LEIGH SALES:
Thanks for coming in Treasurer.
JOSH FRYDENBERG:
Nice to be with you, Leigh.
LEIGH SALES:
You’ve got a big problem here which is that you need businesses and individuals to spend money to keep the economy chugging along and the figures show they’re just not. Why not?
JOSH FRYDENBERG:
Well, what these numbers show is that actually the household disposable income, that is money in the pocket of Australians had its biggest jump, 2.5 per cent, in a decade. These numbers show the remarkable resilience, Leigh, of the Australian economy despite the economic headwinds we face with an absolutely devastating drought at home but also the trade tensions abroad and at a time when other major economies like the United Kingdom, like Germany, like Singapore and South Korea have all experienced negative economic growth this year, the Australian economy continues to grow at 1.7 per cent as an increase on the previous quarter and 0.4 per cent, was in line with market expectations.
LEIGH SALES:
You pointed out at the start of your answer that disposable income is up, but that goes back to my point which is, people aren’t spending it because they’re worried, they’re uncertain, they’re using it to put into their savings.
JOSH FRYDENBERG:
Well, they’re doing what the Government is doing, and that’s paying down their debt. In fact 70 per cent of people with mortgages are more than a month ahead of their prepayments…
LEIGH SALES:
But that doesn’t stimulate the economy.
JOSH FRYDENBERG:
But it’s not my job to tell Australians how to spend their money, my job is to give them more money to spend or to save and that’s their choice.
LEIGH SALES:
Your job is also to manage the levers of fiscal policy and we’re at a point in the economic cycle where you need people to be spending money to stimulate the economy.
JOSH FRYDENBERG:
Well, what we have seen is remarkably strong growth in our labour market, more than 1.4 million new jobs being created, participation rates at around record highs, more women, more young people, more seniors in the workforce and that is good news. That’s where our focus has been and that’s where we’ve had a lot of success as well as getting the Budget back into balance for the first time in eleven years and we’ll deliver the first surplus in twelve years and that means paying down the debt we inherited from the Labor Party.
LEIGH SALES:
The Government gave Australians a tax refund in the hope that they would spend it. As I mentioned, they didn’t, they didn’t spend it. Isn’t that a persuasive case that they aren’t working, those tax cuts, to stimulate the economy, and that the budget is forgoing that tax revenue for no real return?
JOSH FRYDENBERG:
Well, as the Secretary of my department, the Secretary of the Treasury, told Senate Estimates, if people are paying down their debt, ultimately what that means is that, in time, they’ll reduce their interest payments, which means they’ll have more to spend in their discretionary income. So it becomes a timing issue. But more money in the pockets of Australians means ultimately more consumption in due course.
LEIGH SALES:
But, most people have, if you’re paying down debt, it’s usually a pretty long run thing. So you’re talking about people maybe might have more money to spend in ten, twenty, thirty years.
JOSH FRYDENBERG:
Well, I’m not talking about that long at all. I’m just saying right now there’s obviously some significant headwinds facing the economy. People are looking at the global environment and there’s no doubt there’s some uncertainty there. They’re looking at the devastating and damaging drought which, in these numbers, show that farm GDP is down 5.9 per cent through the year and of course the Government has been there to spend additional money to support those communities. But all that is playing into the consumers choices.
LEIGH SALES:
Well, let me come up to the tax question, the tax refunds question from the other way. People didn’t spend this lot. Is that a persuasive case for you to bring forward your next round of tax cuts from 2022 in the hopes that the people might feel they can spend that?
JOSH FRYDENBERG:
Well, obviously, we’re always the Party of lower taxes and we’re always looking for opportunities to reduce taxes. But what we have focused on is legislating through the Parliament, we’ve done that successfully. Again, against Labor opposition….
LEIGH SALES:
But how about bringing forward your next round?
JOSH FRYDENBERG:
But what we’ve done is we’ve legislated those tax cuts. They’re working through the economy, they’re staged over a few years, and these, you know, refundable tax offsets which have made their way into the economy, billions into the pockets of Australians, will be spent, is being spent, but also is helping to pay down their debts.
LEIGH SALES:
Businesses aren’t investing either, we’ve been talking about individuals, but businesses aren’t investing either even though interest rates are at record lows. Earlier this week the former Treasury Secretary Martin Parkinson said that was partly due to policy uncertainty during the past decade over energy and climate policy. Is the economy paying the price because the Morrison Government lacks a coherent policy in that space?
JOSH FRYDENBERG:
Well first, non-mining business investment is up by more than 30 per cent since the Coalition came to government. We actually have a very good story to tell there. When it comes to energy policy our focus has been on driving down prices and we’ve had success with that. But also about stabilising the grid and that means having a reliability guarantee which we’ve agreed on with the States, that means underwriting new projects particularly gas projects which are an important transition fuel as you move to more intermittent sources of power, namely wind and solar. Of course Snowy 2.0 is a ground breaking nation building project which will power more than 500,000 homes and be a big battery for the eastern coast of Australia so we have a climate policy we have an energy policy…
LEIGH SALES:
But even the former Liberal Prime Minister Malcolm Turnbull said last week that the Coalition doesn’t have a coherent climate and energy policy and that’s forcing businesses to hold back billions of dollars worth of investment because of uncertainty.
JOSH FRYDENBERG:
Well I would put to you that our policy is about stabilising the grid as there is an inevitable transition to lower emission sources of power. We’ve seen record amounts of renewable investment in Australia. In fact, compared to other countries around the world, we’re near the top of the list.
LEIGH SALES:
Can I ask, on that point about an inevitable transition. Just a first principles question. Is the Coalition economic policy underpinned by this or not? That over time, it needs to transition to a carbon neutral economy?
JOSH FRYDENBERG:
We are absolutely supportive of reducing emissions over time…
LEIGH SALES:
But to a carbon neutral economy?
JOSH FRYDENBERG:
… absolutely believe in seeing a reduction in the carbon footprint right across the economy. Now, the energy sector is about one third of the overall emissions and we’ve seen a dramatic decrease in emissions over time and you’ve actually seen a number of coal fired power stations close. In its place, you’ve seen more renewables come in. But the problem is unless you’ve got backup and storage, and this is going to be Victoria’s real problem this summer, unless you’ve got that backup and storage when the wind doesn’t blow and the sun doesn’t shine, you don’t have power to support industry and to support households. So, that’s really where our focus is at.
LEIGH SALES:
If I can ask you about a couple of other issues before we’re out of time as one of the Government’s senior figures. Senator Lambie voted with the Coalition to repeal the Medivac bill as we heard before. What did you have to offer to secure her vote?
JOSH FRYDENBERG:
What we had to offer is a good policy and that is to get rid of a bad piece of legislation…
LEIGH SALES:
She was undecided so what has been offered as a sweetener?
JOSH FRYDENBERG:
The Prime Minister was asked that very question today at a press conference today and he was very emphatic that what we have committed to is our existing policies.
LEIGH SALES:
There’s been a substantial distraction from the Government’s agenda in recent weeks, thanks to Angus Taylor. His explanation of how he came to circulate a document with false data in it has been challenged by metadata provided by the Sydney City Council. Do you as a senior figure in the Government accept there are some unanswered questions here?
JOSH FRYDENBERG:
Firstly, Angus Taylor is doing an excellent job as our Energy Minister and he has categorically rejected…
LEIGH SALES:
That’s not what we’re talking about, Treasurer…
JOSH FRYDENBERG:
He’s categorically rejected those allegations that the Labor Party has made and he’s made a statement to the Parliament to that effect…
LEIGH SALES:
You’re comfortable with that? You don’t think there are unanswered questions there?
JOSH FRYDENBERG:
He’s put his case and as you know, there are now police enquiries so I don’t want to speculate on that because of that current enquiry. But what I will say to you is that the Labor Party is making a habit of referring Ministers to the police with nil outcomes. At some point, they have to be accountable for that zero and eight track record of theirs.
LEIGH SALES:
Regardless of how the situation came about and let’s say the Minister is entire blameless, it is indisputable that the Minister’s office did circulate a document with doctored numbers for political gain. Given that Angus Taylor still has his job, isn’t the only conclusion the public can make is that this is the standard of integrity that the Morrison Government considers to be acceptable?
JOSH FRYDENBERG:
Absolutely, we uphold the standards and the Prime Minister’s standards and we uphold those. Angus Taylor has given a statement to the Parliament that’s very clear and emphatic, and as you know, these issues are now subject to a police enquiry. So let that play out but if I was you I wouldn’t rush to judgement.
LEIGH SALES:
Treasurer, thanks for your time this evening.
JOSH FRYDENBERG:
Good to be with you.