After handing down the 2020-21 Federal Budget, Treasurer Josh Frydenberg sat down with 9News political editor Chris Uhlmann to discuss his economic plan to lead Australia out of the coronavirus pandemic.
CU: Josh Frydenberg, how quickly can Australians get their tax cuts?
JF: As soon as the Tax Office is satisfied that the legislation has bipartisan support they can move to amend the tax schedules and money can make its way into people’s pockets and that would be before the end of the year.
CU: If the Labor Party says “yes” to this tomorrow then the Tax Office can get working?
CU: They would have those schedules changed by the middle of the month?
JF: They said they can change those schedules by the middle of the month and it will take a few weeks probably for the computer systems to work its way through with the various payroll software companies.
But this money can make its way into the public’s pockets soon after that.
CU: Before Christmas then?
CU: What can you tell us about how you are going to go about giving people an incentive to hire young people?
JF: It’s very important to help those Australians who are either on JobSeeker or who are on other income support, for example the parenting payment or Youth Allowance, where they are out of work.
We want them to get into work.
So what we are offering employers is an incentive, if somebody is aged between 16 and 29 we are offering that employer $200 a week and if they are aged between 30 and 35 we are offering that employer $100 a week to take them on.
They have to have a minimum of 20 hours.
They have to be additional to their payroll, but this could be the difference between taking on a worker or not and it’s Treasury’s forecast, Chris, that this will support some 450,000 jobs across the economy.
CU: You are also wanting businesses to invest, how are you going about that?
JF: Business investment is absolutely key to not just the productive capacity of the nation but to job creation.
So we are offering the opportunity to businesses to immediately deduct any purchase for their business that they undertake, rather than doing it over a number of years they can do it immediately.
That will bring forward investment, create jobs.
So you’ll have a farmer who buys a harvester, you’ll have a manufacturer who upgrades a machine line, you will have a trucking company that buys a new lorry.
This will be important to creating jobs, may even have a tradie who buys some new tools.
CU: To do all this you have to borrow a fortune, we are going deeply into debt now.
JF: We are doing what is necessary to meet this once-in-a-century economic crisis.
Australians are doing it tough through no fault of their own.
The government, with the budget tonight, is laying out the economic recovery plan, how to secure Australia’s future, how to rebuild our economy, and it’s all about jobs.
CU: Deficits though are over the horizon and debt peaking not until 2031 at $1.7 trillion.
JF: There is net debt and there is gross debt, but you are right about gross debt, that it does peak at the end of the medium term but importantly our spending is not baked into the budget.
Ninety per cent of our spending is in its first two years, but what has happened to the economy is that you’ve not only seen more spending but you’ve actually seen receipts to governments come down as company profits fall, people are out of work and therefore not paying as much tax as previously.
That has impacted upon the budget and that will have a material impact for a while.
CU: You’re expectation is that unemployment peaks in December, at what sort of rate?
JF: At 8 per cent and then comes down after that, 7.25 per cent next year and significantly down after that.
CU: And down to 5.5 per cent in 2024 which is around about when you are going to stop supporting the economy and start thinking about paying off some debt.
JF: We are going to continue to support the economy but our measures have always designed to be temporary, targeted, scaleable and proportionate to the challenges we face.
We are very conscious of ensuring that our spending is responsible and that it delivers more jobs and that’s what this budget does.
CU: In the next financial year the size of government grows to something we have never seen before – 35 per cent of all the activity in the economy next year will be government.
JF: We want the private sector to be out there hiring, innovating and growing.
That’s why we are providing plenty of incentives in this budget.
Our initiatives are part of a broader economic plan, Chris.
Energy reform to deliver more reliable and affordable power.
Our manufacturing strategy to ensure that Australia is making more things at home, rolling out billions of dollars of infrastructure to get product from the paddock to the plate a lot quicker.
These are all part of our jobs creating agenda.
CU: There is substantial uncertainty around all of this, isn’t there?
This is a very uncertain time globally, domestically but the Morrison government is implementing this plan to create jobs which gives us all hope for the future.
CU: Finally, how much confidence do you have this plan will work?
JF: I am confident that this plan will work and it will deliver more jobs.
We have Australians’ back at this very difficult time, we have shown that to date and we will show that going forward.