LAURA TINGLE:
Josh Frydenberg, what contribution has the Government actually made to this Budget Outcome?
JOSH FRYDENBERG:
Well, we've put in place the right policies to help create jobs and one of the real stories out of this Final Budget Outcome which is a $13.8 billion improvement on what was initially forecast when the Budget was handed down in May 2018 and is the first balanced budget in eleven years, one of the real stories out of today is the fact that there has been 300,000 new jobs created, 100,000 more than Treasury forecasts. That's led to an improvement in the receipts and lower payments, as more people move from welfare to work.
LAURA TINGLE:
It's certainly true that it's been a Budget that's seen this period of strong jobs growth but it's also been a period of low wages, low inflation and strong commodity prices and they're not really things that the Government has any control over are they?
JOSH FRYDENBERG:
Well when it comes to real wages growth, it's at 0.7% which is higher than the historical average and it's also higher than when we came to Government. But of course we want it to be higher still and a tight Labor market contributes to that, productivity gains contribute to that. When it comes to commodity prices we had a flat assumption of $55 a tonne for iron ore in the Budget, it averaged at $72 a tonne - that's well below the $180 a tonne iron ore that the Labor Party enjoyed when they were last in Government and it has of course, contributed to an improved terms of trade but that is just one factor.
LAURA TINGLE:
But if we go back to the question of what the Government's done, the figures also show that real growth in spending in that year blew out to 3.9% real growth, that's a huge figure.
JOSH FRYDENBERG:
Well if you look at our spending growth Laura, it's actually around half of what we inherited so we have brought it back in control and we have lower spending going forward. So we've had very targeted spending, we've had lower spending, we've had more people in work which means less people on welfare and that's also led to a reduction in payments.
LAURA TINGLE:
You've benefited from an underspend in the NDIS and I'm not suggesting that you were cutting spending but if NDIS spending picks up and commodity prices start to ease off, how resilient is the improvement in the Budget?
JOSH FRYDENBERG:
Well we'll deliver a surplus as promised, it will be the first in twelve years in 2019/20. The Australian economy is resilient because while Germany, the United Kingdom, Singapore, Sweden and other economies experienced negative economic growth in the June quarter, the Australian economy continued to grow. The 50 basis point rate cut has helped stabilise the housing market which is important. The Free Trade Agreements we've entered into have opened up opportunities for Australian businesses to some two billion new customers and the tax cuts that have passed the Parliament have already seen more than $16 billion go out to Australian taxpayers in refunds.
LAURA TINGLE:
The Federal Court has ruled today that the Biloela asylum seeker family should stay in Australia while their case is assessed, something that might have helped you even further get back into the black was not spending $1.4 billion on re-opening Christmas Island, was that money well spent and what's the point of having them stay there?
JOSH FRYDENBERG:
Well, obviously Peter Dutton who's handling this matter has said publicly that they will remain in Christmas Island on the advice of Border Protection. This is obviously a very challenging case like many are in this space. But let's not forget there were 1,500 people of Sri Lankan origin who were deemed not to be refugees who have been sent back by both Labor and Coalition Governments and there's another 5,700 people of Sri Lankan origin who have also had their refugee status rejected, or cases rejected, and are again waiting to go back. So the border protection policies that we have in place are tough, but they've also led to no deaths at sea as we've seen previously. They've led to the closure of detention centres and a much more orderly border protection policy that has restored the public's trust and confidence in border policies.
LAURA TINGLE:
Just finally, there's been a lot of discussion about the relative roles of the Reserve Bank and the Government, you've flagged a possible rearrangement of the agreement with the Reserve Bank. Where are those discussions up to?
JOSH FRYDENBERG:
They're ongoing between Treasury and the Reserve Bank. We're committed to a 2 to 3 per cent inflation target but what we've seen Laura, over the last twenty quarters is that for seventeen of those, the inflation number has been below that target range. So today it's 1.6 per cent, well below the 2 to 3 per cent range. Now, this is not unusual for the world. We're seeing low inflation, low interest rates and relatively low unemployment around the world. The things that we're just working through is how do we ensure that that target is met because inflationary expectations are important to things like wages and wages growth.
LAURA TINGLE:
Treasurer, thanks for your time tonight.
JOSH FRYDENBERG:
Good to be with you.