JON FAINE:
This year's Federal election will as much as anything be about the economy. Elections always are. Josh Frydenberg, a leading Victorian Liberal is the Member for Kooyong and the Treasurer in Scott Morrison's Federal Government. Mr Frydenberg, good morning to you, happy New Year.
JOSH FRYDENBERG:
Nice to be with you, Jon, and sad to hear that you will be hanging up the boots at the end of this year.
JON FAINE:
Yes. There's a lot of water to go under that bridge between now and then. I'm sure I can have a lot of fun in the remainder of 2019. Kelly O’Dwyer’s…
JOSH FRYDENBERG:
We’ll beware some big-swinging fist fights with politicians between now and then.
JON FAINE:
Hope so. Kelly O'Dwyer's surprise announcement leaves the Liberal Party yet again reeling. First of all, is it that that seat Higgins in inner suburban eastern suburbs Melbourne, absolutely Peter Costello, Robert Menzies territory. Is it earmarked for a woman?
JOSH FRYDENBERG:
It's never gone to the left of politics, that seat, since its inception, I think back in 1949. Kelly…
JON FAINE:
The same was said about Wentworth and Malcolm Turnbull's resignation.
JOSH FRYDENBERG:
Well, Wentworth and Kooyong are both federation seats so they've even been around longer. But there is no such thing as a safe seat these days. The electorate is much more volatile and we're not taking anything for granted in Higgins or anywhere else. I want to pay tribute to Kelly. This has obviously been a hard decision for her, a personal decision for her, but she can be very proud of what she's achieved in public life. A very significant contribution over the last decade, including most recently with the women's economic security statement and the things that we've done around child care, domestic violence, paid parental leave, superannuation, all the things that she's had something to do with as a leading female member of our Cabinet.
JON FAINE:
Okay. Well, you got all of that out, but you didn't answer my question. Is the seat earmarked now for a woman to replace Kelly O’Dwyer?
JOSH FRYDENBERG:
I would hope so, there...
JON FAINE:
But you don't believe in quotas as a party?
JOSH FRYDENBERG:
We don't. We obviously want to see more women in the Parliament.
JON FAINE:
But if a man with greater merit, greater potential, greater capacity is to nominate, then under your party rules they'll win, won't they?
JOSH FRYDENBERG:
Well, the Prime Minister, Kelly O'Dwyer, myself and others have made it very clear that we would like to see a female candidate in Higgins.
JON FAINE:
Then why not just introduce quotas?
JOSH FRYDENBERG:
Because we have a grassroots democratic process…
JON FAINE:
Which this time must choose a woman?
JOSH FRYDENBERG:
Well, it's very clear that we need more women in the parliamentary party and there are a number of leading candidates, female candidates who have declared an interest in that seat. But I will leave it up to the branch members to make that decision because something that occurs in the Liberal Party doesn't always occur with our political opponents, which is that we leave it to the branch members to decide who to select to be their representative.
JON FAINE:
Except here the Prime Minister, the Treasurer, everyone else is sending a signal to the branch members saying you can choose anyone you like as long as it's a woman?
JOSH FRYDENBERG:
Well, look, it's no secret there's been a debate about getting more women into the Parliament, whatever political persuasion they are representing. In the case of Higgins, Kelly has been a very strong member and has done a lot to promote the cause of women across the country and I think it's fitting that her replacement is a woman.
JON FAINE:
Is Julie Bishop about to pull the pin too?
JOSH FRYDENBERG:
I haven't heard that. I know that again Julie can be very proud of what she's achieved in public life as Australia's first female Foreign Minister and those decisions are purely personal ones and I would leave that to her and her family to decide.
JON FAINE:
It would make a lot of sense for someone who has held high office in successive governments not to have much of an appetite for being in opposition?
JOSH FRYDENBERG:
Look, as Kelly made it very clear, there will be people who seek to misinterpret her difficult but very personal decision. I have to say to you the way Bill Shorten and Sally McManus and others from the Labor side have responded to Kelly's announcement has been deeply disappointing.
JON FAINE:
In what way?
JOSH FRYDENBERG:
Well, Sally McManus said that she's thrown in the towel and I felt that that was a petty response, it was a partisan response, it was a pathetic response…
JON FAINE:
Well, she's from the trade union movement, she's not from the Business Council.
JOSH FRYDENBERG:
Well, but she also understands that the decisions of people to enter Parliament and to leave Parliament are often very personal and Kelly made that very clear in her public statement that there are complex reasons and that she wants to, with her husband John, have a third child and that it does take its toll being away from home for weeks on end, particularly if you have a senior role such as Kelly does as a Cabinet Minister. Again, Bill Shorten tried to politicise an issue even though there are plenty of people on his side who have announced that they're leaving politics like Kate Ellis, like Jenny Macklin, like Jacinta Allan and even a male…
JON FAINE:
Jacinta Allan?
JOSH FRYDENBERG:
And a male member Tim Hammond in Western Australia. They've made their public reasons for wanting to leave Parliament very clear. Jacinta Collins, sorry.
JON FAINE:
Senator Jacinta Collins?
JOSH FRYDENBERG:
Jacinta Collins.
JON FAINE:
Jacinta Allan is the Transport Minister for the State Government. She's not going anywhere.
JOSH FRYDENBERG:
Well, that will be a decision for her. But in terms of the Federal sphere, we've seen Jenny Macklin, Jacinta Collins, Kate Ellis, Tim Hammond announce that they're leaving politics for a variety of reasons, often citing personal family reasons and it doesn't matter which side of politics you're from, you should respect the fact that someone has made that decision not to seek to make a political advantage out of it.
JON FAINE:
Let's keep going talking about the internals of the Liberal Party even though I know you would rather not. Do you want to see Peta Credlin in the Federal Parliamentary Liberal Party?
JOSH FRYDENBERG:
I want to see the strongest possible field.
JON FAINE:
Do you want to see Peta Credlin?
JOSH FRYDENBERG:
I want to see the strongest possible field and, again, that will be a decision for Peta herself. She obviously has a very strong set of credentials and seems to be very active in the media with formal roles there. But as to whether she wants to run for politics, again that will be her decision. But from a party position we would like to see the strongest possible field of candidates for what is a really important seat for us to hold at the next election.
JON FAINE:
Kelly O'Dwyer faced a massive internal revolt over changes to superannuation that she brought in and a number of people, including prominent Melbourne lawyers, targeted her and said that she was attacking the very fundamental principles of the Liberal Party, which is that you're free to accumulate assets and wealth without the government taxing it. Jack Hammond QC was one of the leaders. Did that cost her a lot of local support?
JOSH FRYDENBERG:
Look, they're questions you would have to direct at the people who are making those comments.
JON FAINE:
No. You're the Treasurer. It's part of your portfolio responsibility to oversee some of this.
JOSH FRYDENBERG:
Well…
JON FAINE:
It's got budgetary implications.
JOSH FRYDENBERG:
No. You're asking me to comment on a hypothetical situation of what you said in your words, "Costing her local support". She has and she had very strong local support.
JON FAINE:
No. She had an internal revolt in Higgins on her hands.
JOSH FRYDENBERG:
Well, in any political party any member will have issues with some of their constituents or indeed some of their branch members. But Kelly was re-endorsed just like other colleagues in the Federal Liberal Party were. She has contributed an enormous amount to Federal political life and in terms of what the party has contributed and delivered for Australian women, that is also a very significant legacy that she can leave and that she can point to, which your listeners are interested in because that's what makes a difference to their life around paid parental leave or childcare…
JON FAINE:
Sorry. The government that has…
JOSH FRYDENBERG:
…around domestic violence, around superannuation.
JON FAINE:
The government that has as few women representing in its population in its senior ranks as 30 years ago. Where the leader of the National Party and Deputy Prime Minister had to resign over a scandal and is still, you would have to say, circling around a party that can't organise the pre-selection of women in winnable seats, only in marginal seats, where you've been described internally by Julia Banks and Kelly O'Dwyer herself, you're a party that looks as if you're a bunch of homophobic, anti-women, climate deniers and now you're presenting yourselves to the people for re-election.
JOSH FRYDENBERG:
Well, I will talk, if you want to talk about the contribution and the success of Liberal women, let's do that. Because Linda Reynolds is the first Brigadier, female Brigadier from the Australian Defence Reserve. We have Sarah Henderson who was an anchor on the ABC before entering into Parliament. Jane Hume you mentioned earlier has been very successful in the financial services industry. Nola Marino has been a dairy farmer and the list goes on. These are women who are in our parliamentary ranks who are having senior roles, who have contributed to the community before entering politics and continuing to contribute when they're in politics. Now, we have an internal target of reaching 50 per cent female representatives by 2025. That's our goal. We haven't adopted the quota system but at the same time when opportunities like the Higgins pre-selection come about, we'd like to see a female candidate in that role. But I can point to Gladys Lew in Chisholm or Kate Ashmore in Melbourne Port soon to be called McNamarra, as a number of females that we have running in key seats for us at the next election here in Victoria.
JON FAINE:
Greg Hannan former candidate for President of the party is going to nominate, I understand.
JOSH FRYDENBERG:
And that is absolutely his entitlement under party rules.
JON FAINE:
Jeff Kennett says that Kevin Andrews and Julie Bishop should also go?
JOSH FRYDENBERG:
Well, look, Jeff has opinions about lots of things but again they're going to be personal decisions, Jon, for those individuals and for anyone else. But people's decisions to leave politics are taken irrespective of which political party they represent and we've seen plenty of names and announcements from those on the other side of politics too.
JON FAINE:
We will get to the economy next.
JOSH FRYDENBERG:
That would be nice.
JON FAINE:
But on the machinery of it, you've had a clean out of the leadership of the Victorian Liberal Party. What's the actual process? Who decides, who is going to call the shots? Your secretary resigned over Christmas, the party secretary resigned. So who is going to call the shots and what's the process?
JOSH FRYDENBERG:
About, sorry?
JON FAINE:
Preselecting a candidate?
JOSH FRYDENBERG:
Well the party will be announcing the nominations are open today. They'll stay open for a period of time. Then what happens in the Liberal Party is that the branch members who have met certain criteria, namely that they've been in the party for a certain period of time will come together for a pre-selection. There will be hundreds of people present. There will also be represented not just from the local branch electorates but also from what is known as called the State Council, that is from representatives from across the State who are party members.
JON FAINE:
So you won't have any intervention from head office, it’ll all be done at local level.
JOSH FRYDENBERG:
This will be a grassroots branch member-driven pre-selection as is the case in the Liberal Party.
JON FAINE:
Turning to the economy. Your portfolio which is going to be front and centre for the Federal election, Innes Willox is in the media this morning saying that politics is hurting the economy. He's saying you need to somehow reassert the needs of the nation and the economy over the politics of the day. In other words, special interests, whoever shouts the loudest is getting what they want at the moment in Australia, if I can paraphrase his speech.
JOSH FRYDENBERG:
Well, the biggest special interest is the union movement and they are going to cause…
JON FAINE:
No, big fish, surely Treasurer…
JOSH FRYDENBERG:
…fear and consternation in the business community because what the Labor Party…
JON FAINE:
Well, it was the banks who said they didn't want a Royal Commission for months. That's why you didn't call one.
JOSH FRYDENBERG:
Well, the Labor Party are determined to allow militant unionism a free reign in our workplaces and that will lead to less flexibility, less jobs. The abolition of the Australian Building and Construction Commission. So, if I was Innes Willox and indeed the business community, and we've heard from them often, that I would be very concerned about Labor's industrial relations agenda. I would be very concerned about their class warfare rhetoric and the attack from Bill Shorten on business, recognising that business helps create nine out of every 10 jobs across the country but also their high taxing agenda. I mean their changes around franking credits, for example, will not only hurt retirees but it will hurt the ability of companies to grow and to raise capital.
JON FAINE:
It hurts the richest people in the country those who can afford, it seems like the top 2 or 3 per cent who can afford to have shares and portfolios with franking credits making it a substantial part of their income.
JOSH FRYDENBERG:
It might be an inconvenient truth for you, Jon, but the people who are having the benefit of what are called these excess franking credits are actually members of the community who have saved for their own retirement and don't have very high incomes.
JON FAINE:
Well, they've structured their affairs to take advantage of what effectively is the subsidy for the taxpayer.
JOSH FRYDENBERG:
Not at all. This has had bipartisan support for decades because of the fact that it does help some of the lower income earners or…
JON FAINE:
Sorry, how do franking credits help low income earners?
JOSH FRYDENBERG:
The people who have saved for their retirement…
JON FAINE:
Franking credits help people with low incomes? How?
JOSH FRYDENBERG:
Because these are the very people who have put aside money for their retirement, often in a Self-Managed Super Fund…
JON FAINE:
Self-funded retirees are not low income.
JOSH FRYDENBERG:
Well, I can tell you that anyone…
JON FAINE:
It you've got enough assets and income to not need the pension, you're not low income.
JOSH FRYDENBERG:
Jon, if you're having a self-managed super fund you will be on average over $12,000 a year worse off…
JON FAINE:
Because the way you’ve structured your affairs Treasurer. You have to have at least $1 million in a Self-Managed Super Fund before it's worth setting up….
JOSH FRYDENBERG:
Jon, there is 900,000 individuals who don't have self-managed super funds who are going to be hit by the changes to franking credits and why is the Labor Party exempt industry funds and retail funds from the changes to franking credits? But the changes around the retirees tax is just one of many…
JON FAINE:
Sorry, can we just go back. Do you want to retract what you said about how the franking credit changes will affect low income people? You're talking about self-funded retirees who have to have at least $1 million in assets. They are not low income people. And if that's where you're focusing your attention, you're completely missing the point that welfare stagnation and wage stagnation is affecting more Australians by far than any change to franking credits.
JOSH FRYDENBERG:
Jon, these are people who aren't the so-called rich. These are people who have actually saved for their own retirement. Some are in self-managed super funds, others are not. These are people who have been targeted by the Labor Party because they've saved for their own retirement.
JON FAINE:
Treasurer, who are you governing for? Who are you governing for? People with self-managed super funds or the rest of us?
JOSH FRYDENBERG:
We're governing for 25 million Australians.
JON FAINE:
25 million Australians don't have self-managed super funds.
JOSH FRYDENBERG:
Well, it's not just for, but this is the point. It's not just people with self-managed super funds who are affected by those changes to the retiree tax and the franking credits. The same with the 1.3 million people who currently negative gear, two-thirds of whom have taxable income, under $80,000.
JON FAINE:
The Labor Party has made it clear their arrangements will not alter.
JOSH FRYDENBERG:
And what is very clear is that when the people who currently negative gear sell the property, they will be selling into a market where there are fewer buyers. Rents will go up because people…
JON FAINE:
Well, the markets are already down. The Labor Party aren't in power but the market's already down.
JOSH FRYDENBERG:
Jon, their policies have had an impact and that's what the independent economists and property analysts have said.
JON FAINE:
No. It's the banking changes. You can't borrow money. That's what's having an impact. There's no more interest-only loans. That's what's having an impact…
JOSH FRYDENBERG:
Jon, if you think that you can rip out $200 billion with higher taxes from the economy without a significant impact on consumer demand, without a significant impact on employment, you're wrong.
JON FAINE:
Retail over Christmas, it's the centre Labor Party's fault too?
JOSH FRYDENBERG:
The Centre for International Economics have made it very clear that Labor's changes around capital gains tax, there will be up to $1 billion less for the States.
JON FAINE:
So it's the Labor Party that ruined Christmas trading?
JOSH FRYDENBERG:
Jon, in terms of the Australian economy domestically, the fundamentals are strong. What is of concern is a Labor tax and spend agenda which will see $200 billion hit families, hit small businesses, hit retirees, hit investors. They're targeting aspiration and they're doing so in a way that uses a very blunt instrument.
JON FAINE:
We need to get on to a few other quick things. First of all, Tasmanian Senator, Liberal Senator David Bushby announces he's resigning and within an hour that it's announced he gets the plum government job of being Consul-General in Chicago. That's what makes people furious about politics, isn't it? In a snapshot, that's exactly what people hate?
JOSH FRYDENBERG:
Well, Jon, it might upset you but people from both sides of politics have been appointed to overseas positions where they can continue to serve the community and the government.
JON FAINE:
No. When your government came into power you immediately cancelled the appointment of Steve Bracks to being Australian Trade Consul to New York because he was from the wrong side.
JOSH FRYDENBERG:
And we've allowed.
JON FAINE:
He had to unpack his suitcase, he was so close to leaving.
JOSH FRYDENBERG:
And we've allowed many members of the Labor Party, who they've appointed to positions, to continue in those roles too.
JON FAINE:
Is there something wrong? Is it a corruption of the public process that a Liberal politician within an hour of resigning a Senate seat in Tasmania is appointed to a Government, a lucrative Government job in America?
JOSH FRYDENBERG:
Well, the people who have served the Parliament have still contributions to make in public life and that is why the Labor Party and the Liberal Party have, over the years, appointed people. Now I will give you a very good example. Kim Beazley, former Labor leader appointed to become Australia's ambassador in Washington. When we came in, he obviously continued in that role and he served Australia with distinction. We have other members of Parliament who are serving in our diplomatic service.
JON FAINE:
Pill testing - yes or no?
JOSH FRYDENBERG:
I'm not going to buy into that, but obviously I'm very concerned by the number of young people who have lost their lives through the illegal taking of drugs.
JON FAINE:
Thank you for your time on all of those matters this morning and a great way to start the year. Undoubtedly there will be many more to explore the economy and other issues as we head towards the Federal election.
JOSH FRYDENBERG:
Happy to be back, Jon. Thank you.
JON FAINE:
Josh Frydenberg, Member for Kooyong, Treasurer in Scott Morrison's Federal Government.