SABRA LANE:
Treasurer, good morning and welcome.
JOSH FRYDENBERG:
Nice to be with you, Sabra.
SABRA LANE:
Brexit might be a possibility, sooner than later?
JOSH FRYDENBERG:
Well, Australia looks like an island of tranquillity in comparison to Britain right now, but I think it's playing out in a way that Governor Phil Lowe actually talked about, which is political shocks also having an economic impact and we've seen in the United Kingdom that they had negative growth in the June quarter. But certainly, Australia values deeply its relationship with the United Kingdom and we see important economic opportunities with a post-Brexit Britain.
SABRA LANE:
Now, to our own GDP figures, they didn't include the tax cuts that were delivered in July, because it was the June quarter. How confident are you that consumers are going to spend that money this quarter?
JOSH FRYDENBERG:
Well, it's $14 plus billion dollars that's already made its way into the pockets of more than 5.5 million Australians.
SABRA LANE:
But are they spending it, or are they down paying mortgages and debt?
JOSH FRYDENBERG:
Well, I think there's probably a combination. People using the money, spending the money on their own priorities, as is appropriate, but the June quarter numbers of 0.5 per cent and through the year growth of 1.4 per cent does show the resilience of the Australian economy and it is a repudiation of all those who sought to talk it down. Australia is continuing to grow. We're now in our 29th consecutive year of economic growth. A record that hasn't been matched by any other nation. We've got a AAA credit rating and when Germany and the United Kingdom and Singapore and Sweden and others all experienced negative growth, Australia defied the critics and continued to growth.
SABRA LANE:
You say resilient, others say lukewarm and tepid.
JOSH FRYDENBERG:
Well there's no doubt we want economic growth to be higher. And as you said in the opening, the tax cuts were not reflected in the June quarter, they will be reflected in the September quarter onwards. So too the full impact of the fifty basis point rate cuts that will also be reflected more fully in the September quarter and afterwards. And the Prime Minister has written to the State Premiers about which infrastructure projects could potentially be brought forward as well.
SABRA LANE:
Now the government is considering new investment breaks for business, but if that happens that won't be until May next year. What's with the timing of that, is that just about protecting your surplus?
JOSH FRYDENBERG:
Well, we already have R&D incentives for business and more than $2.8 billion went out the door in 2017/18, and we want to continue to see businesses invest. And one of the comments I made the other day in a speech about productivity, Sabra, was that businesses should be looking for growth opportunities, spending on capital and investment, and not always engaging necessarily in a share buy-back, but…
SABRA LANE:
But the point of that question, is this just about protecting your surplus?
JOSH FRYDENBERG:
Well our surplus is important, but we continue to invest in important initiatives that do deliver outcomes for the Australian economy and I'm having that conversation right now with the business community.
SABRA LANE:
Why not invest in Newstart recipients? They would spend the money straight away and that would really stimulate the economy. They wouldn't hang onto it.
JOSH FRYDENBERG:
Well, the Prime Minister and others in the government and I have made it very clear that when it comes to Newstart the best thing you can do for people who are on it is to create a job. We've created more than 1.4 million new jobs. Employment growth is now more than three times what we inherited when we came to government. More than double the OECD and most people on Newstart move into a job within 12 months.
SABRA LANE:
China's ambassador to Australia today says that the new US tariffs being applied to China are trade bullying, that China doesn't want a trade war, but it's not afraid of fighting one. Do you agree, bullying?
JOSH FRYDENBERG:
Our view is whether it's the United States or China, they are best served by a global trading system without this tit for tat tariffs, with a rules based system where the WTO is central to dispute settlement and with one in five Australian jobs, Sabra, connected to trade and now with the government we've entered into a number of free trade agreements which are bearing fruit with the current account surplus that we saw just a couple of days ago, we will continue to make the case privately and publicly for an open rules based free trade system without this tariff war that we've seen play out.
SABRA LANE:
He's explicitly, the ambassador, has said that China is playing by the rules and it disputes everything that America says and they've used a proverb here. "He who tries to blow out the other's oil lamp will set his beard on fire."
JOSH FRYDENBERG:
We know that the Americans do have some legitimate issues when it comes to their trade concerns with China around intellectual property, around subsidies for various sectors with regard to the forced transfer of technology. There are some legitimate issues that the Americans have made, but at the same time we want cool heads to prevail. We want the disputes to be resolved and we want both sides to be sitting at the negotiating table.
SABRA LANE:
Do you agree with Duncan Lewis, who's said overnight that foreign interference is a bigger threat to Australia than terrorism?
JOSH FRYDENBERG:
Well, Duncan Lewis is a very respected figure and he does have some unique insights into this area. I think what he's pointed out, though, is that we have serious challenges, both with terrorism and with foreign interference.
SABRA LANE:
Do you agree, though he says it's a bigger problem?
JOSH FRYDENBERG:
They're not mutually exclusive, both are serious problems and he does point out rightly that with regard to foreign interference and cyber threats that they have been on a growth trajectory. They're a big threat to business, they're a big threat to government. We're constantly battling them. There's a lot the public doesn't know or doesn't see and that is why we have passed laws through the Parliament on foreign interference and that's why we are resourcing ASIO, the AFP and other government agencies to deal with this rising threat.
SABRA LANE:
Treasurer, thanks for talking to AM.
JOSH FRYDENBERG:
Always good to be with you.