CHRIS KENNY:
Bunkered down in his Electorate Office of Kooyong is the Treasurer Josh Frydenberg. Thanks for joining us, Josh.
JOSH FRYDENBERG:
Hi Chris.
CHRIS KENNY:
I believe you just had a meeting with a Governor of the Reserve Bank. Did you have much of a discussion about infrastructure and his calls for more infrastructure spending from the Government as an economic stimulus?
JOSH FRYDENBERG:
Well, Chris, we're actually in the Commonwealth Parliamentary Offices here at Treasury Place in Melbourne, and yes I did have a very constructive and productive meeting with the Governor of the Reserve Bank, Phil Lowe. We talked about the global and the domestic economic outlook and the fact that the fundamentals of the Australian economy remain sound. We're in our 28th consecutive year of economic growth, we have a AAA credit rating, more Australians are in jobs than ever before, and the Budget is coming back to surplus for the first time in more than a decade. But we also spoke about the challenges that we face, particularly with household consumption softer than we would like, and the global trade tensions between China and the US, and the impact of flood and drought. But we spoke in detail about the impact that the tax cuts will have on domestic spending, as well as the interest rate cuts that the Reserve Bank has recently announced, and the $100 billion worth of infrastructure spending and we went through in detail that pipeline of projects, the timing of it, the funding of it and the fact that it will see a record amount spent on transport infrastructure, which will ensure that your viewers today, when they go to work in the morning, they get home sooner and safer to their families at night. That's the purpose of a lot of our infrastructure spending.
CHRIS KENNY:
Yeah, there's been a lot of talk about the Reserve Bank Governor's calls for infrastructure spending, that's not new, he's been talking about that for quite some time, but of course you have got a massive, as you say $100 billion infrastructure program in train. Also many of the state governments, especially in Victoria and New South Wales, have got big infrastructure projects rolling out. I suppose the key question is does the Reserve Bank Governor, does Phillip Lowe tell you that he thinks that's enough? Or is he calling for more borrowing and more infrastructure spending?
JOSH FRYDENBERG:
Well he understands that the pipeline is very strong and at the same time there are some capacity constraints in delivering some of these infrastructure projects, because the demand for skills and materials and the like, but he and the Government are at one when we continue to look for new infrastructure projects that are going to be in the best interests of the economy. And the Governor is right, interest rates, it's just a fact, interest rates are at historic lows and he's also talking not just about the Federal Government, but also the state governments in terms of their infrastructure spend and the importance of ensuring that that is spent on the right projects and at the right time.
CHRIS KENNY:
Are you constrained when you look at what you'd like to do when you stimulate the economy by your political and public adherence to returning the Budget to surplus? That is your top priority? You don't want to jeopardise that in any way, shape or form?
JOSH FRYDENBERG:
Well, as Liberals and Nationals, we believe that future generations should not be picking up the tab for the last, and that means we need to be fiscally responsible, Chris. That means we need to pay back debt, when we have the opportunity to do so and Australia has not seen a budget surplus in more than a decade, and if it wasn't for the work of the Howard and Costello Government in paying back Labor's debt, our ability to have that fiscal flexibility to respond through the cycle when the GFC hit would have been a lot more constrained than it was. So it is important that we stick to our commitment to produce a surplus in 2019-2020, we will deliver that surplus as promised, but at the same time, the tax cuts will put more money in the pockets of more than ten million Australians and today, we have hit over one million Australians who have put in their tax returns, and the money will flow from as early as tomorrow. This will see up to $1,080 going into the pockets of Australians who earn up to $126,000. So we will cut taxes, we will invest in infrastructure, we'll cut regulation, and as the Reserve Bank has done, cut interest rates, all of which will help the economy.
CHRIS KENNY:
Yeah, I was going to mention. Some Australians will see that $1,000 go into their bank account from tomorrow as they get those tax rebates through. What's your advice to Australians then? You don't want them to pay down their credit cards or spend it on overseas goods online. You want them to spend that money as soon as possible on Australian goods and services.
JOSH FRYDENBERG:
Well obviously those decisions are up to Australians. It's not for Government to tell Australians how they should spend their money.
CHRIS KENNY:
Oh go on, give them some advice!
JOSH FRYDENBERG:
It should be spent on their priorities, Chris, but having met with a number of Australians who are getting the benefit of these tax cuts, I can tell you they're going to spend it in Australia. They're going to spend it on home improvements, they're going to spend it on taking a domestic holiday, they're going to spend it on their kids and their grandchildren and that's where the money should be spent, on things that are important to Australians. It's their money and we believe that not only should they earn more, but they should be able keep more of what they earn.
CHRIS KENNY:
Did you and the Reserve Bank Governor discuss how you could get the Big Four banks in particular to be more proactive in passing on rate cuts? We all understand that with such low interest rates the limited scope for monetary policy, it's obviously even more limited when it's not all passed on.
JOSH FRYDENBERG:
Well we did discuss the fact that most of those interest rate cuts have been passed on by the Big Four banks. It was a fifty basis point interest rate cut in those two announcements, and at least over 40 basis points of those have been passed on, and some banks have been better than others. But we are, again, united in calling on the banks to pass on in full the benefits of reduced funding costs to them to the benefit of Australians and they should pass on those rate cuts in full because they have seen, the banks that is, they have seen their funding costs come down and Australians expect that they get the benefit of these interest rate cuts.
CHRIS KENNY:
Just very briefly because we've only got about a minute to go and it's a big topic, I know, but will the issue of indigenous recognition be a bad distraction for the Government? Could it be an ugly distraction from the Government, from your main economic focus or do you think that there can be constructive consensus here?
JOSH FRYDENBERG:
I certainly do believe in constructive consensus and I think that we've got the right person leading that debate in Ken Wyatt. He is a passionate Liberal and he's passionate about his heritage and making a real difference in this portfolio and I think it's a real tribute to the Prime Minister, but also to the Government that the first Indigenous person in Cabinet has been Ken Wyatt, and he is the first Indigenous person to hold down that portfolio and I think he will be able to reach across the political divide to Linda Burney on the Labor side to forge a way forward in this important area and as you know, there is a great deal of goodwill out there among the Australian people for the appropriate recognition of our first Australians.
CHRIS KENNY:
Josh Frydenberg, thanks for joining us.
JOSH FRYDENBERG:
Thank you.