MADELEINE MORRIS:
With just 11 days to go until the Federal Budget Treasurer Josh Frydenberg will announce today the economy is doing well enough to start moving to budget repair. For more, the Treasurer Josh Frydenberg joins me live now from Canberra. Treasurer, a very good morning to you.
JOSH FRYDENBERG:
Good morning, Madeleine. Nice to be with you.
MADELEINE MORRIS:
You're moving to the second stage, as you're calling it, of the fiscal program. What does that mean?
JOSH FRYDENBERG:
Well, as you know, we recalibrated our budget strategy when the pandemic first hit and we needed to do that to ensure that there was sufficient economic support with programs like JobKeeper, the cash flow boost, the $750 payments to pensioners, to veterans, to carers and others on income support. That helped stabilise the economy by opening up the purse strings. Now that the recovery is well underway and the unemployment rate is down to a 14 year low of 4 per cent, it is time to move to that next phase of our Budget strategy, and that means stabilising debt and then reducing debt as a proportion of the overall economy and ending those crisis-level emergency economic support programs.
MADELEINE MORRIS:
I mean, many of those have already been cut, though. I mean, there's no more JobSeeker, JobKeeper, the addition to JobSeeker, was withdrawn. Does this mean you're going to be cutting programs?
JOSH FRYDENBERG:
No, it doesn't. As you know, we've got record spending on hospitals, on schools, on aged care, on disability support. But what it does mean is that we're growing the economy and then we're banking that fiscal dividend as a way of reducing debt as a share of the economy. We're still very prudent with what is called our tax to GDP cap, which means that we put limits on the amount of tax that we will have as a share of the economy. That's an important discipline. And we've also been conservative around commodity price forecasts. We've seen the price of iron ore, the price of thermal coal and metallurgical coal much higher than what was initially forecast. That in the short term will provide a boost to the budget bottom line, but we have not baked in structural spending based on those temporary increases in commodity prices. That's not what the Labor Party did when they were last in government but it is what we do when we're in government. That's an important structural budget discipline.
MADELEINE MORRIS:
I understand that on the spreadsheet the economy is looking pretty good. But the problem is for people living their lives, cost of living pressures are really rising. They are finding it really difficult and increasingly difficult. We know that's going to continue. What are you going to be doing in the federal budget to help people out?
JOSH FRYDENBERG:
Well, Madeleine, you're absolutely right. This is the number one topic around kitchen tables right now, which is the rising cost of living. Petrol prices have increased substantially, largely as a result of what has happened in the Ukraine where a price of barrel of oil is up by more than a third since that crisis began. And that flows through to the bowser here. We've also seen through COVID, and now because of the geopolitical tensions, that supply chains are being constrained and that's lifted freight costs, and that flows through to higher prices for agriculture and food as well as other goods like vehicles or computers or other imported goods. What we have sought to do is to put more money into people's pockets to give them that discretionary ability to spend with tax relief. And about $30 billion has flowed through in the last three years.
MADELEINE MORRIS:
Yeah, you're right, but it's not actually keeping up with the rate of inflation. So people, particularly on petrol, particularly on housing where we've seen such huge issues in terms of the rising costs of housing, it's not flowing through. There is talk that you're going to be giving a one-off boost to wage earners in the budget. Is that what people can expect?
JOSH FRYDENBERG:
Well, Madeleine, it won't surprise you that I'm not going to get on to the sticky paper with Budget speculation about what's in or what's out of the Budget in just over a week's time. There will be initiatives to address the cost of living, over and above what we've already announced. We announced in last year's Budget an additional $1.8 billion for childcare. That's more than $10 billion a year. That's helping to provide families with two or more children in child care with a benefit of over $2,000. We've seen electricity prices come down by 8 per cent in the last two years, and then we've provided that important tax relief. So we have taken steps to address cost of living, but we will take more steps in the upcoming Budget.
MADELEINE MORRIS:
And how do you do that without increasing inflation?
JOSH FRYDENBERG:
Well, again, I'm not going to go into the details of those measures. We're very conscious of ensuring that the overall macroeconomic settings remain stable, that we do achieve this goal of ours, which is to reduce debt as a proportion of the economy, but that we do also address cost of living, which is very real.
MADELEINE MORRIS:
Just finally, Treasurer, before I let you go, can I ask you about the other significant story in Canberra today, which is the alleged treatment of Kimberley Kitching. Do you think that Labor needs to launch an internal investigation into her treatment?
JOSH FRYDENBERG:
Well, that will be a matter for the Labor Party and for the Leader of the Opposition Anthony Albanese. Obviously, these reports are very distressing and concerning, particularly for the family but also for Kimberley's many friends, and I count myself as one of those friends. I think she was a really serious, wonderful politician who cared deeply about human rights issues and was able to achieve effective, significant change, particularly about the Magnitsky laws and a whole series of other areas where she was a strong advocate for holding people to account for human rights abuses. These issues can't be dismissed. But it will be up to the Labor Party as to how they deal with them specifically.
MADELEINE MORRIS:
Okay, Treasurer Josh Frydenberg, thanks for your time this morning.
JOSH FRYDENBERG:
My pleasure.