ALAN JONES:
Treasurer, good morning.
JOSH FRYDENBERG:
Nice to be with you, Alan.
ALAN JONES:
Thank you. Look, I think I’ve said to a couple of politicians this week that we only ever seem to criticise them and yet it is important to give credit where it is due. And I say on behalf of many; you have been outstanding at question time on policy. Prosecuting issues on behalf of battling Australians and I said to me listeners if it were a cricket match the government would be none for a thousand. But to what extent do you think the things like the Hockey affair interfere with your message?
JOSH FRYDENBERG:
Well, obviously Labor has used that as a distraction this week, from their weakness on border protection and their exposure on the retirees’ tax. But the facts in relation to that HelloWorld case need to be pointed out. I mean Labor gave a contract to a company related to Andrew Burnes in 2012, and it was the Coalition who gave a contract to one of his competitors in 2014. Both were independent tender processes and as the Prime Minister has said in the Parliament, Labor trying to distract from their weaknesses and the tightening in the polls has sought to play these personal games and to misrepresent the facts.
ALAN JONES:
Are you completely convinced that Joe Hockey is in the clear. I know that you are saying that Joe Hockey didn’t participate in this meeting, had no role in the tender process, had declared his interest in the company.
JOSH FRYDENBERG:
Absolutely. All of the above.
ALAN JONES:
Okay, just a word before we get into the heavy stuff on Julie Bishop.
JOSH FRYDENBERG:
Well, Julie will be absolutely missed. She has been a stellar performer in the Parliament for a couple of decades. And, now I know as Deputy Leader, just how challenging that role can be and she held it for 11 years and served with distinction. But also, on the international stage, Alan, the work she did in representing Australia at a difficult time after the downing of MH17 and working with the families of the victims, but also the work she did to set up a New Colombo Plan, which was based on a Menzies initiative which, at that time, saw thousands of people from countries in the region come to Australia. Well, she turned it into a modern day scheme for Australia, sending thousands of our young people into the region to get experience and those relationships will stand the test of time and help Australia for decades to come.
ALAN JONES:
Dignity and distinction, I think. We’ve all got weaknesses, Julie would be the first to admit that she’s got hers, but I think she conducted herself internationally with dignity and distinction and brought great credit on Australia.
Look, a few things which I thought we would like to cover here. This whole business going back to about sovereign borders, protecting our sovereignty by securing our borders. How much damage has been done by Dr. Phelps, the Greens and the Labor Party?
JOSH FRYDENBERG:
Oh, enormous. Enormous damage has been done by the Labor Party joining with the Greens and the Independents and pushing that ill-thought through legislation through the Parliament. We already know the hit to the budget will be over a billion dollars by reopening Christmas Island. And, we’ve seen this movie before. I mean, over 50,000 unauthorised boat arrivals, over 1,000 lives lost at sea, 8,000 children in detention, a $16 billion blowout to the budget, money that could have been spent building 1,000 new schools. This is Labor’s track record. And, you know, they tried to tell the Australian people that there was no difference between them and the Coalition, well now they’ve been exposed on the eve of the election and everyone knows that Bill Shorten will be like Kevin Rudd on this issue.
ALAN JONES:
Well, he seems to be backtracking. The Labor Party, on this, seem to be unravelling. Now, Scott Morrison has beaten them to punch by stating the obvious; Christmas Island is part of Australia so they won’t get to the mainland. So, he says well if they can be fixed on Christmas Island that is fine by me. Tanya Plibersek says “well I’m not too sure about that”. The former Shadow Minister for Immigration, Richard Marles, says “well that’s silly.’ And, the invisible shadow Minister, the Member for Blair, Shayne Neumann, well he went troppo. So, basically, this has created divisions within their own party.
JOSH FRYDENBERG:
Absolutely, we’ve seen divisions this week on coal between Richard Marles and Bill Shorten. We’ve seen divisions on Christmas Island, as you point out, between Tanya Plibersek and Bill Shorten. We’ve now seen terrible backflips in relation to the Royal Commission and leaving Chris Bowen hanging out there to dry. And, you know, we’ve also seen other backflips from Labor this week in the Parliament. The other thing that I’ve talked a lot about in the Parliament this week, Alan, is their retiree tax.
ALAN JONES:
Yeah, righto. That is $55 billion. You said in the Parliament these people, of the retirees, these people have done nothing wrong except diligently save and plan for their own retirement and you have read letter after letter. Are people listening? Are you getting a lot of correspondence from retirees about this?
JOSH FRYDENBERG:
Absolutely, people are listening and they’ve also heard the Labor Party say two things. Firstly, that they’re not going to change the policy one bit, they’ve heard that message so don’t be fooled into thinking that Labor will. The second thing that they have heard is Chris Bowen arrogantly dismissed their concerns and fears by saying that if you don’t like the policy, then don’t vote for the Labor Party. I mean, this will disproportionately hit women. Over half the people who are affected are women. This will hit pensioners despite their Pensioners’ Guarantee, which is not worth the paper that it is written on. And, over 80 per cent of the people who are affected have a taxable income under $37,000. These are retired school teachers, the nurses, the self-funded retirees, people who have done nothing wrong and don’t want to be a burden on the system, have saved for their retirement, expecting the rules to remain as they are.
ALAN JONES:
Righto, negative gearing. You’ve made the point that there are more than two million Australians aged 20 to 34 who currently rent, so they will be victims of the housing tax and the higher rent.
JOSH FRYDENBERG:
Absolutely, and we held a forum this week in the Parliament with the leaders from the industry, the Property Council, the Real Estate Institute of Australia, the Master Builders Association of Australia. They have all said the same thing, that Labor’s policy is not only bad policy, but its ill-timed, because, what we’ve seen is prices falling in the housing market, and as you say, renters will be affected because investors are prepared to charge lower rent in the expectation of an after-tax capital gain, and therefore you take investors out of the market, rents will go up and this will hurt the lower-income earners.
ALAN JONES:
There is no doubt about that. What astounds me, I can’t understand, whomever would have conceived of this notion when you see the number of renters in marginally held seats. The seat of Herbert, held by the ALP by .02 per cent, has nearly 20,000 renters. Griffith, in Brisbane, held by Kevin Rudd and obviously 1.4 per cent. There are 28,000 renters. Longman, held by Labor, on .8 per cent, there are 13,000 renters. Lindsay, here in Western Sydney, held by the ALP by 1.1 per cent, there are nearly 14,000 renters. Are you convinced that these people understand what lies in prospect?
JOSH FRYDENBERG:
Look, I think people are alert to the dangers that Labor poses on negative gearing and capital gains. I mean, they are going to slug Australians with a Capital Gains Tax rate which is higher than the US, the UK, Canada, New Zealand. I mean, this is a big $200 billion worth of taxes that Labor is imposing across the economy. Just think of the dampening effect, the wet blanket that it will put on economic activity. The flow-on effect to jobs…
ALAN JONES:
$200 thousand million is a lot of dough. Now, on mortgage brokers. Bill Shorten said that he will implement every recommendation of the Hayne Royal Commission. One of them was that the borrower must pay the mortgage broker. You’ve made the point that there are more than 17,000 mortgage brokers in the country, employing around 26,000 people, 75 per cent of them are sole traders and they work in all the regional communities and they put together more than half the mortgages across Australia in the residential mortgage market. Now, you have stated quite clearly that you are happy with the current arrangement and you will stand by the mortgage brokers.
JOSH FRYDENBERG:
Absolutely. There is only one side of politics that will stand with the mortgage brokers, these small business people, and that is the Coalition under Scott Morrison. In contrast, Labor, as you said, said before they had even seen the report, this is Chris Bowen’s words; he says “if Commissioner Hayne recommended it, it shall be done.” And, Clare O’Neil, the shadow Minister on Financial Services, was asked a question “does she agree that all commission should go for mortgage brokers?” Her words, “we do.” That’s the Labor Party’s policy. Now, today they are playing catch up, that the mortgage brokers…
ALAN JONES:
They’re backing off about this now, aren’t they? They now seem to say…
JOSH FRYDENBERG:
They’re in a mess; they’re in a complete mess. Nobody can trust them. We know that they don’t like mortgage brokers because they don’t like small business. They’ve been prepared to give a free kick to the banks; they said they were going to implement every single recommendation. That is not me making that up, they’re the words from their Shadow Ministers. I don’t know how Chris Bowen and Claire O’Neil can stand up today with a straight face after this humiliation that they are going to feel today.
ALAN JONES:
Well, on these mortgage brokers. I’m getting a stack of correspondence on this just to share with listeners and with you. One says, “Alan, you don’t call a baker to fix your plumbing, yet we want to allow a great legal mind to, and this is Kenneth Hayne and we’re not being critical of him this is true, to advise on how the financial sector should be run. Brad said; “I’ve been broking for 17 years, not once have I had a complaint from a client, not one of my happy customers was called to provide evidence, nor any other customer of any broker I know of”. Now it is fair to say, because Hayne and Rowena all did a terrific job, but they have very little financial sector qualifications or experience.
JOSH FRYDENBERG:
Well what we’ve said is we need to be particularly cautious about this because mortgage brokers are not only respected in the community, but also that they increase competition. The Productivity Commission had looked at this particular issue, and said that if you were going to change the fee service model, that actually would reduce competition, enhance the power of the banks, because they’re the ones with the big branch presence, whereas the smaller lenders do not have that. Now, the Labor Party just jumped in, boots and all, accepting all the recommendations, and saying that they didn’t want any commissions for mortgage brokers. Now they’re starting to feel the heat at the local level, they’ve worked out the error of their ways, but no one can trust them, just like they can’t trust them on taxes, they can’t trust them on mortgage brokers.
ALAN JONES:
Ok well now look, on one issue I think you’re all on the wrong tram here, except Pauline Hanson. I mean the ACCC said in April last year that there should be a mandatory code of conduct to improve “contracting practices between dairy farmers and processors”. Basically the ACCC said you can forget the retail industry, so it stopped talking about Woolworths and Coles, the problem for dairy farmers is a problem with processors. The ACCC said; currently processors can impose milk prices, and other terms of milk supply, that are heavily weighted in their favour, some milk supply contracts, the ACCC, contain terms that restrict farmers’ ability to change processes for a better offer. Now basically, dairy farmers are being run out of business, you want to protect the mortgage brokers and so on. With most of the processors foreign owned, except Bega and Norco, if we keep going the way we are, we’ll be importing milk. Every week there are two plane loads of milk, coming out of Chinese owned dairies in Tasmania and going to China. Don’t you believe, you’re the Treasurer, you’re in charge of all of this, don’t you believe its time now, and I don’t like government intervention, but there has to be a floor price for milk, which is currently way below the cost of production. Now don’t send this to COAG, and have a committee meeting on it, Josh. What are you saying to dairy farmers, about a floor price for milk?
JOSH FRYDENBERG:
Well we’re saying that a floor price won’t actually help the farmers themselves. We’re going to implement the mandatory code which was the recommendation of the ACCC. But look at the wool industry…
ALAN JONES:
Hang on, stop, stop, stop, stop, stop, stop, a floor price won’t help? If you said to the processor, “you can’t offer less than 45 cents a litre, that’s the floor price”, then the dairy farmer stays in existence.
JOSH FRYDENBERG:
Well look, let me say a few things, the Labor Party didn’t consult with any key stakeholders…
ALAN JONES:
Don’t worry about them I’m talking to you, forget them.
JOSH FRYDENBERG:
And let me tell you, when the wool industry had as floor price it took 25 years to reduce their huge stockpile. In the dairy…
ALAN JONES:
It’s a totally different- there was one distribution, for the wool industry. It went to a central area. There are a million processors here, and they are buying one another off, and knocking the farmer off. I’ve got a place in the Southern Highlands, there were 270 dairy farmers near Moss Vale a generation ago, now there are eight. When are there going to be nought? Because they can’t go on, Josh. They’ve told me, they’ve told you.
JOSH FRYDENBERG:
I understand, but listen to what happened when there was price regulation. Between 1980 and 2000 the dairy industry, the number of dairy farms reduced from just over 21,000, to just over 12,000.
ALAN JONES:
Do you know why? Your mob. Your mob. The Coalition deregulated the dairy industry. That’s why. But I’d forget that, we’re running out of time. Can you guarantee that the problems in the dairy industry won’t continue? Or are you going to say to me “dairy farmers, if you can’t make a quid, leave”?
JOSH FRYDENBERG:
We’re absolutely focused on getting a better deal for the…
ALAN JONES:
Well you tell me what that better deal is and we’ll discuss it next Friday.
JOSH FRYDENBERG:
Look forward to it.