PATRICIA KARVELAS:
Josh Frydenberg, welcome to Breakfast.
JOSH FRYDENBERG:
Nice to be with you, Patricia.
PATRICIA KARVELAS:
We’re going to get to the tax cuts in a moment, but first to the by‑elections. The Coalition lost the seat of Bega and it suffered an 18 per cent swing in the North Shore seat of Willoughby. The Morrison government must win seats in New South Wales at the federal election. It cannot afford to lose any. How much harder will it be now for you to be re‑elected in May?
JOSH FRYDENBERG:
Well, I’m certainly not trying to sugar coat those by‑election results because it was disappointing to lose the seat of Bega. But as you know, historically, it’s always been difficult for incumbent governments in by‑elections, and today there’s no such thing as a safe seat, particularly as we’re dealing with the uncertainty of the pandemic. In those particular seats that we contested there were some big names that were retiring – Gladys Berejiklian obviously in Willoughby, John Barilaro as the Deputy Premier and Andrew Constance as the Transport Minister in Bega. Now he is running for the Coalition in Gilmore and we’re hopeful of picking up that seat at the federal election. But it was a difficult night for the Coalition. And there was a little glimmer of hope there with the seat of Strathfield where there was a very small swing to the Coalition. But, you know, state by‑elections and federal elections are very different things.
PATRICIA KARVELAS:
Okay. We will be speaking to the New South Wales Treasurer Matt Kean after 8. He says that there’s no doubt that all of the drama surrounding the federal government didn’t help the state coalition. Do you accept some of the blame for the voter backlash on Saturday?
JOSH FRYDENBERG:
Well, I think state and federal elections are seen very differently by local communities, by voters. And obviously, as I say, in those particular situations, those particular seats, there were some big names that were retiring. But, again, we’ve had a difficult few months at the federal level. There’s been lots of noise –
PATRICIA KARVELAS:
Certainly that must have hurt the coalition at the state level if they’re hearing all of this noise from Canberra and what looked like dysfunction?
JOSH FRYDENBERG:
I think Dom Perrottet would be the first to say it wasn’t as a result of the federal situation. No doubt, you know, he would understand there were a lot of factors there at play. And I’ve no doubt that he’ll be regrouping his team, including with Matt Kean, looking at how they can win their next state election.
PATRICIA KARVELAS:
Okay, let’s talk about what you’re facing. Today’s Newspoll shows Labor still 10 points ahead on the two‑party preferred vote. The Coalition’s primary vote anchored on 34 per cent. That’s just one in three voters supporting the Coalition with the election just months away. Given the mess we saw last week, why would voters be prepared to give you another chance?
JOSH FRYDENBERG:
Because we’re getting the big things right – obviously protecting people’s health, helping keeping them in a secure job and ensuring that our national security is enhanced. They’re the big things that matter to the Australian people.
PATRICIA KARVELAS:
So you say you’re getting the big things right. But you’re getting all of the little things wrong, right?
JOSH FRYDENBERG:
Well, again, there’s been a lot of noise. There’s been a very disappointing summer for many Australians as either they’ve contracted Omicron, had their holidays disrupted. That obviously has led to understandable frustration. But we know what the task is at hand. In my own particular portfolio I’m very proud of the fact that Australians have come together during this crisis and the unemployment rate, despite Australia’s economy facing the biggest economic shock since the Great Depression, is at 4.2 per cent, a 13‑year low.
PATRICIA KARVELAS:
Okay.
JOSH FRYDENBERG:
But you can’t dismiss that, Patricia.
PATRICIA KARVELAS:
I’m not going to dismiss it.
JOSH FRYDENBERG:
That is a key proof point of Australia’s strong economic recovery. Today, you know, we’re ticking over 94 per cent double‑dose vaccinations with 10 million boosters being rolled out.
PATRICIA KARVELAS:
Okay, but it looks still very messy. Over the weekend, leaking against Fiona Martin. Have you reached out to her, the Liberal MP that crossed the floor? I mean, there’s leaking again.
JOSH FRYDENBERG:
I have.
PATRICIA KARVELAS:
What have you told her?
JOSH FRYDENBERG:
Well, again, obviously I work closely with her and was in close consultation with her ahead of that vote. It was a very, you know, difficult position for her, and I obviously would like all our members of our team to, you know, stick together when it comes to votes on the floor of the house. But at the same time I want to see her re‑elected in her seat and –
PATRICIA KARVELAS:
Peter Dutton said the moderates had lied. Did they?
JOSH FRYDENBERG:
Well, again, you know, there was an understanding that there would be more support than there was on the floor of the house from more members. But, again, that’s now behind us and what we’ve got to do is go forward together.
PATRICIA KARVELAS:
Okay. The early lesson from the COVID pandemic is that voters stuck hard with their governments, but don’t the by‑elections show that Omicron has changed that. Incumbency now looks toxic.
JOSH FRYDENBERG:
Well, I don’t think you can generalise. I do think it is a very uncertain political environment, as it has been an uncertain economic and health environment. But the situation in the election – at the election time could be very different to the one it is now. The issues that we will be dealing with could be very different again to what we’re dealing with now. I mean, just look at the international situation. You’ve got a hundred thousand troops poised on the border of Ukraine. They’re not there to check out the view or to have a picnic. Something is brewing, and if it does eventuate that the Russians invade, I think that will have ramifications far and wide. And it’s a reminder why as a government one of our first priorities is to ensure national security. And that’s why we hosted the Quad meeting of Foreign Ministers from Japan, India and the United States just last week.
PATRICIA KARVELAS:
Okay. You’re preparing the pre‑election budget. Will you be extending the low income tax offset for another year, which is worth up to $1080 for anyone on less than $126,000 a year?
JOSH FRYDENBERG:
Well, won’t surprise you or your listeners that I’m not going to pre‑empt what’s in or not in the budget in just a few week’ time.
PATRICIA KARVELAS:
A lot of people rely on this, though. This is obviously targeted at people at the lower end. They will be nervous.
JOSH FRYDENBERG:
Well, a couple of things: firstly, when we introduced the low and middle income tax offset it was in response to the particular economic circumstances we faced at the time. We also brought forward stage 2 of our tax cuts, and so we’re baking into our tax system lower taxes. And we’ve got stage 3, which is legislated to roll out, which will see the abolition of the 37 cents in the dollar tax bracket and will see 95 per cent of Australian taxpayers pay a marginal rate of no more than 30 cents in the dollar if they earn between $45,000 and $200,000. That’s really significant structural tax reform. Labor can’t be trusted to stay true to that because even though we’ve legislated because they’ve attacked it in the past.
PATRICIA KARVELAS:
Okay, so you think expending the offset would add to the pressure on inflation and interest rates?
JOSH FRYDENBERG:
Well, again, I’ll leave the commentary to others.
PATRICIA KARVELAS:
I want to know what’s your economic analysis.
JOSH FRYDENBERG:
Well, again, because we haven’t made a decision as to whether or not we’re going to extend the low and middle income tax offset. We have in previous budget, but we’ve also brought forward structural reform and we’ve still got further legislated reform to take effect. Some key data which you indicated earlier in your program that’s out today from the ATO indicates that young people, Patricia, have been the biggest beneficiaries of our tax cuts, and particularly young women. More than five million women have received more than $14 billion in tax cuts. And if you’re a young woman who’s 24 and under, you paid on average less – 20 per cent less tax than under the Labor Party and you’ve seen more than $2,300 of tax relief. Now that’s not insignificant. It’s rewarding effort, it’s encouraging aspiration and it’s certainly very consistent with the Coalition’s political values, philosophical values.
PATRICIA KARVELAS:
Okay, there are reports that the budget will cut beer excise by 50 per cent. Many more men drink beer than women. That’s a fact. Will that be one for the blokes?
JOSH FRYDENBERG:
Again, you love to get me on the sticky paper and the rule in, rule out game. I have seen the media speculation. I know what the industry’s been asking for. Like all industries, they put in budget bids. They’ll be considered. They will be looked at in the context of all the different priorities we have.
PATRICIA KARVELAS:
The government wants the election to be about economic management and national security. That means both yourself and Defence Minister Peter Dutton will be at the fore. Peter Dutton has noticeably lifted his profile in recent weeks. He hasn’t ruled out nominating for the leadership if the Coalition loses the election. Are you also ready to lead? Will it be a Frydenberg versus Dutton contest?
JOSH FRYDENBERG:
Well, I’m hoping to win the election. And I’m hoping to see Scott Morrison continue as Prime Minister. And I obviously have been very loyal in the role as Deputy Leader of the Liberal Party and as Treasurer of Australia. And it’s been a great honour during this pandemic, and I’m very proud of what the Australian people have achieved.
PATRICIA KARVELAS:
But would you be prepared to lead?
JOSH FRYDENBERG:
Well, again, I’ve made no secret that that would be a – you know, something I’d put my hand up for at the right time. But, you know, we’re not looking at that time right now.
PATRICIA KARVELAS:
Okay, we’re out of time. Thank you so much for joining us.
JOSH FRYDENBERG:
Thank you.
PATRICIA KARVELAS:
That’s the Treasurer and Deputy Liberal Leader Josh Frydenberg joining us.