BROOKE CORTE:
The Treasurer, Josh Frydenberg, joins us on Money News tonight. Treasurer, welcome to the show.
JOSH FRYDENBERG:
Nice to be with you, Brooke.
BROOKE CORTE:
These growth figures, to quote a top economist, were a cracking outcome. We cannot deny that households did a lot of heavy lifting, but given we've got surging cost of living pressures, can we rely on households to continue playing that role for us?
JOSH FRYDENBERG:
Well, these numbers should give all Australian families great confidence going into the rest of the year, because what it does show is despite the biggest economic shock since the Great Depression, the Australian economy has rebounded strongly. We've outperformed all major advanced economies around the world. We've had stronger growth numbers and better employment numbers than the United States, than Germany, France and Italy, than Canada, than Japan, and then the United Kingdom. And that's a credit to 26 million Australians. It's not to dismiss, as you say, the significant challenges we faced, whether we continue to face, whether it's the ongoing pandemic or the geopolitical unrest overseas with the Ukraine‑Russian conflict. But Australians can be confident about how well their economy has come through this once in a century pandemic.
BROOKE CORTE:
Well, I agree. I think it certainly shows our resilience as consumers and households in bouncing back from tough times time and time again. These figures are two months old, we have to acknowledge that. And since then, we've had the Omicron outbreak and the shadow lockdown associated that, there's a war in Europe. We've had devastating floods in Queensland and New South Wales, and the worst may not be over for some parts of New South Wales right now, that's for sure. For the economy, is it two steps forward, one step back? What kind of growth would you expect for the current quarter?
JOSH FRYDENBERG:
Well, firstly, the data that we're seeing already in respect to the first two months of this year shows that Omicron hasn't derailed the recovery. So spending is actually up 4 per cent for the first two months of this year compared to the similar period last year. Business confidence and conditions have improved and we've also seen job vacancies remain very high, more than 30 per cent above where they were at the start of the pandemic. And the unemployment rate has continued to show underlying strength, which is very, very pleasing given Australia's experience during the previous recessions in the 80s and 90s, unemployment was elevated for far too long. Households have also built up more than $250 billion on their balance sheets that was not there at the start of the pandemic, that's money that's been accumulated either through government support and the tax relief we've been providing, but also because people have been constrained in their activities because of the health restrictions, they haven't been able to travel overseas, they may have not been able to go to restaurants or cafes or take interstate trips. That money that's been accumulated will be spent, Brooke, and that's where we started to see in the numbers today, the savings ratio coming down and it will come down further as conditions normalise. So COVID is still with us. Many people are still getting Omicron, but it's not Delta, and it's not going to lead us back into lockdown, as we saw last year, which was obviously very damaging for the economy, but also damaging for people's well‑being as well.
BROOKE CORTE:
Treasurer, can I ask you, of course, about the economic ramifications of Russia's invasion of Ukraine? We have seen Brent crude jump about 10 per cent to $110 US a barrel today. So energy prices, oil prices are ripping higher. We already have record petrol prices here. I think record prices right now are probably going to look cheap in just a few weeks’ time, given what we are seeing in the oil markets, I know you can appreciate this is a major cost of living issue for people and it is probably the most direct impact for us as Australians right now from what's going on. The soaring energy costs, they're bad for households, bad for businesses, it's bad for economic growth. People want you to do something about this. What are you going to do about soaring fuel prices?
JOSH FRYDENBERG:
Well, as you know, Australia is largely a price taker when it comes to fuel because it is determined by that international barrel of oil price that you referred to, which has now gone above $100 for the first time since 2014‑15. And that is a function of the geostrategic tensions and conflicts we are now seeing played out across Europe, and that will again be transferred to the Australian economy in the form of higher petrol prices. What we are doing is obviously trying to put more money into people's pockets with tax cuts, which is not insignificant for low and middle income earners. And that payment, the most recent one, will not go out the door till the end of this financial year. So when people put in their tax returns, so that's going to put more than $1,000 into people's pockets at that income range. We're also reducing childcare costs with significant investment in the last budget of $1.7 billion, particularly helpful for people with two or more children who are in childcare. And then the investments we're making in energy as we transition our economy to a smaller carbon footprint, but also a more reliable grid has seen electricity prices come down by 8 per cent in the last two years, whereas they doubled under the Labor Party. All of those initiatives are helping to improve the situation for many families. But I'm not dismissing either the significant burden that people do face from higher petrol prices.
BROOKE CORTE:
Yeah, well, you're right in pointing out we have so many fires to fight when it comes to the soaring cost of living, we need help everywhere. But just on those petrol prices, the government charges $0.44 a litre in fuel excise, plus GST on the bowser price. So the government is taking sixty, sixty five cents from every litre of petrol and diesel sold. This is something that my listeners email me about all the time. They know the figures, you could cut that. I know it would be a populist move, but John Howard did it back in 2001. What's wrong with just providing some relief at the petrol bowser until things calm down?
JOSH FRYDENBERG:
Yeah. And lots of people have promoted those ideas ahead of the budget. And I wouldn't want to speculate about what's either in or not in the budget, other than saying that money that is received from fuel excise goes directly into funding infrastructure projects. So as you know, we have $110 billion infrastructure pipeline that we're rolling out across the economy, and that's critically important to the productivity of the nation, to reducing urban congestion, to helping people to get to work sooner and safer and home back to their families. So it's money that is actually used on transport infrastructure, and that's where people's fuel excise goes.
BROOKE CORTE:
Treasurer, just finally, I'd like to ask you about the devastating floods in New South Wales and Queensland. One in 100 year floods happen a couple of times a decade, it feels like. We've had the Prime Minister, Scott Morrison, warning banks and insurance companies today that they must deal fairly with flood victims. Are you concerned that they won't?
JOSH FRYDENBERG:
Well, I think it's just an important reminder to them of their social responsibilities. Now, I have been speaking to key people in the banking industry, and we've been speaking to key people in the insurance sector as well. And obviously, this is not the first nor will it be the last natural disaster that they are dealing with. I think the banks were proactive not just during the pandemic, but also through the bushfires. And they realised they had a lot of catching up to do after the banking Royal Commission, and I think they'll do that again. But we're going to continue to keep the pressure on them, which means working with their clients, with their customers and trying to give them as much help as possible during their hour of need. So from a government's perspective, we're going to be contributing our own funds and we've already seen 145,000 applications for the various disaster recovery payments that we've put in place and we'll work with the private sector as well to ensure that when it comes to insurance or other banking services that they're provided appropriately to these people, whether they're in Lismore or Ballina or across Queensland who have really suffered through these devastating floods.
BROOKE CORTE:
Yeah, well, that is reassuring. They are going to need a lot of help, that's for sure. Thank you very much. The Federal Treasurer, Josh Frydenberg. We always appreciate your time. Thank you.
BROOKE CORTE:
My pleasure.