DAVID KOCH:
All eyes will be on the Australian share market this morning after it shed $27 billion yesterday in reaction to the US and China ramping up their trade war. For his take on the challenges facing the market, I'm joined by Treasurer Josh Frydenberg. Treasurer, good to see you.
JOSH FRYDENBERG:
Good morning.
DAVID KOCH:
This share market volatility, does it spook you in terms of the impact on the economy?
JOSH FRYDENBERG:
Well, I think we're going to have to get used to this volatility given some of the trade tensions that we've seen and how that has negatively impacted on the global economic outlook. But I do want to point out to your viewers, Kochie, that the Australian stock market is up nearly fifteen per cent for the year, even with some of the recent falls, and superannuation funds have been delivering returns above five per cent. And obviously, the fundamentals of the Australian economy are strong, but we're not complacent and we do look with concern at the recent trade tensions between China and the US and the impact that that has more broadly.
DAVID KOCH:
Yep. And on that economic front, you challenged corporate Australia to rein in their share buybacks and dividends as part of a new push for productivity. How will that lift workers' wages?
JOSH FRYDENBERG:
Well, I was just pointing out the fact that over the last twelve months, we've seen $29 billion of buybacks and special dividends, and that compares to an average of $12 billion over the four years prior, so some of our leading corporates are moving on a default basis to buying back their shares, maybe instead of looking for growth options. Now, of course, they may have some concern with the market more generally, but the more that they invest, the more that they growth, the more jobs they create, and ultimately, that's good news for wages.
DAVID KOCH:
Ok. Bosses would say though, "Hey, we've got dividend imputation so we're being encouraged to pay out dividends. Why doesn't the business and corporate tax system encourage us to invest? Why not you give us an investment allowance? Why not you reduce our corporate tax rate? Then we would invest."
JOSH FRYDENBERG:
Well, two points there. Firstly, we do have an R&D tax incentive, and $2.8 billion was paid out in 2017-18 for exactly that purpose, to encourage investment by corporate Australia.
DAVID KOCH:
No, a broader investment allowance.
JOSH FRYDENBERG:
Well, obviously we will look at these options, and I'm in discussions with the business community about how we can boost investment, but there is already a R&D tax incentive, and we'll continue to take the steps necessary to ensure that corporate Australia is investing in capital, investing in equipment, boosting their managerial expertise, and that's good news for productivity and ultimately wages.
DAVID KOCH:
Yep, absolutely. Okay. Leaving the door open to investment concessions. Appreciate your time.
JOSH FRYDENBERG:
Good to be with you.