JOSH FRYDENBERG:
Leading credit agency, Standard & Poor's has provided a strong endorsement of the Australian economy, reaffirming our AAA credit rating and removing us from negative watch. Australia is one of only 10 countries around the world that has a AAA credit rating from the three leading agencies; S&P, Moody's and Fitch.
And this comes off the back of the recent National Accounts numbers, which show that the Australian economy is growing at 3.4 per cent through the year, the fastest rate of growth since the height of the mining boom back in 2012, significantly faster than the OECD average and faster than any G7 country.
And a benefit of a growing economy where we are creating more than 1,000 jobs a day is that we can provide the essential services that people expect and need; health, education and disability support.
So, Australians can be confident about their economy today and into the future. But this economic good news and the strong economic performance of the Australian economy will all be put at risk by a Shorten-led Labor government with their tax and spend agenda, which will lead to more debt and more deficits and which will cost jobs, drive investment offshore and lead to lower rates of growth.
Are there any questions?
JOURNALIST:
Would you make any cuts to offset billions you have given to Catholic and independent schools sectors or are you going to risk a AAA credit rating by paying for it all [inaudible]?
JOSH FRYDENBERG:
Well the Australian economy is growing strongly and this was pointed out by S&P today. They in fact pointed to our labour market and the record number of jobs that we're creating there. In fact if you look at the number of young people who have got a job over the last year – more than 100,000, this is the highest number on record.
And more women are coming into the workforce, with female participation rates near record highs - more seniors into the workforce. So our economy is growing, we're on track to come back into balance in 2019-20 with a surplus after that.
Obviously, more detail will be revealed in MYEFO, which is traditionally held at the end of the year after the December National Accounts. But our economy continues to grow strongly and we continue to ensure responsible fiscal management.
JOURNALIST:
Treasurer, [inaudible] it didn't matter much who wins the next election – except a bipartisan approach and that would help the rating in the long term. What's your response to that?
JOSH FRYDENBERG:
Well we know it matters a great deal who wins the next election. Because only one side is proposing $200 billion of new taxes – that's Bill Shorten's Labor Party. There is only one side that will not deliver a Budget back into balance or a surplus into the future and that's the Labor Party.
And there's only one side who can continue the strong employment growth that we continue to expect and that's the Coalition.
JOURNALIST:
S&P said that you need to run bigger surpluses in any case to offset a possible unwinding of the property market. Is that your plan to run ones that are even larger than marked down in the May Budget.
JOSH FRYDENBERG:
Well they actually said there was an orderly unwinding that is happening in the property market and that is the same response and view of the Reserve Bank.
The Reserve Bank of Australia has said that prices have come off in the capital cities, particularly in Sydney and Melbourne, and that this is a healthy development creating a more sustainable housing market. So, the S&P report did say that there was an orderly transition occurring in the housing market.
JOURNALIST:
But it also mentions the fact you need to run larger surpluses in case that that orderly unwinding becomes disorderly.
JOSH FRYDENBERG:
Well as you know, surpluses do increase over time as a result of our fiscal management. We will come back into balance in '19-20 with surpluses after that.
JOURNALIST:
In the last five years all spending has had to be offset by savings elsewhere in the Budget. Does the improving economy give you greater latitude going forward than we have had over the last five years?
JOSH FRYDENBERG:
Well David as you know, we have shown enormous discipline when it comes to budget decisions and spending matters and great credit to the former Treasurer and now Prime Minister Scott Morrison and Finance Minister Mathias Cormann.
We have reduced the rate of spending growth to the lowest level in 50 years, and that's quite a significant achievement. So we will continue to be very prudent when it comes to spending decisions ensuring that our spending is linked to productivity growth and to providing the essential services that Australians need.
JOURNALIST:
So Treasurer, just to clarify, you don't know yet how you are going to pay for this $4 billion Catholic schools deal?
JOSH FRYDENBERG:
We certainly do and that is from our growing economy and a strong Budget. And today's announcement by S&P, reaffirming Australia's AAA credit rating ensures that Australia remains one of only 10 countries in the world with AAA credit ratings from the three major agencies.
The Australian economy is growing strongly. That's why Australians, whatever state or territory they live in, should look at our economy with great confidence today and into the future.
JOURNALIST:
So if the revenue uplift is big enough, then you'll just spend it all? You're not going to promise any offsets for schools funding or anything?
JOSH FRYDENBERG:
Well as you pointed out earlier, we're coming back to balance and then we're delivering surpluses. When it comes to revenue, as you know, our tax to GDP is around 23 per cent and we'll continue to be very prudent with our spending.
But when it comes to tax, I'm glad- and revenue, I'm glad you raised it. Because only one side and that's the Coalition, that's the Liberal and the National Parties has legislated an enterprise tax plan which will reduce the tax rates for small and medium sized enterprises up to a turnover of $50 million, down to 25 per cent.
Only one side has legislated personal income tax relief. But the Labor Party is promising to lift the tax rates for all small and medium sized enterprises across the economy. That is not a good outcome for small businesses. It will cost jobs and it will hurt the family budget.
JOURNALIST:
How did you go from $5 million to $443 million so quickly with the Great Barrier Reef Foundation?
JOSH FRYDENBERG:
Well, as you know the grant to the Great Barrier Reef Foundation, which is the largest charity providing support for the Great Barrier Reef, it has raised millions of dollars itself, has some of the most eminent Australians on its board.
We went through an ERC process and the Department of Environment provided me in writing, a recommendation that this money would not only help serve our purposes to protect the Barrier Reef, but also that it represented value for money and was consistent with the Government's guidelines.
JOURNALIST:
What date was that, sorry? [Inaudible]
JOSH FRYDENBERG:
I have mentioned all those dates in the Parliament.
JOURNALIST:
Why leave it up to the Foundation though to hand out these grants rather than doing it [inaudible]?
JOSH FRYDENBERG:
This is one of the great myths that the Labor Party is trying to promote obscuring the fact that when they were last in government, they ignored the reef. So through their actions, you saw the reef go on the endangered watch list internationally.
You saw dredge disposal projects that were planned for the reef marine area. You saw a failure under Labor to plan for the long-term health of the reef. When we came to government we put in place a $2 billion Reef 2050 plan in partnership with the Queensland Government.
We banned these dredge disposal projects. We ensured that the reporting on the reef went back to the normal cycles and wasn't on the endangered watch list and we put this money to help the reef. And one of the great myths being promoted by the Labor Party is that this is money that won't end up in the hands of farmers or end up in the hands of scientists.
Yes it will. In fact it's going to improving water quality, reducing the sediment, nitrogen and pesticide runoff. It's going to our scientists who are doing ground breaking world-leading work to build the resilience of our reef.
JOURNALIST:
You're the Treasurer now; would you give away $443.3 million again without a tender process – as Treasurer?
JOSH FRYDENBERG:
Well I, as Treasurer, like treasurers before me want to ensure the importance of the ERC process and that spending commitment went through the ERC process and importantly that money will be spent on the reef.
I don't know what Labor's got against Nemo, but they seem to have a problem with extra funding and support.
JOURNALIST:
What have you got against tender processes?
JOSH FRYDENBERG:
Well the Foundation has a proven track record. In fact the Labor Party has provided significant funding – millions of dollars – to the reef in the past. This is muscling tactics again by the Labor Party. You see it in so many different areas when they want to obscure the pitfalls and the failures of their time in office. They revert to these tactics which are not working. Last two questions, last two questions thank you.
JOURNALIST:
Just briefly, how much of a role do you think Kerry Stokes and Rupert Murdoch played in the events a few weeks ago here? Do you think that they were critical to Malcolm Turnbull's ousting?
JOSH FRYDENBERG:
No. Last question.
JOURNALIST:
Just back on S&P. It noted that our banking system is one of the strongest in the world. Are you worried the Royal Commission is now going to undo some of that strength?
JOSH FRYDENBERG:
Well as you know we've got the interim report on the Royal Commission at the end of next week. The Royal Commissioner has done an outstanding job in shining a light on some of the misconduct that has been occurring in the financial services sector. It is absolutely critical that we continue to have a transparent and an effective financial system.
But at the same time, we cannot see a repeat of some of the conduct that we have seen to date – fees for no service, fees for dead people – being charged to dead people, allegations of 300,000 breaches by insurance companies selling unsolicited advice and allegations of lying to regulators. Lessons need to be learned from that experience and new tougher measures taken to ensure there's no repeat again. Thank you very much.