National Press Club address by the Federal Treasurer
13 May 2020
Malcolm Brennan, Chair of the Business Law Section’s Foreign Investment Committee represented the Law Council of Australia at the National Press Club address by the Federal Treasurer held on 5 May 2020. Due to the observation of social distancing rules (under a special dispensation from the ACT Government), this was perhaps the smallest audience the Press Club has had for one of these events.
Noting that the Treasurer will be presenting an economic statement to Parliament next week, he reviewed the recent history of the COVID-19 crisis and the government’s response. It was observed that the government was well aware that the economic impact would be greater than SARS in 2003. This is due in part to China’s economy being four times bigger and far more integrated with us now than it was in 2003. The Treasurer said that the government has looked to provide support / stimulus packages for the economy, with the aim of ensuring that the programme is equivalent to the shock.
The shock has been significant – the ASX has lost 1/3 of its value, overall consumption is down 19.5 per cent (despite panic buying), GDP will drop over 10 per cent in the June 1/4 quarter and there is a 1/3 decrease in net migration. Unemployment rate is heading for 10 per cent in the June 1/4 quarter (would have been 15 per cent but for the JobKeeper initiative). The Treasurer also noted that China has had a 9.8 per cent drop in GDP – the first drop on record.
He spoke of the upcoming National Cabinet meeting on 7 May, which will assess opportunities for further relaxation. There are 15 conditions which need to be satisfied to achieve this – including testing, tracing, health system capacity, availability of masks and so on. The Treasurer said we are on track for satisfying 11 of these conditions and progressing the other four conditions. The COVIDSafe app is critical in this respect. Five million downloads have occurred so far. Easing restrictions will be aimed at minimising health impacts and maximising the economy. The goal will be to build consumer and business confidence in doing so.
Changes to bankruptcy and insolvency laws were highlighted along with responsible lending laws. The Treasurer announced that the Corporations Act will be amended shortly to allow for virtual AGMs and electronic signatures for a six month period.
The Treasurer mapped out the way forward focussing on the support packages and looking to drive changes to result in a more efficient and productive economy. The economy was on track to a surplus, so the underlying fundamentals were strong. The Treasurer emphatically rejected critics suggesting that a focus on the economy is an ideological pursuit. The Treasurer acknowledged there will be a high debt burden but that will be attacked not through higher taxes but through increased productivity and a strong economy. There is no shopping list of reforms, but the government will look at all options with fresh eyes.
The Treasurer assured those assembled that the government will be vigilant against protectionism and will ensure the national interest is safeguarded. The benefit of foreign investment to Australia was noted.
During questions, the Treasurer acknowledged the challenge faced by Australian supply chains and the need to assess exposure in certain areas.
The Treasurer also noted that the government will not cut services. The economy is in a good position through fiscal restraint and will continue to cut unnecessary spending.