QUESTION:
You said you think consumers will continue to spend?
JOSH FRYDENBERG:
Yes.
QUESTION:
Do you think they're going to continue to spend enough to see the growth rate we have seen today repeat itself in the December quarter and onwards?
JOSH FRYDENBERG:
Well again, I'm not going to make a prediction about what happens in the next quarter other than to say that the trend is our friend here. And what we are seeing is improvements on a range of economic indicators. Today's national account numbers is not an isolated event. It's the cumulation of significant government support, it's a reflection of the virus being suppressed across the nation and you're seeing business confidence, consumer confidence coming back. Matthew, what we have seen in recent days is other positive economic data. We saw capital city house prices up 0.7 percent. We even saw stronger growth in regional house prices. We have seen building approvals up 3.8 percent yesterday and up 14 percent through the year. We have seen strong job growth, 178,000 jobs coming back over the last month and 650,000 jobs over the last five months and 80 percent of those who either lost their job or saw their working hours go down to zero since the start of the pandemic, 80 percent of those are now back at work. So the economic indicators are positive. That being said, this is a very challenging time and there's a lot of ground to make up. The economy is smaller today than it was pre-COVID. And it's the expectation in the Budget that that will occur until the end of next year and so what we're really focused on is getting people back into work, that's our number one focus, and the growth numbers today means more jobs. Growth means jobs and jobs are our focus.
QUESTION:
Treasurer, you talked about technical definitions but are you saying today the recession is over? And what impact does that have on people's real lives?
JOSH FRYDENBERG:
Technically the recession is over but the recovery is not. And what we know, Mark, is that a lot of Australian families watching your news tonight will be in a pretty tough financial situation and a number of Australians are still out of work. But what we do know is that the Morrison Government is doing everything possible to help those Australians get into a job and the fact that Victoria now has the virus under control and it's 25 percent of the economy, the fact that these numbers were taken before the Budget and in the Budget there was $98 billion of new spending on various support measures, those measures will roll out over the course of the next 12, 18, 24 months, JobMaker Hiring Credit, the tax cuts, the two $250 payments that are going to pensioners. All of this means that the Federal Government support will continue to be there as we build that bridge to the other side of the crisis.
QUESTION:
APRA this week pointed out savings and banks are up 200 billion over the past year. And you’ve got that exceptionally high savings ratio. Does that mean you should be thinking about the policy settings for the Budget in terms of encouraging people to spend? And does that mean you should be rethinking whether giving more money to people at a time when you're running a 200 billion deficit is actually the right policy mix?
JOSH FRYDENBERG:
Well firstly we're not out of this crisis yet. There is a long way to go. And as you know, Shane, this is predominantly a health crisis. And so the economic recovery both at speed and its trajectory, is very much dependent on success on the health front. We just don't know what's around the corner. Obviously the vaccine trials are going well and that is looking promising. That being said, there are parts of the economy and sectors of the economy whether because the international borders are closed or because of other health-related restrictions are still doing it tough. And so our economic support needs to be there. When it comes to the economy-wide supports like JobKeeper, they are tapering down and that's consistent with our response. It’s always been temporary, it’s always been targeted, always been using existing systems and it's been scalable, but it's tapering down, consistent with the restrictions being eased. But then we’ve started to engage in some more targeted supports like what you have seen in the last few days on HomeBuilder being extended for another three months, changing the price caps allowing the first sod to be turned in six months, not three months so we can build that pipeline in the construction sector which supports so many working Australians, and then also the announcement yesterday about travel agents. Again, $128 million to support people in the travel agency sector, small businesses who, because of the restrictions on our international borders, have come upon pretty hard times and this is designed, again, to build that bridge to the other side. So we'll look for targeted support where it's appropriate, but as for our macro supports like JobKeeper, they are tapering down. Lanai?
QUESTION:
Given mining investment fell 5.2 per cent, will you consider any additional measures to stimulate investment in that sector and keep the resources sector strong?
JOSH FRYDENBERG:
Well again, the measures in the Budget Lanai, are very much designed to boost investment. They'll cover around $200 billion worth of investment and as you know they're focused on immediate expensing. Expanded instant asset write-off - if you’ve got a turnover of up to $5 billion, you can write off that expenditure in year one. So those measures which we announced in the budget are not reflected in the September quarter and we're very hopeful that that will help encourage more investment in the mining sector and, of course, in the non-mining sector.
QUESTION:
Treasurer, Phil Lowe was saying today we could expect two years of high unemployment and low wages growth and this was predicated on there being a vaccine not until the end of 2021 and international borders would be closed largely, or strictly until then, what do you say to people in those sectors like tourism who are facing a very nervy year or two? Should they be looking at other opportunities or are you going to be there to support them all the way through this?
JOSH FRYDENBERG:
Well as I said, tourism industry we announced yesterday the support for travel agents, but there's also been a lot of other structural supports that we have announced in the budget and ahead of the budget for whether it's the aviation sector, whether it's for the tourism sector, we have been there to support them, we'll continue to provide support as necessary. Domestic tourism will be a beneficiary of the international borders being closed. Of course, we want those international borders to open and as you refer to, a lot will depend on that vaccine, but domestic tourism, and we welcome the announcements by the state premiers in recent days, will pick up, absolutely will pick up on that. I saw today Rex Airlines saying they're putting on a lot more flights. Virgin a lot more flights. There's going to be strong competition for that domestic tourism dollar and we are very hopeful about a vaccine. As you know, we had scenarios in the Budget, but until that vaccine is found, I think it's going to be pretty difficult on the international front.
QUESTION:
Are you attracted to a voucher system to encourage people to spend domestically?
JOSH FRYDENBERG:
Well again, there are some responsibilities of the Federal Government and there are others of the state government. I have welcomed what the state governments have done in relation to vouchers. As you know, they have done a set of vouchers in New South Wales, they have done it in Western Australia, they have done it in Tasmania. I have spoken to my counterparts at the Council of Federal Financial Relations about options for them to make those investments and I welcome any more that they do.
QUESTION:
Treasurer I have a question around the Budget. Obviously the economy is going quite strongly, JobKeeper is tapering more quickly than you may have anticipated. Does this mean that you're hopeful that the Budget outcome is tracking better than you expected even only, you know, a month ago or two months ago?
JOSH FRYDENBERG:
Well again, those numbers will be updated in MYEFO but, of course we had made specific allocations in the expectation of a certain number of people being on JobKeeper and in the December quarter. We were expecting 2.24 million people being on JobKeeper and obviously today that’s just over 1.5 million now. That may pick up in the coming weeks, but it's still a long way to go to get to that original forecast. The recovery today in terms of September quarter is even better than we expected at Budget. Better than what the market has expected. You heard that from the Governor today that the numbers that they're seeing are better. Now, take the unemployment rate, we had thought it was going to reach double digit numbers by the end of this year. We were talking and thinking 10 percent. Then we brought down our assumptions to around 8 percent. I'll update those numbers in MYEFO which will be announced over the course of this month. But certainly the improvement in the labour market is better than expected and it does reflect the success on the health front.
QUESTION:
Treasurer, despite the improvement in the labour market, very many people are going to go into Christmas uncertain about when they can get a job.
JOSH FRYDENBERG:
Yes.
QUESTION:
Will you be clarifying before Christmas, say at MYEFO, of the long-term JobSeeker limit will be or will they have to wait until next year for that clarification?
JOSH FRYDENBERG:
Well again, we have announced a temporary extension of that JobSeeker coronavirus supplement - that is our position. The best thing we can do, Michelle, for Australians who are out of work is to help create an environment where they can get a job. And all along we have been talking about a private sector-led recovery. That was a very clear characteristic of the budget that I delivered on October 6. Government
is not the solution. Government can be a catalyst for the solution and the solution lies in the private sector taking those decisions to hire new people, to innovate, to grow, to expand. That's why we put in place the JobMaker Hiring Credit because it was all designed to make that difference between an employer saying, "no, I'm not going to take on that younger worker who's been unemployed, because I just probably can't afford him on my payroll or her on my payroll." But now with the JobMaker Hiring Credit you can tip the balance in favour of taking that decision. So too with the immediate expensing. As you know, when you purchase new machinery for your business, you depreciate it over a number of years. If it's a harvester, might be over six years, we’re now saying go out and buy a harvester today and you can write it off in year one.
QUESTION:
Nevertheless we're going to have a higher unemployment for a longer time, the Governor has confirmed that here today.
JOSH FRYDENBERG:
Again, I think, Michelle, you make a very important point - because you underline the significance of the economic shock that Australia has faced. This is a once-in-a-century pandemic and this is the greatest economic shock since the Great Depression and it dwarfs anything we have seen here in Australia or abroad during the GFC. I mean, that number is very clear - during the GFC, the global economy contracted by 0.1 per cent and according to the IMF the global economy will contract this year by 4.4 per cent. So we have faced a massive shock and what's also different about this crisis is it's been both on the supply and the demand side. Normally you’d see a recession being as a result of a reduction in demand. But because of the health crisis meant that people can't go out so they're spending on restaurants, hotels, cafes, tourism services collapsed and we saw that in the June quarter. So what we have seen today, particularly through the consumption story of 7.9 per cent boost in consumption is as a result of those restrictions being eased, people are getting about their normal lives.
QUESTION:
Treasurer, just expand on Shane's question in relation to the household savings ratio.
JOSH FRYDENBERG:
Yes
QUESTION:
Obviously you’ve had success in defeating the coronavirus or at least suppressing it. And then you were saying that there’s still a bit of uncertainty. What's your message to households who have those high savings ratios - would you like to see them being prudent and maintaining a buffer or would you like to see them out there spending?
JOSH FRYDENBERG:
Well, decisions as to what Australian families spend on and how they spend it and when they spend it are matters for them. But my message to the Australian community today is that Australia's economy is coming back. The economic recovery is well underway. There is real cause for optimism and hope. Australia is better placed than nearly any other country in the world to make this comeback from COVID-19 and that should give them confidence to go out and conduct their normal lives.
QUESTION:
We’ve got near record levels of private saving.
JOSH FRYDENBERG:
Yes.
QUESTION:
And we’re trying to encourage spending. Is this the right time to increase compulsory super?
JOSH FRYDENBERG:
Well, again, as you know, there was a significant report that was conducted by three eminent Australians led by Mike Callaghan, and that report has been released publicly and there’ll be many commentators who have views on it. What it did say is that our retirement system is sound, it’s sensible, sustainable and it’s effective. What it also said though was that there was a trade-off between wages and between compulsory super. And that is not a new comment, but it looked at the evidence including international evidence and made that conclusion. Now, we’ve heard that from the Reserve Bank and we’ve also heard it from the Grattan Institute among others. What I have said publicly - previously is what I'll say again today which is it's legislated to increase, as you know, to 10 per cent next year. Before that legislated increase takes effect, the Government will make an announcement about its decision.
QUESTION:
Treasurer, you pointed out in the Budget that unemployment forecasts would peak at eight per cent, Dr Lowe said today he now expects the RBA forecast to be trimmed down to in the sevens, somewhere between seven and eight per cent, so presumably when you do the update to MYEFO we're going to have an employment forecast of below eight per cent from the Government, somewhere in the sevens?
JOSH FRYDENBERG:
Well again, John, I'll wait till MYEFO for those numbers to be revealed but what these numbers today show, and what the October ABS jobs numbers showed and what payroll data just yesterday showed that the labour market is strengthening and it's quickly strengthening and it's strengthening faster than we thought and any adjustments to those forecasts will be made in MYEFO. I do point out that even with JobKeeper coming off next year, the Budget forecast was for unemployment to be trending down. As you know, 7.25 by June of next year and 6.5 after that, and 6. And as you know I laid out a fiscal strategy which was in two parts, the second part where we were aiming to get our unemployment rate comfortably below six per cent. Remembering that in February of this year, pre-COVID, unemployment was 5.1. When we came to Government it was 5.7. It came down to 5.1. We're really doing everything possible to get that unemployment rate down. Chris?
QUESTION:
Treasurer, how much does China threatening our exports, threaten our recovery? And have you had Treasury have a look at that?
JOSH FRYDENBERG:
Well Treasury continually assess the economic situation both domestically and globally But Chris, this is a very serious situation. China is our number one trading partner. Many Australian jobs rely on trade. Many Australian jobs rely on trade. And that's why the Coalition has put a great emphasis on striking Free Trade Agreements with a whole range of partners, not just China, but expanding further afield and the two-way trading relationships that were covered by Free Trade Agreements went from 26 per cent when we came to Government to over 70 per cent today. But this is a serious issue, we’re very much focused on ensuring the markets are there for Australian exporters and its worth over $200 billion a year to our economy as a two way trading relationship. And so we'll continue to seek the best outcomes for our exporters. Now, of course we would like to do that bilaterally Chris, we would like to sit down and have that mutually beneficial and respectful dialogue but in the absence of that, we obviously have options to use multi-lateral forums.
QUESTION:
Treasurer, just following Chris's question, are you concerned that the long-term impact on trade which is more likely because of the shutdown around the world will have, will detract more from your economic rebound than, say, one or two more nice figures on consumption growth coming back?
JOSH FRYDENBERG:
Well, as you know, consumption is 60 per cent of GDP. So consumption is absolutely key. Consumption is the largest contributor to GDP, four percentage points today. Whereas the detraction from net exports was 1.9 per cent. But trade is absolutely critical for Australia of 25 million people, we look to be trading with the larger populations in our neighbourhood and beyond and we have been very successful at that and we have great produce and we have great services and we have great resource sectors and I'm very optimistic about the opportunities for our exporters around the world, but that being said, the situation with China is very serious. Thank you.