LEIGH SALES:
Treasurer, for years now we've seen Governments of both stripes lecture banks about passing on interest rate cuts in full. Let's level with the viewers; it's hot air isn't it? There's nothing you can actually do about it.
JOSH FRYDENBERG:
Well, we continue to put pressure on the banks and ultimately it's the customers who can vote with their feet. And I would encourage your viewers to go to their banks, seek the best possible deal and if not, take their business elsewhere. Because as you say, Leigh, it's been a pattern of behaviour by the banks. When the previous Government was in, there were fourteen rate cuts, only five of those were passed on in full. But of the last three rate cuts we've seen since June, that's a 75 basis point rate cut, 57 basis points has been passed on to customers. That's still going to leave somebody with a $400,000 mortgage more than $1,500 a year better off in lower interest payments. I also note that five of the smaller lenders, Leigh, have passed on the rate cuts in full. So, the big banks may have thumbed their nose at the customers but some of the smaller lenders have actually done the right thing.
LEIGH SALES:
Australia's close to the end of the road for interest rate cuts. Will you take the pressure off the Reserve Bank and bring forward stage two of your tax cuts or some of your infrastructure spending to stimulate the economy?
JOSH FRYDENBERG:
Well, the Prime Minister has written to state premiers about the possibility of bringing some of the infrastructure projects forward. I have to laugh at the Labor Party's suggestion to bring forward tax cuts that they actually opposed.
LEIGH SALES:
But will you though?
JOSH FRYDENBERG:
Well, the truth is we took to the Australian people tax cuts which we've now legislated into law and that's where it will stay. But more than $18 billion has made its way out of the ATO into the pockets of hard working Australians. And this is money that is being spent in our local communities and it was not reflected in the June National Accounts because the legislation passed after that date. So, let's wait to see as to the next set of economic numbers. But the Australian economy continues to grow. We maintain our AAA credit rating and of course we have seen a strong labour market with strong employment growth; all of which the RBA has positively commented on.
LEIGH SALES:
But the RBA also commented on its concerns about global headwinds, flat wages, weak inflation, unemployment, low productivity, the fact that economic growth hasn't been as strong as what the projections are. That indicates that the RBA is quite concerned about the prospects for the Australian economy.
JOSH FRYDENBERG:
Well, we all want growth to be higher than it is and obviously productivity is a key way to drive that growth and we have a number of reforms underway to do exactly that. But the RBA has underlined the significant downside risks to the Australian economy from what is happening globally. The trade tensions between the US and China don't just affect the protagonists, they actually affect bystanders like Australia. That is why we've encouraged both China and the US to come to the table, to negotiate their solutions and to commit to an open, rules-based trading system.
LEIGH SALES:
But given that context that you give there plus the fact that today, global markets including the Australian share market, have been pretty tumultuous and spooked by the prospect of a global economic downturn. Is it the right time for you to be so insistent on delivering a surplus?
JOSH FRYDENBERG:
When it comes to returning the budget back into surplus, this of course is good news because it means that we're getting our spending under control, but also that we're getting more people into work which means that they are moving off welfare. And that has been the real success behind our balanced budget, the first in eleven years. And we took to the Australian people a commitment, Leigh, that we would deliver a surplus. We were very conscious of the economic challenges we faced globally, as well as domestically with the drought and the floods, when we put down our Budget.
LEIGH SALES:
But you also make a commitment to the Australian people that you will manage the economy soundly and, obviously, be flexible depending on circumstances. The RBA is telling Australians, 'hey, we're trying to stimulate the economy by cutting interest rates and getting more money into the economy,' a surplus by its nature keeps money out of the economy. Aren't you undercutting the RBA's efforts?
JOSH FRYDENBERG:
Well, actually, if you look at the words of the Reserve Bank when the Governor made his testimony to the Parliament just recently, he did say it was very important to deliver that financial discipline, the fiscal discipline that we are delivering. He did point to the benefits that are coming from the tax cuts and the ten-year, $100 billion infrastructure pipeline, and he did not call for a stimulus package. We're very conscious of the headwinds that we face domestically and internationally, but while Germany and Sweden, Singapore, the United Kingdom and others have experienced negative economic growth, the Australian economy continues to grow.
LEIGH SALES:
You're in Warwick in Queensland touring drought-affected areas. Would you forego your budget surplus if it meant being able to give more money to drought-affected farmers?
JOSH FRYDENBERG:
We have more than $7 billion committed to both immediate needs through income support, support for local governments, support for not-for-profit organisations who are distributing vouchers to our farmers, as well as the long term investments in water infrastructure to build the drought resilience of these communities. But Leigh, having met with a number of community leaders and local shop owners and others across Inverell, and now in Warwick, I have to say I've been struck by just how much these people are hurting.
LEIGH SALES:
Have you been struck enough by it that, for example, you would look at bringing forward spending on say, dam creation, as Barnaby Joyce was encouraging today?
JOSH FRYDENBERG:
Well, we have more than $3 billion available for various water infrastructure projects, and that's not just dams, but it's also weirs and irrigation, and as Barnaby Joyce knows, and the town of Tamworth has been supported by the Coalition when we completed the extension of the Chaffey Dam and there are other dam projects that we have underway. But we need to work with the state governments, some of whom have been dragging their feet when it comes to dam infrastructure and David Littleproud is engaged in those conversations to ensure that they can be built to provide the long term resilience for these communities when they, you know, hit the next weather related challenge.
LEIGH SALES:
You mentioned income support before. Only a little over a third of eligible farmers are accessing the Farm Household Allowance. It's administered by Centrelink at the moment, there's a recommendation that you set up an independent body to distribute that to make it easier for farmers to access. Will you do that?
JOSH FRYDENBERG:
Well, the Farm Household Allowance is very important because it can provide up to $37,000 for these communities and we've increased it, for example, by around $12,000 in terms of the amount of support, and we've also worked to reduce that red tape burden which has, you know, been a challenge for various families, and so we've reduced the number of pages you have to fill in from fifteen down to ten, within a family you don't have to do separate forms for a husband and wife, you can do one form. There are a number of other things that we're doing.
LEIGH SALES:
Josh Frydenberg, thank you very much.
JOSH FRYDENBERG:
Good to be with you, Leigh.