PETER STEFANOVIC:
Lets go live to the Treasurer now. Josh Frydenberg, eight and a half billion dollars worth of money going into the economy. Is that your attempt to buy your way to election victory?
JOSH FRYDENBERG:
Well, Pete, this is our way to deliver cost of living relief to millions of Australians. As you know, it's a considered package, it's a responsible one. It's temporary and it's targeted. Obviously, the centrepiece is a cut to the fuel excise which will see lower petrol prices for Australian families. There are also cheaper access to medicines for both concession and non-concession card holders. Pensioners, veterans, carers and others on income support, including self—funded retirees who are concession card holders will get $250 payments. And with our commitment to lower taxes we're also boosting what is called the lower and middle-income tax offset by an additional $420, which will see a couple with two incomes, a household with two incomes – let's say one on $60,000, one on $70,000 – be $3,000 better off when they put in their tax return from the 1st of July. So, these are practical, responsible, targeted measures.
PETER STEFANOVIC:
Okay. So, it is true to say, though, that those people who will face those tax offsets this time around, that will end, so next year those people will be facing a tax increase, right?
JOSH FRYDENBERG:
No, they won't be facing a tax increase; these were always a temporary measure, the lower and middle-income tax offset, because what it was, was part of a broader plan where that would then become a permanent feature through other changes to the tax system. Now those changes have now been made, hence that lower and middle-income tax offset gets replaced. And that is what we're delivering – lower taxes for Australian workers. And we've already seen some $40 billion of relief since the pandemic has begun. And we've been able to in this budget see an improvement to the bottom line – a material improvement to the bottom line – not through higher taxes but actually by having more people in work and fewer people on welfare.
PETER STEFANOVIC:
Right. Well, on that point, the unemployment is heading towards 3.75 per cent by the September quarter, as we know.
JOSH FRYDENBERG:
Yeah.
PETER STEFANOVIC:
Australians have saved some $250 billion. They've got that ready to spend. So, there's a lot of money there. With all of that said, why the need to spend so much money for this budget?
JOSH FRYDENBERG:
Well, actually, we have banked the dividend of a stronger economy to the bottom line. The vast bulk of the revenue upgrades have actually gone to reducing the size of the deficit – more than $100 billion improvement. And that's the fastest rate of what is called fiscal consolidation that Australia has seen in more than 70 years. But there are real cost of living pressures. And you know, Pete, the number one topic around the kitchen tables of Australia right now is higher fuel prices, higher food prices, higher transport costs, which is then putting pressure on household budgets. And so that is why we've taken the action that we've been done. But it's temporary, it's targeted, it's responsible. As you also point out rightly, the unemployment rate is now heading to a 50-year low. This is an achievement that belongs to every Australian. And unlike other countries like the United States where there are fewer people in work today than at the start of the pandemic, here in Australia there are more than 375,000 more people in work than at the start of the pandemic. That's a real success story.
PETER STEFANOVIC:
Yet, when it comes to people's wages, real wages are going backwards.
JOSH FRYDENBERG:
Well, what we've seen is high inflation, largely driven by international factors, particularly the higher fuel prices. And what Treasury actually say is that our cut to the excise will reduce the inflation rate by a quarter of a percentage point and then next year you will start to see wages above inflation and then beyond that as well. So, there is a positive story about the strengthening of wages. But ultimately a tighter labour market where employers are competing for employees will actually drive up wages. And that's what we're focusing on. And, as I said before, Australia has avoided that economic abyss that we were staring into just two years ago when COVID first hit. And with having now more people in work and fewer people on welfare is not only good for the budget but it's good for society as a whole.
PETER STEFANOVIC:
Right. But why cut the fuel excise? Because it's been criticised from leading economists. It's been even criticised from social groups who say it's just going to be swallowed up by inflationary pressures. So that's $3 billion out there. Is that really responsible spending?
JOSH FRYDENBERG:
Well, fuel prices are a major pressure of increased cost of living pressure and a major pressure on household budgets. And this is a temporary and a targeted cut. We've seen a 25 cents a litre cut to the fuel excise in New Zealand. We've seen significant cuts across Ireland and France and others countries in Europe. So Australia's not the only country that is taking this action as a result of the higher petrol prices. And let's fully understand the pressures that Australians are going – are under right now. Cost of living is real and obviously higher fuel prices are putting pressure on families.
PETER STEFANOVIC:
Treasurer Josh Frydenberg, a busy night, a busy morning for you. Thank you for your time. We'll talk to you soon.