SABRA LANE:
Good morning and welcome to the program.
JOSH FRYDENBERG:
Good morning Sabra.
SABRA LANE:
The Dow Jones down 10 per cent, the worst day since Black Monday 1987. The dollar is down to 62 cents, is this all going to undo your stimulus package?
JOSH FRYDENBERG:
Well in terms of the market volatility, obviously that’s reflecting the great deal of uncertainty that we have now with the global pandemic. But Australians can be assured that the banks are very well capitalised. I met with the bank chiefs just a few days ago. Australian corporate balance sheets are in much better shape than they were even during the time of the GFC and this stimulus package that we announced yesterday is very substantial, $17.6 billion has been welcomed by a broad cross section of stakeholders and it will support the economy at this time.
SABRA LANE:
Sure, but we’ve seen this massive downturn yet again overnight, is that going to undo your work?
JOSH FRYDENBERG:
Well look we just don’t know how the virus and its impact will evolve. But what we can control is our response and that has been announced yesterday, and the measures that we announced were very targeted, they’re all temporary, they’re all proportionate, they’re designed to support cash flow of businesses, designed to encourage investment and they’re also providing $750 cash payments to six and a half million Australians who have a propensity to consume and spend that money throughout the economy.
SABRA LANE:
Animal spirits though, are unleashed right now. How can you calm the market here? How can you calm consumers and give them the confidence to actually spend that money because they might want to actually hang on to that money now.
JOSH FRYDENBERG:
Well of course people will do what they may. But this is a Team Australia moment. This is now a time for Governments, Federal and State, businesses big and small, as well as Australian consumers to get out there, support their community, support the economy because there will be another side to this coronavirus and we want to be stronger and better on that other side.
SABRA LANE:
Spend, save Australia, save jobs, is that your message?
JOSH FRYDENBERG:
Well of course the more money that is spent, the better it is for the economy. Spend it at your local store, spend it at a local restaurant, go and take a holiday within Australia, that’s all good news for the economy.
SABRA LANE:
If they don’t spend, what happens?
JOSH FRYDENBERG:
Well again, I can only take the best advice from Treasury. Treasury said that this package is very well calibrated, it’s obviously very substantial, we have the Budget in eight weeks’ time. We’re getting increased information from the Bureau of Statistics and from the banks on real time data to see how this package and these measures are being implemented.
SABRA LANE:
How do you ensure that the money is spent stimulating the economy? And just doesn’t prompt another wave of panic buying and people hoarding stuff.
JOSH FRYDENBERG:
Well as you know the most substantial measure in this package was designed to boost the cash flow of small and medium size businesses because we want Australians to stay in a job, and by supporting those businesses who employ people that will be very important. So too with our measure to support 117,000 apprentices. A wage subsidy, 50 per cent, up to $21,000, will be very significant in keeping that apprentice chef or that plumber or that carpenter or that sparky in a job.
SABRA LANE:
You’ve said that the package is scalable and that you’ll be getting access to bank and ATO data in real time, when do you expect to see positive results and know when the Government might have to adjust, scale it up or scale it back?
JOSH FRYDENBERG:
Well we’re maintaining a watching brief and you know, this is obviously a very delicate and difficult situation but it continues to evolve day by day. I mean what we’ve seen in Italy in recent days, what we heard from the United States yesterday, was unpredicted weeks before. So we will continue to monitor the information as it comes to hand, take the best advice of our Chief Medical Officer, take the best advice of Treasury and continue to take the necessary action.
SABRA LANE:
The New South Wales Chief Medical Officer says 1.5 million people could get the virus in New South Wales alone. And it’s important to point out that most people who get it will recover. But given that, would it be more prudent to put in place social distancing measures now?
JOSH FRYDENBERG:
Again we’re taking the best advice of the Chief Medical Officer. As of yesterday, that advice was that mass gatherings should not be cancelled. But what we have done of course is to better resource the health system, whether it’s medical stockpiles, whether it’s medical research, whether it’s the training of aged care workers, whether it’s telehealth, whether it’s respiratory centres. All those things are being undertaken with a $2.4 billion package that the Prime Minister and the Health Minister announced just days ago.
SABRA LANE:
The Grand Prix in Melbourne, would it make sense to cancel that now? There are reports that it has been cancelled.
JOSH FRYDENBERG:
Well I’ve seen those reports and obviously like you, I’ll be waiting for appropriate announcements by the appropriate authorities.
SABRA LANE:
Lewis Hamilton had something to say, he says he can’t understand it, that Team McLaren has withdrawn because one of their team members have tested positive.
JOSH FRYDENBERG:
Again, let’s wait and see what happens.
SABRA LANE:
This all means of course that the surplus that you promised is no longer there. How long will it be before Australia is back in surplus or are you now reluctant to say that, given that you promised we would be in the black right now and of course we’re not?
JOSH FRYDENBERG:
Well obviously the Government has taken very conscious decisions to spend significant amounts of money to support the economy and that’s what the Australian people would expect us to do. When it comes to the Australian economy, we’re approaching this challenge from a position of real strength. The economy was actually turning up last year. What Treasury have told me Sabra, is that in the June Quarter this package could contribute 1.5 per cent to GDP growth but we don’t actually know the full impact of the coronavirus. So again, it’s quite uncertain but what we do know is that these measures will support the economy at this time.
SABRA LANE:
Have you learnt anything from that, from promising a surplus that is not here now?
JOSH FRYDENBERG:
Well Sabra what you must acknowledge is that we inherited a deficit of $48.5 billion and we delivered the first balanced Budget in 11 years. That’s a significant achievement and the responsible economic management that we have undertaken…
SABRA LANE:
Sure, have you learnt anything…
JOSH FRYDENBERG: …
has actually got us into a positon where we now have the financial firepower to respond. The Australian people know that we can be trusted when it comes to economic management and now we’ve put ourselves in a position that we have the ability to respond like many other countries don’t.
SABRA LANE:
A moment of introspection? Have you thought about it?
JOSH FRYDENBERG:
Well what I do know is that we’ve delivered the first balanced Budget in 11 years and what I do know is that the balance sheet of the Commonwealth is in good shape to respond as required.
SABRA LANE:
Treasurer, thank you very much for joining AM this morning.
JOSH FRYDENBERG:
Good to be with you.