20 September 2018
Transcript - #2018012, 2018

Interview with Patricia Karvelas, RN Drive, ABC Radio National

Subjects: Independent schools funding; COAG meetings; Australian dollar; China-US trade; Peter Dutton

PATRICIA KARVELAS:

Josh Frydenberg is the Federal Treasurer, welcome back to RN Drive.

JOSH FRYDENBERG:

Nice to be with you Patricia.

PATRICIA KARVELAS:

So the Government is spending an additional $4.5 billion on independent schools. Why was that additional funding necessary and what does it achieve beyond ending the war with the Catholic schools?

JOSH FRYDENBERG:

Well the clear message is that there is more funding from the Commonwealth Government to all schools – to government schools or state schools, to the independent sector and to Catholic Schools.

And we've accepted the recommendations of the National School Resourcing Board's review of the socio-economic status, which was released in July of this year and this has led to the increased funding.

And it is important for your listeners to understand that under this new funding model there will be an increase of 101 per cent for state schools and an increase of 70 per cent for non-state schools and this is part of a $309 billion commitment from our Government out to 2029.

PATRICIA KARVELAS:

Okay, so out of that $4.5 billion in new money, are you telling me some of that is going to state schools?

JOSH FRYDENBERG:

No, this is going

PATRICIA KARVELAS:

No.

JOSH FRYDENBERG:

This is going to the non-government

PATRICIA KARVELAS:

That's right.

JOSH FRYDENBERG:

…school sector. It is sector blind though.

PATRICIA KARVELAS:

So that's what I wanted to clarify. You're saying generally. Well it's not sector blind because you just said it is going to the non-government schools.

JOSH FRYDENBERG:

Well within the non-government school sector.

PATRICIA KARVELAS:

Okay, so it's not sector blind. It's a special deal.

JOSH FRYDENBERG:

Well we are not doing special deals, Patricia.

PATRICIA KARVELAS:

It is a special deal. It's a specific deal for the Catholic and independent schools. It's not for public schools is it?

JOSH FRYDENBERG:

Well as I said earlier, the support for the state schools, which is the government schools, which is around $7.3 billion this year, will increase next year to $7.9 billion, $8.6 billion the year after that and $9.3 billion after that.

PATRICIA KARVELAS:

That was already locked in. This new funding doesn't go to state schools at all.

JOSH FRYDENBERG:

But that's right and this additional money will ensure that we will continue to have choice in our school system because you will remember back to the early 1960s, it was in fact Sir Robert Menzies who ensured that there was funding first in a non-discriminatory way which extended beyond the government school system into Catholic schools and independent schools.

PATRICIA KARVELAS:

Okay, we know that $1.2 billion is a choice and affordability fund. How does the shift from the SES model to a parent means-test model result in an extra $3.2 billion?

JOSH FRYDENBERG:

Well, what it will ensure is that the funding will be based on need. We'll have it linked to parental income using improved data collection and analysis and it'll be much more targeted in the way that the money is spent.

But the key message here, for your listeners, is that we value choice in education. We continue to support in a very substantial way, state schools. But we also ensure that those parents who choose to send their kids to a faith-based school, which are often low income and low fee schools, also have the Government's support.

They are taxpayers too and that is why this is important for the Coalition.

PATRICIA KARVELAS:

If you're just tuning in, my guest is the Treasurer Josh Frydenberg, and this is RN Drive. 0418 226 576 is our text line.

The New South Wales – former New South Wales Education Minister Adrian Piccoli isn't a fan of this. He says and I quote, "This is pathetic, there is nothing fair about it. There is nothing Christian about it. It is throwing money at the powerful and well connected." What is your response to that?

JOSH FRYDENBERG:

Well I would say to him, and every other participant in the schools sector that what we want to see is more funding but better outcomes, better student outcomes and we believe that we have got the balance right. As I say, there's increased funding for students in the government school sector, in fact it's growing by 6.3 per cent.

PATRICIA KARVELAS:

Okay, but this is a former Liberal state Education Minister.

JOSH FRYDENBERG:

He is entitled to his view Patricia. But what we do have is the strong support of the Catholic school sector, of the independent school sector today. We have seen increased funding going into the government school sector as well and it will be interesting to see what Bill Shorten and Labor's response to this is because they've been calling for increased funding for the Catholic school sector.

PATRICIA KARVELAS:

Parental income tax records will be used to assess the socio-economic status of private schools. How big of a role will that play in the formula used to determine how much funding individual schools get?

JOSH FRYDENBERG:

Well look, I will leave the detail about how the system will operate to the Education Minister. But it is very important to understand that this is a significant announcement from us that the new funding – there's over $300 billion of Commonwealth funding in the decade out to 2029 will go to all schools, both government and non-government.

PATRICIA KARVELAS:

And in terms of parental income, is it income or taxable income? How does the income get determined?

JOSH FRYDENBERG:

Well look, it is linked to the parental income using the data collection. Again, I'll leave that to the Education Minister.

PATRICIA KARVELAS:

Okay, on another issue, do you share the PM's view that the only thing COAG meetings are good for is consuming Tim Tams?

JOSH FRYDENBERG:

No, well he was making the point that he doesn't hold meetings for meeting's sake. And I think that's a good principle to start from.

PATRICIA KARVELAS:

Yeah but COAG meetings actually determine what happens in our country don't they?

JOSH FRYDENBERG:

And he is holding a drought summit and getting together with the states and others to work through some of the challenging issues we have with drought-stricken communities.

I'll be meeting with my state and territory counterparts early next month to talk about some of the GST related issues that the now-Prime Minister and then Treasurer pushed so successfully to reform.

As the Energy Minister, I sat down with my state counterparts and worked on a number of issues as well. I mean, I do think COAG meetings, at leader level or at ministerial level are important, but they shouldn't be held for a meeting's sake, they are there to work through an agenda.

PATRICIA KARVELAS:

I suppose energy ministers were due to meet as part of the COAG process on the National Energy Guarantee. Do you believe that meeting should still go ahead?

JOSH FRYDENBERG:

Look, I'll leave that one to the Energy Minister.

PATRICIA KARVELAS:

You are the Treasurer and the Deputy Leader of the Liberal Party.

JOSH FRYDENBERG:

Yeah but I can't determine what the energy ministers' meeting arrangements are. I know that from my own experience, those meetings are helpful Patricia, because they are not confined to the National Energy Guarantee or a related- you know related reforms.

They look at a whole range of issues whether its changes to the gas pipeline market, or getting more gas into the system. They're also looking at the ACCC's recommendations which Angus Taylor and our Government are pushing forward with.

PATRICIA KARVELAS:

The RBA says an all-out trade war could force the Aussie dollar up as much as 6 per cent which could shrink our economy by as much as 3.5 per cent. That's recession territory isn't it?

JOSH FRYDENBERG:

Well there's no doubt that we are concerned about the trade disputes that have emerged in recent months and their potential for escalation. Now, Australia has a long-standing interest in having a rules-based trading system and one that is transparent and free.

We export, as a country, over $400 billion of goods and services in any particular year, which is equivalent to about 21 per cent of our GDP. And the US is our 5th largest market for goods and our second largest market for services. And we know that China is our largest market for goods exports and China is also our largest market for services.

So we don't want to see any escalation in that trading relationship between those two large countries.

PATRICIA KARVELAS:

No, but given we are seeing an escalation, do you worry about our economy and are we in genuine risk of recession now?

JOSH FRYDENBERG:

No, I wouldn't say that. I would say that the Australian economy is strong and that's been borne out in the recent National Accounts figures, which showed that our economy was growing at 3.4 per cent through the year, which is faster than any G7 country and much faster than the OECD average and the fastest since the height of the mining boom back in 2012. And we have been creating more than 1,000 jobs a day.

So our economy is very strong. That being said, when I sit down with the Reserve Bank, they do talk to me about the external economy, the international economy and they look at potential inflation pressures in the United States, they look at potential slow-downs, although managed slow-downs in China's growth trajectory and they also point to the global trade tensions and the potential for them to cause disruption to the international economy.

So we do watch it very closely. It hasn't got out of hand at present but we have to be vigilant and we have to continue to be a good global citizen, pushing for a rules-based global trading system.

PATRICIA KARVELAS:

Okay, if our economy is so important and of course our Budget is too, where are you going to get the money for this extra- money for the education sector – you going to have to cut other areas?

JOSH FRYDENBERG:

No, we are growing our economy.

PATRICIA KARVELAS:

So, hang on a minute, this is- the extra money isn't going to be offset by other cuts?

JOSH FRYDENBERG:

Well we're not making cuts in our economy. What we are doing is growing our economy...

PATRICIA KARVELAS:

No, but in the Budget on this, you know what I am asking. On this $4.5 billion you've got to find now, what else might you do to pay for that?

JOSH FRYDENBERG:

Well the first thing I'd say is we inherited a situation where...

PATRICIA KARVELAS:

Okay, that's not my question. I do not care what happened 5 years ago. I want to know how where you're going to get the $4.5 billion.

JOSH FRYDENBERG:

The point is that we are on track to bring the budget back into balance in 2019-20 and then surplus after that. We have reduced the rate of spending growth to its lowest level in 50 years. We are making responsible economic spending decisions, we will continue to do so and the next…

PATRICIA KARVELAS:

Will you

JOSH FRYDENBERG:

…but importantly for your listeners, the next major budget statement will be the Mid-Year Economic and Fiscal Outlook at the end of the year.

PATRICIA KARVELAS:

You know how much I love that, it's in December isn't it?

JOSH FRYDENBERG:

That is the traditional time, correct.

PATRICIA KARVELAS:

Yeah, I am looking forward to it. But I want to know will we see other cuts to pay for this $4.5 billion?

JOSH FRYDENBERG:

Well, what I'll say to you is that we will make prudent spending decisions...

PATRICIA KARVELAS:

That's not an answer. Will we see cuts to pay for this?

JOSH FRYDENBERG:

Well we're not, I'm not projecting cuts and you can ask me four times the same question but we're not projecting cuts.

What we are saying is that we're investing in areas of need and because the Australian economy is growing well, we have an ability to invest in essential services - now that could be the National Disability Insurance Scheme, or the increased funding that we've given to health services and of course to education.

So, we are responsible economic managers unlike those who sit opposite to us in the chamber.

PATRICIA KARVELAS:

During the no confidence motion against Peter Dutton, your colleague Julia Banks was overheard saying, "defending the man is not what I want to be doing." Defending that man...

JOSH FRYDENBERG:

That's what the Labor Party said.

PATRICIA KARVELAS:

Well it's been reported by Nine News which is what I'm referring to.

JOSH FRYDENBERG:

They're also referring to a question from the Labor Party today.

PATRICIA KARVELAS:

Channel Nine is reporting this. How many other Liberal MPs feel the same way?

JOSH FRYDENBERG:

Well as you know, Labor got defeated in the Parliament today on motions relating to Peter Dutton. He has explained the situation to the Parliament. The Labor Party will continue to throw mud hoping that that distracts from our good economic data and the other important announcement that Scott Morrison has made today on strawberries and the other day on the Aged Care Royal Commission.

PATRICIA KARVELAS:

Okay, the other day The Age wrote a feature about you last weekend. Are you the future Prime Minister? Are you already gunning for the Prime Minister's job?

JOSH FRYDENBERG:

No, I am actually a newly minted Treasurer and Deputy Leader of the Liberal Party. It is a great honour to serve in that position and I am very grateful to my colleagues for having the confidence in me and Scott Morrison and I are working really well together. He started strongly and he is getting on with the job of governing in terms of delivering better outcomes for the Australian people.

PATRICIA KARVELAS:

Treasurer, thanks for joining me.

JOSH FRYDENBERG:

Always good to be with you.