PATRICIA KARVELAS :
I was joined a short time ago by the Treasurer Josh Frydenberg and asking does the economy need more stimulus?
JOSH FRYDENBERG:
Well, we will continue to take the necessary steps to ensure that the Australian economy continues to enjoy its 29th consecutive year of economic growth. We've maintained our AAA credit rating. We’re bringing the Budget back into surplus. It's now in balance for the first time in 11 years and you refer to the labour market; unemployment today is at 5.3 per cent. When we, Patricia, came to government it was 5.7 per cent and we've now seen a record number of Australians in work with participation rates around record highs, more women than ever before in the workforce, more young people getting a job and that is all good news for them and for the economy.
PATRICIA KARVELAS :
The RBA is worried about the slowdown in the construction industry, are you prepared to bring forward or increase infrastructure spending beyond what you've already announced today in Adelaide?
JOSH FRYDENBERG:
Well, what we have for the housing sector is the First Home Loan Deposit Scheme. This was an election commitment and will see us support up to 10,000 first home buyers every year and that will be very significant in helping them get into the housing market for the first time. Our population continues to grow, so there'll continue to be demand in the residential construction sector. When it comes to infrastructure projects, as you know, we've got a record ten-year $100 billion pipeline of projects. The Prime Minister made a significant announcement today about bringing forward some projects in South Australia and we'll be making some further announcements later during the week.
PATRICIA KARVELAS :
When will you make the decision about bringing forward tax cuts to stimulate the economy? Because I know you've left the door open, what will you consider?
JOSH FRYDENBERG:
Well, there are obviously a couple of factors that go to our decisions about the tax settings for the economy. One relates to the state of the Budget and whether the country can afford some of those changes, but also it goes to the state of the economy and the differences that tax cuts make in the economy. But what we have said is our principal focus has been on implementing our election commitments and, as you know, we were successful in doing that, legislating the most significant tax cuts this country has seen in more than two decades, involving the abolition of a full tax bracket, the 37 cents in the dollar tax bracket which will see the bulk of Australian taxpayers between $45,000 and $200,000, those who earn between those two amounts paying a marginal rate of no more than 30 cents in the dollar.
PATRICIA KARVELAS :
Just to clarify, is there the possibility that you'll bring forward tax cuts if the economy needs it in next year's Budget?
JOSH FRYDENBERG:
Well, all I've said in response to that question previously, which is what I'll say again to you now, is we're always looking for opportunities to cut taxes. That's what's in our DNA. We're the party of lower taxes and we took those policies to the election and now we have legislated them. So we'll continue to look for opportunities, but our priority has been on implementing the tax cuts we took to the election and we have now successfully done that with legislation through the Parliament.
PATRICIA KARVELAS:
Is the Government still on track to deliver a Budget surplus and will additional spending for the drought or aged care eat into that surplus?
JOSH FRYDENBERG:
Yes, we are on track to do that and that was again, a commitment we took to the Australian people. But a Budget surplus is never a trophy for the cabinet shelf. What the Budget surplus is all about is building resilience in the Australian economy. Currently we have an interest bill of around $19 billion a year. That's more than double what we spend every year on child care and nearly as much as we spend on school funding. So, it's important that we pay down that debt and one of the reasons we were able to get through the Global Financial Crisis is because Howard and Costello left zero government debt when Labor took over in 2007 and that has helped ensure that we have a level of fiscal flexibility to respond to external shocks when they occur. Now, when it comes to the economy, we are facing some domestic and international head winds. You referred to the drought. That's knocked off about a quarter of a percentage off GDP as well as requiring the Government to make spending commitments of more than $1 billion since the election alone. And when it comes to the global economic head winds, which I spoke about today in Sydney, that is negatively impacting on business confidence as well as investment flows, capital flows and also ensuring that right now, the global economy has had a deterioration in its economic health.
PATRICIA KARVELAS:
Treasurer, how about the fires? You've mentioned this before. What kind of impact might fire and fire response add to the Budget?
JOSH FRYDENBERG:
I don't want to go through that right now, because obviously our communities are still going through these terrible fires, but what I will say is of course it's going to impact on those communities and the Government both Federal and State are of course doing what they can to ensure these communities get safely through this terrible period.
PATRICIA KARVELAS:
The Coalition gave voters a commitment to deliver a Budget surplus. Is that an ironclad ongoing commitment? If the economy demands it, would you be prepared to put it aside after next year's Budget?
JOSH FRYDENBERG:
Well, Patricia, I don't see it as an either-or equation. Namely, responsible fiscal management on the one hand and ensuring that we're investing in the essential services that people need and deserve as well as the infrastructure that will continue to grow our economy. And as well as that, providing the tax relief that actually allows people to earn more and to keep more of what they earn. That has been the purpose behind our fiscal strategy. That is what is seeing the Budget now come back in surplus. It's not because we've cut spending dramatically in a particular area. What we've done is increased to record spending, funding for disability support, health and education among other areas, but it's because we have moved so many people from welfare into work. Over the 18-19 year we saw more than 300,000 people get a job and that was 100,000 more than Treasury was originally estimating. And as more people get into work you obviously benefit the revenue side of the ledger with more people paying tax, but you also benefit the spending side because you have less welfare payments.
PATRICIA KARVELAS:
Can you just tell me, what is the surplus promise? Do you want all of your Budgets for the time that you're Treasurer to all be surplus Budgets?
JOSH FRYDENBERG:
Good try…
PATRICIA KARVELAS:
It's a reasonable question, though. Is it a one Budget promise, how long does the promise last for?
JOSH FRYDENBERG:
Well, Patricia, we outlined in the Budget this year in April ahead of the election our fiscal strategy and the surplus not just in 19-20, but in the years going forward. We'll update the numbers in MYEFO as you would expect us to do. Like I said, we are facing some economic headwinds and come the Budget next time, next year in 2020, again those numbers will be updated again.
PATRICIA KARVELAS:
Paul Keating has warned Australia's approach to China has been supplanted by the phobias of security agencies and the hysteria of pious and do-gooder journalists. Is he right?
JOSH FRYDENBERG:
Well, I think he's wrong in relation to that. I think he is certainly making an unfair assessment about the professionalism of our national security agencies who only have one concern at the forefront of their mind and that is keeping Australians safe and that is advancing the national interest. As for the media, as you and I both know, politicians past and present will not agree with the media every day of the week, maybe even half the week they probably won't agree. But the reality is that's the fourth estate and people can report as they see it. What I know and what the Prime Minister, the Foreign Minister, the Trade Minister, the Defence Minister and others know in the Government who are dealing day to day with issues in relation to our relationship with China is that we will continue to advocate for the national interest, but this is a vitally important relationship we have. Over one third of our exports go to China. They're our number one trading partner. More than a million Chinese visitors come to our shores every year. More than 200,000 Chinese students are studying in our educational institutions and just as we have been a great beneficiary of China's economic strength, so too the Chinese people have been a great beneficiary of the exports that we send to their country. Namely, the iron ore that builds the steel that has supported their urbanisation or the agricultural exports that have filled their plates or increasingly the services both financial, health, education, tourism services that are increasing their quality and improving their quality of life.
PATRICIA KARVELAS:
Your Government has taken a more assertive, some might say blunt approach to dealing with China, but at the same time you're calling for Australians to be supportive of Chinese investment. There is a backlash against Chinese investment as you know, how do you plan to build support for this foreign investment when taking a strong line against China at the same time?
JOSH FRYDENBERG:
Well, Chinese investment that comes through the Foreign Investment Review Board and then ultimately to me as Treasurer is dealt with on a case by case basis, but what is consistent in our application of the legislation is that we always look to make a decision that is in our national interest. We take in a variety of factors into account; impacts on competition, impacts on the integrity of the tax system. We look at national security issues, we look at the character of the investor in question as well as the broader impact across the economy. They're all factors that go into the careful and considered deliberation of each foreign investment decision. Now, we have knocked back decisions not just from China, but decisions and approaches that have come from the United States and from the United Kingdom. You may remember Peter Costello knocked back Shell's bid for Woodside and Joe Hockey knocked back a purchase of GrainCorp that was proposed by an American bidder. What we will do is look at every single case in isolation and what I can tell your listeners is that foreign investment is critical to the strength of the Australian economy. One in five Australian jobs is related to trade and one in ten Australian jobs are with businesses who have benefited from foreign investment and that foreign investment helps bridge that gap between our domestic savings and what we need to fuel our further economic growth.
PATRICIA KARVELAS:
Andrew Hastie and James Paterson have had their visa applications for a study visit to China rejected. Do you encourage them to keep speaking out about China?
JOSH FRYDENBERG:
I think they should continue to speak their mind, of course, and I think that decision by the Chinese authorities is counterproductive and deeply disappointing and I, in fact, find it very concerning that allegedly they have to repent and redress their comments if they are going to get a visa to China. That is very regrettable. What my colleagues as elected members of the Australian Parliament are entitled to do is speak out as they see fit and what they were trying to do here is to engage constructively with the people of China. They were to going to go and visit as part of a very reputable organisation, ‘China Matters,’ and I think the Chinese decision in this regard is quite counterproductive.
PATRICIA KARVELAS:
Treasurer, are you concerned by the escalating violence in Hong Kong?
JOSH FRYDENBERG :
Yes, I am. To see that violence play out daily on the streets of Hong Kong is very concerning and obviously there are a large number of Australians who are in Hong Kong. They're an important economic partner for Australia and we've tragically seen the loss of life. So, this is very concerning and obviously, we don't want to see any escalation in the violence that we've seen today.
PATRICIA KARVELAS:
Israel Folau's extraordinary claim that bushfires are God's punishment for same-sex marriage have been condemned today. What did you make of them?
JOSH FRYDENBERG:
Shocking comments. Of course, they're wrong and the more we talk about it, I think the more we give prominence to them and it's a prominence they don't deserve.
PATRICIA KARVELAS:
Should the media stop reporting on him?
JOSH FRYDENBERG :
No, I'm not going to tell the media what to report and what not to report, but I think what I've said should be the end of the matter as far as I'm concerned.
PATRICIA KARVELAS:
That’s Treasurer, Josh Frydenberg.