LEIGH SALES:
Treasurer, thanks for your time.
JOSH FRYDENBERG:
Nice to be with you.
LEIGH SALES:
Has the Treasury Department given you an estimate of how much this summer's bushfires will wipe off gross domestic product?
JOSH FRYDENBERG:
They believe it is about 0.2 per cent of GDP which is not an insignificant amount, about the same as the drought is going to impact the bottom line. But as you know, the bushfires are still burning, full damage assessments are not yet completed and we've announced a $2 billion national bushfire recovery fund to ensure that people get the assistance they need.
LEIGH SALES:
So you've also got the effect of the Coronavirus on top of those things. Is it time to say to the Australian people there's no budget surplus this year?
JOSH FRYDENBERG:
Well, our message has been consistent to the Australian people. Our primary focus is on them and delivering them the support that they need and taking the necessary actions to keep the economy strong.
LEIGH SALES:
That's not exactly answering my question.
JOSH FRYDENBERG:
Well, I think it is because what our focus is on is not necessarily delivering the surplus, but delivering the support that people need. These events are outside of our control - the virus, the floods, the fires, the trade tensions between the United States and China. What we do know though, Leigh, is that the Australian economy is remarkably resilient. We saw in the most recent jobs data, unemployment fell to 5.1 per cent. It was 5.7 per cent when we came to Government which means that the economy continues to grow, continues to be strong and that is something that the Reserve Bank Governor underlined in a speech to the Press Club earlier this week.
LEIGH SALES:
The economy is not strong at all when you look say for example, at the key indicators in MYEFO, a lot of the big major ones were pretty flat?
JOSH FRYDENBERG:
Well, we've had this discussion before.
LEIGH SALES:
We have.
JOSH FRYDENBERG:
There were some improvements in terms of mining investment. We've seen public final demand which is Government, State and Federal spending go up as a result of the rollout of major programs like the NDIS but also infrastructure spending. But when you look at Australia's growth numbers, the International Monetary Fund is forecasting for Australia to grow faster this year than the United States, Japan, Canada, the United Kingdom, Germany and France.
LEIGH SALES:
But that won't be the case with Coronavirus, with the effect of the summer bushfires and so on, will it?
JOSH FRYDENBERG:
Well, the fires and the drought are definitely hitting the budget bottom line. As to the definite impact and the numbers around the Coronavirus, it is too early to tell. What we have put in place is travel restrictions, that's going to hurt the tourism industry. It's going to hurt the students, foreign students coming to Australia. We have over 200,000 Chinese students coming to Australia, the single source of foreign students to this country. We have 1.4 million Chinese tourists coming to this country, the single greatest source of tourists to this country. And of course, China is our number one trading partner, the beneficiaries or the recipients of about a third of our trade. So it will impact the Australian economy but we've taken precautionary measures to protect all Australians.
LEIGH SALES:
The Governor of the Reserve Bank, Philip Lowe, said this week that from an economic perspective, whether or not the Government has a small budget surplus is not really that important. Do you agree?
JOSH FRYDENBERG:
Well, what we've been consistent about is living within our means. And it is not...
LEIGH SALES:
I asked you if you agree with what the Governor of the Reserve Bank said?
JOSH FRYDENBERG:
Well, I agree that we need to live within our means. Like I said, delivering a budget surplus is not our primary focus. Delivering the support to the people who need it most, and that's the people who have suffered through the bushfires, is our focus.
LEIGH SALES:
So then, am I to read into that that you agree that whether or not you have a small budget surplus is not that important economically?
JOSH FRYDENBERG:
Well, it's not as important as delivering the services and the support to people who need it most. What is important economically is to have discipline around economic management. When we came to Government around six years ago, we inherited a budget deficit which was around three per cent of GDP, $48.5 billion. We've now delivered the first balanced budget in 11 years and the biggest tax cut in more than 20 years which means that we have now got the financial flexibility to spend on those areas that need it most like the bushfire recovery fund without increasing taxes.
LEIGH SALES:
Why do you say that you have delivered a balanced budget when you have not yet delivered a balanced budget, when the budget is still in deficit?
JOSH FRYDENBERG:
Because that's the economic term when the budget is either in surplus or deficit by less than a billion.
LEIGH SALES:
Well, it is not. You're promising a surplus of $5 billion next year. That's still a forecast so therefore it is technically incorrect to say that you have delivered a balanced budget and tick off on that?
JOSH FRYDENBERG:
Well, no. That is the economic term and when it comes to the Mid-Year Economic and Fiscal Outlook, which was announced just prior to Christmas, we had a projected surplus of $5 billion. Since that time, the fires have devastated many communities. We've announced the bushfire recovery fund and we've also seen the Coronavirus impact not just the Australian economy but the global economy. And the importance of the impact of the Coronavirus is that, as an economy, we're very connected with China and China is four times bigger today than it was back in 2003 with the SARS virus. So the impact of the Coronavirus is likely to be much more significant globally.
LEIGH SALES:
Would you support the Federal Government investing in a coal mine in Collinsville in Queensland?
JOSH FRYDENBERG:
Well, I'm technology neutral when it comes to reducing emissions and delivering more affordable reliable power. We haven't made any decisions around that particular coal-fired power station that you mentioned. What we did do is undertake a study which looked into providing energy to major industrial customers who are big job creators.
LEIGH SALES:
Well, at a time when mining businesses like Rio Tinto and South 32 are getting out of coal, fund managers like Black Rock are divesting from it, other conservative governments around the world like Britons are moving away from it, why would the Australian Government even bother with a study?
JOSH FRYDENBERG:
Well, we've actually seen 10 coal-fired power stations close in as many years across Australia.
LEIGH SALES:
So why would you invest in one then?
JOSH FRYDENBERG:
Well, we haven't made any decisions in that regard. What we've said is we would undertake a review which we have and the Government is considering that. But what we do know is that industrial customers are responsible for about two-thirds of the overall energy use and households are about one third and we do have some industries, like aluminium, like steel and other industries which are heavily dependent on energy and we need affordable, reliable energy and that's what we'll do. But in terms of the energy system itself, there's been a wonderful transition to a lower carbon future and particularly the uptake of renewables. And what is missing in the market right now is enough back-up and storage so that when the wind is not blowing and the sun is not shining, there is back-up power.
LEIGH SALES:
One last question I've asked other ministers on the program this question this week and so now I'm asking you. As an individual, as Josh Frydenberg, the elected member for Kooyong, do you think it is the right thing to allocate Government grants based on a colour coded spreadsheet showing which seats various organisations land in?
JOSH FRYDENBERG:
Well, I accept that things need to change and that the Auditor-General's report was a serious report which made a series of recommendations...
LEIGH SALES:
Is that how you'd do it in your office?
JOSH FRYDENBERG:
Well, I don't make grants and I wasn't the decision-maker in this case.
LEIGH SALES:
I just want to get a sense of the ethics of it. Do you think, you, Josh Frydenberg, was it the right thing to do? Is it the right way to behave as a politician?
JOSH FRYDENBERG:
Well, what is important out of that report is it said that the finance department's rules and guidelines need to apply. They didn't apply because you had a corporate Commonwealth entity, namely Sports Australia, and you had the decision-maker being the minister.
LEIGH SALES:
I'm not asking about the report because if we have to rely on our elected officials always going by what reports say and so forth, that's not the ideal situation. We want to know that you, as an individual person, has a sense of what's right or wrong and I'm asking you, as an individual, do you think that's right or wrong?
JOSH FRYDENBERG:
And I think what is right is that we fund eligible projects, community-based projects and those projects that received that money were good projects.
LEIGH SALES:
Josh Frydenberg, thanks for your time this evening.
JOSH FRYDENBERG:
Thank you.