FRAN KELLY:
Josh Frydenberg has just returned from talks with G20 finance leaders, he joins us in Melbourne. Minister, welcome back to Breakfast.
JOSH FRYDENBERG:
Nice to be with you Fran.
FRAN KELLY:
Treasurer, economic forecasters are tipping the Budget could be back in balance this year; 12 months ahead of schedule. Do you agree? Could the Budget be back in balance or better more than a year earlier than forecast?
JOSH FRYDENBERG:
Well, there is no doubt the economy is in good shape. We have just had our AAA credit rating reaffirmed, we’ve announced the smallest budget deficit in a decade, and the recent National Accounts showed that the Australian economy was growing at 3.4 per cent through the year, which is its fastest rate since the height of the mining boom and faster than any G7 country.
That being said Fran, we shouldn’t get ahead of ourselves. We are on track to bring the Budget back into balance in 2019-20, which is a year earlier than expected and the next major economic statement from the Government will be the National Accounts in December, followed by the Mid-Year Economic and Fiscal Outlook.
FRAN KELLY:
Okay, these figures do take a bit of the pressure off though, seven months out from an election you’re still behind the polls by a long way. Will you be able to resist the temptation to try and spend your way out of trouble?
JOSH FRYDENBERG:
Well, there are some additional spending measures that we’ve already announced.
FRAN KELLY:
There’s a lot of them.
JOSH FRYDENBERG:
Including for education, helping the drought stricken communities, which is the first priority of the Morrison Government, as well as some of the GST payments; that we are ensuring Western Australia gets a better deal and we have a fairer system overall.
All that being said, we are ensuring that fiscal discipline is maintained. The Australian economy does not run on auto-pilot and when the voters in Wentworth go to the ballot this weekend they need to ask themselves a question as to which government or party can deliver the stability, the economic certainty and the results and there is no doubt we are doing that.
FRAN KELLY:
Let’s just go to that spending though, $3.2 billion to bring forward the small business tax cuts, the $9 billion in GST revenue over a decade, $4.6 billion for catholic schools, $1.8 billion for drought assistance; doesn’t really look like spending constraint and we are not even close to the election yet. Is temptation going to be too much for you and your colleagues?
JOSH FRYDENBERG:
Well, certainly not. What we are focussed on is continuing the strong economic plan that we have announced and that is clearly working.
I mean having just come back from this global meeting of finance ministers, I can tell you Australia is the envy of world, there is no complacency, but the steps that we have taken to reduce the rate of spending growth to the lowest level in 50 years.
These are steps that we have taken to ensure that those people of working age on welfare is at the lowest number of 25 years. These things just do not happen by accident; they come from economic discipline and an economic plan.
FRAN KELLY:
Okay, we’ve seen you talk of headwinds in the global community; that was the talk around the Finance Minsters table at the G20. We saw some major falls in global markets last week, more volatility is predicted. How significant are these headwinds? Should we be bracing for another economic shock?
JOSH FRYDENBERG:
Well, certainly these headwinds are there and they’re more present than they were six months or a year ago. Australia is a trade exposed capital importing nation, we have the fifth most traded currency in the world, and so what happens globally really does impact us here at home.
And particularly these trade tensions between the United States and China; we don’t want them to get out of control. One in five Australian jobs, Fran, are related to trade and China is our number one trading partner and the United States is our number one investor.
So, I was pleading with my colleagues at this meeting to ensure that we maintain our support for an open, free and rules based trading system.
FRAN KELLY:
And there’s also, at this moment, interest rates across the globe are at historically low levels, global debt levels though are almost historically high. How well placed is the world, not so much Australia, but the rest of the world, particularly, Australia too though, to respond to another downturn?
JOSH FRYDENBERG:
Well, there isn’t the same headroom that countries have to respond both with monetary policy and with fiscal policy than there was a decade ago. Again, Australia is better placed than most countries.
But the impact of the normalisation of interest rates in the US, which has seen the US lift its interest rates eight times since December 2015, is that we’re starting to see the increased cost of debt servicing for some of these emerging economies and some out- capital outflows from them.
We’re also seeing some weakness, Fran, into major emerging economies like Turkey, like Argentina where their currencies have fallen by around 50 per cent this year alone.
FRAN KELLY:
So, how worried should we be?
JOSH FRYDENBERG:
I think we should be focused. I don’t think we should be alarmed. I still think the Australian economy and the global economy are growing strongly.
The International Monetary Fund put out its figures for global growth and it’s still at 3.7 per cent, which is healthy and global unemployment levels are at their lowest level in about a decade.
FRAN KELLY:
Your first set of GDP figures last month, as you just mentioned, were very good 3.4 per cent over the year. Yet today we learn one in six Australian children is living in poverty. If the economy is in such good shape, why are these kids and their families still being left behind?
JOSH FRYDENBERG:
Well, there is definitely pockets of poverty around the country…
FRAN KELLY:
One in six Australian children; it’s more than a pocket.
JOSH FRYDENBERG:
Well, can I just say what the Productivity Commission found when it reported, which was very recently…
FRAN KELLY:
Yeah, we reported on that here, yep…
JOSH FRYDENBERG:
Importantly, it said that living- the quality of living standards had improved with every generation, it has said the inequality had reduced in Australia since the GFC and it said that our economic mobility in Australia was greater then what had occurred- than what was in existence in the United States and United Kingdom.
It also pointed out that there had been around one per cent of the population that hadn’t moved up income percentiles in the last few decades and now that is an area that is a cohort we need to focus on to ensure these families and these people living in poverty get all the support through our welfare system and into a job soon as possible.
FRAN KELLY:
You’re listening to RN Breakfast, it’s 18 past 6; our guest is the Federal Treasurer Josh Frydenberg. Two opinion polls out today show the Government still behind. In the Fairfax poll the Government is behind 10 points two-party preferred; in Newspoll 6 points. The Fairfax poll also shows 74 percent of voters are opposed to allowing religious schools to discriminate against gay pupils and teachers.
The Government will legislate this week to ban religious schools from expelling gay or lesbian– gay students. Labor says consideration should also be given to protecting LGBT teachers. Will the legislation be extended or should it be extended to cover teachers?
JOSH FRYDENBERG:
Look, these are negotiations that we will have both internally and with the opposition.
FRAN KELLY:
What do you think?
JOSH FRYDENBERG:
Well, I don’t think there’s any room for discrimination and be it a student or against a teacher, but that being said, we need to work through this process with the Labor Party and ensure that we can provide a bipartisan front to the country.
But let’s not forget these laws allowed the discrimination against students were put in place in the Gillard Government and just a few days ago…
FRAN KELLY:
Sure, but that’s not the point. The point is now, are they good laws or bad laws and will you change them?
JOSH FRYDENBERG:
Well Fran, two days ago Tanya Pilbersek was telling everybody that they weren’t going to be changed now…
FRAN KELLY:
If Tanya Pilbersek was here now I’d be asking her the same question…
JOSH FRYDENBERG:
Well I’m glad you are…
FRAN KELLY:
I am asking you as the Treasurer what do you think?
JOSH FRYDENBERG:
Well, I don’t think these laws are right, and I do think we need to ensure that there is no discrimination in either our workplaces or in our schools. That’s my feeling.
And we and Scott Morrison has made our position very, very clear here that we will be moving changes in the Parliament and we will have our Attorney General be speaking to the Shadow Attorney General to ensure this is a bi-partisan position.
FRAN KELLY:
The Ruddock Report on Religious Freedoms was leaked ahead of the Wentworth by-election this week, which is this weekend. You’ve campaigned- you’ve been campaigning in Wentworth recently. It’s got a socially progressive population, how unhelpful has this debate been to the Liberals in Wentworth?
JOSH FRYDENBERG:
Well look, the debate in Wentworth has veered from one issue to another over the course, as you would’ve imagined, of the last month or so. But the reality is, we have a contest there between David Sharma, who is an outstanding candidate, a former ambassador for our country; primarily with an independent who’s pretending to be a Liberal, who is certainly not.
And if she is elected, then this will bring greater instability into the Parliament and will put in danger the economic reforms that we are rolling out across the country.
FRAN KELLY:
Just on Kerryn Phelps, you say she’s pretending to be a Liberal and she’s certainly not. The ads say she’s pretending to be a Labor, that she’s a Labor stooge. She says she’s an independent.
That aside, if you lose a blue-chip Liberal seat like Wentworth will it be for no other reason than the Liberal Party tore down, yet again, another Prime Minister. You’ve got no one else to blame but yourselves do you?
JOSH FRYDENBERG:
Well look, those issues have been dealt with in the media and certainly in the commentary. The reality is we’ve had a change of Prime Minister and if you look at those polls that you’re referring to, the people like what they see with Scott Morrison.
He’s leading as preferred Prime Minister in all the major polls and he’s just getting started. He has been very active, he has established what our priories are and he has an agenda to take this country forward.
In contrast, we have a Labor Party that is proposing $200 billion of new taxes, we’ve had speeches from the incoming President of the Labor Party, Wayne Swan, talking about wanting to tear down neo-liberalism, the Shadow Assistant Treasurer quoting Engels with praise; and the Labor Party wanting to emulate the Corbyn and Sanders example from around the world and to dispense with the legacy of Hawke and Keating.
That’s what the contest is going to at the next election, about the economy and about having freedom in our work place and in our community.
FRAN KELLY:
Josh Frydenberg thank you very much for joining us.
JOSH FRYDENBERG:
Thank you.