefore very difficult to forecast the take up for particular programs. So it’s a bit rich of the Labor Party to be out there attacking the public servants and to be out there calling on the Government to spend more money when we know, that at $60 billion, that money will now no longer need to be borrowed and that is good news.
PETER STEFANOVIC:
Does this though now throw into question the reliability of Treasury forecasts? I mean, what if there’s a second wave, what do you do then?
JOSH FRYDENBERG:
Well if there’s a second wave, we’ll put the health measures in place that are required, based on the official medical advice, and at the same time it will have an economic impact that would need to be taken into account going forward. But right now, Australia is making real progress in flattening the curve, unlike other countries. Fortunately we haven’t seen the fatality rate that we’ve seen in the United Kingdom or the United States.
PETER STEFANOVIC:
Now I guess the problem here is Treasurer is that you’ve shown your cards, so, you know, the different industries and the different sectors know how much extra money that you wanted to spend. So I guess everyone’s got their hands out, so will you be expanding the eligibility criteria for JobKeeper?
JOSH FRYDENBERG:
Well we’re doing a review of the JobKeeper program in the month of June by Treasury and we’ll be able to look at how the program is rolling out and the support that it is providing. But I’ve made it very clear, and so has the Prime Minister, we’re not about to make wholesale changes to the eligibility criteria. There will be some sectors, like tourism, that will face ongoing challenges because those international borders will remain closed for some time. But the fastest way to get people back into work is through the lifting of the restrictions. And as you know, the National Cabinet Pete, agreed to those three stages of lifting of the restrictions and the estimate was that that would see 850,000 people back in work including 76,000 people in the arts sector. So we know that more people get back into work, the economy will be stronger as a result of those restrictions being eased.
PETER STEFANOVIC:
Okay. Well you mentioned tourism there, what sort of a lifeline will be applied to the tourism sector?
JOSH FRYDENBERG:
Well we’ve already announced significant relief through a special recovery program, as well, of course, the JobKeeper payments, as well as the cash flow boost and other measures that we’ve announced are all going to support the tourism sector. But we will continue to analyse what is happening in the various sectors across the economy as those restrictions are eased, and as I said, the best way to strengthen the economy, the best way to get people back into work, is through the lifting of those restrictions in accordance with the medical advice. And take Queensland for example, if that state border was not closed then no doubt, you would see many people from the south go up to the north for a holiday and that would create more jobs in Queensland. That’s a multi-billion dollar industry in Queensland and keeping those borders closed is going to be hindering the recovery of Queensland’s tourism sector.
PETER STEFANOVIC:
Okay, so is that a message to Annastacia Palaszczuk to open the border?
JOSH FRYDENBERG:
Well the Deputy Chief Medical Officer Pete, said there was no reason, from a medical perspective, as to why those borders should be closed and we don’t see any reason as to why the borders should be closed. You open up those domestic borders you will see more jobs in Queensland, you will see a stronger tourism sector and you will obviously see a stronger national economy overall.
PETER STEFANOVIC:
What about to casuals, will they be included? Will you be expanding JobKeeper to include casuals?
JOSH FRYDENBERG:
Well casuals are already included, you just have to be connected to your employer for 12 months or more, and that was the basis for the definition in the Fair Work Act for a long term casual and that is what we based our decision on. You’ve got the JobKeeper program, but you’ve also got the JobSeeker program at $1,100 a fortnight, so for those who cannot get the JobKeeper program they‘re getting the JobSeeker program, that was effectively a doubling of the old NewStart, the safety net that is in place. So people are getting support from a whole range of initiatives and programs from the Government.
PETER STEFANOVIC:
Labor wants you to front a Senate inquiry Treasurer, will you front one?
JOSH FRYDENBERG:
I’m not appearing before that Senate inquiry because that is not what convention has been, nor has that been the approach that the Labor Party took when they were last in Government. Gillard and Combet and other ministers, Garrett, were also requested to appear before Senate committees but they didn’t, because Senate committees are like Senate estimate processes where House of Representative Ministers have a representative before them and senior officials are before that committee. So this is again, a cheeky political point scoring by the Labor Party, from a desperate Labor Party indeed.
PETER STEFANOVIC:
Just finally Treasurer, your assistant Michael Sukkar said last week on radio that there would be wholesale changes if JobKeeper only applied to some 3 million Australians. It turns out that it is only being supplied to 3 million Australians or there abouts, so was he wrong?
JOSH FRYDENBERG:
Well firstly he didn’t say that, that’s actually a misrepresentation, with the greatest respect Pete of what he said. He said it would be a different conversation. We are conducting a review at the halfway point of the JobKeeper program. But your viewers should not lose sight of the fact that 3.5 million Australian workers are going to be covered by the JobKeeper program, more than 900,000 businesses have formally enrolled, together with the 1.6 million on the JobSeeker program, you’ve got 5.1 million Australian workers receiving support under one of those two schemes. This is an enormous and comprehensive economic response from the Government, together with the other initiatives we’ve undertaken, and just last week we had Australia’s AAA credit rating reaffirmed. So the Labor Party, they’ll go out there and call for us to spend more, and we know when you spend more, when you’re the Labor Party, you have to tax more. But this is all borrowed money, that’s why this revision and the number of people being covered by the JobKeeper payment is good news for the taxpayer. It means a lower debt in the future, which is better off for our children and our grandchildren.
PETER STEFANOVIC:
Okay, Treasurer Josh Frydenberg, appreciate your time this morning. Thanks for joining us.
JOSH FRYDENBERG:
Always good to be with you Pete.