NICK MCCALLUM:
The Treasurer joins me on the line now. Treasurer, thanks, indeed, for your time and merry Christmas.
JOSH FRYDENBERG:
Merry Christmas to you and all your listeners, Nick.
NICK MCCALLUM:
So should we be concerned? Clearly this shows that we have tough financial times ahead?
JOSH FRYDENBERG:
Well, there's no doubt that the Australian economy, like many other economies around the world, are facing a number of significant challenges, particularly the trade tensions between the US and China are weighed negatively on consumer and business sentiment but also the devastating impact of the drought here at home has knocked a quarter percentage point off GDP and has seen farm output down by around 14 per cent in the last two years. But despite all of that, the Australian economy continues to grow and the IMF have us growing faster than the US, the United Kingdom, Germany, France, Japan and other major economies next year and we're also seeing our labour market be very resilient with over 1.4 million jobs being created since we came to government.
NICK MCCALLUM:
But having said that, of course, one of the key take‑outs is that wages will not grow. So there are a lot of people sitting around at home at the moment thinking my prospects are not particularly good over the next couple of years.
JOSH FRYDENBERG:
Well, just on that, actually we have wages growing by 2.5 per cent this year and 2.5 per cent next year and importantly…
NICK MCCALLUM:
But that's come down a bit, though, hasn't it?
JOSH FRYDENBERG:
There's been some revisions to the forecast but importantly, Nick, what wages are doing is they're growing faster than inflation. So they're growing at 0.6 of a per cent in terms of real terms and that is higher than when we came to government and, importantly, we've seen the real minimum wage go up every year that we've been in government and the way to lift higher wages is obviously infrastructure, investments and tax cuts which is what we've done, but we also saw in the most recent national accounts, household disposable income go up at its fastest rate in a decade and that was because people are getting the benefits of the tax cuts.
NICK MCCALLUM:
Okay. So, Treasurer, the Labor Party has said the Government should spend more on infrastructure to try and reignite the economy, or boost the economy. Will you do that?
JOSH FRYDENBERG:
Well, we have done that in this budget update…
NICK MCCALLUM:
Will you do it more?
JOSH FRYDENBERG:
We've significantly done it in this budget update. There's $4.2 billion worth of infrastructure projects that are either new projects or brought forward within the next few years and this is part of our 10‑year $100 billion pipeline. But the importance of investing in infrastructure is not just to get people home sooner and safer, but also to boost the productive capacity of our economy. So we very much value infrastructure spending and that's why we're undertaking it in record amounts.
NICK MCCALLUM:
Okay, what about some injection, the retail industry, as you would have read, is clearly suffering some issues. Already people are telling us anecdotally there are not as many people in the malls, not as many people buying in the lead up to Christmas. What can you do to try to boost that economy? Can you give people extra ‑ improve Newstart, say, for instance, or allowances or do something to give more money to people so they can go out and spend it and help the retail sector?
JOSH FRYDENBERG:
Well that's what the tax cuts are doing. They're putting more money into people's pockets. Now some people, Nick, are actually saving that amount. So 70 per cent of people with a mortgage are at least one month ahead of their payments…
NICK MCCALLUM:
But isn't the argument, though, if you give the bottom end, and I'm talking about people on Newstart and allowances, if you give them that money they will spend it because they have to, to survive?
JOSH FRYDENBERG:
Well, the people who have been getting the tax cuts are the ones who have been earning under $90,000 a year. Now if you're a teacher and a tradie and you're a couple, you're getting $2,160 in your pocket. Now that's not an insignificant amount of money if you're both earning $60,000 a year. So…
NICK MCCALLUM:
But they're not spending it, though, that's the point, isn't it?
JOSH FRYDENBERG:
Ultimately it's up to the individual to decide whether they spend or save it. It’s my job to try to put more money into their pocket but ultimately that is going to be a choice for them. Now some people who are saving now will reduce their interest payments over time and their debt burden and that means that will free up more money in the future for them to spend across the economy.
NICK MCCALLUM:
Okay, GST, that's taken a big hit. Do you expect problems now with the State Government coming cap in hand and saying ‑ all State Governments all around Australia ‑ cap in hand saying we've received a big hit here because we're not getting the GST?
JOSH FRYDENBERG:
Well as you know with the GST, all the money goes towards the States…
NICK MCCALLUM:
Yes, that's right. That’s why…
JOSH FRYDENBERG:
It's currently $65 billion. It's going up to $75 billion over the forward estimates and over the decade it's up by around 56 per cent. And the GST payments that we're seeing now, which are slightly lower than originally expected, are pretty consistent with what a number of the State Governments have actually been forecasting for themselves.
NICK MCCALLUM:
Okay, you don't expect them to have planned ahead thinking ‑ going with your original figures and they will come cap in hand asking for more?
JOSH FRYDENBERG:
Well they know…
NICK MCCALLUM:
That's the way it works, isn't it?
JOSH FRYDENBERG:
They know, Nick, it does depend, to a large extent, on what's happening with consumption and obviously there's been some challenges, for example, because of the drought and a few other factors. But consumption will pick up, more money will flow into Australians’ pockets and more money will flow through the GST to the States.
NICK MCCALLUM:
And just finally, and a little cheekily, there is still billions of dollars, hundreds of millions of dollars sitting in a bank account waiting for the East West, is it time to release that and use that now?
JOSH FRYDENBERG:
Well, that's $4 billion…
NICK MCCALLUM:
Yes.
JOSH FRYDENBERG:
That Daniel Andrews should put to building a very important road…
NICK MCCALLUM:
But you know he's not going to so why not use that money to help you get over the economic problems you've got at the moment?
JOSH FRYDENBERG:
Because we want this road to be built for Victoria and what we do know is…
NICK MCCALLUM:
So it's just going to sit there until, you've got at least another three years.
JOSH FRYDENBERG:
It's going to sit there until he says yes.
NICK MCCALLUM:
Well, but isn't that a waste?
JOSH FRYDENBERG:
Well, what we're doing is investing not just putting money aside for that project, but we're actually investing in a whole series of major projects in Victoria and bring forward money here for the North‑East Link, there's also money that we've put into the Monash, as you know, we've put $5 billion for the Melbourne Airport rail link, we've put $2 billion for the Melbourne‑Geelong fast rail. So we're absolutely committed to spending more than ever on Victoria and we look forward to working with the Victorian Government to deliver those projects which bust congestion and improve the productive capacity of the economy and the East‑West Link would be another one.
NICK MCCALLUM:
Ok Josh Frydenberg, Federal Treasurer, always good to talk to you. Thanks, indeed, for your time.
JOSH FRYDENBERG:
Merry Christmas to you, Nick.
NICK MCCALLUM:
Merry Christmas to you and to your family.