LAURA JAYES:
Good morning to you, Josh Frydenberg.
JOSH FRYDENBERG:
Good morning, Laura.
LAURA JAYES:
How do you propose the States help lift productivity?
JOSH FRYDENBERG:
Well that work is already under way between the Commonwealth and the States. When we as Treasurers met recently in Canberra, we agreed, Laura, on a set of work across the fields of transport, environment and health where we would take advantage of the Productivity Commission's extensive report called the Shifting the Dial Report, which laid out opportunities to cut red tape, to develop more uniform approaches and, of course, more efficiencies. Because at the end of the day we don't want to see duplication between the Federal and the State governments in areas which are preventing investment and holding off the creation of new jobs.
LAURA JAYES:
I think there's a bit of frustration with the States as well because they too have seen this report. I know in NSW, the Treasurer here has said that Federation is, well, basically the relationship between the States and the Federal Government is broken. He's even described this as a "need to break the emergency glass situation." Do you agree with him and is it time for the Federal Government to support the States in abolishing inefficient taxes like stamp duty, for example?
JOSH FRYDENBERG:
Well, issues like stamp duty and payroll tax and land tax, they are within the domain of the States and its welcome that the NSW Government is doing its own body of work and, as you know, it has its own levers when it comes to taxation and when it comes to spending and it will make its own decisions. There is not a big bucket of money sitting at the Commonwealth level that we can just hand out to the States, so that's why we're focusing on supply side reforms, micro economic reform, deregulation and industrial relations and other areas where we can actually get more flexible workplaces, we can get more efficient and effective cooperation, which delivers that productivity boost which is so important to our economic growth, to wages and of course, jobs.
LAURA JAYES:
Talking about tax breaks as well to fast track some big infrastructure projects and really get some foreign capital involved here, but once again, Dominic Perrottet has said just recently that basically NSW, for example, is building as much infrastructure as the market can handle.
JOSH FRYDENBERG:
Well, there's certainly an enormous amount, a record amount of infrastructure being built across the States right now with their support, but also with record funding from the Morrison Government. We have a ten-year, $100 billion pipeline of infrastructure spending, which we want to keep extending so what we're talking about today is providing tax incentives to get more investors for nationally significant projects.
These are projects that are going to be worth more than $500 million. These are projects that could be in the energy field, the water field. They can relate to telecommunications or, indeed, to transport infrastructure. They'll need to be ticked off by the Treasurer, namely myself, when they meet a certain set of criteria and then they will attract a tax incentive for doing that and this will be the way that we as a country can remain competitive, particularly because it's expected, Laura, that there will be a $15 trillion infrastructure deficit globally by 2040. So lots of countries will be competing for the same bucket of money and that's why we're providing these tax incentives, so that money can be invested here creating jobs and lifting wages.
LAURA JAYES:
Treasurer, isn't part of the problem the duplication between the Federal Government and the States. It does seem from time to time that the Federal Government leaves things to the States when it suits them, but then meddles elsewhere when it suits you politically. I'm thinking of energy, for example.
JOSH FRYDENBERG:
Well, just this week we had a big win in the Parliament when we passed through our Big Stick Legislation. Now, that Big Stick Legislation obviously has divestiture as a sanction of last resort, but it has a whole graduated set of measures which are designed to get better outcomes for consumers, whether it's in the retail market, the wholesale market or the contract market. We've taken the advice of the ACCC…
LAURA JAYES:
How is investment in divestiture actually good for productivity?
JOSH FRYDENBERG:
Well, what we have seen in the energy market is the companies taking advantage of consumers. We've seen effectively a loyalty tax. If you stay with a retailer, you get penalised than if you're potentially a new customer and we've seen examples where companies have withheld supply and that is being done in order to lift the price. So what we are done here is taking the advice of the ACCC, putting in place new legislation - which by the way was opposed in the lead-up to the election by the Labor Party and now they've back flipped and supported our legislation - that's a really important win for consumers, but we of course, are investing in storage which is critical as more renewables come on line and I'm thinking particularly of Snowy 2.0 which is a nation-building, ground-breaking project, but there’s a whole series of other measures which we are introducing into the energy market, which working together with the States can deliver better outcomes which ultimately means lower prices and a more reliable, efficient system.
LAURA JAYES:
We're now a couple of months down the track since we saw those tax cuts, have they worked to stimulate the economy?
JOSH FRYDENBERG:
Well, they're certainly making their way into the economy. Some people are paying down their mortgage and others are spending it with tradies or at their local shopping strip. But ultimately this is consistent with our values as a coalition which, Laura, is to see people earn more and to keep more of what they earn and these tax cuts, again, which were opposed by the Labor Party are worth $158 billion over time and what we are doing is introducing a massive reform to the tax system. We're eliminating a whole tax bracket. The 37 cents in the dollar tax bracket and if you earn between $45,000 and $200,000 you'll pay a marginal rate of tax of no more than 30 cents in the dollar. That's a lot simpler…
LAURA JAYES:
But has it had that stimulatory effect?
JOSH FRYDENBERG:
Well, it's certainly had an impact in terms of the economy and Treasury's analysis says that it will add about $8 billion a year to peoples incomes and the RBA have also said that it will boost disposal income…
LAURA JAYES:
But have we seen that in the wages growth data, or when do we start to see that?
JOSH FRYDENBERG:
Well, what we saw is 2.2 per cent for wages growth. Now, that's above inflation which is tracking at about 1.6 per cent and, indeed, that's higher in terms of what we're seeing in real wages growth than what we saw when we came to government after we inherited the fiscal mess from the Labor Party. So, we want wages to grow even faster, but what we have seen is a labour market that is enormously resilient. I mean, we've got unemployment today, Laura, at 5.2 per cent. When we came to government it was 5.7 per cent. We have a record number of Australians in work, we've created nearly 1.5 million new jobs and it's our AAA credit rating, the fact that we've got a balanced budget for the first time in eleven years, the fact that we have a current account surplus for the first time since 1975 and a record number of Australians in work, which is our economic record that we are proud of and that we'll continue to roll out as the years go by.
LAURA JAYES:
Are you actively considering bringing forward those second round of tax cuts then, if the first round was so successful?
JOSH FRYDENBERG:
Well, our focus is on delivering the measures we spelt out in the Budget and when it comes to tax…
LAURA JAYES:
Is that a "no"?
JOSH FRYDENBERG:
Well, when it comes to tax, they were the tax cuts that we passed through the Parliament, the most significant in twenty years. Now I'm obviously conscious that there is a staged approach to our tax cuts that we legislated, but we are focused on delivering a stronger economy and we're always looking for opportunities to reduce tax.
LAURA JAYES:
So you might revisit that then?
JOSH FRYDENBERG:
No, we're always looking for opportunities to reduce taxes, but what we do, what we are focused on, Laura, is delivering on what we promised in this year's budget which was our economic plan that we took to the Australian people and that includes a surplus, and that includes record infrastructure spending, 80,000 new apprenticeships and these record tax cuts that we've now legislated.
LAURA JAYES:
Okay, it's a "no" for now, Josh Frydenberg, appreciate your time.
JOSH FRYDENBERG:
Good to be with you.