MADELEINE MORRIS:
The Treasurer joins us now from Canberra. Thanks very much for your time. As part of this speech you are also going to say there is no end to austerity, not in the short term, as well, so you are keeping the taps on and therefore the debt is going to continue to flow, is that right?
JOSH FRYDENBERG:
Well we’re actually going to see an improvement in the budget bottom line for this year off the back of more people being in employment than we initially thought. In fact, just as recently as the Mid-year Economic and Fiscal Update which was December last year, we thought the unemployment rate would be 7.5 per cent, it is now at 5.6 per cent. That means that 200,000 more Australians are in work and that can improve the budget bottom line by around $5 billion because you’ve got $3 billion less in welfare payments going out and about $2 billion more in revenue through taxes coming in. So, the key to repairing the budget is to repair the economy. We are not out of this pandemic yet. You have seen events in India, you’ve seen the lockdown in Western Australia, the virus is having new strains and so we've got to be very cautious and we’ve got to be very considered and try to drive that unemployment rate down.
MADELEINE MORRIS:
What number are you looking at? You say it has to have a ‘four’ in front of it. What is your target?
JOSH FRYDENBERG:
When I pointed to the ‘four’ I was referencing the Reserve Bank and Treasury analysis that say until you get the unemployment rate down to around 4.5 per to 5 per cent, you won't get an acceleration in inflation and unemployment. So Treasury have actually redone their economic modelling and forecasting around that number. With respect to our priority, it is to drive the unemployment rate down in the first instance to where it was pre-pandemic, which was 5.1 per cent last February. The economy, the labour market has been a lot more resilient than we had even expected in our most optimistic forecasts but there is still a lot of uncertainty out there and that is why the Budget, in just a couple of weeks’ time, will keep the focus on skills, on infrastructure, on tax and of course, on ensuring we guarantee those essential services like aged care.
MADELEINE MORRIS:
Aged care, you talk about there, pretty much every economic model says one of the best ways to get bang for your buck in terms of economic return and also unemployment is to put more money towards childcare, is that going to be part of what you announce in the Budget?
JOSH FRYDENBERG:
I’m not going to comment on pre-Budget speculation, but we have already put more than $10 billion a year into childcare and we amended some of the rebate levels and we focused it on low‑and middle‑income earners and we have already done some changes around childcare but as you can imagine, I'm not going to get into the rule in, rule out game just a week‑and‑a‑half from Budget.
MADELEINE MORRIS:
Of course, one of the other reasons that you're going to be able to afford not to be too austere in here is because of that record breaking iron ore price, thank you very much China for buying all of our iron ore. Seriously then, why are senior Ministers and senior public servants then talking up the threat of war between China and Taiwan. You have seen overnight the response from the Chinese Foreign Ministry about. That they have absolutely panned us for it.
JOSH FRYDENBERG:
The Prime Minister put it best when he said our focus is on securing peace in the Indo‑Pacific and in our region. Australia is a great beneficiary from peace. At the same time, we want our national Defence Force to be well resourced and as capable as possible and that is why the Prime Minister announced more than $700 million to upgrade some of our bases yesterday in the north. But the relationship with China is important. They are our largest trading partner, but with respect to our national interest, we'll always continue to prosecute the case whether that is foreign investment, whether that is human rights or other national security issues.
MADELEINE MORRIS:
Sure, sure. So why are we talking about the drum beat of war then? We saw the tearing up of the Belt and Road Initiative as well, the Foreign Minister is reviewing the lease to the Port of Darwin and these are all sending really strong signals to China. What message are you trying to send here?
JOSH FRYDENBERG:
That Australia will always defend it’s national interest. That national interest extends across issues that you have talked about, but also other issues like speaking out about human rights abuses, like ensuring that foreign investments are approved when they are in the national interest, and also ensuring that we are able to maintain our national security position because Australia has a firm set of principles, a firm set of interests and we will continue to defend them.
MADELEINE MORRIS:
Kevin Rudd says it is about distracting from domestic policy failures.
JOSH FRYDENBERG:
He is entitled to his own opinion but in that one, I don't think many people will listen.
MADELEINE MORRIS:
He is an astute observer of China. He has made the point that tensions really aren't at that point yet, talking about war being imminent or close. So I'm just confused about why at this stage we are using such strong language towards the country which we are most reliant on?
JOSH FRYDENBERG:
Again, I will leave others to defend their own comments, but with respect to the Australian Government, we want to see a stable relationship with China. We want to see that important economic partnership continue, a partnership which is mutually beneficial. You referenced iron ore, Madeleine. Iron ore has helped underpin China's remarkable economic growth. China is the world's largest steel exporter and our iron ore has helped them develop their own economy to a great extent. They can't replicate our iron ore in either the quality or the quantity very easily from other countries.
MADELEINE MORRIS:
Not for the time being anyway. A quick one to finish, Treasurer, LNP MP Andrew Laming, said he has been diagnosed with ADHD. Which he says doesn’t excuse but does explains some of his behaviour. I wonder if that has changed your opinion of him and how you view some of that behaviour?
JOSH FRYDENBERG:
That behaviour was unacceptable. He obviously acknowledged that and he's not contesting the next election, but I obviously continue to talk to Andrew and obviously wish him all the very best.
MADELEINE MORRIS:
He will be back in the Party Room?
JOSH FRYDENBERG:
He is welcome back in the Party Room.
MADELEINE MORRIS:
Treasurer, Josh Frydenberg, thanks for your time this morning. We look forward to hearing more in that speech you will be delivering a little bit later on today.