GARETH PARKER:
The federal Treasurer Josh Frydenberg is giving a speech today to the Australian Chamber of Commerce and Industry, and he's talking about budget repair. After a period of massive economic expansion to deal with the pandemic, debt's gone through the roof. Treasurer Josh Frydenberg, good morning.
JOSH FRYDENBERG:
Good morning, Gareth. Nice to be with you and your listeners.
GARETH PARKER:
Thank you for your time. You sound as though you're saying it's time to tighten the belt.
JOSH FRYDENBERG:
Well, as you know, when the crisis first hit we changed our budget strategy which allowed us to open the purse strings and to deliver programs like JobKeeper, which saved the economy; the cash flow boost; the $750 payments to pensioners, carers, veterans and others on income support. That helped avoid Australia falling into the economic abyss and an unemployment rate which Treasury first feared could reach as high as 15 per cent. In the end, the unemployment rate has reached 4 per cent just yesterday, which is the lowest in 14 years, and female unemployment is now at 3.8 per cent, the lowest since 1974. This is a very strong recovery, so now is the time to move to the second phase of our fiscal strategy, which seeks to stabilise our debt levels and then reduce them as a share of the economy.
GARETH PARKER:
What about getting the Budget back into surplus?
JOSH FRYDENBERG:
Well, again, it's a long road and a steep hill that we need to climb. And that is why we're starting that process by changing our fiscal strategy in light of the very strong economic recovery that Australia has seen.
GARETH PARKER:
There was the back in black budget and, of course, we know the pandemic came next and derailed all that. But do you have a year in which the Budget might come back into surplus?
JOSH FRYDENBERG:
Well, you'll see the numbers printed on budget night, but what you will see is an improvement in our debt profile. So the share of our economy that debt makes up will peak at a lower level and earlier than what we were forecasting as recently as MYEFO at the end of last year. We're still being very conservative around our commodity price forecasts. We haven't baked in long‑term structural spending off the back of what may be temporary increases in commodity prices. I mean, take iron ore, for example, it's around $130 a tonne now. We've had it in the Budget previously at $55 a tonne. Metallurgical coal and thermal coal are also at record highs right now. So we've been responsible with our forecasts, and we've also stuck to this discipline of having what is called a debt to GDP cap, which means that – sorry, a tax to GDP cap, which is a discipline that says that we went lift taxes as a share of the economy above a certain amount. Labor doesn't have the same approach. We do, which means you have constraints on your expenditure side because you're not raising taxes.
GARETH PARKER:
Four per cent unemployment nationally is a fantastic number. That means more Australians in work. There's no way of saying that is anything other than fantastic news. But, it's a funny economy, isn't it? Because cost of living pressures are really rising. Wages aren't keeping up with those cost of living rises. You've got petrol prices over $2 a litre in most parts of the country, albeit that global oil prices seem to have slipped back a bit. Now you've got even basics like groceries, you've got the likes of SPC, Browns Dairy in this state warning of double digit price rises coming down the pike. Are you going to help households at this next budget with some cost of living relief?
JOSH FRYDENBERG:
There will be measures in the Budget to address cost of living pressures, because they're real and it's the number one topic around the kitchen tables in Perth or, indeed, other capital cities around the country. But it also – the measures will also build on what we've already announced. So we've introduced some $30 billion worth of tax relief, focusing on low and middle‑income earners since the pandemic began. We've also seen electricity prices come down by 8 per cent in the last two years. They doubled under Labor. And we've also seen child care costs come down as we've introduced spending of more than $10 billion a year, particularly focusing on families with two or more children in child care. But we recognise there is a need to take further steps, and that's what you'll see in the Budget. But with respect to oil prices, as you know, Gareth, Australia is a price taker when it comes to the price of fuel at the bowser. And it is determined by the international oil price, which has spiked because of the events in the Ukraine and the uncertainty that has brought. But we do welcome the fact that it's come down a slight amount over recent days.
GARETH PARKER:
That doesn't help households, though. I mean, we understand the reasons for it, but it doesn't help households trying to make ends meet.
JOSH FRYDENBERG:
Well, of course the cost of living pressures are real, but that's why we've delivered tax relief, which is putting more money into people's pockets. And obviously we're focusing on driving up wages.
GARETH PARKER:
Okay, but –
JOSH FRYDENBERG:
And your reference to the unemployment rate being at an historic low – well, at a very low level at 4 per cent, which is the lowest level in 14 years, is important because it means people have been able to retain their job or get a new job even after the biggest economic shock since the Great Depression. And that's a very significant achievement for our economy, because other countries like the United States have not seen their employment levels get back to where they were pre‑pandemic, whereas here in Australia there are 377,000 more people in work today than when COVID began.
GARETH PARKER:
Tax cuts are always welcome, but they don't hurt – don't help people who don't pay tax, including pensioners. We know they're getting a $20 a fortnight rise, $30 a fortnight for couples, but that's barely going to touch the sides given the cost of living pressures that we're seeing.
JOSH FRYDENBERG:
Well, that is an important increase based on the indexation. And it does reflect the higher inflation realities that we've seen here in Australia. But we are always focusing on measures that can support seniors and support others across the economy who are battling these higher cost of living pressures. And that's what we'll do in the Budget.
GARETH PARKER:
So should we expect a one‑off cash payment?
JOSH FRYDENBERG:
Well, again, that's speculation that I'm not going to feed this morning. I'm not going to get on to the sticky paper about what may be in or not in the Budget. There's always different ideas that are being thrown around in the week leading up to the Budget, but it wouldn't add anything if I was to comment on that.
GARETH PARKER:
I just want to return to the unemployment rate. Particularly here in Western Australia the participation rate was 70 per cent, which is a record high. It means that Western Australia is the hardest working state in the nation, yet the Premiers of New South Wales and Victoria seem to want to continue to revitalise like some sort of zombie this GST issue. Now, the PM's been here this week. He’s been saying it's a done deal, it's a forever deal. But can someone please explain to the Premiers of Victoria and the Treasurers of Victoria and New South Wales the reason why this deal is in place? Because West Australians are already right now sending more of their share of GST to other states than they're receiving on a per capita basis?
JOSH FRYDENBERG:
Well, this was an important achievement for the Coalition, to put in place a fairer and better deal for the people of Western Australia from their GST. And, you know, that was obviously not something that preoccupied the minds of Premiers in other states, but it did preoccupy the minds of millions of people in Western Australia. Now the Labor Party never touched this, never fixed it. Scott Morrison when he was sitting my chair as Treasurer made this a focus for him. And he as Prime Minister has been able to deliver that. And I think that's, you know, of significant credit to him. But it's also very important to the people of Western Australia who are getting this better deal from the GST than they were previously.
JOSH FRYDENBERG:
Do you reckon you could have a word to Tim Pallas and to Matt Kean next time you're around the Treasurers table?
GARETH PARKER:
Well, I'm not sure that my word would convince them not to speak up about their share of the GST. But, you know, they do know that consumer spending is increasing and, therefore, that leads to higher GST take. And every single dollar from the GST goes to the states; it doesn't go to the commonwealth.
GARETH PARKER:
Right. Treasurer, thank you very much for your time.
JOSH FRYDENBERG:
Always a pleasure.