SHARRI MARKSON:
Treasurer Josh Frydenberg, thank you for joining me today.
JOSH FRYDENBERG:
Nice to be with you Sharri.
SHARRI MARKSON:
Now, you're creeping towards a federal election but Bill Shorten is so far ahead in the polls that he even feels comfortable having his own input from policy to positions like the Governor General and he wants a say in the population policy as well. Is he right to be so confident?
JOSH FRYDENBERG:
Absolutely not. Bill Shorten is taking the Australian people for granted, he's showing great presumption in acting as if he has already won the election; wanting to veto appointments; threatening organisations that have received government grants not to spend the money because they won't honour the contracts if they're elected; and writing to the Prime Minister proposing a joint taskforce on population.
Well, no one has told Bill Shorten, well certainly from his own side, that he is in opposition, he's not in government. And we have seen this behaviour from him before Sharri, you might remember after the last election he ran around the country doing a victory lap.
But what we have seen from him in recent days is his five point plan. That five point plan is for new taxes on your property, new taxes on your business, new taxes on your income, new taxes on your savings and new taxes on your electricity bill.
SHARRI MARKSON:
One of the changes he is proposing to make in the property sector is to negative gearing. Now, you've said that these changes will mean that people's house prices - that the value of their home will fall. Have you or the Treasury done any modelling into just how much the value of people's homes will drop, how much property prices will drop if these negative gearing changes go through?
JOSH FRYDENBERG:
Treasury have said it would put upward pressure in the short term on, downward pressure in the short term on prices and that would be particularly problematic coming at a time when the heat has come out of the housing market. And we are seeing groups like CoreLogic and RiskWise and Citi Group all talk about the negative implications of Labor's new property tax.
And we have seen the housing market dynamic change, moving away from investor led growth to more owner occupier led growth and we've seen the greatest number of first home buyers getting loan approvals in any time since the end of the GFC.
So, the market has changed and Labor's property tax would decrease the public's value in their-own homes.
SHARRI MARKSON:
Has Treasury given you an idea of just the extent to which prices could fall?
JOSH FRYDENBERG:
As I said, Treasury have provided that advice but you've also had commentary and analysis from a whole group of other reputable organisations. And Sharri, the key point here is Labor's policy is absolutely designed to drive property prices down. That's their intention and it's coming at a time when the property market doesn't need that because we've already started to see a correction.
SHARRI MARKSON:
Now, in a piece you wrote today, you've hit out at Bill Shorten's style of class warfare and wealth redistribution, you describe it as similar to Jeremy Corbyn and Bernie Sanders…
JOSH FRYDENBERG:
And Bernie Sanders, that's right.
SHARRI MARKSON:
The thing is that this approach does seem to be working for him, doesn't it? I mean, he's well ahead in the polls - he had a strong victory in Longman. Isn't this working?
JOSH FRYDENBERG:
Well, one of the consequences of Labor's arrogance is that they are starting to give the Australian public a glimpse of what they would do in office; and $200 billion of new taxes is one of, one series of the policies they will implement.
But they're also going to give the unions a seat at the Cabinet table and the unions are preparing for a grand feast at the Cabinet table, except it'll be the tax payer who will be paying for this lunch. And we've already seen, under Bill Shorten, talk of union law breakers becoming union law makers.
And the ACTU Secretary Sally McManus, Wayne Swan the incoming President of the Labor Party and the Shadow Assistant Treasurer Andrew Leigh have all made it very clear that the unions having more power is what they believe to be a tonic to inequality. This goes against Australian experience; it will be a recipe for less jobs, less growth, less investment and more industrial disputation.
SHARRI MARKSON:
Last night on the show, I interviewed the New South Wales Treasurer Dominic Perottet and he was very passionate about the amendment to the GST legislation that will see, that will ensure that no state is to be worse off under your new arrangements.
He even went so far as to encourage Senators from New South Wales to support the amendment if it goes to Parliament in the next fortnight. I mean, this would- if they do follow his advice, this could be a situation where you have Senators, Liberal Senators, in effect, crossing the floor. Is this something you're worried about ahead of Parliament returning next week?
JOSH FRYDENBERG:
Well, we actually believe we've got the right national solution to what is a national problem, namely that the integrity of the GST was being threatened by the fact that Western Australia had gone down to just 30 cents in the dollar.
So, we went to the Productivity Commission, we sought their advice, states and territories provided data to the Productivity Commission and the end result was that we've put forward a plan, which will see a floor at 75 cents in the dollar, below which no state can fall.
And the Commonwealth are putting in an additional $9 billion to the states and territories, including a legislated a billion dollars plus going in every and each year in perpetuity. So, New South Wales will be $351 million better off. Victoria will be $425 million better off…
SHARRI MARKSON:
But Treasurer…
JOSH FRYDENBERG:
And Tasmania…
SHARRI MARKSON:
The treasurers did present modelling to you that showed, in different economic scenarios, for example if property prices fall in New South Wales or if the mining boom returns in WA, they could be billions of dollars worse off. If it is true what you say, that every state will be better off under this new arrangement, why not just put the legislation through? Why not just include an amendment in the legislation?
JOSH FRYDENBERG:
Well, the first thing to say Sharri is we actually are using the data provided by the states and territories and the Productivity Commission data and we're putting more money in that would have never been there before. On top of the $6.5 billion that the states and territories are getting in additional GST payments because we've extended it to online purchases and greater compliance activity.
SHARRI MARKSON:
And on the amendment?
JOSH FRYDENBERG:
But the reason why we're not running with the Labor and some of the Liberal states' proposal here is because it would lead to having two parallel systems. You'd have to run the old model or the existing model as it's called, and then you would have to run the new model simultaneously, a bit like running digital and analog at the same time.
Now, Bill Shorten went to Western Australia, he campaigned with Labor Premier Mark McGowan. He said he supported the Coalition's policy in this regard, its reforms and its legislation. So, he can't walk both sides of the street.
SHARRI MARKSON:
So you're saying- you're saying you can't commit in legislation that none of the states will be worse off?
JOSH FRYDENBERG:
Well, we have absolutely said that none of the states will be worse off…
SHARRI MARKSON:
You said it, but you won't put the amendment into the legislation.
JOSH FRYDENBERG:
But what we are guaranteeing in legislation is there will be a billion dollars plus put in each and every year that wouldn't have been there before.
SHARRI MARKSON:
Now, you're off to the G20 on Thursday. What's the main topic that you're keen to discuss and you're keen to raise on Australia's behalf?
JOSH FRYDENBERG:
We'll be talking about the international economy. Its ten years on from the GFC. We'll be talking about some of the global trade tensions, obviously between China and the US in particular. It is not in Australia's interest for that to escalate. What we are focused on is ensuring an open, rules based trading system.
This will be a good opportunity to meet with Australia's international partners to talk about the success of the Australian economy because we are in our 27th year of consecutive economic growth, but also to take the temperature on the world economy and what other countries are seeing.
SHARRI MARKSON:
There's, a- I can't even say a new plan because we've been talking about this immigration plan since May now, when the Tele first broke it. But there's more detail on a plan out today to force migrants to live in regional and rural areas; to force them to stay there for up to five years.
Do you agree, as a Treasurer, with lowering the immigration rate? Because past Treasurers, even Scott Morrison when he was in that position, had concerns that it would affect the Budget position.
JOSH FRYDENBERG:
Well, my view, both from a personal experience, given my mother was born overseas and my grandparents had been born overseas, is that immigration is good for Australia. We have a wonderful story to tell of social harmony and multiculturalism and migrants have helped make this country the great country that it is.
That being said, there are some challenges around the growing population. I mean, Melbourne's growing by 2,700 people a week. We're adding a city the size of Canberra to the country each and every year and 75 per cent of the population increase over the last five years, Sharri, has been in three largest population areas of Melbourne, Sydney and south-east Queensland.
Even though we have seen the number of permanent visas come down to the lowest level in a decade, we do need to take measures which Alan Tudge has foreshadowed today to ensure that prospective migrants to this country get an opportunity to live and work in the regions and in the smaller states to alleviate some of the pressure.
SHARRI MARKSON:
This isn't talking about an opportunity; this is talking about binding them to stay there for up to five years. Isn't that unconstitutional?
JOSH FRYDENBERG:
This is obviously a good policy that we are working through and we are very confident that everything we do has a sound legal basis. What we are focussing on is getting the best outcomes to those prospective migrants because they want to be in jobs, they want a good place to live for their family, but also for the economy as a whole and dealing with some of the congestion we are seeing in our cities today.
SHARRI MARKSON:
Now lastly as a former Environment Minister, the IPCC report came out yesterday – it suggests that we should all be cutting back on out meat intake. Are you going to do that?
JOSH FRYDENBERG:
No, I am a meat lover and will continue to do so. And Australia Sharri has been able to reduce its emissions to the lowest level on a per capita and GDP basis in 28 years. But also have an energy mix which in includes coal, which includes gas, which include renewables. We need to have an all of the above approach, not the ideological reckless approach that the Labor Party will bring which will send everyone's power bill higher.
SHARRI MARKSON:
So you don't think we should follow the reports advice and walk away from coal-fired power by 2050?
JOSH FRYDENBERG:
If we did that Sharri the lights would go out on the east-coast of Australia.
SHARRI MARKSON:
Thank you so much for your time today.
JOSH FRYDENBERG:
Good to be with you.