LAURA JAYES:
Treasurer, thanks so much for your time this morning. There’s some pretty worrying signs out of the IMF this morning. How worried are you about their projection for wages?
JOSH FRYDENBERG:
Well, Australia has had gradual wages growth, 2.3 per cent in the most recent wages price index numbers that is in contrast to 1.8 per cent inflation, and the Reserve Bank of Australia has said we’ve started to see an upswing in wages. What we’re really seeing across the Australian economy is strong jobs growth, with 1.2 million new jobs being created in the latest job numbers; showing more than 60,000 full time jobs have been created. nine out of every 10 jobs in the last recent period have been full time, and we’ve also seen a record number of women come into the work force. So wages are picking up, we’re seeing a tightening in the labour market, particularly in some sectors like healthcare…
KIERAN GILBERT:
So you’re more optimistic than the IMF on the wages front though? Because as Laura says, the IMF have suggested that the wages outlook is anaemic, but you sound a lot more optimistic than them?
JOSH FRYDENBERG:
Well, the first thing I’d say about the IMF though, Kieran and Laura, is that they said Australia had robust and resilient economic growth. It was above trend. So the IMF gave Australia a big tick in terms of its economic performance and it praised our infrastructure spending and, of course, our overall fiscal management. Now, when it comes to wages growth the government has said, very clearly and publicly, we’d like to see stronger wage growth but what we’re experiencing in Australia is not too dissimilar, for example what they’re experiencing in the United Kingdom, with strong jobs growth, but wages growth being gradual. Now, the Reserve Bank of Australia is a good indicator as to where this is going to go. They say that the move is upwards over time with respect to wages.
LAURA JAYES:
Treasurer, how frustrated are you? You were the architect of the NEG, it seemed that this was the one hope of bringing all sides together; industry liked it, it had some level of bipartisanship, and now you’re back at direct action.
JOSH FRYDENBERG:
Well we’re at direct action, we’ve always been at direct action, but we’re also, a lot more than that was in the Prime Ministers announcement. I think this was very significant, Laura, a $3.5 billion commitment to reducing emissions, with a series of measures. Obviously land-based agriculture or other means to reduce emissions on the land, also what we’re seeing through energy efficiency initiatives, particularly in terms of housing and commercial buildings and the work that we’re doing there, as well as the interconnector and the structural changes that we need to build more storage and to capitalise on the incredible hydro facilities in Tasmania. As the Prime Minister pointed out, there’s 400 megawatts of renewable energy waiting to be used in Tasmania that we just don’t have an interconnector, a second interconnector, to bring that over to the mainland, and it would’ve been of great use to Victoria in their recent energy crisis. So we’ve got a system in place, with respect to the energy markets that can be there for the future that can ensure that we get more renewables into the system without compromising stability. But it requires these investments and today’s announcement about Snowy 2.0 is another significant investment by the Commonwealth in the energy transition.
KIERAN GILBERT:
Onto the Property Council report out today, it’s basically surveying investors, potential investors, in the context of Labor’s negative gearing and capital gains tax proposed changes. Now, from my reading of it, there is still quite a significant percentage of investors who will go ahead with investing in the property market, far from the government’s dire warning that all investors would flee.
JOSH FRYDENBERG:
You’re obviously reading the wrong document there, Kieran, because the Property Council, through this survery…
KIERAN GILBERT:
Well the numbers reduced, but there’s still upwards of 20 percent, who would invest.
JOSH FRYDENBERG:
Let me take you through the numbers. Firstly, it was 1,000 people who were surveyed. 500 of whom were existing investors and 500 of were potential investors. Around 6 out of 10 investors said that they wouldn’t be investing into the market, 25 per cent of investors said they won’t go ahead with purchasing new properties, who otherwise would’ve in the next five years. That’s significant because it means less construction and less jobs, and 50 per cent of those surveyed said they’d actually increase rents. Now as you know, a 1 per cent increase on rents in New South Wales is a $250 hit to those renters, and there are more than 2 million people aged 20-34 in Australia who rent, who will be hit with higher rents under Labor’s policy. And the people who negative gear currently, Kieran, and there’s 1.3 million of them, they’re not necessarily rich. Two thirds of those people have a taxable income under $80,000…
KIERAN GILBERT:
You said all investors would flee. It’s not the case, is it? Like, there is still a quarter of investors, at least, 24 per cent of those surveyed who said that they would invest.
JOSH FRYDENBERG:
Well this report sends a chilling message as to what would be the impact. Because ultimately you take investors out of the market, in these sorts of numbers that this report and this survey indicates, and you’ll see the value of everyone’s home go down, and you’ll see rents go up. That’s the impact of Labor’s policy, and that’s why Wayne Swan, when he was the Treasurer of Australia, a Labor Treasurer, said in his own words it would be ‘economically disastrous’ to change negative gearing. Now the Labor Party, with a $32 billion tax grab, desperate for cash, is going to see Australians have the highest capital gains tax rate from any comparable country in the world. Higher than the UK, higher than Canada, higher than the United States. That’s what they’re going to slug Australians with, it’s going to hurt aspirations, it’s going to hurt investment, and ultimately it’s going to take money out of people’s pockets, and putting it in the hands of government.
LAURA JAYES:
Treasurer, thanks so much for your time this morning.