Josh Frydenberg, welcome to the program.
Great to be with you, Richo.
Now look, I guess that we should start with the fact that you've only been Treasurer for five minutes and you've- you must be born under a lucky star because you've got a few extra billion you didn't know you'd have.
Well, yesterday we released the Final Budget Outcome for 2017-2018. There was a $10.1 billion deficit and a $19.3 billion improvement from what was forecast when the budget was handed down in May 2017.
What's good news for us is that is the smallest deficit in a decade and we're on track to bring the budget back into balance in 2019-20. We've been able to get the rate of spending growth down to its lowest level for 50 years and we've managed to get the number of working-age Australians on welfare to its lowest level in 25 years.
So, our budget strategy, our economic plan is working and the results in the Final Budget Outcome, Richo, come off the back of a decision recently by Standard & Poor's to reaffirm Australia's AAA credit rating – one of only 10 countries in the world to have a AAA credit rating from the three major ratings agencies – and our National Accounts numbers which showed that the economy was growing 3.4 per cent through the year and at its fastest rate since the height of the mining boom in 2012.
Yeah, but the problem with that narrative, which I've heard before is two things. One, if you ask economists, they'll say what about the half a trillion debt that you've run up? Because half of that is under your watch, as in, not your personal watch, but under your Government's watch.
And the other thing is that when you tell people the economy is just humming along nicely and they haven't had a wage increase for five years and everything's gone up around them except their wages, there's a lot of unhappiness and disgruntlement – what do you say to them?
Well firstly on net debt to GDP, that has peaked in '17-18 and as I said we're on track to get the budget back into balance in '19-20 and we've basically been able to halve the rate of spending growth that we inherited from the Labor Party. So they left us with a ticking time bomb when it came to the economy.
If they were still in office the deficit would've reached $1 trillion. It was growing 30 per cent per year…
Yes, but your- hang on, wait a minute, wait a minute. Your narrative had you dropping this debt a lot faster than that. Come on, you can't say: if Labor had and they kept spending and it would have, but we have only let it go up by $300 billion.
That's not a very good only is it?
No, the reality is that we've actually brought the rate of spending growth down and we've seen the economy grow. And the 3.4 per cent GDP growth through the year is creating more jobs and more revenue for the Government to invest in the essential services that people need and expect – the health, education…
Look, I accept that, but the problem you've got is that everybody knows profits are up and they are, they're up everywhere, but wages aren't. Why won't employers invest in their employees?
Well, the fact is that if you looked at the National Accounts, compensation for employees was up significantly. Now, the wages price index, which is seen as a barometer of real wage growth, was up by 2.1 per cent. Now, I have said before that we want real wages growth to be up higher than that.
The Reserve Bank has said that as the economy continues to grow, the spare capacity in the market will be eaten into and real wages will rise. And they've already started to see that wages pressure in some sectors like healthcare.
But, the real story of the budget and the real story for people watching at home is the record jobs growth. More than 1,000 jobs a day has been created and that we have seen more women come into the workforce; we've seen more seniors come into the workforce; and over the last year we've seen more than 100,000 young people employed, which is the highest number on record.
So, while we want real wages growth to increase more, we are seeing record jobs growth and that's a very positive story.
Well you know, until you see not record wages growth, you know, reasonable wages growth – some wages growth, many would say, then that's the story they want to hear. The other story of course that they want to hear, that they desperately want to hear, is what's happening with electricity prices.
Now, you worked for, I don't know, 12 months to come up with the NEG. You could convince a lot of people in industry, but you couldn't convince a lot of people in your party and so the NEG is now history. What is replacing it? I mean, I know that the Prime Minister is doing a pretty good job at trying to talk the price down. But in the end, policies work not talk. What have you got as a policy to bring prices down?
Well, firstly we need more stability in the system, so the reliability component of the Guarantee is something we are pursuing with the states and the states have been positive about that.
And why is that needed? It's because there's more intermittent sources of power, more wind and solar coming into the system and as you and I have talked about before, that is not producing power 24/7. So, you need a reliability component and that will create more stability and that will drive prices down.
Where we're also taking action is implementing the recommendations of the ACCC, which is to set effectively a default price, which will mean that millions of Australians will see a better deal from their retailers, they'll see a more understandable bill.
There won't just be these discounts that they don't know what they're benchmarked off and we'll also see more investment in generation with the Government being prepared to provide some level of guarantee or finance where we see firming power come into the system in order to secure the needs of large commercial and industrial customers.
So there's a number of things that we are doing on the recommendation of the ACCC as well as pursuing the reliability component of what was formerly the National Energy Guarantee.
I wrote a column in the last couple of weeks on, I can't remember exactly what day, but I wrote a column saying why don't we just mandate that whatever the cheapest price companies have got at the moment is that's the one they should offer to everyone?
It seems to me that's the easiest way of doing it because there's a whole plethora of prices. You get the- and I have no idea what I'm paying by the way. I'm guilty, I haven't had the time to go and find out. I am probably paying too much; I could probably be on a better deal.
But, why can't we just make the companies offer me a better deal if they're capable of so doing?
Well absolutely, that is what we are focusing on and that is what the ACCC's recommendations will do. Millions of Australians again have gone and searched for a better deal, like myself, you go and you compare the offers that are elsewhere in the market, then you ring your retailer and you do save hundreds of dollars as a result. energymadeeasy.gov.au is the website that your viewers should go onto.
But, I also want to make very clear that we saw prices come down in New South Wales, Queensland and South Australia from the 1st of July. The ACCC has reported that gas prices have come down by up to 50 per cent and we successfully passed legislation through the Parliament to stop the networks, the poles and the wire companies gaming the system, which if the Labor Party had done previously, would've saved consumers $6.5 billion.
So, there is no silver bullet, but there are lots of different initiatives occurring right across the supply chain when it comes to energy and it is working because prices are coming down, but they need to come down even further.
How do we ensure though that there's more well, I don't know whether you call it dispatchable power or baseload power but how do we make sure that sort of power- there's more of it coming on stream?
Because still, I mean you've talked about how you're prepared to offer guarantees etcetera, but I haven't heard and I can be wrong – I always admit that – I haven't heard of any company wanting to build a large gas-fired or coal-fired power station since you've made the offer.
Well there have been companies that have indicated they're interested in building a new gas-fired peaking stations. One of the key issues is can we get gas prices down to make that commercially viable? But, we are also very keen on keeping our coal-fired fleet going for longer.
That's why audits are being done of the coal-fired power stations across the country. And that is why we continue to put an emphasis on the reliability guarantee because that means that the Australian Energy Market Operator will set the requirements for power that is available, regardless of the weather.
Regardless of whether the wind is blowing or the sun is shining, power will be available. And the Australian Energy Market Operator will do that and the reliability guarantee will ensure that that happens.
Now you mentioned gas-fired peaking stations. But what about coal-fired? Is no one coming forward saying: we'll build one?
Well, certainly what we've seen is interests from the companies with existing coal-fired power stations wanting to keep them going for longer. As for new coal-fired power stations, Richo, that will be commercial decisions that companies will need to make themselves.
But what we have made very clear is that the ACCC recommendation which sees, you know, the Government potentially playing a role to helping support these companies get the necessary finance from the banks to build new firming power, regardless of what it is.
It could be gas, it could be coal or it could be renewables with the requisite storage. We will get behind proposals that produce more reliable dispatchable power in the system…
Having mentioned just then, sorry for interrupting, but having just mentioned keeping stations online longer than originally intended, has the removal of Vesey as the CEO of AGL meant that AGL are reconsidering what they're doing with Liddell Power Station in New South Wales?
Well look, again we have seen AGL make commitments that they want to replace that with other energy sources including gas and including some more renewables with storage. But what we don't want to see is Liddell close and a gap in the market. And that's a priority for Angus Taylor as the Energy Minister, that's a priority of the New South Wales Government.
But we have 20 coal-fired power stations in Australia today, with an average age of 27 years. So they should live for longer and that is certainly something that the Government is encouraging.
Lastly, on coal itself, around the world there are coal-fired power stations being built everywhere. I mean, just name the place and they're building them. What's happening with Adani? I mean everybody, I think the Labor Party if they were to try and make them jump hoops again, that would be a disgrace and it would be sovereign risk.
I am not going to defend the Labor Party on something like that. What's happening with Adani? I mean, is it going to go ahead or not? We hear about it all the time, and if you wear a stop Adani badge in the street, you know, people will applaud you. I won't. But people do. In your view, will Adani go ahead?
Well again, that's going to be a commercial decision for the company but everything that I've seen to date shows a company that is very focused on delivering that project creating thousands of jobs, focused on the Galilee Basin, creating export income for Australia and helping to provide the energy needs for people around the world.
The problem for Bill Shorten is he goes to the baristas in Batman and says one thing about Adani, namely that he doesn't support it. Then he goes to the miners in Mackay, Richo, and he says that he does support it. So he has a very mixed message and is at odds with his Energy Spokesman Mark Butler on this project.
And Labor wants to you know, walk both sides of the street when it comes to energy policy. They say they're for lower prices, but they have a recklessly high 45 per cent emissions reduction target, which the Business Council calls economy wrecking.
And they have a 50 per cent renewable energy target, which depending on the day that they're asked is either an ambition, an objective or…
JOSH FRYDENBERG: …or a legislated target. So what the Labor Party have failed to do as the alternative government in this country, is put forward a costed, detailed plan of their own energy policies knowing what we know about their last time in office where prices doubled and we saw no effort to rein in the power of the networks and no effort to put in the storage and the gas that we need to keep our economy strong.
So, the next election we will see a very clear choice – the Labor Party which will drive families' and businesses' power bills up and the Coalition which will drive people's power bills down.
Well, we shall see. Come next May, I don't think we're going to have it before May, I'll be fascinated to see what happens. But, you are starting a long way behind. I think we all agree with that. There's ground to make up and I wouldn't want to hold you up from too much of that.
Also, I think I'm holding you up from going back to your family and I reckon as the new Treasurer and Deputy Prime Minister, that's something…
Deputy Leader, I'm sorry, that's right. I'm sorry, Deputy Leader of the Liberal Party and Treasurer, I am sure that going to see your wife and your children is more important than talking to me. So you go forward and multiply with that and I wish you well and you can give our best to the family.
Thanks Richo and all the best to you and your viewers.