12 March 2019
Transcript - #2019046, 2019

Doorstop interview, Commonwealth Parliamentary Offices, Melbourne

Subjects: Mortgage brokers; wages; tax cuts; Labor’s $200 billion of new taxes; Labor’s energy policy; Coalition’s energy policy.

JOSH FRYDENBERG:

Thank you very much. As you know, Commissioner Hayne in the Royal Commission into Misconduct in the Financial Services Sector made a number of recommendations with respect to mortgage brokers.

Firstly, he said that there should be a legislated best interest duty and the Government has said that they will implement that. Secondly, he said that we should abolish volume based bonuses and the Government has said that we will do that. Thirdly, he said that the borrower should pay a fee as opposed to the lender and we were very cautious about that, saying that we would have a review in three years time, which would be conducted by the ACCC and the Council of Financial Regulators, because we were concerned about the impact of that recommendation on competition. And fourthly, he suggested that trailing commissions be abolished and we said that we would grandfather existing trailing commissions and then abolish new trailing commissions from July 2020.

After consultation with the mortgage broking sector as well as small lenders, the Government has decided that the trailing commission issue will now be the subject of the review by the ACCC and the Council of Financial Regulators in three years time. And so, the abolition of trail from July 2020 won’t proceed as first announced. The reason is we are concerned about the impact on competition in the mortgage lending market. Small lenders and mortgage brokers are an absolutely critical part of competition in that market. There are 17,000 [sic: 16,000] mortgage brokers employing around 26,000 people and they write over half of the residential backed mortgages. So, they’re a very critical part of the sector. And, Labor’s decision to have a higher upfront fee will cause problems for competition in the sector because not all lenders have the ability to, with a strong balance sheet, to provide higher upfront fees. And so, Labor’s policy will end up being a free kick to the banks and what we’re very concerned about is ensuring that mortgage brokers continue to be a critical part of our residential mortgage market, and that they continue to play a critical role as small businesses in our community.

So, the Coalition stands with mortgage brokers as they continue to play a critical role and continue to take action on all 76 recommendations from Commissioner Hayne. And, we’ve already made significant progress in that respect; announcing a capability review for APRA, led by Graeme Samuel, passing legislation through the Senate, which will extend the civil penalties to superannuation trustees and directors, making it difficult and indeed unlawful for employers to be offered inducements by superannuation funds, as well as a number of other changes around the debt mediation scheme and a review of financial counselling. So, we’re getting on with the job of delivering for Australian consumers and ensuring competition and we stand side by side with mortgage brokers. 

QUESTION:

Minister, on the Fair Work Act, Bill Shorten has not ruled out changes to ensure the Commission can broaden its considerations with setting a minimum wage. The Reserve Bank says low wage growth is a challenge. So, what will the Coalition promise to increase wages by?

JOSH FRYDENBERG:

Well, just look at Bill Shorten’s record on wages. When he worked with the AWU, they were involved in the Cleanevent scandal, which was unveiled by the Royal Commission into that misconduct. What happened there was that union bosses were prepared to trade away the penalty rates and other benefits and effectively the wages of the workers. So, Bill Shorten will say one thing and he will do another. The reality is you drive wages up by boosting productivity and by creating more competition in the labour market namely by increasing the number of people in employment. What we have seen under the Coalition is unemployment fall from 5.7  per cent when we came to Government to 5 per cent today. We have created more than 1.2 million new jobs and we have seen the Wages Price Index increase by 2.3 per cent, which was the biggest jump in three years. You’ve heard from the Governor of the Reserve Bank of Australia say that wages are starting to increase in every state and every sector, faster than they were a year ago. So, this is an important change in what is happening with respect to wages.

The way to increase wages is not by lying to the Australian people, which is what Bill Shorten is doing, the way to increase wages is through boosting productivity in our workforces, reducing taxes, investing in infrastructure, opening new free trade agreements, having a cop on the beat in the construction sector like the Australian Building and Construction Commission. You see, Bill Shorten’s way to increase wages is to lift taxes across the board. That won’t increase wages; that will lower them.  

QUESTION:

Treasurer, since last week’s National Accounts there have been some further soft numbers, retail last week, business conditions, particularly for retailers today. Do you think this is increasing the case for tax cuts? And do they need to be made larger than what you’ve obviously already announced?

JOSH FRYDENBERG:

Well, David, as you know, the legislated tax cuts are very significant already. What we’re going to do is get rid of a whole tax bracket, and we’re going to ensure that 94 per cent of taxpayers pay no more than 32.5 cents in the dollar. We are going to reduce taxes, for over ten million Australians, not to mention what we’re doing with small business. The difference between us and the Labor Party, is that they’re going to lift taxes, they’re not only going to reverse our existing legislated tax cuts, but they’re promising $200 billion in higher taxes. You go to see your accountant, you’ll end up paying more. You want to go and have another investment in some shares? You’ll end up paying more. Whatever you do under Labor, you’ll end up paying more, because they’ve got higher taxes. So, we continue to be the Party of lower taxes. We continue to be the Party of stronger economic growth, certainly than what the Labor Party ever left the Australian people.

QUESTION:

But, is there a case for doing more?

JOSH FRYDENBERG:

Well, we’ll continue to consider the opportunities in the tax space, but we are the Party of lower taxes, not just through what we’ve legislated, for the small businesses as well as for income earners, but because we will not impose, as Bill Shorten is on the Australian people, $200 billion of new taxes. You see, it doesn’t matter if you own your own home, it will end up being worth less under Labor. If you rent your own home, you will end up paying more under Labor because of what they’re doing with capital gains tax and negative gearing. If you’re a retiree, or if you’re a pensioner, you’ll be hit by Labors retiree’s tax, which is really hitting people who have saved for their own retirement. People have done nothing wrong, but have actually planned for their retirement diligently, based on the laws that they thought would have bipartisan support as they’ve had for the last 20 years. And, I could go on about superannuation taxes, income tax hikes, and of course, what they’re proposing to do in the energy space. And I have to say, on energy, Labor is proposing a new electricity tax. They have a recklessly high target that they have not come clean with the Australian people as to how they will meet their target. Bill Shorten’s had weeks now, since he announced his policy, but where is the detail? I saw Bill Shorten got agitated today at a press conference because people kept asking him the obvious question, ‘how are you going to reduce emissions by 45 per cent?’ I say to Mr Shorten, come clean with the Australian people, don’t just promise, actually tell us how you’re going to deliver. Because nobody trusts you, because based on the last time Labor was in office, electricity prices doubled.

QUESTION:

Minister, on energy, George Christensen sees a role for Government designing, citing and funding a coal project in Queensland. What do you think the Government’s role is?

JOSH FRYDENBERG:

Well, all my colleagues are focused on one thing; ensuring a more affordable and reliable energy system…

QUESTION:

Does that mean a whole project in Queensland?

JOSH FRYDENBERG:

Well, it means that we are adopting a technology-neutral approach. We are approaching the ACCC recommendations, with the view to lowering people’s power bills. And, we’ve seen power bills come down last year, come down again on 1 January, and we’re putting in place a default price, all in relation to the ACCC’s recommendations. You see, when the Labor Party was last in Government, energy prices doubled. Now, they’re proposing a 45 per cent emissions reduction target, that Bill Shorten has no explanation as to how he will reach it. It’s just a target with no policy behind it. In contrast, we have just announced a series of funding initiatives, including additional funding for Snowy 2.0, which will be a game-changing, nation building, pumped hydro project. It will provide storage for our energy system across the east coast of Australia, and enough power for 500,000 homes, and create 5,000 plus jobs. And, we’re going to focus on delivering a new interconnector between Tasmania and the mainland to ensure that excess power supply in Tasmania can be brought to the mainland to support homes, particularly here in Victoria.

QUESTION:

So, no coal project in Queensland?

JOSH FRYDENBERG:

We are focused on an energy policy and an energy system, which will lower people’s power bills, and will create a more reliable system. We understand that there is an energy transition underway. There is a record amount of renewables that are currently being invested, planned and built in Australia, under the Coalition Government.

QUESTION:

When will we see the list of big energy projects to be underwritten by the Government?

JOSH FRYDENBERG:

Well, Angus Taylor is obviously working on that, he’s taken submission in respect to that. Our focus is on implementing the ACCC’s recommendations and one of the key recommendations from the ACCC, was trying to generate more supply, particularly for large, industrial customers. Those industrial customers that might not get access to the affordable, reliable power that they need to underpin the blue collar jobs in their industries, and often in the case, export industries. So, we will obviously implement the ACCC’s recommendations, and we are following through on lowering people’s power bills, and creating a more reliable system. Thank you.