6PR Mornings with Gareth Parker
GARETH PARKER: (greetings omitted) These are unprecedented times. Can you tell me what the Government is considering for a round 2 of economic measures at this point?
ATTORNEY-GENERAL: Well I would describe the round 1 measures as being sort of traditional fiscal stimulus. I mean they were things designed to keep businesses ticking along even with reduced demand which will be clearly the case in many sectors, I mean many sectors are going to have increased demand obviously but traditional stimulus measures to keep the economy pushing through what will be a very challenging six months.
What is now being considered, what I would describe more generally as safety net issues - so not so much in the nature of traditional economic stimulus designed to push the economy through a challenging time but to identify people who will be in need of assistance, whether they're businesses or business sectors or obviously individuals and clearly we're going to have some issues around unemployment. So we're trying to look at the ways in which we can cater for what are our best-estimates around the scale and depth and location of those sort of problems.
GARETH PARKER: It sort of moves by the hour doesn't it? And it seems to still be on the deepening aspect of that movement rather than levelling out. What's your current best estimate of the impact to say unemployment or say the economy?
ATTORNEY-GENERAL: Look, I don't want to give figures here because this, they're in such a broad range that, these are matters that are being considered from Treasury and Finance inside the Expenditure Review Committee and Cabinet but you know you can you can ask, as they say, 20 different economists and get 25 different answers to those questions. But I think that like the actual anticipated growth in the number of infected people by the virus itself, so you model around different scenarios, certainly that's what we're doing with the economics and with the issues as to who it may be that will need assistance through these times - in what numbers - in what industry sectors - where might they be located. But like a lot of these things, the central issue is having identified people who will need assistance, what's the best, most efficient delivery mechanism to give that assistance? And with the employment issues I mean, very, very sadly it's going to mean for a period of time over the next six months that people who have never had any contact whatsoever with the welfare system perhaps for the entirety of their lives, will be needing of assistance from the taxpayer. And in fact these who up until this point have been paying the taxes that keeps the system able to offer assistance. So, you know, it is extraordinary, these are unprecedented times in many ways, but not issues that we’re unprepared for, they're being dealt with quickly, but in a very orderly fashion and based on all the best evidence and data that we can get in.
GARETH PARKER: This is going to be a sharp recession isn't it?
ATTORNEY-GENERAL: Well, again the exact numbers that might attach around say the June quarter, you're getting different estimates around that, but the way in which the Government is looking at this is that one – this is a health issue and our response has to be about logistics and organisation and cooperation and by the way the extent to which that is happening between all the states and the state and federal governments is totally unprecedented and remarkable and incredibly pleasing. But it is a health response first and foremost, and how do we get all of those levels of government coordinating their logistics and their organisation to make sure we not only will flatten the curve of this in terms of the types of announcements we've had around gatherings and social isolation, aged care facilities, but also that we’re absolutely prepared for the increase in demand that will be at GPs and at wards and at ICUs – so first of all it’s a health response. Secondly, obviously we have to make best-assessments around how the challenges in the health sector and to the health of Australians are going to affect the economy – and the second thing we need to do is produce the best possible response to that. But, you know, there are things that no government can control and even with the best health response and the best of best responses to issues like unemployment and issues like the fact that they'll there’ll be massive demand for some work in some industries and demand falling off a cliff in other industries, what will be in a sense will be in terms of data about the June quarter and the quarter after that. But what we can do is design the best health response and the best economic response to the conditions as we find them.
GARETH PARKER: I had a fair bit to say about this yesterday that what this current moment it seems calls for to me, is not actually economic stimulus in the sense that you're trying to stimulate people to go out and create demand for stuff. What people are most going to need at varying levels, some are going to need it more than others, some may not need it at all - but very many people are going to need access to help them bridge the gap - to help them get through the impact that this health crisis is imposing on the economy. They're basically going to need assistance to meet short term financial obligations, be they rent, be they mortgages, be they business loans, be they the wages of staff that do not pause, despite the fact that the money coming in the door has paused, or perhaps even evaporated. Is that the nature of the crisis we're facing and if that's the case is the best thing that government can do here to basically just send people cash?
ATTORNEY-GENERAL: Well, your description about the nature of the challenge is about right and that word ‘pause’ has been used in a number of meetings that I've been in over the last several days. The demand in a whole range of industries is going to pause - people's ability to engage in the workforce is going to pause - but their requirements to pay a mortgage will go on. And obviously what you've got to do - and that pause our best estimates you know we're looking at a six month period of disruption to the economy and to our health system and to life as we've previously experienced in Australia for a long period of time. But what we want to make sure is that businesses who find a decrease in demand during that period stay as operational businesses albeit at a lower level so that when we get out of this thing they come straight back into the economy and straight back into employment. Likewise that employees, even if they're working for a business that is experiencing a downturn stay connected to that business and then where employees have less work, or there is redundancy, which invariably there will be, that those people are looked after so that they can manage to maintain their commitments and that when this ends, life normalises - employment normalises and life goes on much as it did before and that we as an economy bounce out of this very quickly.
Now, when you talk about cash, what we have said, I think fairly consistently since the beginning of this is that the individuals we have a very deep, broad welfare system, which is a proven delivery mechanism to get people through hard times. Now how we might modify that welfare system for these particular and extraordinary challenges is obviously something that's being worked on. But already in the first round of stimulus we've dealt with this issue of the pause with respect to say for instance business. So business being able to get in, in the first wave of the direct fiscal economic stimulus payments based on the amount of withholding tax they keep for their employees, which is a good proxy measure for the number of people they employ – of up to 25,000 - is going to allow that business if it has a downturn in demand to keep people engaged with the business, even though they're doing less work and get through that six months so that they can surge-out the other side of it when things get better and when things get better they're likely to get, you know, better fairly quickly.
GARETH PARKER: You're going to have all this pent-up demand aren't you I mean presuming we can get through the pause then then at the other end people are still going to want to, you know, they're going to want to get back on the horse they're going to want to buy shoes and clothes and go on a holiday and all that sort of stuff.
ATTORNEY-GENERAL: Absolutely, which is why, whether you're an individual and your work circumstances have been affected by this or whether you're a business and your demand has been affected by this, the key that we are trying to achieve with the efforts and interventions of governments and stimulus and assistance is to make sure that everyone can manage through what is going to be, you know, a very extraordinary period of time - but a period of time that will ultimately come to an end.
Just while I'm on your show, if you don’t mind can I make a comment about this schools stuff?
GARETH PARKER: Please please.
ATTORNEY-GENERAL: Schools, they need to stay open. I mean, every single chief medical officer in every state and territory in the Commonwealth agrees that schools need to stay open. And there are a number of reasons for this, but the first reason that they’ve offered us as the federal cabinet is that, that is actually in the best interest of children and their families. The best data that we've got coming out of China is that only 2.4% of all the recorded infections were for children. They get the disease less, they are less symptomatic, they spread the disease less; together as a group, they are safer than if you don't have school and school shut and they're back somewhere else at a shopping centre or at home mixing with other people - people who might be grandparents and so forth. It is actually in the best interest of the health of children and Australian families for schools to stay open. Secondarily, if schools were to close and parents who would otherwise have their children at school, come out of their particular part of the workforce to look after their kids, the effect on that for healthcare workers - nurses and others - is going to be absolutely unsustainable during what's going to be a peak period of demand in the health service. So this is the advice from every single chief medical officer in every state and territory in Australia and the Commonwealth Chief Medical Officer to every state and territory government and the Commonwealth Government.
GARETH PARKER: I think it's important to say that because it's continuing to be an issue of community debate. Might that change if this crisis really takes hold? Might that advice change? Might schools be closed?
ATTORNEY-GENERAL: That's the advice based on all of the circumstances we have and the best estimate of the circumstance that are likely to unfold and as you pointed out and what Brendan Murphy has pointed out, if you just closed schools for two weeks or four weeks, given that we're going to be dealing with this for six months, they will have to reopen at some point in time and he described it as a bounce-back effect – that you are simply delaying something that would otherwise happen. But in any event, the advice is that it is actually in the best health interests of the children in the Australian community that children are in schools. Now obviously if children exhibit symptoms then parents and teachers make rational calm decisions about that. But it is very important, based on all the advice that we are getting in government, which I must say you know, we don't just sit and listen to it – we scrutinise it - we ask questions – we stress test it - we have the debates that mums and dads and communities are having. I’ve got to say it all appears absolutely plausible to me what the medical experts advising state territory and Commonwealth government are saying about schools.
GARETH PARKER: Okay. Can I just return to the economic issues? I just want to see if I understand an earlier answer you gave about the unemployment benefit system. Can I summarise this accurately in shorthand? What you are saying to the community is that for a number of people who have spent their whole adult lives as taxpaying workers and contributors to society, they need to prepare for the possibility that in this coming period, they may go on the dole for the first time?
ATTORNEY-GENERAL: Well, the welfare system is just the best …you know we’re not going to invent a delivery mechanism when one exists at the moment. And people who have contributed to that system their entire lives may need for the first time ever to rely on that system. And what we want to do as a government is make sure that that reliance is fair and reasonable; is quick and actually is of a type which allows for precisely what we spoke about earlier; people who've never experienced the system to be able to get into it, use it for a short period of time and then go back, because the system has allowed them to hang on and meet their obligations as far as the system can over a period of time which we expect, you know, will come to an end, whether that's in six months or earlier or slightly later.
But it's not about any stigma attaching to being inside a welfare system during this very challenging period we're about to go through. It’s just that this is a system which sits there - has all of the mechanics around it - all the offices - all of the IT platforms - all of the applications - all of the delivery mechanisms that would allow for response in these extraordinary times and obviously we're considering how you would tailor that response but the delivery mechanism must be the welfare system.
GARETH PARKER: I know your time is precious. We've got to keep moving. Can I just ask you this last question? Mutual obligation for job seekers - can they be suspended?
ATTORNEY-GENERAL: Yeah I mean we're looking at how we cater for the fact that a range of people will find themselves needing assistance, who've never needed it before. We're not going to…
GARETH PARKER: It just doesn't make sense at this point at this point in time to have people applying for 20 jobs a month.
ATTORNEY-GENERAL: Correct. I mean someone who was working at Qantas and needs the assistance of the welfare system during a period where, in their industry and other industries there's massively decreased demand, obviously we're trying to work out at the moment the most sensible ways of going about that. And of course you know we're going to… a whole range of things that would normally apply will not apply during this extremely unusual set of circumstances.
GARETH PARKER: Christian, there's lots going on I very much appreciate your time this morning.
ATTORNEY-GENERAL: Hang in there, everyone we'll get through it.