JOSH FRYDENBERG:
Today the unemployment rate fell from 4.9 to 4.6 per cent, the lowest since 2008, and it beat market expectations of 5 per cent unemployment rate. Today’s ABS jobs data takes into account the second and the third weeks of New South Wales’ lockdown and the last few days – sorry, the starting of Victoria’s lockdown that began at the end of that reference period.
Normally when the unemployment rate hit a 12-year low, it would be a cause for celebration, but not today as millions of our fellow Australians are in lockdown, as lives have been lost and as the economy has been hit hard. Today’s numbers show the impact that the lockdowns are having, particularly in New South Wales with a fall in the number of hours worked in the month of July of 7 per cent and an increase in the effective unemployment rate to 8.3 per cent, as 230,000 people in New South Wales became employed but on zero hours.
But as I’ve said at this podium before, and as these numbers bear out, there is enormous resilience in the Australian economy. We’ve bounced back before as restrictions have eased, and we’ll bounce back again. In these numbers, you see the impact in Victoria as they were recovering from their previous lockdown. In fact, hours worked in this month of July increased in Victoria by 9.7 per cent and 170,000 who were employed on zero-hours came off being employed with zero hours.
As you know, from day one of this pandemic, we have done everything in our power on both the economic and the health front to ensure that Australians come through this crisis, including providing significant economic support. And the economic support that we’re providing in the form of the COVID disaster payment, with individual weekly payments of $450 a week if you’ve lost between 8 and 19 hours of work or $750 a week if you’ve lost 20 hours or more of work, have been very effective in targeting those people who need support and have lost hours of work. Over $3.1 billion has actually gone out the door, and more than 1 million Australians are receiving those COVID disaster payments.
We’ve also entered into bilateral relationships on a fifty-fifty basis with state and territory governments to provide additional business support in the event that the lockdowns have impacted businesses in their state.
Today we’re announcing an additional $807 million in partnership with the Victorian government to support small and medium-sized businesses over the course of the next two weeks with their extension of the lockdown. Payments between $2,800 and $20,000 will be made to businesses across the hospitality sector, the reconciliation sector, the tourism sector and other affected sectors in that state. It builds on similar arrangements that we’ve put in place with other states to provide the business support.
So this is a very difficult time for our country. This is a very challenging time for our economy. Today’s numbers do show that there is enormous resilience in our economy, and we know that with the Doherty modelling and the road map that was agreed by national cabinet, there is a pathway out of this crisis. The vaccine rollout is gaining momentum with more and more people being vaccinated right around the country each and every day. And as we reach those targets of 70 and 80 per cent, we can see the restrictions easing across the country. And as restrictions ease, our economy bounces back. That’s the experience in the past over the course of this pandemic, and that will be the experience in the future as we come out of those restrictions. Stuart.
STUART ROBERT:
Yeah, thanks, Treasurer. Today’s labour market statistics show from month to month almost no change from 13,156,000 Australians in work. It is in many ways a tale of two states – Victoria and New South Wales, who are together 57 per cent of the national employment market. It’s a tale of participation and hours’ story in terms of participation rate slightly down. A tale, of course, as the Treasurer said, of New South Wales’ hours down 7 per cent but Victoria hours up 9.7 per cent. But, more importantly, it’s a story and a set of numbers that validate that the economic supports we have put in place as a government to both individuals and to businesses is having an impact.
The reference period for these national numbers from the 4th to the 17th of July take into account those two lockdowns – the start and the end of our two largest states – and still we see the numbers of employed Australians holding. In fact, in terms of youth unemployment, the rate hasn’t changed but the participation rate for young people has increased, which is so very important. Because we see the scarring from unemployment that came out of the 1992 recession and the GFC. We see the scarring effect of Australians on unemployment benefits today by virtue of those two events.
So it’s wonderful to see the youth unemployment rate ostensibly holding firm. But, importantly, it demonstrates that the economic reforms and the economic supports that we’ve put in place for individual and small businesses – and, of course, the Treasurer has just announced more support for small to medium enterprises in Victoria – it is working and it validates what the government has done throughout the pandemic. Thanks.
JOURNALIST:
Treasurer, if I might just ask, the cases across the country, here in Victoria and Sydney, they are getting worse. It looks like they’re going to go up for some time. Are you concerned that we might face another recession? And if I might just ask another one that’s separate: Why does Parliament need to sit next week when ACT is still in lockdown? What’s your response? Is it putting people’s health at risk?
JOSH FRYDENBERG:
Well, again, we’ve been working with the Chief Medical Officer about ensuring that we conduct parliament in a COVID-safe way. And, as you know, the numbers that will be present over the course of the next two weeks will be significantly reduced compared to the numbers that would otherwise be here. I think it’s important for the country to see that their federal parliament is in action. Now, I know some states have not resumed their parliament that would otherwise have sat. But that’s a decision for them, and I’m sure they’re taking the medical advice, and I’d hope they would be looking for the opportunity to front up at parliament if they can.
In our case, the Prime Minister has been in regular contact with both the Health Minister and the Chief Medical Officer to ensure that when the parliament resumes it’s done in a COVID-safe way. And I think it’s good for the country to see that the normal course of business continues in the nation’s capital, including debating the very important issues around the country. And, as you know, they’re not just issues domestically like COVID but also internationally, as we’ve seen in recent days in Afghanistan.
With respect to your first question, it’s certainly too early to make that call. It’s too early to speculate on what will happen in the December quarter. Now, in the September quarter there’s no doubt in my mind and, indeed, in the advice that I’ve received from Treasury that the economy will contract and that we will see a significant impact on the economy in the September quarter.
Treasury’s estimate is that those lockdowns in New South Wales and Victoria are costing around $2 billion a week. Now that’s probably around $950 million in New South Wales, which is largely the metropolitan area, but that’s in the state of New South Wales, and around $700 million in Victoria with the balance around the rest of the country. So it’s not an insignificant impact these lockdowns are having. We’ll see that play out in the September quarter.
But I again come back to today’s numbers. Normally we would be celebrating the fact that the unemployment rate is at its lowest level in 12 years. But today we’re not. Today we’re not because millions of our fellow Australians are doing it tough. And that is why the Morrison government through our business support, through our family individual worker support with the COVID disaster payments will continue to do everything we can to help Australians get to the other side. And we do know that the vaccine rollout is really gaining momentum as that vaccine hesitancy has reduced around the country.
JOURNALIST:
Treasurer, there’s hundreds of millions of dollars of money owed to businesses in New South Wales sitting in a backlog of payments. The government’s working on getting that now, but we’re seven weeks or eight weeks into this outbreak. Services Australia is administering money in most of the other jurisdictions. Is it time for the Commonwealth to take over the administration of that fund, because these businesses haven’t had any money for months?
JOSH FRYDENBERG:
Well, when the Prime Minister and I sat down with our New South Wales counterparts they were telling us that this program could be delivered by Services NSW.
JOURNALIST:
But for companies, it’s not working.
JOSH FRYDENBERG:
So the latest information I have is that around $350 million in payments has already been delivered. About 72 per cent of 100,000 claims have been processed and delivered, and around slightly more than that – 90 per cent of the claims – have been approved. So they have made up that backlog that was building with those small and medium-size business payments. So 90 per cent as I am advised have been approved. Over 70 per cent have already been delivered, and I’m expecting more money to be delivered by Services NSW in the coming days and weeks. And that support is there from our government.
Now with respect to Services Australia, their job is in relation to the COVID disaster payment. And I was informed this morning, as the Prime Minister and Stuart were, that 93 per cent of those applications are now being done online. There’s been a massive spike in the number of people developing myGov accounts, and that money is going out the door in as little as under an hour from the time that those applications have been made with over $3.1 billion already delivered. So that’s working well. And in these numbers we can see that those payments are being [indistinct].
JOURNALIST:
Treasurer, has the Treasury indicated how high the unemployment rate could get?
JOSH FRYDENBERG:
I don’t have a specific number on that, but I have to tell you that they weren’t expecting 4.6 per cent today. In fact, the median market expectation was around 5 per cent. And that is a welcome number to see the resilience in the labour market. But it doesn’t tell the full story. I would expect that we will see a continued negative impact in the labour force data next month for the month of August and, indeed, maybe after that as well as the full impact of these lockdowns are effective.
But, again, I go back to a point that both Stuart and I are making – if you look at Victoria in these numbers in the month of July, there’s been a 9.7 per cent increase in the hours worked and that there are 170,000 fewer people who were employed on zero hours —170,000 fewer people in the state of Victoria who were employed on zero hours in these numbers.
It’s a very different picture in New South Wales, which is still subject to the lockdowns and which these numbers take into account weeks 2 and 3 of those lockdowns. Because in that state we’ve seen the effective unemployment rate get to 8.3 per cent. We’re seeing the number of hours worked fall by 7 per cent, and we’ve seen a 320,000 increase in the number of people who are employed but on zero hours.
STUART ROBERT:
Just to add to the Treasurer, on that, in New South Wales, for example, in June the stood-down numbers were 13,900; in July 116,700 – 100,000 increase in stood down between June and July in New South Wales, but the national numbers in June, 156,000, July 181,000. It just shows the stand downs in Victoria bouncing back. That’s why today’s numbers are very much a tale of two states.
JOURNALIST:
Treasurer, Australia’s only committing to 3,000 Afghans living in existing humanitarian program, that’s just 20 per cent of our annual intake. In 2015 during the Syrian civil war we accepted 12,000 refugees. Why can’t we do the same now? Can you honestly say the government is doing its very best to help these people in danger?
JOSH FRYDENBERG:
Well, as you acknowledged there we made that decision around the 3,000 on the humanitarian places out of our forward program of 13,750. We have discussed this issue as recently as this morning at the National Security Committee and it’s something we will continue to watch and evaluate. The key focus, and the Prime Minister will stand up later today, is to get those people out of Afghanistan and we are working around the clock to do so. It’s a diabolically difficult situation right now and dangerous situation in Afghanistan. I think Australians understand why we left. It was an American-led mission. We’ve been there for 20 years and we’ve helped make Australia safe by being in Afghanistan. And, indeed, we improved the lives of so many people by being there. But I do think Australians are saddened by what is now left in Afghanistan because, obviously, the rise of the Taliban changes the situation quite profoundly.
JOURNALIST:
Treasurer, your personal family story, your dear mother, Erica Strauss, a stateless Hungarian, a refugee herself. Is it from your perspective would you like to see your mother’s adopted country be very generous to those in Afghanistan who have had our protection or the protection of the coalition forces for the past 20 years?
JOSH FRYDENBERG:
Andrew, I think every decent, fair-minded Australian wants us to do all that we can to help those people in Afghanistan get a better life. And, as you say, my own experience is that this country provided a safe haven, a warm embrace, to my own family. And my story is not unique. One of the amazing strengths of this country is what we have done to help people in need.
As we were discussing the issues today and in recent days at the National Security Committee, as our amazing Defence Force personnel and foreign affairs workers are trying to get papers to people and identify those who have helped us in the past, my mind did flashback to terrible times in the world, including during the Second World War. But, again, the Prime Minister will stand up later today, and the story he will tell you is, like he did yesterday – that we are making a difference on the ground and we are bringing people home.
STUART ROBERT:
I will say the 3,000 amount, of course, is on top of the 8,000 Afghans we’ve already resettled since 2013, and that includes 1,800 Afghan civilians and Afghan interpreters. So we are talking about a net total of 11,000 Afghan nationals that we’ve settled here under our humanitarian and other programs.
JOURNALIST:
Treasurer, can I just ask about the COVID Disaster Support payment, up to $750. The decision to make them tax free, who made that decision and is it correct that in making that decision the government overruled advice from Treasury not to make them tax free?
JOSH FRYDENBERG:
No, we worked through these issues at the ERC. And the Prime Minister and I discussed the tax treatment of those payments recognising, Joe, that this is assisting people at a very difficult time. We have made disaster payments non-assessable for tax purposes. The contrast is with JobKeeper, because JobKeeper payments were assessable for tax purposes, in this case they’re not, but we have worked through these issues at the ERC. We have – the Prime Minister and I have discussed these issues and Treasury and Finance have been integral to our decisions on not just the tax treatment of various payments but on the whole economic response.
JOURNALIST:
But did you go against the Treasury advice?
JOSH FRYDENBERG:
Again, I’m not going into the details of individual Treasury advice because if I answer one question you’ll ask me another question about another issue and Treasury’s advice there. We don’t talk about what is happening within those subcommittees of cabinet. But what I can tell you very firmly and very confidently is that Treasury have been front and centre of our economic decisions.
JOURNALIST:
Treasurer, can I just ask about the Woodside deal with BHP. What do you read into that in terms of ESG sort of pressures now on major corporations, especially in the mining and resource sectors? Is BHP responding to environmental pressures or something more substantial than that?
JOSH FRYDENBERG:
Well, I’ve had the opportunity to be talking to the chairman in both BHP and Woodside in recent days and so, too, has the Prime Minister. These are transformational changes to two great Australian companies. This is a very significant moment I think in corporate Australia. In the case of BHP we’re bringing it home. A dual listing that is now going to be collapsed into an Australian listing, provided they get the 75 and the 50 per cent shareholder support that they need from their UK shareholders.
This is a very significant moment. At the same time, with Woodside we’re creating another national champion, a top 10 player in the oil and gas world. And for them, you can see the real benefits. They’re diversifying their portfolio, they’re able to get synergies, they’re strengthening their balance sheet which can offer new opportunities for acquisitions. It’s a very significant moment.
What has driven BHP from their public commentary is that they’re now focusing on new areas of expanding their business, and for Woodside, they’re gaining new scale. So I don’t think it’s been driven so much by the debate around climate; I think it’s being driven by the need to refocus their activities on areas where they’ve got great scale and great opportunities. And, as you know, they have been a remarkable Australian success story since their early beginnings.
JOURNALIST:
Treasurer, New Zealand today made Pfizer available for 12 to 15-year-olds.
JOSH FRYDENBERG:
Yes.
JOURNALIST:
Last year you were scathing of Victoria for having children study from home for a long period of time. It’s happening now. The ACT, Sydney, New South Wales. Should we be moving faster to vaccinate children given there is now transmission here in schools?
JOSH FRYDENBERG:
Well, as you know, we’re waiting on the ATAGI advice with respect to the provision of the vaccine to children who are under the age of 16. As I understand it, they’re working through that as fast as they can, and we hope that that advice is imminent. And we will follow that advice.
I understand the anxiety that a number of parents would be having. We heard in Victoria, for example, that there were 50 cases involving children. But at the same time, we haven’t seen the severity of the illnesses in children that we have seen in some of the older age cohorts or, indeed, the transmissibility that we’ve seen in some of the other age cohorts.
We’ll follow the medical advice. This is a very important issue, and I do note that in some countries they have vaccinated people under the age of 16, but in others they have yet to take that decision. So we’ll wait for the ATAGI advice. We’re all seized of this issue and recognise that when the medical advice comes in on the vaccination of children we will follow it.
JOSH FRYDENBERG:
Treasurer, have you got a percentage point estimate on the impact of the September quarter? It’s only six weeks since the financial year started. How much damage has been done to your already damaged budget bottom line by the extra money that you’ve had to pay out?
JOSH FRYDENBERG:
Look, normally I wouldn’t speculate this far out from the national accounts, but everything I’m seeing is it’s 2 per cent for the September quarter. And you’ve heard about New South Wales extending their lockdown, Victoria extending their lockdown. I don’t think, Shane, it will come as a surprise to you, but it is a reflection of the significant damage. But as for the December quarter, it is certainly too early to speculate on that.
With respect to our overall economic settings, I mean, the most recent numbers that have been published were by the Reserve Bank in their statement of monetary policy just the other week. And they were still saying that economic growth will be a little over 4 per cent in 2022. And I want to emphasise in no way to diminish what is happening in the economy right now, but when you compare the confidence numbers, the consumer spending data today to what it was at the height of the pandemic last year – and there are significant differences – in the June quarter last year the economy contracted by 7 per cent. And, as I said, it could be 2 per cent and above.
Consumer spending according to bank data is 30 per cent above where it was in March and April last year. Consumer confidence, again, is around 30 per cent higher than it was in March and April last year. Business investment has increased off the back of our immediate expensing provisions. Monetary policy remains accommodative. As you know, the Reserve Bank is very active in buying bonds in the secondary market still, and they’ve had their term funding facility which has reduced the borrowing costs for the banks.
And so the overall macro economic picture right now while challenging is quite different to what it was last year. And we know from APRA data and from Treasury that there’s some $290 billion that’s been accumulated on household and business balance sheets today that was not there at the start of the pandemic last year. And that’s as a result of government spending but also the increase in the savings ratio.
I think what we will see, Shane, is an increase in the savings ratio, because people ultimately become more cautious. But what that does mean is that money gets built up to be able to be spent when the restrictions ease. And that’s why the vaccination rollout is our ticket out of here. It’s our ticket out of the pretty dark tunnel that some businesses are finding themselves in right now. It is the light at the end of the tunnel.
JOURNALIST:
And the budget?
JOSH FRYDENBERG:
Well, again, we’ll update the numbers in MYEFO. I don’t want to run a commentary on the budget numbers. Unemployment and the labour market, certainly surprised on the upside. And I think our payments are helping in that respect. But, you know, there is still a long way to go.
When I talk to the bank CEOs – whether you love them or hate them – the bank CEOs do have a bird’s eye review across the economy. And I have been speaking to them and what they have said is that the level of distress and hardship among the customer base is not nearly what it was this time last year, or in April and May at the peak of the pandemic last year. For example, a bit over 15,000 household mortgages have been provided with relief and around 1,500 business loans have been provided with relief by the banks. The banks are leaning in trying to provide that level of support.
This is less than 5 per cent of the value of the loans that were given relief last year at the height of the pandemic. Remember when the banks provided over $250 billion worth of loan relief. It is a fraction of what they’ve had to do this time with respect to hardship within their customer base. But that’s not in any way to diminish the very significant, you know, hardship that businesses and households are encountering. But there has been a build up of economic support on their balance sheets which I think will help us come back on the other side of this pandemic. And we don’t want to lose sight of that. Johnathon.
JOURNALIST:
Treasurer, can I ask you: why do you need four commuter car parks in your own electorate at the last election? What conversations did you have about those projects with the Prime Minister?
JOSH FRYDENBERG:
Well, I spoke to my local council. That’s who my conversations were with, Jonathan. I think the commuter car parks have been warmly welcomed in my electorate. And I’ve seen resident groups do so. In some of my train stations you’ve got more than 2 million – more than 2 million – commuters going through them each year, yet the number of car spots are in the low hundreds. And commuter car parks, which is a principle or a program which has been supported by state Labor governments, it’s been supported by federal Labor, are designed to reduce some of that congestion on our roads. So in my case we welcomed the commitments to build those commuter car parks. I’m looking forward to having them built –
JOURNALIST:
Treasurer, one of the councillors in your own electorate said that the time lines for construction will be provided even when the next project is deemed viable. So they haven’t even been deemed viable yet, the ones you promised two years ago.
JOSH FRYDENBERG:
Well, if you’re referencing one particular train station which Shane has written about, which has been since we announced it the state government announced that they were going to collapse two train stations into one. But at the time that the Victorian government announced Daniel Andrews himself said that he looked forward to working with the Commonwealth on the issue of car parking. So that’s a conversation we will have.
JOURNALIST:
It’s not just that train station, though, Treasurer. It’s still pretty rotten, isn’t it, Treasurer? I mean, you’re next door, Chisholm didn’t get any, and then the one, you know, Chisholm is between your seat and Michael Sukkar’s seat. There’s a very big gap in Chisholm where you didn’t think you were going to win, and it didn’t get any car parks. I mean, that’s just – that is really dodgy, isn’t it?
JOSH FRYDENBERG:
Well, Andrew, these are good investments in reducing congestion.
JOURNALIST:
Treasurer, how are they good investments if they don’t get built?
JOSH FRYDENBERG:
Well, obviously we’re seeking to build them, and we’re working with the state government to do so.