HAMISH MACDONALD:
Treasurer, Josh Frydenberg, is with us from Stanthorpe this morning. A very good morning to you.
JOSH FRYDENBERG:
Good morning to you, Hamish.
HAMISH MACDONALD:
You’ve been through Inverell in northern New South Wales, across the border into Warwick and Stanthorpe, where you are this morning. Is the impact of the drought worse than you expected?
JOSH FRYDENBERG:
It’s as bad as you can imagine. As one farmer said to me yesterday, it’s their GFC plus some. 95 per cent of New South Wales and two thirds of Queensland is impacted by this drought. And as you know, we’ve had big droughts before in our country. We had one at the time of Federation, one at the time of the Second World War and then we had the millennium drought during the time of the Howard Government. But this is the worst drought in living memory for those who have been on the land and their families who have been on the land for more than a century. So it’s really bad and people are hurting, shops are closing, farmers are destocking and they do need our help.
HAMISH MACDONALD:
I know politicians tend to loathe to admit mistakes, but I wonder if you having now been there and witnessed all of this, would say that the impact of this drought has been underestimated in terms of the way it has affected the communities?
JOSH FRYDENBERG:
Well, I wouldn’t phrase it like that. What I would say is that you have to see it to believe it in terms of the depth of despair among some of these communities. They’re not broken but, of course, they are under real pressure. And it’s not just the farmers because they are one aspect of the community, it’s the small business owners, it’s the schools, it’s the service providers, the local government representatives. It’s everybody who is affected by the fact that there hasn’t been rain and by the fact that these communities are seeing people leaving.
HAMISH MACDONALD:
And in terms of the contribution that the Federal Government can make, is making, the NFF says that it is again calling for a nationally consistent drought policy. When are you going to deliver on that?
JOSH FRYDENBERG:
Well, we believe we’ve got an effective drought policy. We’ve allocated some $7 billion for a range of initiatives that are both immediate - in terms of income support, we’ve lifted that to $37,000 for a household – we’re also providing support for local governments and they’re spending money. I was just with the acting Mayor of Gwydir the other day who was telling me that the money they’ve received from the Federal Government has helped employ local tradies through the community and get important work done. We’re supporting not-for-profit organisations, like Rotary and the Salvos and others who are helping the community. As well as getting regional financial advisers in to help people work through their economic challenges, as well as mental health support. So, we are doing a lot in the medium term and the longer term.
HAMISH MACDONALD:
Are you saying that there’s not going to be a nationally consistent drought policy?
JOSH FRYDENBERG:
Well, I’m saying that we do have a number of initiatives that are in place that are working…
HAMISH MACDONALD:
But the National Farmers Federation doesn’t see it that way.
JOSH FRYDENBERG:
We’ll continue to work with the National Farmers Federation as an important stakeholder, as well as with the state governments and the local governments. What we need to do, Hamish, is not just provide support immediately to get them through this drought because it will break, it’s just a question of when. But also, the long term drought resilience of these communities which involves water infrastructure and, as you know, here in Stanthorpe, there’s a major dam that’s being planned called Emu Swamp, where we’ve allocated $47 million, which will help provide water for the businesses here.
HAMISH MACDONALD:
Could you just help us understand though what the policy trajectory is here though? Are you going to keep rolling out individual policies on specific components of this drought? Or is there going to be some overarching drought policy or not?
JOSH FRYDENBERG:
Well, the overarching driver for this programme is to get support to the people who need it most.
HAMISH MACDONALD:
Sure, but I’m just asking for an explicit answer on that question. Because it’s obviously a matter of debate and the Labor Party’s having, you know, a go, at this. But also the National Farmers Federation clearly has a view that there clearly needs to be a single consistent drought policy. I’m just trying to establish whether or not your Government intends to deliver one.
JOSH FRYDENBERG:
Well, I’m here with David Littleproud, who, as you know, is the Drought Minister. He is working with the National Farmers Federation to ensure that we have the most effective and efficient policies in place. And we’ll continue to make improvements to that policy, we’ll continue to provide more support. At the same time, if you point to the Labor Party, I mean they might like to try to politicise this issue, but I think it goes beyond politics, and what it goes to is helping those who need it.
HAMISH MACDONALD:
Well, I mean they’re not the only ones. Barnaby Joyce has also taken a pretty strong view on the way the Government has handled the drought.
JOSH FRYDENBERG:
Well, I was with Barnaby yesterday in Inverell, and he know firsthand the pressures of the drought on the, on his community. But he was pointing out that the State Governments do need to work a bit harder to make these water infrastructure projects a reality. Because under the Constitution, they have enormous authority here, and a good example is Emu Swamp, where we’re still waiting on State approvals.
HAMISH MACDONALD:
So you blame the States for the fact that, under this Government, no new dams have been built.
JOSH FRYDENBERG:
Well, firstly, if you point to Barnaby Joyce’s electorate, we know the Chaffey Dam extension occurred under our Government and that’s been important for helping the people of Tamworth which is a large regional centre. And the reality is, that of the twenty dams that have been built across Australia since 2003, sixteen of them have been in Tasmania because that Government has been more prepared to get on with building these dams. So, we’ll put more money on the table, significant money on the table for water infrastructure. We do need the support of the States, we will work as closely as possible with them, but we also need them to make it a priority.
HAMISH MACDONALD:
In other news, the Reserve Bank’s decision this week to cut the official interest rate to a new record low of 0.75 per cent means it’s now on the cusp of printing more money and buying bonds according to some. Some economists are forecasting that quantitative easing will start mid next year. Do you have a view on that?
JOSH FRYDENBERG:
Well, those are matters for the independent board of the Reserve Bank. They conduct monetary policy and, as you say, the notion of quantitative easing. It has been done in the US, it’s currently underway in Japan and Europe. But I do point out, Hamish, that the Reserve Bank itself has said as recently as September that they’re unlikely to employ this unconventional monetary policy of which quantitative easing would be, you know, an example of. Because that’s about really, the central bank buying bonds on issue and reducing the cost of funds for the banks.
HAMISH MACDONALD:
Would it be a matter of regret if Australia got to the point where we were doing that?
JOSH FRYDENBERG:
Look, again, those are matters for the independent Board of the Reserve Bank. What I do know is that the rate cuts are leaving more money in the pockets of Australian families. There’s been three rate cuts since June. That’s seventy-five basis points. Of those, fifty-seven basis points have been passed on to the banks. So, if you’re an Australian family with a four hundred thousand dollar mortgage, that means you’ll be fifteen hundred dollars a year or more better off with reduced interest payments.
HAMISH MACDONALD:
Well, in theory. I mean, you’ve slammed the Big Four banks for not passing on the full interest rate cut.
JOSH FRYDENBERG:
Absolutely. Because this has been a pattern of behaviours where they haven’t passed on the bank rate cuts in full. And, you know, that’s not just under our Government that that’s occurred. During the term of the previous Government, there were fourteen different rate cuts, and only five were passed on in full. The Banks have not been prepared to eat in to their net interest margins, or in other words, their profitability. And we want them to put their customers first. And the only way they’re going to hear the message, Hamish, is if the customers of these banks go and make their displeasure known. And if they can’t get a better deal, take their business elsewhere.
HAMISH MACDONALD:
In a major speech to the Lowy Institute overnight, the Prime Minister made it clear Australia’s international engagement will be driven by national interests. I know you’ve had a look at that speech yourself. What is ‘negative globalism’ in your view?
JOSH FRYDENBERG:
Well, I think the point the Prime Minister was making is we want these global institutions to work for all countries and we see ourselves as the thirteenth largest economy in the world. And as a good global citizen, being a founding member of the UN and pulling more than our weight in our region, for example, in East Timor and the Solomon’s and other places. We want these global institutions not to berate countries but to work effectively with them. So, the Prime Minister was making an obvious point there that it needs to work for all countries, not just some. And that he was also making a broader point about the need for Australia to chart a practical path forward globally and that means engaging with our key partners. He announced that he will soon be off to India, to Indonesia and Japan as well as not seeing the China US relationship as a binary choice for Australia.
HAMISH MACDONALD:
He gave the example of, well he mentioned ‘unaccountable international bureaucracy.’ Can you give me an example of that?
JOSH FRYDENBERG:
Well, I do know that during the term of the Howard Government you had the human rights organisations within the UN singling us out more than North Korea or Iran. Now, they were doing that at the time because of our border protection policies, border protection policies, Hamish, that have been admired by a number of other countries around the world for their effectiveness in ensuring that authorised arrivals come to Australia and lives are not lost at sea. So, that’s a good example.
HAMISH MACDONALD:
Is this the Prime Minister saying look we like these international institutions and frameworks when they work in our interests, but if they criticise us, we don’t like it? Is that essentially the message?
JOSH FRYDENBERG:
No. The message is that these institutions are important, whether it’s the World Health Organisation or the World Trade Organisation acting on behalf of refugees. These organisations play a vital role but it’s about getting the balance right and sometimes they don’t.
HAMISH MACDONALD:
Obviously, comparisons have been drawn by the messages in this speech, and messages that Donald Trump has delivered, particularly in relation to globalism. How do you respond to those comparisons?
JOSH FRYDENBERG:
Well, Australia charts its own course, Hamish. The Prime Minister and, indeed, Prime Ministers before him have been very clear that we act in our own national interests. We don’t have the same national interests as the United States…
HAMISH MACDONALD:
But is it in our interest to echo Donald Trump on globalism?
JOSH FRYDENBERG:
Well, we’re not and I don’t accept that assertion. What we do is act on behalf of 25 million Australians and we do disagree with the Americans on a number of issues, not least of which is the big trade tensions that we’ve got right now between China and the US. They’ve got some legitimate issues but we want an agreement between those two parties so that the global economy can continue to grow. But the United States is a key alliance partner for us and it is based, not only on the shared history, but also on shared values.
HAMISH MACDONALD:
Josh Frydenberg, thank you very much.
JOSH FRYDENBERG:
Good to be with you.