GARETH PARKER:
Treasurer, good morning.
JOSH FRYDENBERG:
Good morning to you, Gareth.
GARETH PARKER:
This is a big meeting, it's an annual meeting, isn't it?
JOSH FRYDENBERG:
It absolutely is and there's a really strong delegation of American Congressmen and Senators who have come to participate, as well as our Ambassador, Joe Hockey, who is here and our Ambassador Designate, Arthur Sinodinos, and as you say, the US Ambassador to Australia. So it's an important group of business leaders, political leaders, people who have held senior positions in various Democrat and Republican Administrations, as well as representatives from academia. And we're discussing a range of issues from defence and economic issues to technology and robotics and artificial intelligence, the importance of water and, of course, what is happening between the United States and China.
GARETH PARKER:
Yeah and the timing there of Andrew Hastie's intervention is interesting. What did you make of the Member for Canning's comments in the Sydney Morning Herald yesterday?
JOSH FRYDENBERG:
Well, Andrew, as you know, is a distinguished colleague. He's somebody who has represented and served Australia on the battlefield and he is somebody who is very thoughtful and holds the chairmanship of an important intelligence committee. He's entitled to his views as a Member of Parliament. At the same time, what you will hear from the Prime Minister, from the Foreign Minister, the Defence Minister and myself is the importance of our relationship with China. We won't agree on everything, but the China Australia relationship is absolutely critical to our economic prosperity. At the same time, we have an alliance relationship with the United States and it's founded on shared values and a shared history. So, we are trying to manage what are some very difficult diplomatic times.
GARETH PARKER:
Certainly the Premier of Western Australia, Mark McGowan, thinks that Andrew Hastie has done damage to the economic relationship. I mean, do you agree with the Premier about that?
JOSH FRYDENBERG:
No, I don't. I think the economic relationship is to both China and Australia's benefit. Our two way trade was over $215 billion last year and, as you know, the Coalition signed a free trade agreement with China. Since then in 2015, we've seen our two way trade increase by more than 40 per cent. The beneficiaries of that trading relationship going from strength to strength are our farmers, are our miners, are people working in the health and the education and tourism sectors. And one in five Australian jobs, Gareth, is related to trade and one third of our exports go to China. So, we'll continue to maintain that important relationship and the minerals and the agriculture and the other services and goods that we provide to China are helping its economy continue to grow too.
GARETH PARKER:
It's testy times at the moment, though, isn't it? Because you've got the emerging trade war between the United States and China. It's clearly rattled stock markets, certainly this week and previously. It's pretty choppy waters at the moment.
JOSH FRYDENBERG:
Well, stock markets will go up and down and it's not for the Treasurer to comment on a daily basis what happens. But I do note that the Australian Stock Market is up 14 per cent through the year, even taking into account the falls from last week. So, what we will see is that the Australian economy maintain its strong fundamentals, our net debt to GDP, Gareth, is a quarter of what it is in the United States or the UK. We have a AAA credit rating from the ten leading credit rating agencies. We have a budget that is coming back into surplus for the first time in more than a decade. And as a nation, we are in our 28th consecutive year of economic growth; a run of economic growth that has not been mirrored by any other developed nation. It's a pretty good record.
GARETH PARKER:
Is that run petering out though?
JOSH FRYDENBERG:
Well, this certainly challenges to our economic growth. We've made no secret of that. Globally, these trade tensions are leaving uncertainty in the minds of investors and the growth in trade volumes has gone from above 5 per cent in 2017 to basically very moderate or zero growth today. So, that is an issue that is challenging for us. At the same time, domestically, the impact of floods and droughts has had a significant impact on our agricultural output. And as you know, housing prices both in Western Australia but also in the capitals of Sydney and Melbourne have come down in recent times. But there are signs that those markets are starting to stabilise and certainly our employment growth has been a very good story.
GARETH PARKER:
Okay. The people listening to the interview this morning can hear the statistics and they can sort of understand those. But, at the ground level of the real economy, when we have these discussions virtually every day on the program and people know it as they go about their business and go about their work. But things are still very sluggish on the ground. There is still a reluctance of people to open their wallets and go and spend. The retail economy is still really, really tough. The hospitality economy is really, really tough. You talked about housing prices, I think there is perhaps some evidence in Sydney and Melbourne it may be turning, haven't seen that evidence here to be frank. I think housing prices are still falling in the west. You spoke with Ben Wyatt yesterday, the WA Treasurer, is there a recognition from you that we need something to get the economic activity kick started and kicking over because interest rate cuts are not doing all of the work on their own.
JOSH FRYDENBERG:
Well, the first thing to say is I've got a good working relationship with Ben Wyatt, which is important. We may represent different political parties but we recognise that our mutual interests are to serve the people of Western Australia. My good friend and the senior Western Australian, Mathias Cormann, also has a good working relationship with the Western Australian Government. In Western Australia, you're going to see 1.2 million tax payers get the benefit of the tax cuts we passed the Parliament and the tax office has told me that already over $1 billion of refunds has been provided to Western Australians. So that's money that's going to flow into the shopping strips across the state, be spent with the local tradies, will help boost the economic activity. We also announced in the budget that we're extending the instant asset write off for small businesses so that they can go out and buy equipment and not depreciate it over time but do it straight away. Now, there are 375,000 Western Australian businesses which will see the benefit of that instant asset write off. But, you're right. There has been some challenges in the Western Australian economy and I think one of the issues that both Ben and I discussed yesterday was population growth because the population growth in Western Australia is about half of where it's been in terms of your long-term average. Whereas most of the population growth in the country is in Sydney, Melbourne and south-east Queensland. Western Australia has a lot to offer and we'd like to see more people here and that would be good for your economy too.
GARETH PARKER:
So is that the message, go west?
JOSH FRYDENBERG:
There's certainly good opportunities here. I mean your gas prices are half of what they are on the east coast of Australia and, you know, that should be good news for some manufacturers. But ultimately, that's up to the Western Australian government too to provide those economic settings that attract people here to the west. But certainly I think population growth is a real issue for your state.
GARETH PARKER:
Okay, in terms of direct infrastructure spending from the Federal Government. Everyone listening to the program is intimately familiar with the debate about row eight and row nine. What I want to ask you is this; that there's $1.2 billion of money sitting there that you're prepared to commit to that project. The state government doesn't want to do it and we're at an impasse. So we understand that. Would you consider making that $1.2 billion available for different projects that you and the state government do agree on? Because sitting on the sidelines, $1.2 billion isn't doing anyone much good. If you unlocked it and allowed it to go to other projects that you do agree on, something that could be done quickly, then wouldn't that provide some of that stimulus to the economy, get construction jobs going, put it into productive infrastructure and we actually get the benefit of it now instead of having a political argument.
JOSH FRYDENBERG:
Well, it's not about a political argument, it's actually talking about what could be of benefit to your state. We believe that row eight and nine, which are the extensions to complete the Perth Freight Link project that could be of significant benefit to your state. Now, that…
GARETH PARKER:
A lot of listeners agree with you, but it's not going to happen so would the money be better off being spent on something else?
JOSH FRYDENBERG:
This is where your listeners need to make their point to the Western Australian government because we have the same issue in Victoria with the East West Link, where we've got $4 billion sitting there as a contingent liability but the state government for illogical reasons is not wanting to build that project. So, by having that money there and saying that it's available to the people of Western Australia, if the state government gets behind the project, then that is a pretty strong incentive. We're not about to, you know, change the terms. We want this project to be build, just like we want the East West Link in Victoria. So, the question really is for your Premier and for their team; how are they going to get that money working for Western Australians? And it's not going to by getting us to support other projects, it's about making decisions to support this one.
GARETH PARKER:
So that money really is the Perth Freight Link or bust?
JOSH FRYDENBERG:
That money is for the Perth Freight Link and I note that some of my colleagues like Ben Morton have been very strong advocates for this project and for good reason.
GARETH PARKER:
Okay. Josh Frydenberg, thank you for your time.
JOSH FRYDENBERG:
Good to be with you.