11 July 2019

Meeting with Reserve Bank Governor Phillip Lowe


Subjects: Economy


It was a great pleasure to welcome the Governor of the Reserve Bank Phil Lowe to Melbourne today and we had a very productive discussion with senior treasury officials about the global and domestic economic outlook. We both agreed that the fundamentals of the Australian economy remain sound. Australia is in its 28th year of consecutive economic growth.

We have a AAA credit rating, we have a record number of Australians with a job and the Budget is coming back to surplus for the first time in more than a decade. But the Australian economy also faces some challenges. Particularly the global economic outlook, the trade tensions with China and the US has weighed on investor confidence and seen the deferral of investment decisions. We've also seen the impact of drought and flood. And we have also seen household consumption softer than we would like it to be. And it was with those headwinds in mind that we put together the Budget that we delivered on April 2. And one of the central planks of the Budget were the tax cuts. The $158 billion of tax cuts focussing on low and middle income earners. Those tax cuts have now been legislated and will be making its way into the pockets of Australian taxpayers.

In fact, as of this morning, over 1 million Australian taxpayers have put in their tax returns and as early as tomorrow, will be seeing the benefits of those tax cuts. The contribution and the combination of the tax cuts, the interest rate cuts that the Reserve Bank has already announced, the $100 billion worth of infrastructure spending, and today we had a really detailed and productive discussion about that pipeline of infrastructure spending. In particular, the projects that are underway, the timing of those projects, the funding of those projects, and how those projects will boost the overall productive capacity of the economy while also ensuring that we bust the congestion in our cities and unlock the potential of our region to ensure that Australians who are out there working day to day get home earlier and safer, and that's the purpose of a lot of our infrastructure spending.

The combination of the tax cuts, the interest rate cuts, the infrastructure spending, the regulatory changes that APRA have made which are going to provide a boost to the housing market, as well as the pickup in mining investment after a period of decline as the mining sector moved from the investment stage to the production phase, all of that is going to be good news for the Australian economy. So what we've agreed on today is that Australia remains a great place to invest and to employ people and we're going to work together, the Government and the RBA, to ensure that continues to be the case.


Thank you, Treasurer for the discussions today. I agree 100 per cent with you that the Australian economy is growing and the fundamentals are strong. The outlook is being supported by our lower interest rates, by your tax cuts, by higher levels of investment in infrastructure, by a pickup in the resources sector and the stabilisation of the housing market in Sydney and Melbourne. But I don't think we should forget that more Australians have jobs today than ever before in Australian history. That's a remarkable achievement. And I also agree with you that a priority is to make sure that Australia remains a great place for businesses to expand, innovate, invest and employ people and I'm sure we can do that.