SABRA LANE:
Treasurer, good morning, and welcome to AM.
JOSH FRYDENBERG:
Nice to be with you, Sabra.
SABRA LANE:
The Tax Office update on the JobKeeper numbers, does that mean the economy’s bouncing back faster than you’d hoped?
JOSH FRYDENBERG:
Certainly we’re seeing strong momentum in the economic recovery. And the JobKeeper numbers for the month of October are better than what we forecast at Budget. There are two million fewer Australian workers and about 450,000 fewer Australian businesses that are on JobKeeper in the month of October compared to the September quarter. Now this builds on earlier positive economic data that we got, 178,000 jobs being created in the month of October. We’ve seen consumer confidence up 11 out of the last 12 weeks. Australia’s AAA credit rating has been reaffirmed. And the effective unemployment rate, which is the number that we watch very closely, Sabra, has come down from 9.3 down to 7.4 per cent. So certainly things are trending in the right direction, but we know that the economic recovery will be long, it will be hard, and there is certainly a lot of ground to make up.
SABRA LANE:
Does that mean, then, that the recession is over? The National Accounts are due out on Wednesday, and some economists are tipping a growth rate for the September quarter of 2.5 per cent. If so, technically that would mean the recession is over, even though some Australians, many Australians, will feel like it’s still there.
JOSH FRYDENBERG:
Well, let’s wait and see what the national accounts numbers show on Wednesday. What we do know is…
SABRA LANE:
You’re confident?
JOSH FRYDENBERG:
We’ve seen some partial data already, on capex numbers on construction, and that does show that these areas continue to be challenging. We do know that in the June quarter the economy contracted by seven per cent, which was a record amount. So let’s just wait and see what happens on Wednesday, but we do know that…
SABRA LANE:
Are you confident?
JOSH FRYDENBERG:
…the economic support is making a difference and that the economy is recovering.
SABRA LANE:
Are you confident about it?
JOSH FRYDENBERG:
Well, look, I’m not Nostradamus; I’m not going to make a prediction for Wednesday. The numbers will be what they are. This is primarily a health crisis, and as long as we suppress the virus successfully, Sabra, across the country, and it’s very pleasing to see recent developments in Victoria after that devastating second wave, as long as we suppress the virus I’m confident that our economy will continue to recover strongly.
SABRA LANE:
Well, as you just said, the effective unemployment rate now I think is 7.4 per cent.
JOSH FRYDENBERG:
Correct.
SABRA LANE:
Back in March did you ever think it would rebound this quickly?
JOSH FRYDENBERG:
Well, not as quickly as we’ve seen. And you would have had to find a very optimistic economist who would indicate that. I mean, we have to go back to what we saw in early March. I mean, the start of this pandemic 1.3 million Australians either lost their jobs or saw their working hours reduced to zero. Now 80 per cent have seen their jobs come back, which is a really positive sign. The global economy is expected, according to the IMF, to contract by 4.4 per cent this calendar year. That compares to a contraction of just 0.1 per cent during the GFC. So the size of the hole in the global economy from this crisis is enormous. Now, a lot of other countries are going through second and third waves. That’s going to affect Australia as well because they’re our export markets. And we may be an island geographically but we’re certainly not an island when it comes to the economy. So let’s just wait and see what happens into the new year. But I’m certainly more confident than I was earlier in the year about the speed of the recovery.
SABRA LANE:
One reason for the strong recovery is Australia’s suppression of COVID. And it looks like some of the states are actually eliminating it even though publicly they said that wasn’t their aim. Are you prepared to now admit that you went too hard on Daniel Andrews in Victoria? You labelled the state’s strategy at one point bloody-minded and unforgivable?
JOSH FRYDENBERG:
Well, firstly, there were big mistakes in Victoria. I’m not here to litigate that. We’ve got a code inquiry which, ironically, is coming out just days before Christmas and you had contracts that no-one appeared to sign in Victoria that led to private security guards and…
SABRA LANE:
Gosh, you’re not arguing the Commonwealth Government never does anything like that?
JOSH FRYDENBERG:
…overseeing a fateful quarantine failure. Now, the economic consequences, the human consequences, of what happened in Victoria will be felt not just this year but for years to come. And that’s very tragic. So my view has always been, Sabra, it didn’t have to come to this because other states didn’t go through it. But I’m not here to re-litigate the Victorian experience; I’m here to say to you and to the Victorian people that the Morrison Government is providing unprecedented support to those in Victoria. More than $35 billion has already poured in to the pockets of families and businesses through JobKeeper, JobSeeker, the cash flow boost and other measures. And we’ve got some $75 billion which may go into Victoria based on Budget estimates.
SABRA LANE:
You say you’re not going to re-prosecute. Everybody acknowledges that there appears to have been major failures with hotel quarantine in Victoria and a lack of answerability. But the process for getting the state back on track and for eliminating COVID you did say was bloody-minded. Are you prepared to say you went too hard?
JOSH FRYDENBERG:
Look, I don’t regret any of the comments that I made, Sabra, because when you read those open letters from GPs about giving antidepressants to kids as young as 12 as a result of the mental health consequences of that COVID-related lockdown, it just breaks your heart. Now I said my piece in Parliament and…
SABRA LANE:
Alright, we’ll move on.
JOSH FRYDENBERG:
And what I’m saying to the people of Victoria is that the Morrison Government is there to support them through this crisis.
SABRA LANE:
All right. On China, the Prime Minister says the Government will support producers who’ve been affected by the responses that Beijing is carrying out. Given some companies can’t instantly find new markets to replace China, what kind of support are you considering?
JOSH FRYDENBERG:
Well, I’m not going to again pre-empt decisions in relation to that. What I would say is that, like all other challenges that we are faced through this crisis, we’ll methodically work through our options and make decisions based on the best advice to us. This is difficult for those export-orientated industries who have enjoyed a strong market in China. But the relationship is very much mutually beneficial, Sabra, between China and Australia. Our iron ore has underpinned their economic growth. Our agricultural produce is amongst the best in the world. Now we obviously would like to resolve these issues in a respectful, mutually beneficial dialogue with China, but if we can’t do it bilaterally we retain the option to use multi-lateral forums.
SABRA LANE:
All right. Australia is considering a formal protest at the WTO. That won’t be a quick and it might actually prompt Beijing to be even angrier. Has the Government factored in that in its response?
JOSH FRYDENBERG:
Well, again, as the trade minister has made clear, that option for us is now under active consideration. It’s not like we haven’t been to the WTO before with other trade-related matters. But, you know, these are very challenging times, and the list of 14 grievances that China issued recently in respect to Australia, I mean, on none of those would we walk back from our positions. We ultimately are elected to uphold the national interest, and whether that’s in relation to foreign investment, whether that’s in relation to foreign interference, whether that’s in relation to a whole host of other national security related matters, we take decisions that are based on the national interest. And in that list, as you will remember, there was criticism of Australia’s free press and the democratic right of elected politicians to speak their mind. No-one would expect us, Sabra, to do anything but uphold those rights.
SABRA LANE:
Treasurer, thanks for talking to AM.
JOSH FRYDENBERG:
Always a pleasure.