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6 April 2022

Interview with David Koch, Sunrise, Channel 7

Note

Topics: interest rates; Budget 2022-2023; cost of living and inflation.

DAVID KOCH:

Treasurer Josh Frydenberg joins me now. Treasurer, Reserve Bank has changed its language around interest rates. Patience has been replaced with an indication it could start raising rates within months. Is that a worry for you?

JOSH FRYDENBERG:

What the Reserve Bank is reflecting is the higher than expected inflation. But they've also been cautious, too, in their language, Kochie. And they did point out that household budgets remain in a strong position and that the economy is strengthening. What they want to see is inflation sustainably within that band that they set up 2‑3 per cent, and they want to see higher wages growth. We'll wait for the Reserve Bank, obviously, to take their decisions as an independent board. What we have done as a Federal Government is lay down our economic plan for the future in the Budget, which sees more investments in small business, more investments in skills and manufacturing, more investment in our regions.

DAVID KOCH:

It sort of goes against your logic, does that everyone fears rises in interest rates, but the reason they're rising from these record low levels is the economy is looking pretty good. The Reserve Bank has said, "hey, we want almost record low unemployment". We've almost got that. Inflation is a sign people are getting out and spending, but they also want wages growth as well. And that looks to be coming.

JOSH FRYDENBERG:

Well, it certainly does. And as you know, we upgraded our wages forecast each and every year in the budget. And the expectation from treasury is that wages growth will be higher than inflation in the coming years. And what we have seen with inflation, though, is higher fuel prices, largely as a result of international developments like the Ukraine, which is then playing out here at the bowser in Australia. We've also seen higher food prices, higher wheat prices as a result of the conflict in Ukraine. There are factors beyond our control which are driving inflation globally, which are being felt locally.

DAVID KOCH:

Okay. A lot of people will be put under pressure, though, because even though Australian households have never been wealthier, it's all because their house values have gone up and their super has gone up. And you sort of can't eat your house or your super, can you? And that lagging wages growth means people are finding it tough at the supermarket, tough to buy school shoes for their kids at the moment.

JOSH FRYDENBERG:

That's why we announced in the Budget more than $8 billion of cost of living relief, including halving the fuel excise. And I was in Perth yesterday, and petrol prices were $1.74 litre, which was more than $0.22 lower than what it was going into Budget night. We've got 10 million Australians who will get a $420 top-up to their tax offset when they put in their tax return from the 1 July, I've got 6 million Australians who will be receiving $250 including pensioners, veterans carers and other concession cardholders, including self-funded retirees who are eligible and we've made medicines more affordable and accessible to 2.4 million Australians. We're very conscious of the need to provide that cost-of-living relief now because it's the number one topic of discussion around the kitchen tables of Australia. But we've also put into place a long-term economic plan, Kochie, to create more jobs and drive that unemployment, as you say, to a historically low number which is three and three-quarter percent in the Budget by September.

DAVID KOCH:

All right, Treasurer, thanks for joining us.