Treasurer Josh Frydenberg reveals pressure as Australia faces biggest budget blowout since WWI
It’s a tough job and Josh Frydenberg’s got to do it: navigating the nation’s finances during a global pandemic is testing the mettle of the Member for Kooyong.
Victoria
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It was supposed to be Josh Frydenberg’s grand final.
May 12 was marked in the Treasurer’s calendar as the day he would bring Australia’s budget back to surplus for the first time since 2008.
Like any Carlton supporter, Frydenberg knew it was an opportunity not to be wasted.
A year earlier, when he handed down his first budget, the Liberal Party started selling premiership-style merchandise in anticipation of the milestone being reached in 2020.
But on March 7, those “Back In Black” mugs disappeared from sale. Nine Australians were diagnosed with the coronavirus that day, taking the nation’s total to 72 cases.
It was a small number, but Frydenberg knew his surplus was gone.
A fortnight later, the budget was postponed until October. Even for the government’s top economists, forecasting the impact of a once-in-a-century pandemic was like kicking a football blindfolded.
By May 12, 6964 Australians had contracted COVID-19. Frydenberg rose in parliament to declare Australia was “at war against a faceless and flagless enemy”.
He reeled off figures almost unimaginable for the 39 men in charge of the nation’s finances before him.
Unemployment at 10 per cent. More than 1.4 million people out of work. A $50bn hit to the economy in just three months. And $320bn committed in taxpayer-funded economic support.
It was enough to make anyone’s mouth go dry. For Frydenberg, that’s precisely what happened.
Scott Morrison, who was sitting next to him, initially chuckled as the Treasurer started coughing. But the Prime Minister’s expression darkened as Frydenberg struggled to regain his breath.
A constituent watching on TV saw Frydenberg spluttering into his hand, instead of the crook of his elbow, and decided to post him a handkerchief.
Frydenberg soldiered on, finishing the speech before he sought out Deputy Chief Medical Officer Paul Kelly, who directed him to get tested for COVID-19.
He was cleared the next morning. It was a dry throat after all — a sign that, even for a man in a hurry, life at the top can catch up with you.
Asked for his reflections on that day, Frydenberg takes a deep breath and says: “It’s as if last year never ended.”
“We had responding to the (banking) royal commission, the budget which was early … we had the election campaign, then legislating the tax cuts, we had the challenges of the ongoing drought, the mid-year economic and fiscal outlook, then there were the devastating fires and COVID-19. It’s just been constant.”
As former prime minister John Howard said this week: “Anybody who’s treasurer at a time like this knows they’re alive.”
A BIG YEAR FOR THE FRYDENBERGS
This was always going to be a big year for the Frydenberg family.
Five-year-old Gemma started school, and her dad was bracing for a busy social schedule.
“You know how they are at that age — there’s three parties a weekend,” he laughs.
But coronavirus restrictions mean Gemma has spent much of her prep year at the family’s Hawthorn home with three-year-old brother Blake and mum Amie, a workplace relations lawyer.
The Treasurer has also helped out with her remote learning curriculum, although like many parents, he worries about how much time his kids are spending in front of screens. He knows the pandemic has been hard on them.
“They think about it, whether they’re afraid to touch things, or they’re extra conscious about washing their hands,” Frydenberg says.
“They talk about wanting the virus to go away, and being able to see their friends again.”
While Gemma and Blake have grown up with their dad travelling regularly, his routine has been even more punishing this year.
At the end of a busy summer, Frydenberg squeezed in a trip to Saudi Arabia for the G20 finance ministers’ summit. It was here he began to realise the damage COVID-19 would wreak on Australia’s economy.
With Morrison, he started working on support measures as soon as he returned.
In March, the Treasurer flew to Canberra to announce their response, spurred on by the “pretty graphic” scenes of thousands of Australians queuing at Centrelink offices.
On a Sunday, he spent $66bn to double the dole and deliver $100,000 grants to small businesses. A week later, Frydenberg and Morrison unveiled the JobKeeper scheme to subsidise the wages of millions of Australians for six months.
Frydenberg had packed four sets of clothes for the trip. He stayed for 15 days.
The Treasurer spoke to Weekend from Canberra last week, after a joint call with the Five Eyes finance ministers, talks with Business Council boss Tim Reed and crucial meetings to finalise the next phase of economic support.
It was the night before his 49th birthday, and he couldn’t wait to fly home to his family.
“It’s hard yakka being away from them a lot. I miss them,” Frydenberg says. “But I’ve got a really understanding family which just makes what I’m doing that much easier.”
With interstate borders closed to Victoria, Frydenberg needed a special exemption to return to Canberra this week to unveil changes to JobKeeper and JobSeeker payments and deliver the budget update, and now must wear a mask when in public in the capital.
He was armed with new running shoes — a birthday gift from his family — for his early morning walks into Parliament House.
Throughout the pandemic, Frydenberg has been up before 6am every day, eating breakfast, lunch and dinner at his desk in between constant meetings with business leaders, industry chiefs, public servants and colleagues.
Reed says he is intelligent, thoughtful, warm and easy to deal with, even in the most difficult of circumstances. “It always strikes me that he’s very present in the moment and very focused,” Reed says. “He’s thinking about the gravity of decisions that he’s making. He has this ability to listen and to incorporate feedback … so when they made an announcement, they were decisive.”
Frydenberg also leans on Howard for advice. When he was designing JobKeeper in March, the Liberal legend told him: “At times of crisis like this, there are no ideological constraints.”
Howard says he also encouraged the Treasurer to “intervene very strongly at the beginning than do it in half measures”.
“It’s something that we haven’t had to grapple with before,” Howard says.
“He’s handled an incredibly difficult challenge so early in his time as treasurer very well.”
But the former PM cautioned that cutting back support would be politically tricky.
“When you face a situation like this, going into it is a less difficult thing than coming out of it,” he says. “They’ll earn their keep in leading the country out of it.”
THE ‘A-GRADE NETWORKER’
Frydenberg is Kooyong’s seventh member of parliament since 1901.
Half of his predecessors led their party, including Robert Menzies, Australia’s longest-serving prime minister.
Frydenberg is well aware of that history — he keeps Menzies’ walking stick in his office — and has rarely been shy about his ambition.
But according to his critics, internally and externally, Frydenberg’s focus on his profile is to the detriment of his portfolio. While JobKeeper has been praised by the business community, the initial $130bn costing was wrong.
Not just by a little bit, either — the scheme was actually worth $70bn.
Labor MP Ed Husic, who Frydenberg counts as a close friend, says it was “one of the worst budget bungles in Australian history”.
In a Labor caucus meeting, Husic raised Frydenberg’s move to compel Facebook and Google to pay news outlets for content, claiming it prompted the media to go soft on him.
Shadow Treasurer Jim Chalmers responded by calling Frydenberg an “A-grade networker and a reserve-grade treasurer”.
Frydenberg leapt on their exchange within hours, perhaps pleased with the backhanded compliment. Even among politicians, his networking is legendary.
His so-called “ratpack” includes media mogul Ryan Stokes, pub baron Justin Hemmes and music industry chief Dan Rosen.
Hemmes, who runs Sydney’s Merivale hospitality group, was among the key business leaders Frydenberg sought out before introducing JobKeeper.
“The Treasurer has demonstrated a deep understanding of the impacts right across the economy,” Hemmes says. “He has been measured and thoughtful, and shown a willingness to listen to the many important voices in our community.”
Rosen, the boss of the Australian Recording Industry Association, helped in a different way.
During the pandemic, various politicians appeared on the ABC’s Insiders talk show, singing their favourite songs as they washed their hands to promote good hygiene.
When Frydenberg was challenged by Labor’s Tony Burke, he didn’t bother with a homemade video. He drafted Rosen to write a COVID-19 version of “C’mon Aussie C’mon”.
Then Frydenberg donned a white floppy hat and added his pièce de résistance — cricket legend Shane Warne joined in from his kitchen to sing along.
Rosen himself performed at Frydenberg’s wedding. In 2014, Frydenberg was at Rosen’s wedding in Byron Bay when Tony Abbott asked him to be his Assistant Treasurer.
Frydenberg had long been interested in the foreign affairs job, but he says he has enjoyed the “great opportunity and great responsibility” of handling the nation’s finances.
He jumped at the chance to become Treasurer after Morrison vacated the portfolio to take the top job from Malcolm Turnbull two years ago.
Asked if he thinks about making a similar ascension, Frydenberg says he is “very happy doing what I’m doing”.
“It’s a great privilege to serve in the Treasury portfolio, to be the deputy leader of the party, and to work closely with the Prime Minister,” he says.
He concedes, however, that he would rather be the world’s best tennis player than prime minister.
“Reaching the pinnacle of tennis would be hard to beat,” Frydenberg laughs.
As a kid, he wanted to drop out of school to go pro, and he once defeated Mark Philippoussis in a doubles match. Cabinet colleague Dan Tehan says Frydenberg’s efforts as Treasurer remind him of Swedish tennis legend Björn Borg.
“He’s very strong on both sides of the body, backhand and forehand, and he just plays with a steely determination to get the job done, no matter the context of the match,” Tehan says.
Frydenberg became the Liberal Party’s deputy leader in 2018, defeating Steve Ciobo and Greg Hunt, the Health Minister who was one of Frydenberg’s groomsmen at his wedding.
Howard says the elevation shows Frydenberg’s stocks are rising, particularly given he was the architect of the energy policy that sparked Turnbull’s demise.
“You don’t get to be deputy leader of the party after a relatively short period of time in the parliament without impressing your colleagues,” Howard says.
Those close to Frydenberg embrace his ambition because they say it is matched by determination.
It is a quality that can be traced back to regular weekend breakfasts with Sir Zelman Cowen, Australia’s 19th Governor-General who became Frydenberg’s mentor and friend.
Sir Zelman used to tell him: “You don’t need to take too much time to smell the roses. Just get on with it.”
NO TIME TO SMELL THE ROSES
The Treasurer has been taking long walks lately to clear his head, but he certainly hasn’t had time to smell the roses.
“We’ve had to make some tough decisions during this crisis,” he says. “The scale of the shock is enormous.”
Frydenberg is in no doubt about the need to suppress the virus. He has seen what it can do — his cousin contracted COVID-19 in the UK and ended up in intensive care in Melbourne.
“Nobody can honestly say with any precision when a vaccine will be found,” he says.
In the meantime, Frydenberg is focused on the economic crisis, and the burden it will leave to his kids and children everywhere. As he announced on Thursday, Australia’s budget is now in a $184.5bn hole — and debt is hurtling towards $851bn.
“There is no money tree, and at the end of the day, the higher debt burden has to be paid back by future generations,” he says.
“No one should underestimate the challenges ahead … But we can come back, absolutely. I’ve got a lot of hope for the future, and a lot of confidence in the resilience of our economy.
“The Australian spirit is strong.”