MARK RILEY:
Treasurer, thanks for joining us on The Latest.
JOSH FRYDENBERG:
Nice to be with you, Mark.
MARK RILEY:
The tax offsets, they won’t come into effect for at least four months. Don’t people need relief sooner than that?
JOSH FRYDENBERG:
Well, we’ve used the existing system and, as you know, this builds on the previous low- and middle-income tax offset that we announced in last year’s budget. So, if you’re a family with two income earners between $48,000 and $90,000, you will now get $3,000 when you put in your tax returns at the start of July. We’ve also got the immediate cost of living relief that will come from the changes to the fuel excise, which, of course, take effect immediately, but will roll through over the next couple of weeks.
MARK RILEY:
So, the fuel excise cut, cutting it in half, 22 cents a litre, how did you arrive at that figure?
JOSH FRYDENBERG:
Well, it’s a substantial reduction and it actually provides real relief. We also looked at what was happening around the rest of the world. New Zealand cut theirs by 25 cents a litre. Ireland cut theirs roughly by 20 cents a litre or equivalent. There were also cuts in France and elsewhere. What we have decided to do here is to provide that cost of living relief to Australian families and motorists and businesses because we understand that when the price at the bowser is more than $2 a litre, that really does impact on families’ hip pockets.
MARK RILEY:
So, this will bring the price in most petrol stations down below $2 a litre and save about $15 on average for filling up a family car and it’s in place for six months?
JOSH FRYDENBERG:
Only six months. That is correct.
MARK RILEY:
What happens if oil prices fall?
JOSH FRYDENBERG:
We’ve said it’s only there for six months. This will allow for families to get some relief now, but we’ve also got a forecast from Treasury that is expecting the oil price to come down to settle at about $100 a barrel by the end of September, which is actually the point in which we’ll transaction back to the full fuel excise.
MARK RILEY:
So, the $250 payments for pensioners, carers and welfare recipients, that seemed to come into consideration late in the piece. What went on there?
JOSH FRYDENBERG:
Well, again, we always were evaluating our settings and we wanted to ensure that the support was broad-based. There’s some six million people who will receive these benefits and, as you say, they’re veterans, they’re seniors, they’re carers. We also looked at the indexation arrangements that are currently underway. If you’re a single pensioner, you received just above $20 a fortnight extra from March of this year as a result of this year’s indexation arrangements. This is on top of that because we recognise that pensioners have also got cost of living pressures.
MARK RILEY:
And they’ll get another indexation increase later in the year. But was the thinking, though, that you were going to give some relief to workers and families and the pensioners would miss out and that wouldn’t be very popular just a couple of months out from an election?
JOSH FRYDENBERG:
You’re being too cynical, Mark.
MARK RILEY:
Or practical or realistic Treasurer.
JOSH FRYDENBERG:
What we’re focusing on here is delivering cost of living relief across the board to many Australians, and we’ve got around six million who will benefit from that $250 payment. We’ve got about 10 million that will benefit from the $420 boost and then, of course, you’ve got millions of Australians who use their cars on a daily basis.
MARK RILEY:
Okay. So, $100 billion going to the bottom line. That’s very good. About $40 billion spent – that’s a lot of money. Won’t that be inflationary? Won’t that just drive the cost of living higher?
JOSH FRYDENBERG:
So, you’re right. There was $40 billion worth of decisions, but if you break that down, there’s obviously the cost of living component. Then there’s the COVID component. So, we’re still buying significant amounts of PPE, protective personal equipment, also purchasing new treatments and vaccines and the like. That comes at a cost to the bottom line. In this budget, we’re investing more in infrastructure. We’re investing in skills. You would have seen the small business incentives as well where small businesses can go out and purchase new technology or train up their workers.
MARK RILEY:
$120 back from $100 spent.
JOSH FRYDENBERG:
Correct, yeah, so these are bonuses designed to boost the productivity across the economy and also drive that unemployment rate even further –
MARK RILEY:
So, what’s the inflationary impact, Treasurer?
JOSH FRYDENBERG:
So, they’re actually in the numbers. So, the inflationary impact is factored in by Treasury, but let’s not forget that that cost-of-living package is still less than half a percentage point of GDP, and so you’ve got to keep it in context about the size of the economy. What Treasury have said is that the main driver of inflation, Mark, is actually international factors, particularly what’s happened with COVID and Ukraine.
MARK RILEY:
Ukraine, okay. Labor has been hammering saying that the price of everything is going to go up. Everything’s going up except your wages. Will wages rise?
JOSH FRYDENBERG:
You should correct them, because what’s been going down is the unemployment rate and so that’s just a gimmick, that’s a slogan from a Labor Party that I can’t say ran out of ideas because they haven’t had one in the first place. The reality is that the unemployment rate has been just a stellar performer for Australia. And unlike the recessions we’ve seen in the 1980s and the 1990s, during this recession, we’ve seen the labour market rebound and programs like JobKeeper were very significant –
MARK RILEY:
Unemployment is undoubtedly the success story –
JOSH FRYDENBERG:
That’s going to put upward pressure on –
MARK RILEY:
Will real wages rise?
JOSH FRYDENBERG:
What you can see in the forecast numbers is that in 2022–23 and beyond, the wages price index, which is the indicator of that, is above the inflation rate.
MARK RILEY:
So, real wage rises. Have you done enough, the crucial question, to save this Government?
JOSH FRYDENBERG:
Well, our focus has always been on delivering for Australian families, for small businesses, for seniors and ensuring that the Australian economy can remain strong and that Australia can have a stronger future.
MARK RILEY:
And getting re elected.
JOSH FRYDENBERG:
Well again, that will be a decision for the Australian people. My focus is on delivering a stronger economy, and we’ve done exactly that.
MARK RILEY:
Thanks, Treasurer.
JOSH FRYDENBERG:
Thank you, Mark.