As NSW transitioned this week out of lockdown, and with Victoria soon to follow, the federal Treasurer Josh Frydenberg has told Momentum Media in an exclusive interview he’s optimistic about Australia’s economic recovery but urged the nation not to become complacent.
Speaking to Alex Whitlock, director of Momentum Media, federal Treasurer Josh Frydenberg said that the “once in a century pandemic” had caused “the biggest economic shock since the Great Depression”.
Mr Frydenberg believes that despite a short-term contraction triggered by lockdowns in NSW and Victoria, the Australian economy is set for a "very strong recovery" on the back of government support for business, rapid advancement to 80 per cent vaccination and a strong labour market.
His comments come as NSW begins to reopen after three months' hard lockdown, hitting parts of Sydney particularly hard. You can tune into the full interview between the Treasurer and Mr Whitlock here:
According to Mr Whitlock, the timing was ideal to catch up with the Treasurer given NSW’s release from lockdown on the back of the outstanding vaccination rollout and take-up nationwide.
“Mr Frydenberg gave me a lot of his time and we covered a pretty wide scope of topics, from the resilience Australians have shown during the pandemic to the unbelievable challenge he has personally faced in steering the economy so well through absolutely uncharted waters.
“It was a great opportunity to have such a relaxed chat with the man who's helping to shape Australia's fortunes, and give our audiences this up close and unrefined commentary on so many critical areas, from reopening our borders while safeguarding our health and wellbeing, to what's driving our prosperity and what the future looks like for the economy,” he said.
With everyone's focus on the property market, this was also something that Mr Whitlock discussed with the Treasurer at great length.
“From the importance of negative gearing for all Australians – to the critical role that mortgage brokers have played in helping keep competition healthy and keeping rates low for everyone – we covered significant ground.
“As a media business and intelligence provider for more than a million Australian professionals across critical business sectors, there's great value in getting the real story, first hand, from the people that have the greatest influence on our prosperity,” Mr Whitlock said.
Reflecting on when the pandemic first hit, the Treasurer conceded that Treasury “had feared the worst”, with the department forecasting that the unemployment rate could reach 15 per cent with “hundreds of thousands of fellow Australians lined up outside Centrelink”.
“People were fearful of losing their homes, and their lifetime savings. And for some, those images were reminiscent of what we saw in the Great Depression,” said Mr Frydenberg.
“We responded with JobKeeper and, immediately, it boosted both consumer and business confidence, and it suddenly saw employers, rather than sacking workers, hold on to them.”
In the interview with Mr Whitlock, Mr Frydenberg said that JobKeeper was “a very important intervention”, and “a major economic support program; a combination of a wage subsidy and economic stimulus”.
“It had the desired impact in that it kept the formal connection between employers and employees. But it also laid the foundation for what was a very strong recovery, saving – according to the RBA – at least 700,000 jobs,” he added.
The Treasurer stated that the economy had “shown remarkable resilience” despite the “game-changer” Delta variant of the virus.
"Today our economy is larger than it was going into the pandemic, and that our employment levels are higher than they were going into the pandemic [currently at a 12-year low of 4.5 per cent], does give people confidence that we have got through this crisis in a position that is stronger than that of many other comparable jurisdictions,” Mr Frydenberg said.
Outlining that the vaccination targets of 70 to 80 per cent are now “well in sight” for the two states, with NSW starting to reopen this week and Victoria “hopefully” not far behind, he said that “confidence will start coming back into the economy, and – of course – the jobs will come back”.
“It is important, though, that we keep [up] momentum in the vaccination program, and everyone who's eligible [gets] vaccinated because it not only protects themselves, but also protects the broader community,” he said.
“I'm also very confident that as restrictions ease, we will see people back in work, and we'll see businesses reopen and monetary policy will stay accommodative.”
Mr Frydenberg also pointed to the $200 billion on household balance sheets “that was not there this time last year”, as well as business balance sheet growth and “strong pipelines of investment in both the housing sector” (bolstered by the HomeBuilder program), but also in machinery and equipment off the back of the expanded instant asset write off.
“[But] that's not cause for complacency,” he added. “Far from it.”
Looking back at the impacts of the pandemic, the Treasurer and deputy leader of the Liberal Party told Mr Whitlock: “[It was] certainly not the economic environment I thought I would be involved in as the Treasurer.
“In fact, I was pleased to deliver the first balanced budget in 11 years, was looking forward to delivering the first surplus budget in 12 years, and – even after the terrible bushfires and the ongoing drought – we were on track for that.
“And then the pandemic turned the world on its head; there was no rule book.”