LAURA JAYES:
Treasurer, thank you for your time. We heard from the RBA Governor last night. He essentially said, in terms of rate cuts, he's got two shots left in the locker. He wouldn't go below 0.25 per cent. How does that sit with you?
JOSH FRYDENBERG:
Well, look, obviously decisions about monetary policy are those for the Governor, but what we do know is that the Australian economy, Laura, continues to grow. We're in our record 29th year of consecutive economic growth and the lower interest rates and, no doubt, have helped the housing market where prices have stabilised, clearance rates are up. That's important, because people's confidence in the value of their home then plays into their household consumption, but we've also seen Australia maintain its AAA credit rating, and we've seen a real resilience in our labour market with more than 1.4 million new jobs being created. So we'll do our side of the job, namely, on fiscal policy, and we've seen infrastructure projects being brought forward, and the RBA Governor will handle monetary policies.
LAURA JAYES:
Well, if the RBA does go down the path of quantitative easing. What does that say about our economy?
JOSH FRYDENBERG:
Well, I think the Governor is saying that QE is not likely, is the way that it's being interpreted, but what he is saying is that he's going to continue to watch the interest rates, and obviously we're now seeing a cash rate at a record low of 0.75 per cent. But what we do know, Laura, is that more than fifty central banks from around the world have cut their interest rates, and so, obviously, the Governor is very closely watching what other countries do because we're not immune to that global movement downwards in interest rates.
LAURA JAYES:
Can you see any economic circumstance where you might think about bringing forward that second round of tax cuts earlier than 2022?
JOSH FRYDENBERG:
Well, what I've said on this before is that the Coalition is always the party of lower taxes. And we took to the election a big agenda to cut taxes, and we've delivered on that, we've legislated through the parliament. That was in contrast to our political opponents who took $387 billion of higher taxes to the election and are still holding on to those policies. So they may have been Bill Shorten's at the election, they're now Anthony Albanese's. But when it comes to our tax agenda, what we're focused on is delivering the tax cuts that we've already legislated, which will see the abolition of the 37 cents in the dollar tax bracket, and we'll see people earning between $45,000 and $200,000 pay marginal rate of tax of no more than 30 cents in the dollar.
LAURA JAYES:
But Treasurer, as you say, you're in charge of the fiscal levers, surely you're keeping this option open to yourself to pull on a little earlier?
JOSH FRYDENBERG:
Well, we'll always be the party of lower taxes, but when it comes to our tax agenda our focus is on delivering what we've now legislated through the parliament.
LAURA JAYES:
So and what circumstances might that lever be pulled on earlier though?
JOSH FRYDENBERG:
Again, as you know, the timetable for the further roll out of that tax plan was legislated in the Parliament…
LAURA JAYES:
Sure, but is that a flexible timetable?
JOSH FRYDENBERG:
We'll continue to always look for opportunities to lower taxes. And, as you know, not only for income earners, we've also cut taxes for small businesses with turnovers of up to $50 million, and we've also extended the instant asset write-off again, to businesses with a turnover of up to $50 million, and we've extended that to $30,000. And that tax relief and those tax incentives have been used by hundreds of thousands of businesses across the country.
LAURA JAYES:
And now you're putting forward a Business Growth Fund, which was a promise at the election. The big four banks tipping in $100 million each. A small fry for the big four, you've got to say. But how many businesses would have access to it? And why is it just a half a billion-dollar fund? Is it all that's needed?
JOSH FRYDENBERG:
Well, $520 million is what we've put together initially. And we hope to grow it to $1 billion. And the model is based on a growth fund that operates in both the United Kingdom, which is £2.5 billion, and one that is based in Canada, which is of a similar size to Australia. And the whole idea is that if you've got a business that you may want to grow, expand, to innovate, to buy new equipment, but you don't want to increase your debt profile, well, therefore, this fund offers the opportunity to get a capital injection from equity to get an opportunity to partner with the growth fund who will take a minority stake in your business and then you can actually continue to grow without increasing your debt. And that's an attractive option to many businesses. I visited an engineering business, for example, that was family-run that was participating in the defence industry supply chain and now for them to continue to grow, they don't want to take on more debt. This Business Growth Fund would be an attractive option. So between $5 and $15 million will be the injection made by the Growth Fund. And obviously, there will be additional support provided by it.
LAURA JAYES:
And when do you hope to pass it through the Parliament? By the end of this sitting fortnight?
JOSH FRYDENBERG:
Well, we are introducing the legislation to the Parliament next week, and hopefully it receives bipartisan support. And we'd like to see it up and running by 1st July next year. But this is an important opportunity to back small business. It builds, Laura, on our other initiatives to back small business, like cutting taxes, the instant asset write-off, ensuring businesses get paid on time. We've established a $2 billion Securitisation Fund to build liquidity in the lending market for small and medium-sized businesses. And we're cutting red tape for small businesses as well. So there's a lot of work that's been undertaken to ensure that the more than three million small businesses across Australia, that employ more than seven million people, get the support of government to grow, to innovate and to hire more people.
LAURA JAYES:
Why didn't you call for Brian Hartzer to go? Why did it take leaks, really, from senior executives for him to finally fall on his sword?
JOSH FRYDENBERG:
Well, I made very clear on Sunday that these issues tend to have a momentum of their own. And where boards start is not necessarily where boards finish. And, as you can see, in the subsequent days, with the announcement of the immediate departure of the CEO and the brought-forward departure of the Chairman, that's exactly what had happened. And we've made very clear all along that these alleged breaches by Westpac of our anti-money laundering laws are very serious matters indeed. 23 million alleged breaches and involving allegations of this nature had to be taken…
LAURA JAYES:
Well, should the board go? That being said, should the board be cleaned out?
JOSH FRYDENBERG:
Well, obviously, there must be accountability. The fact that there has been now this movement by both senior executives and, at board level, and as to what further actions will be taken at board level, I do note that they've got an AGM coming up on 12th of December, and the shareholders seem to be very vocal in their desire to have needed change.
LAURA JAYES:
And it's right that Westpac's being locked out of the Government First Home Loan Deposit Scheme? Reputational damage, would you be concerned about that?
JOSH FRYDENBERG:
Well, look, that's a matter for NHFIC. Under that program, we'll be supporting 10,000 first-home buyers every year. We'll see NHFIC choose two of the big four banks, and then also some of the smaller lenders and those are matters for NHFIC, not for the Government.
LAURA JAYES:
Josh Frydenberg, appreciate your time.
JOSH FRYDENBERG:
Always good to be with you.