DEB KNIGHT:
Australia is hoping to get in ahead of the US and fast track a trade deal with the UK, when and if a Brexit deal is eventually thrashed out. Our Prime Minister is meeting directly with his British counterpart at the G7 as trade wars hit global markets including ours hard, as Ross just mentioned. Treasurer Josh Frydenberg joins us now in Canberra.
Treasurer, good morning to you.
JOSH FRYDENBERG:
Good morning, Deb.
DEB KNIGHT:
Scott Morrison impressing on the world stage, but do you really think Australia is going to get in ahead of the US on this? How can little old Australia compete with a global giant like the US?
JOSH FRYDENBERG:
Well, in terms of striking trade deals, our record shows that we get them done and we get them done in record time and in fact, since we came to Government, we’ve expanded free trade agreements that were covering just 26 per cent of our two way trading relationships to now over 70 per cent. We struck a deal with China where our two way trade has increased by more than 40 per cent since 2015.
DEB KNIGHT:
So are we going to beat the US to the punch here?
JOSH FRYDENBERG:
Well, we’ve got a good case to put and it seems that both Boris Johnson and Prime Minister Scott Morrison see this as an absolute priority, and we’ve got a lot of products, whether it’s services or agricultural products or other things that we sell that the UK will need.
DEB KNIGHT:
So is a trade deal with Europe next?
JOSH FRYDENBERG:
A trade deal with Europe is on the cards too. As I say, we’ve been very successful in our region. Japan, Korea, China, Indonesia, the eleven nation Trans-Pacific Partnership, and we’re been trying to get India in a regional deal which also includes China, and we’re now looking further afield to the UK and the European Union.
DEB KNIGHT:
Now the US-China trade war is hitting our markets hard, Ross just detailed this. $27 billion wiped off shares yesterday, the Aussie dollar plummeted to its lowest level in a decade. Do you share the optimism of the US President in the wake of the G7 that this could be resolved soon?
JOSH FRYDENBERG:
Well, we welcome any de-escalation in these tensions including more dialogue between the US and China, and we’ve actually been calling for that consistently. We want the major parties to come to the table to resolve their differences and to use a rules-based trading system as the way for us all to go forward. Because it’s not just the protagonists, China and the US, that are affected by these trade tensions. It’s the rest of the world, it’s the bystanders; because it does impact negatively on investment flows, on growth in trade volumes and overall confidence in markets.
DEB KNIGHT:
Now you’ve had a go at Australian companies. You said yesterday that they need to put investment before returning cash to shareholders, which we know a lot of people rely on for their investments, for their superannuation. You’re the Treasurer. Isn’t it your responsibility to make it more appealing for companies to invest here in Australia in the first place?
JOSH FRYDENBERG:
Well, absolutely we’re focused on doing that and what I detailed in the speech is the infrastructure reforms, the tax changes, what we’re looking at in industrial relations competition reforms; a whole suite of areas where we’re enabling business to grow and to employ more people.
DEB KNIGHT:
So why are they investing in the US rather than here?
JOSH FRYDENBERG:
Well, they’re doing both, and some of our Australian companies have a global footprint. But the message I was sending to the business community, Deb, is that over the last twelve months, we’ve seen $29 billion worth of buybacks and special dividends and that compares to an average of just $12 billion over the four years prior. So while companies may well reduce the number of shares that they have on offer in order for those shares to be worth more individually, sometimes it’s best for that company to invest in research and development, and to grow, like a CSL, like a Cochlear, like SEEK, and like other major Australian companies have been doing.
DEB KNIGHT:
We’ll see if they take you advice. Treasurer Josh Frydenberg in Canberra. Thanks for your time.
JOSH FRYDENBERG:
Thank you, Deb.