TONY JONES:
Josh Frydenberg, I think we’ve established contact. Good morning, Treasurer.
JOSH FRYDENBERG:
Good morning, and Melbourne is still the nation’s sporting capital, and long may it be so.
TONY JONES:
Well, I hope Daniel Andrews is listening, because he reckons you’re anti-Victorian, doesn’t he?
JOSH FRYDENBERG:
I think that was just a cheap political line to distract from his own challenges. The reality is I’m very proud of Victoria and Victorians.
TONY JONES:
Okay, so the poll we’ve been running this morning, let me ask you this – a yes or no – should Novak Djokovic play at the Australian Open if he’s not vaccinated?
JOSH FRYDENBERG:
Well, if he’s got a medical exemption that’s different, and that would provide an avenue for him to play. But, you know, the rules should be consistently applied, and obviously he’s a great tennis player. I’d love to see him in the Australian Open. If he’s got a legitimate medical exemption then that would be a pathway forward for him.
TONY JONES:
So do you think that that medical exemption should be legitimised by tabling it and telling us what it is?
JOSH FRYDENBERG:
Well, I think the medical experts and the proper authorities should have visibility over it. I don’t think it needs to be made clear for every one of your listeners today. I just think that, you know, we have to back our authorities here, and obviously they will need to satisfy themselves. But, you know, Djokovic has been a great Australian tennis champion. He’s obviously quite a complex character, but there’s no doubt about his tennis skills. And I think it makes for a better Australian Open if we have the full complement of international players present.
TONY JONES:
Even if they’re unvaccinated?
JOSH FRYDENBERG:
Well, again, it goes to the medical exemption. And, you know, you or I are not privy, Tony, to the actual details of that. But I’ll leave that to the authorities to judge as to its legitimacy. And if he’s got a legitimate medical exemption then that should be enough.
TONY JONES:
Of course, we should remind our listeners that you were a very, very good tennis player in your day, in your university days. If you were to play, in your heyday, Treasurer, if you were to play Novak Djokovic now, would you win a point? A game?
JOSH FRYDENBERG:
I’d certainly win a point. As to whether you’d win a game, I think that would be, you know, tough, given that I eat for a living today. And with respect to my tennis, you know, my ambitions were always far greater than my talents, Tony. But I did get on the tennis court with an Australian Davis Cup player, former, Sam Growth the other day, just, you know, the other weekend. And he’s got the fastest serve in the world, probably still. He knocks them down incredibly hard. And, I tell you what, trying to return that bullet was pretty hard.
TONY JONES:
Yes, I did see that on his Instagram account. He was splashing it around that he was on the court with the Federal Treasurer. Settle down, Sam. Hey, I just want to get more serious for a moment, because the whole cryptocurrency, I won’t call it a craze because it’s been around for a while. If we’re going to include this as part of our, you know, monetary everyday life, how are we going to understand it first? I mean, because it seems to me it’s the under 50s that get it, it’s the over 50s like myself that really struggle with it.
JOSH FRYDENBERG:
Well, the first thing to say, Tony, is there’s a revolution, and it’s a digital-led revolution, in our financial system. I heard you talking earlier about cheques. Back in 1995, 38 per cent of non-cash payments were using cheques. Today it’s just 0.2 per cent. So cheques are nearly gone. Cash is in decline. It’s fallen from 69 per cent of payments back in 2007 to just 27 per cent in 2019, and that would even be lower today. And things like digital wallets, buy now pay later, cryptocurrencies, they’re fast becoming a norm. But our regulatory framework hasn’t really adjusted to those digital technologies, even though every single day in Australia about 55 million non-cash payments are made and that is worth some $650 billion. And over 800,000 Australians have owned a cryptocurrency, and it’s rising rapidly. And, of course, buy now pay later is used by more than 5 million Australians. So these are very real issues, and we need a regulatory framework that’s fit for purpose. So what we’re seeking to do is enhance competition and transparency around it by modernising the payment system so that these new products and services are covered by regulation. We also want people and businesses that are buying and selling cryptocurrencies to actually have a licence, which will give people who buy and sell a little bit more certainty and confidence about the credibility of the parties that they’re interacting with. Then as you said earlier, we’re looking at our own digital currency with the Reserve Bank of Australia.
TONY JONES:
So can I just ask you about cryptocurrency. And, again, I’m pretty uneducated when it comes to this, but my understanding is that Bitcoin, for example, it’s very much like the share market. I mean, $1 can end up 60 cents or it might end up $2.50.
JOSH FRYDENBERG:
Yeah, volatile. Very volatile.
TONY JONES:
Yeah, very volatile. So how do business owners, if you’ve got, say, a shoe shop, right? So the owner of the shoe shop, the customer says, “Look, I want to pay that in Bitcoin,” so how do you know you’re actually getting the true value of what you’ve just sold?
JOSH FRYDENBERG:
Well, the first thing I’d say is, as the Treasurer, I’m not about to give individual financial advice to people – that would be the last thing I would seek to do. But people do need to acquaint themselves with the research, with the rules, with the nature of these investments, because they are very volatile and they’re an emerging area of technology. But if we were to have a Reserve Bank of Australia-backed digital currency, then that would provide a bit more security and certainty as to how it would operate.
TONY JONES:
How do you do that?
JOSH FRYDENBERG:
Well, again, you’d have to create that. And it would be, you know, linked to our traditional currency. But at the same time that is something we’re investigating in, the feasibility of doing it. We’ve yet to commit that. But that’s where other countries are heading. China has been leaning in in this area, some of the smaller nations around the world as well. But what a crypto asset or a digital currency really is, it’s a digital form of value that’s exchanged between the parties, and it uses, it’s a complex term, but it uses digital ledger technology, which is really just a record of transactions. And that’s what blockchain is. And it’s very complex. A lot of people can’t get their heads around it.
TONY JONES:
No, I can’t. I mean, I’ve got to be honest with you, Josh, I mean, you’re talking a language I just don’t understand.
JOSH FRYDENBERG:
And most people would feel the same way. And, you’re right. But it’s the way of the future in that a lot of younger people are seeking to transact in this way. The Commonwealth Bank, you know, Australia’s largest retail bank, has said that it’s going to allow transactions in this area and is setting up its own systems. So there is definitely a movement to mainstream what until now has been a technology that’s operating in the shadows.
TONY JONES:
Yeah, well, it’s interesting. I mean, you say that more and more people – well, not more and more, but there’s a gradual sort of increase in the amount of people using it. But I saw a media release come through in my inbox the other day from South East Melbourne Phoenix, of course one of the leading teams in the NBL, who are now accepting, I don’t know if its Bitcoin specifically, but certainly cryptocurrency for people to pay their memberships and buy merchandise. And I thought, well, geez, that is a really step in the direction of this new age, isn’t it?
JOSH FRYDENBERG:
Absolutely. And don’t forget digital wallets as well, which is, you know, your Apple Pay and your Google Pay and Alipay. That’s really taken off. And what we want to see is that new entrants coming into this space can do so with their innovative products into what is a level playing field. And I don’t want the rules for Australia’s payment system effectively made by companies in Silicon Valley. I actually want those rules to be made here in Australia. And I think it’s really important for the stability of the financial system, it’s important for our taxation system, it’s important for competition and choice, and also for getting better products and lower fees to consumers. And that’s why we’re really focused on this fit-for-purpose regulatory architecture.
TONY JONES:
But is there also a risk the more we get into this of it being corrupted? You know, if it’s, the true value of these currencies, is based on demand or whatever, is there an avenue there for corruption?
JOSH FRYDENBERG:
Well, there’s certainly, you know, opportunities for less than reputable players globally to be entering into this area, and that’s why having a licence required by those businesses that are buying and selling cryptocurrency is so important, because it will ensure they adhere to appropriate standards with respect to their governance and their operations, which will give Australians more confidence that they’re dealing with a reputable party.
TONY JONES:
Okay. Just one other one before we let you go. The Beijing Winter Olympics, the US have already indicated they’ll put a diplomatic boycott on it. Are we going to do the same?
JOSH FRYDENBERG:
Look, we’ll have more to say about that very shortly. And, you know, I’ll leave that announcement to the Prime Minister. But we’ve noted what the United States have done. You know, we’ll make our own decisions in what is Australia’s national interest. But at the same time, sport and politics don’t always mix. But there is also opportunities to make a statement as well, and so we’ll have more to say about that soon.
TONY JONES:
What would it achieve, Treasurer?
JOSH FRYDENBERG:
Well, again, you know, I don’t want to pre-empt our announcement or decision in this area. But, you know, we’ve been thinking through the implications at a number of levels, and we’ll have more to say about that very shortly.
TONY JONES:
Okay. Terrific to talk to you.
JOSH FRYDENBERG:
Thank you.
TONY JONES:
Okay, Josh Frydenberg joining us there the federal Treasurer.