VIRGINIA TRIOLI:
Treasurer, good morning. Thanks for joining us from all the way over in the US.
JOSH FRYDENBERG:
Nice to see you, Virginia.
VIRGINIA TRIOLI:
Nice to see you. The NAB has declared Australia’s retail sector is in recession. Some economists believe that we are in an effective recession and others that we will formally enter a recession next year. And of course, we have discussed, you and I, the economy has slowed to levels last seen since the GFC. Yet, you’ve told your US audiences in the last 24 hours that a surplus is more important at this stage than stimulus. Why?
JOSH FRYDENBERG:
Well, we’ve committed to a surplus in 2019-20 and we will deliver on that. But also, we believe we can effectively bring budget repair and at the same time, ensure that Australia’s remarkable 28 consecutive years of economic growth continues. I have to say to you, Virginia, talking to my international counterparts at the G20 Finance Ministers Meeting and in other Capitals around the world, Australia is widely admired for its economic performance. At 1.8 per cent GDP growth, we’re still growing faster than the other advanced economies except the United States. We have the AAA credit rating from the three leading credit rating agencies. Employment growth has been strong. Just a couple of days ago, our recent jobs data showed that the workforce participation rate was at record high. And when you look at our net debt levels, they’re about a quarter of the average across the G20. So, we’ve got to continue with our productivity, pro-growth agenda. That’s what I’ve been talking to counterparts here in Washington about. But at the same time, Australians should understand that the fundamentals of our economy are sound.
VIRGINIA TRIOLI:
That doesn’t necessarily answer my question, though, about why at this stage, when you’re looking down the barrel of that shrinking growth; why you wouldn’t pivot, why you wouldn’t make some change towards spending rather than focusing solely on the surplus. Are there no circumstances, is there no floor level, if you like, at which you would then consider pivoting?
JOSH FRYDENBERG:
Well, we believe as I just said that we can reduce government debt, which all governments should do at every opportunity because that means lower interest payments on the debt and that also means greater flexibility to respond to downturns and economic shocks when they occur. But we believe we can pay down debt as promised to the Australian people at the budget on April the 2nd, and at the same time, continue with our pro-growth agenda which involves tax cuts, which involves $100 billion of infrastructure spending and a major skills package.
VIRGINIA TRIOLI:
Although, that is where the question keeps coming back to because, of course, all these credentialed, august, serious Australians that I’m mentioning here, including major banks and economists, business heads, and of course as we discussed last week, the Reserve Bank. They’re all well aware of your program. They know what you want to do with tax cuts and that you argue that it will mostly work. And yet, they’re not persuaded. So, what do we say to that?
JOSH FRYDENBERG:
Well, we’ve heard from the Reserve Bank Governor himself that the tax cuts that we have promised at the budget and we’re looking to pass through the Parliament, will boost disposable income. And the tax package was always designed to provide both short term tax relief, so for those who earn up to $126,000, to get up to $1,080 in their pocket, but also the long term structural reform for low and middle income earners to ensure that 94 per cent of Australians pay a marginal rate of no higher than 30 cents in the dollar. And it seems that Anthony Albanese doesn’t want Australians to have the tax cuts that they voted for. Labor is ignoring the will of the Australian people. We took to the election a comprehensive tax policy and tax plan and the Australian people voted for lower taxes, not Labor’s higher taxes and redistribution agenda. And it’s time they took notice of the election result and they supported these changes which will benefit low and middle income earners, strengthen and simplify the tax system and ensure that our economy is stronger.
VIRGINIA TRIOLI:
Well, we’ll get to what else you can possibly do to get those tax cuts through the Senate in a moment. But on the issue of the opposition, they’ve asked you for more modelling on the longer term impact for your tax cuts. You’ve told them to go and read the budget papers. And yet, the budget papers don’t show what proportion of tax cuts would flow to workers earning more than $180,000 a year, which is a sticking point for Labor. So, can you tell viewers this morning when the full package is implemented in 2024, will higher income earners be favoured over lower income earners?
JOSH FRYDENBERG:
These tax cuts are all about the low and the middle income earners. We’re not changing the tax rates or the threshold for the highest income earners…
VIRGINIA TRIOLI:
I’m going to jump in there with my apologies. That’s not what my question goes to. You’re talking always about a full suite of cuts. When the full suite is introduced, who wins out? Those higher income earners or the lower ones? Because that is the sticking point for Labor if you want them to come to the party.
JOSH FRYDENBERG:
And the lower and middle income earners are the winners and is Labor saying that they don’t want to reduce the tax rates for people who earn between $45,000 and $200,000. Now, the numbers are clearly set out in the budget. This is $158 billion worth of tax relief, that’s the cost to the budget and its $95 billion for reducing the rate from 32.5 cents to 30 cents for those who earn between $45,000 and $200,000. That is 70 per cent of Australian taxpayers, more than nine million taxpayers. And the Labor Party is again going on with its class warfare rhetoric. What we are talking about is helping people get ahead who have a go. These are not people who consider themselves wealthy. These are the people who confronted Bill Shorten during the election campaign. These are the people who simply not only want to earn more, but keep more of what they earn and the Labor Party keeps going against aspiration and middle income earners.
VIRGINIA TRIOLI:
Well, that’s a whole lot of rhetoric there but it still doesn’t clarify the point about what proportion end up getting that. But we’ve had a couple of go’s at it. But let me just ask you about the other point of getting it through the Senate. How are your negotiations going with the Senate crossbench? I think we heard from Pauline Hanson yesterday saying she hadn’t been contacted by the Government about that yet. Are you in active discussions or are you wanting to leave it all to Labor so that you can then try and politically wedge them on this issue?
JOSH FRYDENBERG:
Well, we’re interested in getting this tax package through the Parliament in full to the Australian people…
VIRGINIA TRIOLI:
So have you negotiated with the crossbench? Have you spoken to them directly about it?
JOSH FRYDENBERG:
We are negotiating with the crossbench and we’ll provide the briefings that they require. Indeed, One Nation recently had a briefing and Mathias Cormann and myself have been speaking to crossbenchers and we recognise it’s very important for the Australian economy that this tax package goes through. It was central to our campaign. It goes to the heart of our philosophy which is that people should keep more of what they earn. They should be rewarded for effort. And again, the Labor Party is showing itself to be the high taxing Party. They lost the election. They had a high tax agenda. It was rejected by the Australian people and its time they acknowledge the result of the election. Indeed, before the election, they were claiming moral superiority and mandate for tax increases…
VIRGINIA TRIOLI:
I think it’s probably time that we focus on the Party that actually won, that has the job now of trying to implement tax reform, rather than harking back to the past…
JOSH FRYDENBERG:
Exactly.
VIRGINIA TRIOLI:
Well, that’s what I’m doing. I’m focusing on what you’re going to do to get it through. But let’s move on to another topic that I want to get to before our time runs out and that compelling landmark report from the CSIRO today, declaring that we face slow decline and if governments and businesses fail to undertake significant economic, social and environmental reform, then we go into decline. Do you agree with the CSIRO that these are reforms that are real and that are needed now?
JOSH FRYDENBERG:
Well, sorry Virginia, I haven’t seen that report. As you say, I’m over in the United States. I’ll have a look at that report. But clearly, we are always focused on reforms that are in the interests of Australians.
VIRGINIA TRIOLI:
The report says that we could unlock wages growth of 35 per cent if we take on the issue of improving education outcomes, lift our performance in maths and science and improve business collaboration among other key points. Does that strike you as crucial that those changes that Australia make now?
JOSH FRYDENBERG:
Well, as you know, we’re spending record amounts on education, particularly school education, but also early childhood education. And one of the things that I’ve been talking about here is collaborating with business and government to deliver better skills and better apprenticeships and more opportunities for our younger people in work. So, they’re all noble objectives. They’re things that the Government is focused on and of course, as I said, at the start, we’re in our 28th consecutive year of economic growth. Australia is widely admired for our economic performance. We’re not resting at all. There is a lot to do. Our plan for the economy was set out in the budget and now we will endeavour to implement faithfully all of those election commitments.
VIRGINIA TRIOLI:
Minister Frydenberg, thank you for joining us today, thank you.
JOSH FRYDENBERG:
Always good to be with you.