VIRGINIA TRIOLI:
Good to have you on the program, Mr Frydenberg. Good morning.
JOSH FRYDENBERG:
Nice to be with you, Virginia.
VIRGINIA TRIOLI:
Let's start with an interesting survey of 2,225 people via voxpop labs, that was in collaboration with us at the ABC. It’s found that only about one in eight Australians would attend a large event even if they could and fewer than one in five would get back on a plane. How do you get the economy back to work when many of us are clearly still too afraid to get out there?
JOSH FRYDENBERG:
Well, we'll continue to take the medical advice and that medical advice has indicated that we can start to ease the restrictions as we did, for example, with non-urgent elective surgery and the medical advice is also that if there's a high take-up of the app then that will be very helpful in suppressing the spread of the virus. And we've had great success in this country through the high testing rate, the low mortality rate and we've avoided the lock downs that we've seen in Europe and the deaths that we've seen in the United States.
VIRGINIA TRIOLI:
Sure, but we’re speaking here about people's anxiety, though, about just the fear that’s been created, understandably, by unprecedented times. So how do you get us back into the economy and working when we don't feel safe?
JOSH FRYDENBERG:
By communicating the success and the progress that we've made when it comes to the health measures that we've put in place. And once those messages are being communicated people can be confident that we can start getting back to life as normal. Now it will take some time, the restrictions will be eased in a number of phases. It will be done through a collaborative approach of the National Cabinet, but it's really important that we start to ease those restrictions because for every extra week that they're in place, the level of economic activity is $4 billion less than it would otherwise have been the case.
VIRGINIA TRIOLI:
Which parts of the economy do you believe will find it easiest to open up first?
JOSH FRYDENBERG:
Well, sectors like manufacturing, agriculture and mining have been able to continue through this crisis with the social distancing in place. When it comes to retail and hospitality, that's a bit more difficult but there are certain arrangements that may need to be made to accommodate those particular health restrictions around social distancing but also allow a gradual re-opening of those premises and those businesses. So that's what we're actually working through now. I think it's really important that the sectors that enable broader economic activity open and I'm talking here about the logistics for example, that's really important to supply chains. So domestic travel is not only important for tourism but it's also important for the freight task. And then when it comes to schools and obviously Daniel Andrews and his ministers are working through these issues but the more kids that get back into school, the more parents that can enter the labour force and that's important.
VIRGINIA TRIOLI:
Yes. I wanted to ask you about that. You've released Treasury analysis that shows classroom closures have contributed to more than 300,000 job losses. Can you explain that to us? Because, as we understand it, people are working from home if they can and if they can't they're going to work and their kids are able to attend school at school. So how do you explain the 300,000 job losses because schools are closed?
JOSH FRYDENBERG:
It's due to the reduction in labour force participation. So over a million Australian households have two parents that work and children under the age of 15. And as a result of home schooling, at least one parent in some of those cases has to pull out of the workforce because they don't get the other caring arrangements, they can't get access to additional support. And so once people come out of the workforce that means that we're going to see lower economic activity. There's also impacts on productivity…
VIRGINIA TRIOLI:
But what do you mean "come out of the workforce"? Do you mean…
JOSH FRYDENBERG:
Well they can't keep their same job because they're looking after their child at home and making sure that they're following the classes and everything that goes with that.
VIRGINIA TRIOLI:
But they're working from home?
JOSH FRYDENBERG:
But not everyone is and that's the point. Not everyone who has to look after a child at home can continue to work at the same time. You would understand that reality.
VIRGINIA TRIOLI:
Well, of course. And that's why if you're in that situation you're able to send your child to school and they can get educated there. So it just doesn't seem to line up because every…
JOSH FRYDENBERG:
Not every parent wants to send their child to school. As you know, there are a lot of parents who are concerned about the health situation and are keeping their kids at home as well. So that is the Treasury forecast about the impact on the labour force. You've also got a productivity issue…
VIRGINIA TRIOLI:
So it's a forecast rather than saying what's happened as a result of school closures?
JOSH FRYDENBERG:
Well, it's over the June Quarter and obviously that's still to play out.
VIRGINIA TRIOLI:
Yes. See, it's interesting. It looks to some in Victoria like the Federal Government is yet again trying to hang it on the states and their decisions around schools. More pressure being applied around schools rather than this actually being something that logically stacks up?
JOSH FRYDENBERG:
Well, if you look in South Australia, Western Australia, the Northern Territory, about 70 percent of school kids are now back in the classroom. Queensland as well as New South Wales have laid out a timetable for kids to get back into the classroom.
VIRGINIA TRIOLI:
Yes. No, no, Treasurer, we're talking here about justifying that Treasury forecast when logically it doesn't quite follow that that many jobs…
JOSH FRYDENBERG:
Maybe in your logic, Virginia.
VIRGINIA TRIOLI:
No. Not really.
JOSH FRYDENBERG:
It's a Treasury forecast about the impact on the labour force and there’s also there's an impact on productivity because when you do work from home…
VIRGINIA TRIOLI:
Well, productivity is productivity. That's not a job loss.
JOSH FRYDENBERG:
Well, it all contributes to lower economic activity across the economy and …
VIRGINIA TRIOLI:
But which one are you measuring here, lower economic activity or job losses? I mean a $300,000 figure of job losses…
JOSH FRYDENBERG:
300,000 jobs.
VIRGINIA TRIOLI:
Is substantial, significant, you know…
JOSH FRYDENBERG:
Absolutely.
VIRGINIA TRIOLI:
But it’s not the same thing.
JOSH FRYDENBERG:
Absolutely. And what the Prime Minister was talking about was both a GDP impact of the health restrictions and the school closures, as well as a job loss impact.
VIRGINIA TRIOLI:
The Federal Government’s made three changes to the $130 billion JobKeeper wage subsidy program to prevent universities from getting access to the scheme. Why are potentially 21,000 job losses in the sector acceptable to the Federal Government?
JOSH FRYDENBERG:
Well, we actually announced that the universities will be receiving their grants based on the number of domestic students attending that was expected prior to this crisis. So it's really important to understand that we put out that financial support to the universities even though the number of students attending universities has fallen. Now of course, universities have relied heavily on international students and there's no surprises there that that's going to hit their bottom line. But we have continued to support the universities with about $18 billion a year of financial support and the Minister has said that that will continue.
VIRGINIA TRIOLI:
Yes. You clarified that they're going to keep their Commonwealth grants. But on the 24th of April the government also said that the Commonwealth grants have to be counted, universities must count those…
JOSH FRYDENBERG:
In their turnover.
VIRGINIA TRIOLI:
That funding, towards their revenue.
JOSH FRYDENBERG:
That's right.
VIRGINIA TRIOLI:
Despite a change allowing other charities to leave out Government grants?
JOSH FRYDENBERG:
Well, a university is a different type of arrangement, different type of organisation to St Vincent de Paul or to the Salvation Army. As you could imagine, those are providing different types of services, hardship services and so we made the test, the turnover test, easier to meet in that case and obviously universities are a different types of organisations.
VIRGINIA TRIOLI:
Sure. But you've also now specified that universities have to count six months of revenue when calculating their projected downturn and that's a tweak that puts the fortnightly payments per worker out of their reach. So, as I say you know, all up and you've got all those changes. Why are you deliberately trying to obstruct the universities from getting access to that payment? Why do you not want them to get access to that payment and get those jobs kept?
JOSH FRYDENBERG:
Well, you should be asking, well, why did we continue to support $18 billion to the university sector and continue to maintain…
VIRGINIA TRIOLI:
Guaranteeing the Commonwealth grants is one thing, that's just a Commonwealth grant.
JOSH FRYDENBERG:
But the reason why we've…
VIRGINIA TRIOLI:
But actively preventing them from getting access to a payment that allows them to keep employing their people, just answer that question why?
JOSH FRYDENBERG:
Well, the reason behind what we have done is to ensure that when it comes to universities, that they rightly take into account this extra funding from the Commonwealth with regards to grants in their turnover. That's reasonable. When it comes to the six months versus the one month, you had some universities that had different arrangements that would have led to an inequitable result across universities. So there are justifiable reasons behind those changes to the program, but your listeners have to understand that the funding that the Commonwealth provided pre-crisis is continuing post crisis.
VIRGINIA TRIOLI:
Well, okay. Let's stay with that. Let's compare like with like then. Why then haven't you given schools in the private and the independent sector the same requirement? They're all claiming JobKeeper and yet don't have to count six months of revenue and calculating projected downturn, you’re not asking them to count in their Commonwealth grants either. Neither do they have to count any cash reserves or investments and yet they can claim JobKeeper for their employees. Why take care of those jobs and not ones at universities?
JOSH FRYDENBERG:
Well I challenge your assumption that you said, I think your exact words were, "They're all claiming JobKeeper". They're not all claiming JobKeeper. JobKeeper…
VIRGINIA TRIOLI:
Well, okay. The ones that are, how come they can get JobKeeper and jobs at universities aren't the same?
JOSH FRYDENBERG:
Well, the reality is that we are ensuring that those schools, where there has been a reduction in turnover now, a lot of schools continue to charge the fees to their parents and obviously to their students and as a result they're not seeing that reduction of turnover so they're not going to be eligible. But universities are a different cohort. It's not like for like. We have guaranteed the grants funding consistent with what was done pre-crisis. We've managed the six month…
VIRGINIA TRIOLI:
Both sectors are losing income. Both sectors are losing those fees and yet you're treating one lot of jobs as more important than the other.
JOSH FRYDENBERG:
Well, when it comes to the university sector, there's been a heavy reliance on international students and I accept that that's going to hurt their bottom line and they will have to accommodate to those new arrangements given the international travel restrictions that are in place. But the reality is that universities are getting significant funding from the Commonwealth in relation to the coronavirus. We're very conscious of the impact. We've also made allowances for the provision of online services and extra support for them through that means. We're providing for regional universities as well.
VIRGINIA TRIOLI:
Yes.
JOSH FRYDENBERG:
This is a critically important sector and…
VIRGINIA TRIOLI:
You're not answering the question about JobKeeper. Look, I've had a few goes and I can't exhaust the listeners' patience on this.
JOSH FRYDENBERG:
Well, the rules are the rules.
VIRGINIA TRIOLI:
The rules as you decide to make them. The ACTU is pressing ahead with its 4 per cent minimum wage claim, arguing it's necessary to drag the country out of recession. Why is that argument any different to the approach that the Federal Government, your Government, has already taken to try and protect jobs and get money into people's hands to spend with JobKeeper and JobSeeker? Isn't what the ACTU arguing there very similar?
JOSH FRYDENBERG:
Well, we have one of the highest minimum wages already in the world and as you know, that is set independently of us. And what we've seen is that it has continued to increase under the Commonwealth. So that obviously continues to be a focus for us to ensure that people are getting paid as well as they can.
VIRGINIA TRIOLI:
I'm so sorry we've run out of time this morning, Treasurer. But great to talk to you nonetheless. Thank you for joining us.