PETER PSALTIS:
Good morning, Treasurer.
JOSH FRYDENBERG:
Good morning, Pete. Nice to be with you.
PETER PSALTIS:
Good to be able to chat with you. You’re likening climate change to the industrial revolution or the digital age in terms of the impact on financial markets. Now, is this a shift in approach for the Government?
JOSH FRYDENBERG:
Well, it’s reflecting the reality that we’re seeing in financial markets, which has a big impact on Australia, because we are very reliant on foreign investment. We have about $4 trillion of foreign investment in this country. Around 50 per cent of our Government bonds are bought by foreign investors and our domestic banks get about 20 per cent of their borrowings from offshore, and that, obviously, is money they use to support small businesses and to support home loans. And so it is really important that we’re conscious of these trends in global markets, that we’re not disadvantaged by them, and, to the contrary, we’re actually capitalising on the advantages that they provide us, and that is more investment in a whole range of sectors. And that’s what this speech is about, to sort of communicate the changes that are underway, how we need to be very cognisant of them and how we need to capitalise on them.
PETER PSALTIS:
We were talking there in the intro about Australia on the world stage. Is the speech, say, in response to not so much pressure but what the US and the UK are doing in regards to emission targets?
JOSH FRYDENBERG:
Well, 129 countries have adopted that net-zero emissions by 2050 and around 190 countries signed on to the Paris Agreement and, of course, Australia has been one of those. Unlike a lot of other countries, we’ve made real progress in reducing our carbon footprint. So,our emissions are down by over 20 per cent since 2005 levels, whereas that’s around double what the OECD average is and it’s a faster rate of reduction in emissions than you’ve seen in New Zealand or Canada or Japan or the United States. So, this is creating lots of opportunities in the agricultural sector, lots of opportunities in the energy sector, and many of our resource countries are actually at the cutting edge of new innovations and technologies. So, for example, BHP, has been around for more than a century, is not just looking to be here in 2050; it wants to be bigger and stronger after 2050 and it will be powering mines off renewable energy. Fortescue, another big iron ore player, is investing significantly with about a billion dollars going into hydrogen technology and investments, and that’s a new source of energy. So, there’s some really great innovative stuff that is occurring in our resources sector, in our agriculture sector. And my message today to investors to superannuation funds, to insurers, is that you’ve got to invest right across the economy not just in green energy or you can’t just ignore what’s traditionally seen as brown investments.
PETER PSALTIS:
Do you think today, following on from what you said there, people’s eyes will be open a lot more about what the private sector is doing? You mentioned what some of those companies, some of the biggest that we have, in the country are doing in this space.
JOSH FRYDENBERG:
Exactly. This is about a change that’s occurring as we speak, and Australia needs to be very conscious of those changes. We need to have the right regulatory frameworks in place so investors can make informed decisions, can make timely decisions. And we also need to ensure that we’re sticking to our international targets. It is about managing this transition in a smooth a way as possible.
PETER PSALTIS:
Treasurer, just on a separate matter and it is in regards to the AUKUS announcement, and there’s been shockwaves reverberating all over the world since the announcement, particularly the anger from France and China. How exposed are we to financial retaliation from the likes of China?
JOSH FRYDENBERG:
Well, in terms of China we have been subject to economic coercion whether it’s our coal exports, whether it’s barley, wine, beef; there has been an impact on our trade as a result of Chinese actions. But, at the same time, Australian exporters have been very nimble and very active in being able to find new markets. So, for example, we’ve got 30 million less tonnes of coal going to China but 28 million tonnes of coal going to other countries. We’ve seen our wine that was otherwise going to China now going to Singapore or to Germany. We’ve seen our barley going to Saudi Arabia that was previously going to China. We’ve been able to find new markets, which has been a very positive development. Again, business has to be conscious they can’t put all their eggs in one basket. They need to diversify their markets and that’s what the Australian Government is helping them do.
PETER PSALTIS:
It has been good seeing the way some of the companies have gone more diverse on the world stage and thinking outside the square in recent times. While I’ve got you there, just finally, very sad news overnight, wasn’t it, the passing of John Elliott at the age of 79.
JOSH FRYDENBERG:
Yeah. John was a larger‑than‑life figure, a larrikin, a proud Victorian, a President of the Liberal Party, a President of the Carlton Football Club. We shared those passions and, you know, he will be greatly missed. He really made a big impact. I read the story from one of the famous Carlton footballers Greg Williams who said when John was the president, he’d only go down to the rooms if they’d won. He wouldn’t go down if they lost he was so demanding of success on the field. He was like that. Big impact on the corporate world, the political world and the sporting world and, you know, I had the pleasure of knowing him and my thoughts are with his family and his children.
PETER PSALTIS:
Well said. He will be missed. So, you’re a Carlton fan. No fear that Michael Voss is going to bring the Blues out of the doldrums then, Treasurer.
JOSH FRYDENBERG:
Welcome Vossy. For my sins, Peter, I’m Carlton’s number one ticketholder but also with the Melbourne Storm so you’ve got to love both codes. I probably had half your Queensland audience turn off right now, so there you go.
PETER PSALTIS:
It’s all right. I’m a Carlton fan as well, so don’t worry about it. There you go.
JOSH FRYDENBERG:
There you go. We’re not hiding under the doona, are we?
PETER PSALTIS:
No exactly. Thanks for your time Treasurer. Appreciate you coming on this morning. Good luck with the speech today.
JOSH FRYDENBERG:
Thank you.