Interview with Patricia Karvelas, ABC TV

Source: Australian Treasurer

PATRICIA KARVELAS:

I did just speak with the Treasurer, Josh Frydenberg, a short time ago. Here’s that interview.

JOSH FRYDENBERG:

Well we’re very pleased that the JobKeeper program is supporting some 3.5 million employees according to the Treasury forecast. These numbers that they have put out today in their statement explaining what has occurred is good news for the Australian taxpayer. $60 billion less than would have otherwise been spent because the Australian economy has not deteriorated by as much as Treasury initially forecast. This is all borrowed money…

PATRICIA KARVELAS:

Ok, but the actual number of workers on JobKeeper is 3.5 million, not 6.5 million which you’ve been saying. You say it was a Treasury reporting error, but why wasn’t it picked up until now?

JOSH FRYDENBERG:

Well the Tax Office and the Treasury have put out an extensive statement tonight to explain what actually occurred, and it seems that some 1,000 businesses have made an unintentional reporting error in their enrolments for the JobKeeper program. Importantly, there was no money that was sent out that shouldn’t have been sent out, there was no underpayments, there was no overpayments. But in Treasury’s and the Tax Office’s initial estimation as to how many people were covered by the JobKeeper program, they’ve had to revise that downwards in light of discovering this reporting error.

PATRICIA KARVELAS:

But this was not just a reporting error, this is also a forecasting error. You announced in March that this would cost $130 billion and it hasn’t.

JOSH FRYDENBERG:

Well again, Treasury have explained that in their extensive statement, Patricia. When they announced the forecast, as you say for $130 billion and expected 6.5 million people to be covered by the JobKeeper program, they also expected the economy to deteriorate further than it has. And so that’s why this is good news for the taxpayer because the JobKeeper program, indeed our coronavirus economic initiatives, all involve borrowed money, and therefore this is not an invitation to spend more money but rather to ensure that the program gets to those people who need it most. And with 3.5 million people covered by the JobKeeper program, that’s significant.

PATRICIA KARVELAS:

But Treasurer, you’ve been saying that the JobKeeper program essentially needed all these tight restrictions around it because of how much it was going to cost. If it’s costing this much less, won’t you include for instance, the casuals that have been excluded, people in the arts sector that have been excluded, is that something you’re open to now?

JOSH FRYDENBERG:

Well Patricia, we’ve always been consistent that the JobSeeker program and the JobKeeper program would work complimentary to each other, and when it came to casuals, that you raise, we worked off an accepted definition in the Fair Work legislation about a long-term casual. The JobKeeper program also provides support to part-time workers, to full-time workers, to sole traders, and to the not-for-profit sector. Now, with 3.5 million people to be covered by that program, 1.6 million people already getting the JobSeeker payments, together that’s over 5 million people, nearly half the Australian labour force.  That’s a very significant amount of money and a significant amount of support.

PATRICIA KARVELAS:

But with respect Treasurer, you can’t spin this. This is 3 million people not accounted for. This is incredibly significant. So, will you now include the people who were excluded?

JOSH FRYDENBERG:

Well, we’re not making wholesale changes to the JobKeeper program. We’ll have a review, as we’ve always stated, mid-way through the program, and we’ll wait for the results of that review if there are to be any changes.

PATRICIA KARVELAS:

But how can that review not be different now? How can that review not be changed now, given you have underestimated this program so significantly?

JOSH FRYDENBERG:

Well let’s be very clear what’s occurred here. Treasury initially forecast around 6.5 million people to be covered by the JobKeeper program, but because the economy did not deteriorate by as much as they initially thought, the take-up for this demand driven program has been less. So at 3.5 million people, with the 1.6 million people in the JobSeeker program, we are now providing taxpayer support to over 5 million Australian workers. Now that’s of course understandable at this difficult time, but it’s not an invitation to go and spend more money. No doubt the Labor Party will say ‘go and spend it more here or there’. The Labor Party have never seen a spending proposal they haven’t supported, and a tax that they haven’t increased…

PATRICIA KARVELAS:

Sure, but Josh Frydenberg…

JOSH FRYDENBERG:

…we’re a lot more principled, and a lot more disciplined in relation to spending.

PATRICIA KARVELAS:

But you’ve also made a massive mistake. Do you take responsibility for that mistake?

JOSH FRYDENBERG:

Well, again, the ATO and the Treasury have made it clear what has occurred here.

PATRICIA KARVELAS:

Yeah, but you’re the Treasurer.

JOSH FRYDENBERG:

And this was an unintentional reporting error by about 1,000 businesses, and I’m sure those businesses didn’t mean…

PATRICIA KARVELAS:

But, hang on a minute, the forecasts were wrong too.

JOSH FRYDENBERG:

Well again, this is a very uncertain time. I’m not blaming Treasury, and I’m not blaming the ATO. What I’m saying is that no underpayments were made, no over-payments were made. This is a massive program with a revised costing of $70 billion, and this is all borrowed money…

PATRICIA KARVELAS:

But you’re trying to say this is good news.

JOSH FRYDENBERG:

And so we’ll continue to provide the support to the public.

PATRICIA KARVELAS:

You’re trying to say its good news…

JOSH FRYDENBERG:

This is good news for the taxpayer…

PATRICIA KARVELAS:

Well how can Australians trust Treasury and you, with respect Treasurer, if you can get the numbers that wrong?

JOSH FRYDENBERG:

Well again, I think Treasury have provided a very detailed explanation for that. There were no underpayments, there were no over-payments Patricia. What has occurred here is a revision in the number of people that are covered by this program, and to the costing.

PATRICIA KARVELAS:

Ok and how significant do you, what’s your interpretation of this? How disappointed are you that this is so out of line with what we were told. Because you’ve told Parliament three times, in fact Labor has sent me all of the times that you’ve said on the record in Parliament that 6 million people are on this payment, but they’re not. So have you mislead Parliament?

JOSH FRYDENBERG:

Well as of yesterday, Patricia, the Secretary of the Treasury was before the Covid committee, a Parliamentary Committee, saying 6.5 million people were covered by it. Because that was the advice to Government, that was the advice that Treasury themselves had reached. Obviously with the discovery of this reporting error they’ve had to revise those numbers and I’m explaining to you what has actually occurred…

PATRICIA KARVELAS:

I know you are…

JOSH FRYDENBERG:

But I do think it’s very unfair, I think it’s very unfair, to blame Treasury, to blame the Tax Office. What has occurred here has not had the impact of underpaying or overpaying. What this has just meant, is in relation to the forecast that Treasury has made, that the number of people covered by the program is less, and therefore the spending by the taxpayer is going to be substantially less than was otherwise thought.

PATRICIA KARVELAS:

Given everything we’re seeing now, is it realistic that we go back to that unemployment payment, the Newstart payment, particularly given you now have a lot more money to work with than you thought you did.

JOSH FRYDENBERG:

Well again this is the mistake and premise of your question, Patricia. Every dollar that we’re spending is borrowed money. It means that our children will be paying it back. It will take years to pay back the accumulated debt from the coronavirus period, there’s no doubt about that. But we make no apologies for spending where it’s been necessary. The Jobkeeper program at $70 billion is the biggest such program the country has ever seen…

PATRICIA KARVELAS:

Sure but on the unemployment benefit, are you honestly prepared to go back to the Newstart rate?

JOSH FRYDENBERG:

Well we’ve always been consistent that the programs that we’re implementing, namely the JobSeeker coronavirus supplement that you’re referring to, the extra $550, that’s temporary. That was for the 6 month period and reflected…

PATRICIA KARVELAS:

But will you go back to a higher rate than the previous Newstart rate? I spoke to one of your colleagues, Trent Zimmerman, he said he was going to call you and make that case, I imagine he has. Will you go to a higher rate than the old Newstart rate?

JOSH FRYDENBERG:

Well what I can tell you is that the announcements that we have made to date in the coronavirus period are temporary and they’re targeted to provide that support. I know there has been lots of debate about the adequacy of the Newstart rate. But right now, we are getting $1,100 to people who are unemployed, effectively a doubling of what that old safety net was, and that’s very significant, on top of all the other financial support we’re providing.

PATRICIA KARVELAS:

So you’re saying these new figures, this massive underspend, this changes nothing in terms of your snapback priorities and what you’ve told us in the past?

JOSH FRYDENBERG:

What I’m saying is it’s not an invitation, this revision by Treasury, is not an invitation to go and spend more. All the money that the Government is spending during the coronavirus period is borrowed money. There is no money tree.

PATRICIA KARVELAS:

Fair enough. You’ve previously used this language that we needed to draw a line somewhere with JobKeeper. That line that you drew looks really different now, billions of dollars different to the line you drew. So aren’t the rules different now too? Shouldn’t you be reconsidering whose on this payment?

JOSH FRYDENBERG:

Again, we’ve been entirely consistent. The JobKeeper program and the JobSeeker program are to work in complement to each other. One has got 1.6 million workers on it, the other will have 3.5 million workers on it according to Treasury. That’s nearly half the Australian labour force. The Tax Office and the Treasury have explained what has happened with this reporting error, I accept that. And now we continue to provide the support to the Australian people when they need it most. What they do know is that their Government is doing everything possible to provide them with the economic relief, to provide them with this safety net during this very difficult time.

PATRICIA KARVELAS:

Treasurer, do you understand how some Australians might be feeling watching this, thinking ‘the Treasurer is trying to tell us this good news, but 3 million Australians were counted that weren’t in the numbers. How can we trust the figures?’

JOSH FRYDENBERG:

I think Australians who are watching your program, either themselves or others, will know people who are coming under the JobKeeper program, coming under the JobSeeker program, receiving the cash flow boost if they’re a small business, being able to use the extended instant asset write-off, receiving the $750 cash payments if they’re a pensioner, or if they’re on a carers’ payment, or if they’re on a family tax benefit or another form of income support. What Australians know right throughout the country is that Scott Morrison and his Government are working day and night to provide them with the economic support and the health support that they need through this difficult time.

PATRICIA KARVELAS:

Ok, Treasurer does this also mean that the unemployment rate…

JOSH FRYDENBERG:

And the facts, Patricia, the facts tell a very powerful story. While other countries have seen the number of coronavirus cases increase by large numbers every single day, we’ve been able to manage to flatten the curve, we’ve now got a pathway out with the easing of restrictions. That’s a very significant development and that’s what this Government has helped to achieve.

PATRICIA KARVELAS:

Let me sneak my question in Treasurer. Does this also mean that the official unemployment rate is higher than what’s been reported, given these people are not on JobKeeper?

JOSH FRYDENBERG:

The unemployment rate is as the ABS announced just the other week. And of course we announced that there was nearly 600,000 people who are not in jobs from one month to the next. As the PM said, a very tough day…

PATRICIA KARVELAS:

But won’t there be an impact from this underspend? 

JOSH FRYDENBERG:

As you know in the statement put out by Treasury and the Tax Office, they’ve made it very clear that the forecast remains for unemployment to peak at around 10 per cent in this June quarter, but for the JobKeeper payment, you’re talking about the unemployment rate being another 5 percentage points higher. So it’s having a very significant and positive effect.

PATRICIA KARVELAS:

Treasurer, thank you so much for joining us this afternoon.

JOSH FRYDENBERG:

Always good to be with you.