NARELDA JACOBS:
Treasurer, thanks for joining us.
JOSH FRYDENBERG:
Nice to be with you.
NARELDA JACOBS:
The Budget has been described as a sugar hit, with the rush coming smack bang at election time in the form of short‑term cost‑of‑living relief and one‑off payments. Is this a short‑sighted Budget?
JOSH FRYDENBERG:
Well, the Budget does a number of things. Firstly, it banks the dividend of a stronger economy, Narelda, where we've seen the unemployment rate come down substantially, getting close to a 50‑year low, and therefore more people in work, paying more tax, and less people on welfare, requiring less expenditure. That is seeing a $100 billion improvement to our budget bottom line over the next few years. Secondly, we're providing cost‑of‑living relief now and that's really important because higher fuel prices, higher food prices is putting real pressure on household budgets. There's also a long‑term economic plan to create more jobs with major investments in our regions, in infrastructure, in the digital economy, in energy, in manufacturing and supporting small business. We're also guaranteeing the essential services that Australians rely on; mental health, there's more investments in women's safety, we've listed more drugs on the Pharmaceutical Benefits Scheme, and then we're investing more in defence as well which reflects the threats that Australia faces with a much more unstable regional environment.
TRISTAN MACMANUS:
Treasurer, there have been repeated calls to cut the fuel excise. Now you're halving it for six months. It was such a relief this morning driving past places and seeing that and being able to take advantage of it. But people are asking, "Why only a 6 month commitment?"
JOSH FRYDENBERG:
Well, fuel excise is an important source of revenue for our road infrastructure. And what we've sought to do here is provide temporary, targeted relief. And Treasury is forecasting that the price of a barrel of oil will actually come down by the September quarter, which is the period in which this program does end. But as you know, Ireland, Tristan, in France, in other countries like New Zealand, they've also cut the fuel excise. And it's responding to the need of Australians. When you see prices above $2 a litre, you understand that it does put pressure on household budgets.
NARELDA JACOBS:
Treasurer, real wages are lagging well behind inflation. An increase in salaries can make a lasting difference for households. For example, aged‑care workers say they're on the edge of poverty, earning $22 an hour. So, shouldn't real wages growth be the focus here?
JOSH FRYDENBERG:
Well, we did provide additional bonus payments this year for aged‑care workers, as we did in the previous year, and they have been just outstanding through this crisis. They've had to carry so much during COVID and that is really important that we continue to invest in our aged‑care sector, as we did. Last year’s Budget put $17.7 billion into aged care.
The key to driving up wages is actually getting a tighter labour market, where employers are competing for employees. And you get that tighter labour market when the unemployment rate comes down. Inflation is high now because of those international factors, but what Treasury have forecast, and which is in the Budget Papers last night, is that the inflation rate will start to moderate, wages growth starts to pick up, and, of course, we've put more money into people's pockets with significant tax cuts, which is helping to address some of those challenges.
NARELDA JACOBS:
Well, Treasurer, there is a danger the $8.6 billion cash splash, that will kick in around election time, will stimulate the economy so much that the Reserve Bank will have to put up interest rates earlier than forecast, which could only add to the cost‑of‑living pressures?
JOSH FRYDENBERG:
Well, a couple of things there. Firstly, we believe we've got the balance right. If you look at the size of the overall economy and then if you look at that $8.6 billion package of measures, that's less than half a per centage point of GDP. Treasury have taken into account our measures in their inflation forecasts, and actually cutting the fuel excise reduces inflation, according to Treasury, by a quarter of a per centage point. So, that is good news given that, you know, inflation is higher than expected. So, we are responding to need. We're doing it in a temporary, in a targeted, in a responsible way. We're also banking that dividend of a stronger economy seeing a much better bottom line.
TRISTAN MACMANUS:
Treasurer, thanks so much for your time this morning. Congratulations on the low employment rate as well. We really appreciate your time, as always.
JOSH FRYDENBERG:
Thank you very much, Tristan.