8 August 2019

Interview with Luke Grant, Nights, 2GB

Note

Subjects: US China relationship, economic outlook, tax cuts, tennis.

LUKE GRANT:

Good morning Treasurer.

JOSH FRYDENBERG:

Good morning, nice to be with you.

LUKE GRANT:

Lovely to talk to you, Josh. You're in Perth tonight and you're there for a special event tomorrow. Can you tell us what that is?

JOSH FRYDENBERG:

Look, it's the Australian American Leadership dialogue which is an annual gathering of business, political and academic leaders from both countries and we celebrate the strong relationship that the United States and Australia have, but also we work together on areas where we have mutual interests.  

LUKE GRANT:

Right. Fair chance there will be a discussion of the current trade impact between China and America. That would have to come up at some point, surely?

JOSH FRYDENBERG:

Absolutely. There's a very strong delegation at this year's meeting in Perth from the United States Congress, Senators and Congressman, as well as many other senior officials who have had positions in both Democrat and Republican administrations. Certainly, the trade tensions between the US and China are of great concern to Australia and the world. We're seeing it have a negative impact on the global economic outlook. It's weighing heavily on investor decisions and it's also contributed to the slow-down in the growth in the volume of trade.

LUKE GRANT:

Yeah. I know the other day you reported at least, as suggesting, that there has got to be some calm around the conversation. But for people that have investments that might be linked to the market and might be close to retirement and are worried about where things are going. Can you give them some hope that we've got good heads, level heads, both in China and the US that will sort this out?

JOSH FRYDENBERG:

Well, from Australia's perspective, we would obviously want the parties to come together and amicably resolve, what are, their disputes. But at the same time, we understand that there are some legitimate issues at play in relation to trade and these are two major countries that have a lot at stake. From Australia's perspective, we will always encourage a rules based international trading system; one in five Australian jobs, Luke, are related to trade. And we've been a great beneficiary from the growth in the Chinese economy. In the last year, we had two-way trade with China of over $200 billion and, indeed, a third of our exports are going to China. So, it's very important, whether it's their students coming to Australia, their tourists coming to Australia, or whether the exports whether it's agriculture, resources or other services into China, we are a beneficiary. At the same time, the United States is our number one investment partner and we have a historic and important alliance with the United States and that is based on shared values. So, we're sort of caught in the middle of what is going on there.  

LUKE GRANT:

Yeah, it's like we've got two rich uncles and we really do need them both and it's like walking the tight rope. I know Andrew Hastie had a bit to say about where the globe is in dealing with or understanding the rise of China. I guess it doesn't help, does it, and I won't ask you to be critical of a colleague, but it's such a precious relationship, both of them. For us, almost in the middle as you put it, it's a bit difficult to negotiate your way through that, isn't it?

JOSH FRYDENBERG:

Well, as a colleague, Andrew Hastie is entitled to his opinions as a Member of Parliament and at the same time, the Prime Minister, myself, the Foreign Minister, we're also re-enforcing the importance of the relationship we have with China at so many levels. Now, we won't always agree, but you would expect that two mature countries, and in a mature relationship, you can make your voice heard at the same time as trying to maintain a strong and fruitful relationship. But, from Australia's perspective, we'll continue to advocate for a rules based trading system and hope that the recent escalation in the trade tensions between the US and China can be resolved. 

LUKE GRANT:

Yeah. In relation to our economy, I think the idea that we will be back in surplus hopefully soon gives Australians some comfort, because at some point we've got to start paying down that debt that you've reminded us for so long is out there and a real issue. Every day, as you would imagine, we get to hear from people like yourself and of course we hear from the Opposition, who say that the economy might not be a basket case but it's anything but travelling well. What do you say to Australians about the current state of financial matters?

JOSH FRYDENBERG:

Well, I'd say that the fundamentals of the Australian economy are strong. They're actually the words that have also been used by the Governor of the Reserve Bank who doesn't have a partisan truck to push. He will tell it as it is as I do as well.

We inherited an economy where unemployment was 5.7 per cent. Today, it's 5.2 per cent, Luke, and we've been able to create more than 1.4 million new jobs and the workforce participation rate is at a record high at around 66 per cent. We've also got a pipeline of $100 billion of infrastructure spending which is important nation building projects, including a second airport for Sydney or the building the airport rail link in Melbourne. And we've also just passed through the Parliament the key plank of our budget which was tax cuts for over ten million Australians and the Australian Tax Office has told me that already $8.5 billion has been paid out in refunds to Australians and that's money that will be spent by local tradies or at local shops and will contribute to increased economic activity. But we will bring the budget back into surplus and that will be the first time that has happened in twelve years and it's important that Australia has targeted spending when it comes to economic management, that we reduce taxes not increase them. And so I would say to the Australian people, the fundamentals are strong and your Government is taking action and delivering lower taxes as opposed to the Labor Party which went into the election campaign with $387 billion of higher taxes. 

LUKE GRANT:

And we had the former Prime Minister, Keating, say yesterday that he thought the ALP got it wrong, particularly increasing the top rate, and he said that potentially, were he able, he thought that not a jot over 39 should be the top rate. Is that a decent objective slash goal to have? Will there be a day when that rate will be a reality for those that do well here?

JOSH FRYDENBERG:

Well, our focus has been on low and middle income earners and so what we're doing is abolishing a whole tax bracket- the 37 cents in the dollar tax bracket- and we're creating one big bracket between $45,000 and $200,000 where the marginal rate will be no higher than 30 cents in the dollar and that's where the vast bulk of Australians will be. And what that will mean is that we're tackling bracket creep so when people earn a little bit more money from taking an extra shift or taking a second job or getting a promotion, they won't necessarily be hit by a higher marginal rate. So, that's where our focus has been but, you know, Paul Keating was right about the Labor Party. They've lost the middle class, they don't understand the term 'aspiration,' they keep complaining about the Australian economy but their answer was $387 billion of higher taxes which is not really the solution to those challenges that we face. I think the Labor Party opposed our tax cuts and the Australian people saw through them and understood that the Labor Party will always be for higher taxes whereas we, the Liberals and Nationals, stand for lower taxes. 

LUKE GRANT:

I think that's a really good point, Treasurer, and I think when the Prime Minister and you made the point during the campaign several times that your money is better in your hands. We don't want to tell you how to live your lives and I mean there are things you have to do, obviously, but to give more money back to the people and then encourage them to do well. That's what this place has been all about, isn't it? I mean, it's not hammering people so you can give a few shekels to someone else.

JOSH FRYDENBERG:

Well, absolutely. It's about enabling Australians to earn more and to keep more of what they earn. I think one thing that the Coalition kept reinforcing through this campaign was that our policies were not decided in a vacuum; they were actually decided and delivered based on our values and our values are formed around the notion that it's not the government's money, it's the people's money. We should at every opportunity try to return that money to the people and the people know best how to spend their money as opposed to government. So, government, yes, needs funds to provide the services and the support for people who can't provide for themselves or to provide the necessary national security apparatus or to provide the infrastructure that makes our economy strong. But, no more than that.

So we believe in an effective government, we believe in the invisible hand of capitalism as opposed to the dead hand of socialism. We believe in building economies from the ground up as opposed to deciding policies from the top down. That's what motivates us as Liberals, they're our values. That's why we back small business because when the Prime Minister says, Luke, that Australians who have a go or get a go, they're the people who are running the café or the florist or the sub-contractors and the tradies. They are people who will be first to work and the last to leave. They're the people who will pay their staff before they pay themselves. They're the people who will run the front office and the back office. And there are millions of those out there and we, as Liberals and Nationals, want to be for those quiet Australians, whereas the Labor Party are always talking about looking after their union mates.

LUKE GRANT:

Yeah. A couple of quick ones before you go. In fact, not a couple, three. You are the Treasurer, I should be precise with this stuff. The first thing, we've got COAG today. The relationship between the Federal Government and the states. How is it? You've been around politics for a while now even though you are still a very young man, Josh. Do you think it's in a good place?

JOSH FRYDENBERG:

Look, I do. I think there's good working relationships. Thursday I actually met with Ben Wyatt, the Western Australian Treasurer, and we discussed how we can work together on population issues, on infrastructure issues and swap notes on trade. So, the states and the Commonwealth need to work together towards a mutual end which is serving their populations. And you may remember when John Howard had his long reign as Prime Minister, there were many a year when there was just Labor Premiers around the COAG table but he managed to work through those relationships. So, that's what we will try to do because ultimately, our servants are the people, our servants are not the particular political parties.   

LUKE GRANT:

Yeah. Have a listen to this.

JOSH FRYDENBERG:

Silence.

LUKE GRANT:

That's the sound of your Government just getting about doing stuff. How refreshing. Seriously, Josh, how refreshing. After all those years of turmoil.

JOSH FRYDENBERG:

Well, we have passed significant legislation through the Parliament in just a few weeks and the tax cuts were obviously the most significant but we also passed the Drought Fund which will help us deal with some of the challenges in regional Australia. We've got important legislation before the Parliament in ensuring the unions and the players in the construction sector are adhering to the law. And we passed also in my portfolio an important piece of legislation called the Consumer Data Right which will enable consumers to use their information to get better deals on energy, on their telecommunications services, and on their banking services. So, we're doing lots of things through the Parliament. The Parliament is working and the Australian people got the tax cuts that they voted for.

LUKE GRANT:

And it's so much less like a circus than, perhaps, it once was. The final question, you've been so generous with your time, Treasurer. Is it true that you played tennis and you have a doubles partnership with Albo? Is this true?  

JOSH FRYDENBERG:

Well, there's a regular game that goes on on a Thursday in Parliament House, Luke, and my good friend John Alexander was down there. He's a serious tennis player, the rest of us are pretenders. He was world number eight, Australian number one. He's a great fellow and a great player still, so he was down there. Albo was there, too, wearing his Hawthorn colours. But I had to explain to Albo that when I hit the ball and it landed on the line that actually meant that was in. That was in, he couldn't call it out. But after we got over that small difference, we did have an enjoyable game and the good thing about sport is that it goes beyond politics. There's no partisan points on the tennis court. And tennis was the winner, Luke, tennis was the winner.

LUKE GRANT:

Oh please. Did you ever have a world ranking? You would have had an Australian ranking, surely?

JOSH FRYDENBERG:

Well, I played junior tournaments around the world. But, you know, the thing about my tennis career is that my ambitions were far greater than my talents and now I eat for a living. So, tennis is long gone, just like my mullet.

LUKE GRANT:

Yes, what a mullet it was. Good to talk to you Treasurer, thank you very much for your time.

JOSH FRYDENBERG:

Always good to be with you and best to your listeners.