VIRGINIA TRIOLI:
Good morning and thank you for joining us.
JOSH FRYDENBERG:
Nice to be with you Virginia.
VIRGINIA TRIOLI:
How will you respond to Governor Phillip Lowe’s calls for major reforms to tax and industrial relations. It’s that old discussion again about reform being central to us getting through this financially. Do you agree?
JOSH FRYDENBERG:
Well I absolutely agree with the Governor, that we need to continue to boost the productivity of the nation. It’s not business as usual. What we’ve seen is a global health crisis which has had severe economic impacts across the nation. Right now, we’re still in the midst of that pandemic and we’ve been successful in flattening out the curve with one of the highest testing rates in the world, and one of the lowest mortality rates in the world. And yesterday the Prime Minister announced the beginning of the easing of some of the restrictions with regards to elective surgery, reflecting some of that progress we’ve made on the health front. But with the economic front, we’ll continue to examine options for tax reform knowing that we are a party of lower taxes; that we’ve legislated through the Parliament over $300 billion worth of tax cuts on the last two Budgets and that 94 per cent of Australians tax payers, once those reforms are rolled out, will pay a marginal rate of no more than 30 cents in the dollar.
VIRGINIA TRIOLI:
It’s been a discussion that we’ve had backwards and forwards and a catch phrase that’s been used over and over, more productivity to look at the productivity gains that we can get out of the economy. But let’s get specific here, what exactly would they be after years and years of enterprise bargaining that would have seen to have traded away or traded off in return for income, all the productivity gains that you can possibly make?
JOSH FRYDENBERG:
Well it’s not just in industrial relations and as you know, we’ve got a bill before the Parliament to reduce some of the lawlessness that we’ve seen in the construction sector which adds about 30 per cent in some cases to the cost of major building activity. But it’s also in infrastructure and we’re working cooperatively with Victoria and other States in rolling out our 10 year, $100 billion program. It’s in deregulation, so instead of having two forms you may have one, and a simplification of that process across the board. The skills and the education agenda which is more important than ever as we move to a more digitalised economy. All those issues are very important Virginia, in terms of enhancing our ability as a nation to grow the economy as the means of paying back that greater debt that we’ve now incurred.
VIRGINIA TRIOLI:
How many people unemployed are we going to see in Australia out of this towards the end of the year and then into the following year and beyond?
JOSH FRYDENBERG:
Well the last ABS numbers that we saw for unemployment were for the month of March. That saw unemployment only tick up marginally to 5.2 per cent…
VIRGINIA TRIOLI:
But it won’t stay there.
JOSH FRYDENBERG:
Absolutely not, and Treasury has forecast that unemployment will peak at around 10 per cent in the June quarter, but for the JobKeeper package it would have been around 15 per cent. So that’s a doubling of the number of people that have been unemployed, and of course, it’s one of the reasons why we put in place the JobKeeper package, because we want to maintain that formal connection between the employer and employee. So even if a business has had to close because of the health restrictions, they continue to keep the worker on their books even if they’re stood down and that means that the business and the employee can get back to work sooner on the other side of this virus.
VIRGINIA TRIOLI:
Let me put to you what I was discussing with John Dewar, the Vice-Chancellor of Latrobe University about, and ask you why the Government has abandoned international students from whom, this and other Federal Governments, have profited so greatly?
Josh Frydenberg are you there?
JOSH FRYDENBERG:
Oh sorry, I thought you were going to put John Dewar on...
VIRGINIA TRIOLI:
Oh no I’m sorry, that’s me phrasing here, if you were listening, you probably didn’t get to hear, but he was saying pretty much and agreeing with what the Vice-Chancellor of Deakin University said to ABC News last night, that the Federal Government’s abandoned these students. The line from the Prime Minister was “it’s time to go home” and that’s just simply impossible for many students, and no particular payment for them to survive in situations that John Dewar says are hand to mouth at the moment for some.
JOSH FRYDENBERG:
Well as you know, international students need to make a commitment when they come here for their first year, that they can support themselves. There’s also ability for some to work. We’re giving them access to their superannuation where they have it, but at a $130 billion Virginia, we had to make some decisions, some of which were hard decisions, as to who were eligible and who were not. Now as you know, not everyone’s eligible for the JobKeeper package, but we estimate some six million Australian workers are. That’s nearly half our overall workforce, and at $130 billion it’s an enormous amount of money, an enormous call on the public purse, so we had to make some hard calls and that was one of them.
VIRGINIA TRIOLI:
Well of course, but that hard call might then result in huge job losses of course, cuts to research, probable closure of many regional campuses and of course that extreme hardship of those overseas students. Is that one that you’re happy to live with?
JOSH FRYDENBERG:
Well we have actually made a significant announcement around university funding...
VIRGINIA TRIOLI:
Yes and we spoke about that but…
JOSH FRYDENBERG:
But that is important. That’s really important. We’re guaranteeing funding…
VIRGINIA TRIOLI:
But not nearly enough to make up the shortfall of course.
JOSH FRYDENBERG:
If universities have relied on large cohorts of international students for their income, and that income is now drying up, that’s a situation that the universities will have to accommodate themselves for. What we have said is that we will guarantee funding for universities at current levels even if there is a major fall in their domestic student numbers. So last year we provided universities with around $18 billion, and we’re saying we’re going to do that again this year despite those enrolments falling, so I think the combination of the JobKeeper package and other decisions that we’ve made will help the Tertiary sector get through this.
VIRGINIA TRIOLI:
We started our conversation with you agreeing with Phillip Lowe about a need for major reforms to tax and industrial relations. Can you be specific with us about the overhauling of the tax system that you would like to see?
JOSH FRYDENBERG:
Well one area that we’ve got an open mind is in relation to company tax. Now we’ve tried in the past to pass legislation to give all companies a major tax cut, and that’s because at 30 cents in the dollar for the larger companies it’s pretty uncompetitive compared to where the rest of the world is. So, in the United States it’s 21 cents in the dollar and the United Kingdom it’s 19 cents in the dollar, and Singapore it’s 17 cents in the dollar and we’re competing for capital, we’re competing for those businesses to establish their headquarters, their operations here in Australia and to employ people, so business is pretty unsentimental. Capital is mobile and we need to have a competitive tax system, but we tried and we weren’t successful other than for getting tax cuts for small and medium sized businesses. So that’s one area where we’ve retained an open mind.
VIRGINIA TRIOLI:
It’s looking like, I know the government is hopeful, that a private sector buyer will be found for Virgin, but how can we ever guarantee that Australia will have at least two airlines if a Government doesn’t take some kind of stake in a company like Virgin. Aren’t we fundamentally a one airline, or at the best a one and a half airline country, without ongoing Government support?
JOSH FRYDENBERG:
Well I think with 25 million people, with very lucrative trunk roots, with a new second airport being built in Sydney, with new runways being built at major airports around the nation, I think there is a good opportunity for a second airline to continue operating in Australia. Now, the voluntary administration process is a well-worn and established pathway for businesses to recapitalise their balance sheets and to come out stronger on the other side. Channel 10, Billabong, Darrell Lea, are all companies that have gone through a voluntary administration and continued to operate. And you heard from the company yesterday Virginia, say that they actually see this voluntary administration process as an opportunity to come out stronger on the other side. So we’ll work with the administrator, we’ve appointed Nicholas Moore to do that, and we do think that two commercially viable airlines are good for jobs, good for competition, good for a stronger economy, good for lower prices. And with five large foreign shareholders owning 90 per cent of the company, and I’m talking about Etihad, Singapore Airlines, Virgin International and two major Chinese businesses, the Government wasn’t going to dig into our pockets or your pocket as the taxpayer, and bail out those five companies when they weren’t prepared to dig into theirs.
VIRGINIA TRIOLI:
Of course, but that wasn’t my question. We’re right up against the time but just very quickly to try that again, looking at it realistically we really only have seconds. Can you have two airlines in this country without some ongoing Federal Government money?
JOSH FRYDENBERG:
Well I do believe we can have two commercially viable privately owned airlines. Of course the Government has already announced the measures to reduce the regulatory burden and also some of the levies and charges as a way of facilitating that outcome.
VIRGINIA TRIOLI:
Josh Frydenberg, always good to talk to you. Thank you.
JOSH FRYDENBERG:
Thank you.