6 March 2019
Transcript - #2019045, 2019

Interview with John Stanley, Money News, 2GB

Subjects: National Accounts; Budget; and Labor’s housing taxes

JOHN STANLEY:

Treasurer, good evening to you.

JOSH FRYDENBERG:

Good evening to you, John, and to your listeners.

JOHN STANLEY:

Disappointed with these figures?

JOSH FRYDENBERG:

No, I'm not, as you say, the economy continues to grow and at 2.7 per cent for the 2018 calendar year this puts Australia's GDP growth rate second only behind the United States when compared to G7 nations. We have seen the impact of the drought, there was a nearly 6 per cent reduction in farm GDP, which played into the export market and also into manufacturing, and we've also seen a fall in housing construction, and the RBA Governor has talked about how the increase in supply prior to that is now coming online, and that's one of the explanations for that. But overall, non-mining investment was up, our terms of trade is up, so what is called nominal GDP, which will be used to determine our revenue numbers for the Budget, was strong. And overall, we've seen very good employment growth across the country, with over 1.2 million new jobs being created, the number of women in the workforce is at a record high, the gender pay gap is at a record low, and young people have now got jobs like they never have before. So, I'm very pleased, with how the fundamentals, as you say, of the economy are sound.

JOHN STANLEY:

Yeah that's the fundamentals, and a couple of people have made that point in the previous hour, but you've also got just the December quarter, a growth of 0.2 per cent. So it's pretty sluggish growth, it does look like the second half of 2018 things really did start to slow down, you're arguing that the Labor Party's going to put the economy in reverse, it's already slowing down significantly under your stewardship.

JOSH FRYDENBERG:

But you add $200 billion of taxes, and the economy can only go one way. And that's south. And if you take away $55 billion, as the Labor Party's planning, from the pockets of retirees, then they'll have less disposable income. If you remove negative gearing as we know it and increase capital gains tax by 50 per cent, then you'll see less construction activity. Don't take my word for it, John, that's what the Master Builders Association and others are saying.

JOHN STANLEY:

Sure, but it has slowed down significantly though hasn't it? In the last 6 months?

JOSH FRYDENBERG:

Well there are reasons for that, as I said, the drought has been very significant, and also the housing market, we've seen less activity there as more supply has come on. But that was coming off a record high. As well as that, in the mining sector, the economy's moved from what was the construction phase of these mining projects, particularly big LNG projects in the Northern Territory and in Western Australia, into what is now the production phase, and that is producing good export income for us, but less jobs, because those big facilities have been already built.

JOHN STANLEY:

To what extent does the level of immigration feed into these numbers to keep those fundamentals going, because without that, we wouldn't have had any growth would we, without reasonable levels of immigration in the last 6 months?

JOSH FRYDENBERG:

There's been a lot of factors that have contributed to the growth, I mean, public final demand, which is government investing in infrastructure is a factor. Household consumption is up, as I say, we continue to see good export growth…  

JOHN STANLEY:

But what factor immigration? What would you say?

JOSH FRYDENBERG:

I would say that it contributes to the overall GDP growth numbers, because if you have more people in the country, you're going to have more demand. The issue though with immigration, is to separate that out, from population management, and I think Australia needs to do better into the future in managing higher numbers of people, particularly in cities like Melbourne and Sydney, and also in Southeast Queensland, where a lot of the…

JOHN STANLEY:

Get the growth happening in the right places.

JOSH FRYDENBERG:

Correct.

JOHN STANLEY:

So, you're putting a Budget together, so you know how hot an issue immigration is with listeners to this network, are they going to see any significant reduction?

JOSH FRYDENBERG:

Well, what we're focused on is managing the population growth, getting people to the areas where there are jobs, but also to bust some of the congestion in our cities. And we've already announced an investment of over a billion dollars in congestion busting infrastructure and the Prime Minister's made a number of significant announcements. If you look at the big, nation building infrastructure projects; I'm talking about the second airport in Sydney, I'm talking about Snowy 2.0, I'm talking about an interconnector to bring power from Tasmania into the mainland. These are the projects that the Federal Government is invested in and I think they will pay off significantly for the country.

JOHN STANLEY:

What about the Budget? Are you still going to bring down a surplus?

JOSH FRYDENBERG:

We are, and that will be the first surplus in over a decade. And, it's important for your listeners to know, John, that when we announce the surplus on April the 2nd, it won't be because of any decisions that are taken overnight, it will be as a product of hard decisions, difficult decisions that have been taken over the last five-plus years that we've been in Government. When we came to Government, we were seeing Government spending growth grow at around 4 per cent per annum; we've brought that down to under half of that, which is the lowest level in fifty years. And, the number of working age Australians who are on welfare as a proportion of the overall population, is now at its lowest level in thirty years. This is really a good result and a reflection on the decisions that we've taken.

JOHN STANLEY:

Just correct me if I'm wrong because I think $5 billion has been allocated for fiscal stimulus and announcements in the Budget, is that right?

JOSH FRYDENBERG:

There were some decisions taken, not yet announced…

JOHN STANLEY:

Not yet announced, yeah…

JOSH FRYDENBERG:

There are a few but obviously we will have more to say…

JOHN STANLEY:

In the Budget…

JOSH FRYDENBERG:

We've already made some announcements…

JOHN STANLEY:

Sure, but there is more to come in the Budget and that is fiscal stimulus and what we in the media might call handouts, but is there…

JOSH FRYDENBERG:

Not always, not always…

JOHN STANLEY:

Not always…

JOSH FRYDENBERG:

What we are focused on is investments that improve productivity, therefore providing long-term gains.

JOHN STANLEY:

Yep. So, might there be more? Do we know the quantum of that or is that something you're still working on?

JOSH FRYDENBERG:

Oh, look, there will be more announcements between now and Budget night and then again on Budget night, as you would expect. But, what we are really focused on is discipline in our economic management. Today's National Accounts really underline the importance of having a steady hand at the helm, supporting an economy with lower taxes, not higher taxes, more investment in infrastructure, not less, and more jobs, not less jobs. 

JOHN STANLEY:

Just to clarify. So, you bring the Budget down in April, there is an election not far after that. Will you expect to get that through or will it be something dealt with after the election?

JOSH FRYDENBERG:

Well, there are things that will get through and there will be things that will be dealt with subsequently. But, what will be very clear to the Australian people is the next stage of our economic plan, building on what we've already announced and, of course, we've legislated significant tax cuts already for individuals but also for small businesses. We've announced significant infrastructure projects, including record spending on the defence industry, which is important to the national security of our nation as well as domestic defence industry, and record spending on health and education. We're doing that without increasing taxes.

JOHN STANLEY:

Yeah, we had a call yesterday about negative gearing. That has to be passed through the Parliament, doesn't it, the change to negative gearing?

JOSH FRYDENBERG:

Labor will have to take their terrible housing tax through the Parliament, just as they will have to do the same with their retirees tax, their increases to income tax, their increases to superannuation tax. 

JOHN STANLEY:

Of course, Paul Keating famously in 1993 pledged that Labor would wave the GST through to avoid people thinking, 'well, I can vote this mob out, but I, I will rely on the Senate to block the GST.' But, I would imagine regardless of what happens, if you found yourselves in opposition, you'd be opposing it, would you, in the Senate?

JOSH FRYDENBERG:

Well, I think the people of Australia would expect that this bad policy doesn't get passed. The point is, housing taxes like Labor is promising, is coming at exactly the worst time. We've already seen prices being reduced by around 12 per cent in Sydney and around 10 per cent in Melbourne. And, as you know, many small businesses borrow against the family home and if the family home…

JOHN STANLEY:

Yep.

JOSH FRYDENBERG:

…is worth less…

JOHN STANLEY:

Sure.

JOSH FRYDENBERG:

… then their ability to borrow…

JOHN STANLEY:

…But it is hypothetical and hypothetical, but if you did find yourself in opposition, your inclination would be to oppose it, regardless of whether they are in Government.

JOSH FRYDENBERG:

We're opposing this policy all the way to the election and we will continue to argue our case and what the Australian people already know and will continue to hear from us, is that if you vote for a Coalition, you will be voting for lower taxes.

JOHN STANLEY:

Alright, Josh Frydenberg, I thank you for your time. Thank you.

JOSH FRYDENBERG:

Thank you.