CHRIS KENNY:
Thanks for joining us, Josh.
JOSH FRYDENBERG:
Nice to be with you, Chris.
CHRIS KENNY:
Look, I want to come to your portfolio issues in just a moment. But first up, when it comes to internal Liberal Party politics, you’ve preselected a new candidate to replace Kelly O’Dwyer in the federal seat of Higgins, the pre-selections occurred tonight. And hallelujah, you must be relieved the Party members of Higgins have chosen a woman, her name is Katie Allen, she is a paediatrician.
JOSH FRYDENBERG:
Katie Allen, indeed Chris. And she is an outstanding candidate and she will work hard to deliver for the people of Higgins. She is a Professor of paediatrics at the University of Melbourne and also at the Royal Children’s, she is a Fellow of the Australian Academy of Health and Medical Sciences and she has been a local for forty years, and is on the board of a local school and a local hospital. So, I think Katie will really put up a very good show at the up-coming federal election. She is an outstanding candidate and the Liberal Party is proud to have her representing them in Higgins.
CHRIS KENNY:
Apparently she ran in the state seat of Prahran at the State Election just last year and obviously failed there. So, the electorate, many of the voters in the electorate have had a look at her already and obviously not voted for her. That’s a bit of a risk federally isn’t it?
JOSH FRYDENBERG:
Well, they are very different electorates really, the state electorate of Prahran and the federal electorate of Higgins. Yes, there is overlap and you are right that there are a lot of voters in Prahran within the federal electorate of Higgins. But that seat has not been held by the Liberal Party for a little while and Prahran whereas you know Kelly O’Dwyer has strongly held the seat of Higgins. But she is an outstanding candidate and she will do very well.
CHRIS KENNY:
Look, there is a ridiculous amount of focus, particularly from your political enemies on identity politics these days and gender when it comes to the Liberal Party, people railing against another pre-selection in Perth over the weekend. Because a man happened to win, as if men are no longer welcome in Parliament, which is silly, you’ve got to make sure that you’ve got the best candidate. But, nonetheless, of course you do have a very, very poor representation of women; you need to lift your numbers. In other words, you do have what they call a women problem. The issue is with Julie Bishop retiring now and Kelly O’Dwyer, you know, losing two Cabinet Minister level women. It is only going to exacerbate the situation in the short term, isn’t it?
JOSH FRYDENBERG:
Well, Julie and Kelly will be losses to the team, there is no doubt about that. And we all pay credit to their fantastic work as ministers and as local members. And Julie as the Deputy Leader of the Party for eleven years and an outstanding Foreign Minister, was really well regarded right across the community. So to with Kelly, she has been a trail blazer and has made some very significant policy changes, particularly with her women’s economic security statement that they put out this year as well as in a number of other areas, so they will be missed. But we also have a number of very strong female representatives in our Coalition team. And I am just thinking of the work recently been done by Linda Reynolds in the flood ravaged areas of Queensland, where she has been bringing her military experience to bear and has been taking charge up there doing a fantastic job. Sarah Henderson, who is doing important work in disabilities and in other areas and has fought hard to retain the trust of the people in Corangamite at successive elections. And then in Cabinet, obviously Michaelia Cash and Melissa Price and Karen Andrews, and Marise Payne…
CHRIS KENNY:
Melissa Price we hardly hear from and we don’t really know why, because she has got a high level portfolio in the environment. And Michaelia Cash we don’t hear much from, but we know that because she is under siege on these union investigation issues.
JOSH FRYDENBERG:
Well, no, I’d say to you that Melissa is working hard on a whole range of fronts in that important environment portfolio; the one that I held before this one and so too is Michaelia….
CHRIS KENNY:
When you were Environment Minister, we saw a lot more of you than we are seeing of Melissa Price, she doesn’t seem to be interested in the…
JOSH FRYDENBERG:
But I also had the energy portfolio…
CHRIS KENNY:
She doesn’t seem to be so interested in making…
JOSH FRYDENBERG:
I also had the energy portfolio…
CHRIS KENNY:
…the case publically about how your government is reducing emissions and looking after all the other environmental issues in this country.
JOSH FRYDENBERG:
And we are. But I also had the energy portfolio as well as the environment portfolio and as you know now that is held by two separate Cabinet Ministers.
CHRIS KENNY:
Well, speaking of energy, let’s talk about coal. We know there has been this problem with getting coal in to some Chinese Ports, a lot of toing and froing as to whether this is diplomatic payback or not, as if China would ever say so upfront. A lot of the economic implications of this, is it slowing revenues to Australia? Is it slowing the tax take view from our record coal exports? Which have been a real bonus for the budget.
JOSH FRYDENBERG:
Well, I wouldn’t be jumping to conclusions on this. In fact I’d be saying that the trading relationship between China and Australia is very strong, very important to both countries and very healthy. If you look at our coal exports to China in the last quarter of 2018, they were higher in both value and volume then they were in the same quarter in 2017 and our exports are worth more than $60 billion a year and the coal industry creates more the fifty thousand jobs. And in fact the attention, really, should be on the Labor Party who have tied themselves in nots over the issue over the last week and previously, because they are stuck between their heart and their head on this issue. They know how important our coal exports are to creating jobs, particularly in regional communities and many jobs for the Indigenous community. But also for the export income that it generates, that leads us to be able to put more money into schools, hospitals and roads and infrastructure. So, the coal industry is an important part of our resources sector and unfortunately Bill Shorten, as we have seen before, is trying to walk both sides of the street, he will say one thing to the barristers of Batman in Melbourne and another thing to the miners in MacKay in Queensland. So, we are very consistent with our message, which is that coal is an important part of the energy mix and will be so for some time to come.
CHRIS KENNY:
Yeah, well it is undeniable obviously our number one export and most of our electricity comes from. It is pretty hard to play it down, especially when you have energy companies wanting to invest in more coal. They are obviously have markets for it, which brings me to the Rocky River mine that was proposed in NSW near Gloucester, metallurgical coal to be exported from that particular mine. But you must be gravely concerned that the NSW Land and Environment Court judgement actually sited climate change concerns and global emission concerns in knocking back a mine. I mean this is a signal to overseas investors that you cannot invest in coal in Australia.
JOSH FRYDENBERG:
Well, we continue to welcome foreign investment in our resources sector. And I said we continue to export coal around the world, because it is an important part of our energy mix…
CHRIS KENNY:
Sure, but you must be alarmed that a state court can site climate policy for actually stopping a project?
JOSH FRYDENBERG:
But I also note that there was an unsuccessful case, which tried to do the same, vis-à-vis the Adani mine in Queensland. So, I think the focus needs to be on the environmental impacts of a particular resource project, whatever that resource may be, and it is done under our EPBC Act and that has very strict parameters to it.
CHRIS KENNY:
Now, tell us about our emissions reduction targets. There was the modelling released this week by Brian Fisher, which talks about a $472 billion hit to the economy under Labor’s doubling of emissions targets and all the flow on effects to the economy. But of course there are very heavy costs with the policies you have on the table right at the moment. It’s going to cost jobs, it’s going to cost wages growth and it’s going to cost the national economy. Why are we doing this? Why are we imposing such a heavy cost on ourselves when global emissions are continuing to rise by an enormous factor, by twice of our total emissions?
JOSH FRYDENBERG:
Well, it is true that the modelling that was released by a very credible economist, did expose the Labor Party for the damage that it will do if it has ever got a chance in government with its 45 per cent emissions reduction target and 50 per cent renewable energy target. Because the impact on jobs, particular those in manufacturing and aluminium, in steel, in chemicals, in paper, energy intensive industries will be very immense. But also the impact that it is going to have on wages, so jobs, wages and electricity prices. All of which will go up under the Labor Party and indeed the Business Council of Australia had described Labor’s targets as being a wrecking ball through the economy. In contrast, I think we’ve got the balance right in our 26 – 28 per cent emissions reduction target, we will meet and beat that target, just as we did for the first Kyoto target and just as we on track to do so with the 2020 target. But we have got a much more balanced approach, much more considered approach, Chris. Whereas the Labor Party is all about ideology and is all about virtue signalling, without coming clean to the Australian public with the real costs of their policies.
CHRIS KENNY:
Yeah, but we are still left with just the mind numbing inanity of imposing this cost on ourselves, while the global emissions continue to rise. I mean, why should Australia be harming itself when the rest of the world is going ahead and having a merry old time and increasing its emissions and therefore its economic prosperity? It just doesn’t make sense, no matter how we would like the world to be, how much we would like the world to reduce emissions, it’s not happening. So, why are we the country that seems to be doing itself more economic damage than any other country on the planet in order to deliver these climate goals?
JOSH FRYDENBERG:
Well, I would say to you, Chris, that emissions are now the lowest on a per capita and GDP basis in twenty eight years, but we are doing that in a sort considered and balanced way. We are not going to subject the Australian people to a 45 per cent emissions reduction target or a 50 per cent renewable energy target. There is a transition that is taking place in the energy sector, there is more intermittent sources of power that is coming in and we need to provide the backup and the storage. Because, you see when state governments, particularly, get it wrong like they did in South Australia, the exposure to those states and the cost to those states is immense, both in business confidence as well as the real hit to the economy. In contrast, we think we’ve got the balance right, we’re going about it in a measured way. We have a series of policies, and yes, there are financial costs to some of these investments, but in the long term, that is what we do to meet our international commitments.
CHRIS KENNY:
Alright, Josh Frydenberg, you’ve got a big battle going on with Labor on taxation issues, especially Labor’s proposed changes on negative gearing and franking credits. Now, watching this play out between you and Shadow Treasurer and former Treasurer, Chris Bowen, I just get the sense here that this is much more than a political contest between you two, this is really personal. He is out there attacking you personally, day in day out, and likewise, you really want to get under his skin. You’re both after each-others scalps here, aren’t you?
JOSH FRYDENBERG:
I’m actually on the side of the Australian people, here, and I’m only after a better deal for them and what I don’t want to see is that the Australian people get subject to $200 billion of new taxes, which is the real genius of the Labor Party. Somehow, they think that if they can slug Australians with $200 billion of extra taxes that will somehow create more jobs, higher economic growth and more prosperity. Well, the history shows you that is exactly what won’t happen. The reality is when it comes to, for example, franking credits, and the changes that were put in place there, or being proposed there by the Labor Party, is that we’ve had two decades of a bipartisan consensus and Simon Crean, when he supported this as Shadow Treasurer for the Labor Party back in the year 2000, he said it would support lower income earners and retirees, and it has done exactly that. Now, Chris Bowen, under a huge amount of pressure, went out and said that the Australian people who don’t like this policy, well they can go out and vote against the Labor Party. Well, that showed an enormous hubris and arrogance, and was very dismissive of the concerns of the people who were really worried about it. And, Chris Bowen has doubled down, Chris, ever since that statement. When he did an interview last week with the 7.30 Report, he was asked by Leigh Sales will there would be any tweaks, will there be any changes, and he said absolutely not. So, there is only one side of politics, that is our side of politics under Scott Morrison, who are going to stand by retirees and keep the law as it is and allow people who have planned for retirement to actually continue in retirement with these benefits that they get from the franking credits. And, the same can be said about negative gearing and capital gains tax. Chris Bowen wants to give Australians the highest capital gains tax nearly anywhere in the world, higher than the UK, higher than the US, higher than New Zealand, higher than Canada. It really will be crushing aspiration and indeed, job creation.
CHRIS KENNY:
Will you then guarantee then, will the Coalition guarantee, do you personally guarantee that if you were to be re-elected, that the next term there will not be a single change to laws effecting superannuation and retirement incomes, or to housing investments? Just absolutely guarantee no changes to any of those arrangements.
JOSH FRYDENBERG:
Look, we’re not seeking to make changes to those arrangements and we do recognise that people need stability and consistency in policy to plan for their retirement. And, I can tell you that the housing market has seen a bit of a fall and that means that this is actually quite a delicate time in the housing market. And, the Labor Party came up with their policy on negative gearing at a time of rising housing prices. So, their policy will only do one thing, it will only see the value of the family home go down and it will see rents go up. And it’s not the right time for this policy…
CHRIS KENNY:
So, can you just rule out any changes in the whole first term, the next term of the Government should it be re-elected, no changes to any of those negative gearing arrangements or retirement incomes and superannuation changes?
JOSH FRYDENBERG:
We are certainly not planning to change the negative gearing…
CHRIS KENNY:
Sure, but can you rule it out? Tell people they have a whole term of Government where no one fiddles with any of this?
JOSH FRYDENBERG:
Well, Chris, I can tell you that the Liberal Party knows when it comes to a retirees tax, or when it comes to negative gearing or capital gains…
CHRIS KENNY:
But you fiddled in this term. You fiddled with superannuation in this term. Ask Kelly O’Dwyer all about that…
JOSH FRYDENBERG:
I can tell you, Chris, we’ve got no plans to do that…
CHRIS KENNY:
Retirees and investors would love a term of Government with no changes in these areas.
JOSH FRYDENBERG:
Well, I can tell you that the Coalition, under Scott Morrison, is on their side; is on the side of retirees, is on the side of people planning for their retirement. I mean, when you look at the retirees tax from the Labor Party, it’s predominantly going to hurt women. Over 50 per cent of those affected are women and of those women, two thirds are over the age of sixty and half are widowed or single. I mean, this is actually going to really hit those people who have a low taxable income, particularly under $37,000. It’s going to be very punishing for these people, particularly because they can’t change their retirement plans so late in their careers and late in life.
CHRIS KENNY:
I just want to get to population quickly before we let you go, Treasurer. Of course, your big focus now, Parliament is done until you get back for the Budget. No pressure on you, of course we are expecting you to deliver a Budget with a realistic forecast of a surplus, the first one for a decade. But, also, you’re expected to deliver a Budget that will give the Government a chance of re-election, so your colleagues are pinning all of their hopes on you. But, population, our immigration numbers are part of the Budget framework. You’ve got Tony Abbott, now the former Prime Minister, openly running a petition, a petition on his own Government, to lower the official rate of immigration in this country. And, David Coleman, the Immigration Minister, told me on radio on Friday night that, effectively, Scott Morrison has already talked about a 30,000 people cut in our permanent migrant intake in the coming year. Can you confirm that that sort of number is going to be contained in the Budget?
JOSH FRYDENBERG:
Well, as David said, the Prime Minister has already talked about bringing that number down. Our focus really is on managing the population change. You see, back in 2002 when the Intergenerational Report was done, there was an expectation that Australia would hit 25 million people by 2040. Well, we hit that target last year and the population has been growing much faster than anyone thought it would. Two-thirds of that growth has been either in Sydney, Melbourne or South East Queensland. And, this is creating real challenges. I’ve seen it, you know, first hand in Melbourne, whether it’s on public transport infrastructure or in schools or in hospitals, it really puts pressure on the infrastructure. So, we need a better plan, we need greater coordination with the states, because our population growth at 1.7 per cent is the fifth fastest in the OECD and much faster than it was in the 80’s and 90’s. So, what we’re really focused on is the right infrastructure spending, encouraging people to move to the regions where there are lots of jobs and ensuring we get the balance right where immigration, which has served this country so well, and I am a proud product of immigration to this country and I think it brings great diversity and strength to our community. But, at the same time, we need to manage that population change by investing in the infrastructure that we need to serve Australia for decades to come.
CHRIS KENNY:
So, we can expect a Budget time announcement of about a 30,000 reduction in our permanent migrant intake.
JOSH FRYDENBERG:
Well, obviously the Prime Minister has talked about that number, but we’ll wait for the Budget. But, one thing I can tell your viewers tonight about the Budget, is that it will be in surplus and it will be the first surplus in over a decade. We’ve got strong economic growth, unemployment is down the lowest level in eight years…
CHRIS KENNY:
Alright, alright, save that. You go back to writing your Budget speech. Thanks so much for joining us, Josh Frydenberg.
JOSH FRYDENBERG:
Good to be with you, my friend.