ROSS GREENWOOD:
Now listen, for the first time in Australian history, as you’ve been hearing this morning the Reserve Bank’s official interest rate has a zero in front of it, below one per cent. Now, all eyes are now on the lenders. Josh Frydenberg, the Treasurer, has urged the big banks to pass on those cuts in full to help Australian families and to ensure our ailing economy continues to grow. So far, the Commonwealth Bank and the National Australia Bank have barely passed on half of the Reserve Bank’s cut.
Treasurer Josh Frydenberg joins me now.
Treasurer, yesterday you said, I quote this, “it’s the Government’s expectation the banks will pass on this twenty five basis point cut in full”. They didn’t listen to you. Have you, have they stopped listening to you, the Government, by defying you and only passing on half this rate cut?
JOSH FRYDENBERG:
Well, as you know, the Reserve Bank itself has pointed to the lower borrowing costs for the banks and their expectation that these interest rate cuts are passed on. So it’s not just the Government that they are going against here, they’re also going against the advice of the Reserve Bank, and it’s very disappointing.
ROSS GREENWOOD:
Have the banks learnt nothing, Treasurer? Have the banks learnt nothing from the Royal Commission about putting their profits ahead of their customers’ interests?
JOSH FRYDENBERG:
Well, the banks have a lot of explaining to do, Ross. Because this is very disappointing by the banks and customers should vote with their feet. Now, some of the smaller lenders have actually passed on this rate cut in full, and I saw Athena, today, is offering a variable rate at 2.84 per cent, which is below what the major banks are doing. So, people should shop around, get the best deal, but also make their displeasure known to their banks. Because the rate cuts should be passed on in full, and that would be a good thing for consumers.
ROSS GREENWOOD:
Okay, so if the Reserve Bank cuts are not fully stimulating the economy in the way they would expect, you would expect, is right now the time for you to announce more tax cuts? Or even to bring forward some of those tax cuts from 2022-23?
JOSH FRYDENBERG:
Well, the economy has hit a gentle turning point as the Reserve Bank said yesterday in its statement, pointing to the positive benefits for the tax cuts, with more than $18 billion flowing into the pockets of working Australians. We’ve also seen our infrastructure rollout, as well as the stabilisation in the housing market. Now, the Reserve Bank did point to the global economic outlook and the risks to the downside, and that it did need to take into account what was happening globally with the interest rates.
ROSS GREENWOOD:
So, Treasurer, that says to me, Treasurer, that it’s time for you to announce more tax cuts, or to bring more tax cuts forward. The Reserve Bank Governor has expressed frustration at the fact that he’s having to do all the heavy lifting by cutting interest rates, and the Government simply is going along. Budget in surplus, the plan is working, but you’ve got more money in the bank. So, is right now the time to announce more tax cuts?
JOSH FRYDENBERG:
Well Ross, can I point to you that the actual $18 billion that has flown, flowed through to Australian taxpayers is actually money that is being spent in to the economy and the last June Quarter in the National Accounts did not take into account those tax cuts, nor did it take into account the full benefits of the rate cuts. So the money is going out the door, but in contrast to us is the Labor Party that took $387 billion of higher taxes…
ROSS GREENWOOD:
Okay, leave the Labor Party aside. This is about you. Are tax cuts now more likely to either come forward, or is there more money for more tax cuts if needed? Are more tax cuts on the table or not on the table right now?
JOSH FRYDENBERG:
Ross, the tax cuts have passed, the money is flowing, we will see the impact.
ROSS GREENWOOD:
No, those tax cuts have passed. Those tax cuts have passed. Are there more tax cuts to come as interest rates get close to zero, when the Reserve Bank can do no more. Is it then time for the Government to announce more tax cuts? Are they on the table?
JOSH FRYDENBERG:
Ross, we’re sticking to our economic plan. That is a plan that has delivered more than 1.4 million new jobs, that is the tax cuts that we took to the Australian people at the last election, that is the infrastructure plan that we took, and that will play through across the economy.
But I want to point out to your viewers. The Australian economy continues to grow. While the big economies of Germany, the United Kingdom, Singapore, Sweden and others all experienced negative economic growth in June, in the June Quarter, we continued to grow. We have a AAA credit rating, we’ve seen a stabilisation in the housing market, and of course, and of course, the Government will continue to ensure that more jobs are created.
ROSS GREENWOOD:
Okay, Treasurer, I imagine that your Budget might be in better shape than some household budgets right now, but time to go. Treasurer, Josh Frydenberg, many thanks.
JOSH FRYDENBERG:
Good to be with you.