3 April 2019
Transcript - #2019054, 2019

Interview with Michael Rowland, News Breakfast, ABC News 24

2019-20 Budget

MICHAEL ROWLAND:

Joined now by the man of the moment, the federal Treasurer, Josh Frydenberg. Mr Frydenberg, Good Morning.

JOSH FRYDENBERG:

Good morning, Michael.

MICHAEL ROWLAND:

With all of these risks facing the Australian economy, both domestically and overseas, how much trust can voters put in you of the Government achieving that promised – it’s only a promise – $7 billion surplus next financial year?

JOSH FRYDENBERG:

Well this Budget is for the 2019-2020 year, and we have announced, and will deliver, the $7.1 billion surplus. This is a significant surplus, it’s not a wafer thing surplus – a wafer thin surplus would be 0.1 per cent of GDP…

MICHAEL ROWLAND:

It’s 0.4 per cent of GDP - it’s not exactly a fat surplus.

JOSH FRYDENBERG:

Well, $7.1 billion is significant, but what is important is the trajectory that we’ve been on. We’ve seen the deficits reduced in the years that we’ve been in Government. And now, we’re seeing $45 billion of surpluses over the next four years, and we’ll be eliminating Government debt by 2030. That is significant, it’s based on conservative commodity forecasts, and it’s also because we’ve brought down the rate of spending growth to half of what we inherited.

MICHAEL ROWLAND:

Okay, but also Treasury, in the Budget documents, separate to anything you say in your office, pointed to the risks of those falling house prices on consumer confidence. Spending makes up 60, 70 per cent of the Australian economy. The obvious risks of trade tensions overseas, China’s economy has come off the boil: surely, ah, those surpluses are very much at risk if that perfect storm continues.

JOSH FRYDENBERG:

We believe that we can manage those challenges, particularly with the economic plan that we outlined last night: $158 billion of tax cuts, the most significant since the Howard Government; $100 billion of infrastructure spending, so there are cranes and heavy machinery through our cities and our regions; and of course a half a billion dollars skills package. That’s what’s going to keep the economy going, that’s what’s really important. But we are seeing, as you say, internationally, global growth slowdown, and domestically we are concerned about the housing market. It’s the worst possible time for Labor’s housing taxes, because that will drive people’s property prices down, their rents up, and ultimately will impact on their household consumption.

MICHAEL ROWLAND:

Labor’s already matched you on your promise of tax cuts for low to middle income earners, in fact arguing that people below $40,000 a year would do much better under a Labor Government. So does that neutralise that Budget promise of last night?

JOSH FRYDENBERG:

Well actually that’s wrong, because under the Labor Party’s plan, if you are a teacher earning under $100,000 you’ll be $1,750 worse off under Labor than you will be under us when our plan is fully rolled out. Importantly, we’re reducing the 32.5 per cent tax bracket down to 30 per cent; I haven’t heard the Labor Party say that they’ll support that.

MICHAEL ROWLAND:

And that’s a big tax cut, so why not bring that forward?

JOSH FRYDENBERG:

Well obviously we have to balance competing objectives. We have to return money to pay down the debt, and that’s an important obligation, responsibility and commitment of ours; but at the same time we also want to give people more money in their pocket with tax cuts which we do at every opportunity.

MICHAEL ROWLAND:

I know, and you’re starting with the, the increase in the low to middle income tax offset. But, ah, isn’t it also the case that if you brought forward that lowering to 30 per cent you blow out of the water your Budget surpluses?

JOSH FRYDENBERG:

Well obviously, this is about balancing these competing priorities. Delivering a surplus, that’s significant, providing tax cuts; but then spending on the essential services and Michael, in this Budget not only is hospital funding going up, not only more money for schools, but importantly for mental health, spending an enormous amount of money to get perinatal support, to get early psychosis treatment, to get support for Indigenous Australians with better peer support. Those sort of programs are in this Budget: domestic violence, support for our carers. There are things in there that will make Australia even stronger.

MICHAEL ROWLAND:

Again, once again in the Budget we have what many economists argue are heroic wage growth forecasts, three and a quarter per cent by 2021, surely that – that is a courageous forecast given how anaemic wage growth is, and how it continues to be anaemic.

JOSH FRYDENBERG:

Well the wage price index which is the indicator of wage growth is at 2.3 per cent which is faster than inflation…

MICHAEL ROWLAND:

Yes, it’s barely above inflation.

JOSH FRYDENBERG:

But what the Reserve Bank governor has said is that wages are growing faster, across every state, across every major industry, than they were a year ago. The policies that we have put in place will boost the productive capacity of the economy, and that will drive wages. What will not drive wages up is higher taxes, that is what Bill Shorten is offering; we’re lowering taxes.

MICHAEL ROWLAND:

We had on the show a bit earlier Jennifer Westacott from the Business Council, Cassandra Goldie from ACOSS, and they forged quite a striking unity ticket on Newstart. Both very unimpressed that in this Budget of $45 billion worth of surpluses, not a single cent has gone to Newstart – is there any scope to raise the Newstart level at all?

JOSH FRYDENBERG:

Well, what I can say is that we will be applying to Newstart recipients, the energy supplement, so $125 for couples and $75 for individuals, that will be in the legislation that we’ll be introducing into Parliament…

MICHAEL ROWLAND:

But what about increasing the $277 per week, which every interest group argues is way too low?

JOSH FRYDENBERG:

Well, a couple of points there. Firstly, Newstart does go up twice a year, it is indexed. Secondly, unlike those other payments, people who are on Newstart tend to be on other payments – a parenting payment, or a family tax benefit. And, many people, the majority of people on Newstart, move within 12 months into a job and off Newstart, and that’s why it’s different to the disability support pension or the aged pension, for example.

MICHAEL ROWLAND:

I’ll put to you what I think is one of the best lines from the Budget this morning, James Campbell of the Herald Sun says this is akin to turning up at home at eleven o’clock on Valentine’s Day night with a stale bunch of flowers from the servo…

JOSH FRYDENBERG:

Is he speaking from experience, I don’t know…

MICHAEL ROWLAND:

Well, who knows, but no he is speaking about politically, and voters are smart enough, they have seen the chaos, they have seen the Muppet show – the Prime Minister’s own words of last year with a leadership change – ah, is this going to be enough to change deeply held perceptions of people, many of whom have simply stopped listening to this Government?

JOSH FRYDENBERG:

Well, Michael you can talk about the past, I’m focussed on the future, and this Government’s record, is that since we have come to Government, growth is higher, unemployment is lower, business investment is stronger, and more than 1.2 million people are in a job. You don’t just turn a first – turn up with a surplus on Budget night overnight; that is the product of hard work, disciplined decision-making. It is no accident. And the Australian people can trust us to deliver a strong economy, which delivers them the hospitals, and the schools, the aged care, the disability support, but also to deliver lower taxes. That’s what the contest of the next election will be about.

MICHAEL ROWLAND:

How can voters trust you to keep surpluses and deliver tax cuts if you can’t be trusted to keep your own leaders?

JOSH FRYDENBERG:

What we are focussed on is the Australian people. It’s not about us, it’s about them. It’s about putting more money in their pocket. We want them to earn more, and keep more of what they earn. We want them to get the very best mental health support for those who need it. We want to fully fund the NDIS as we’ve done in this- in this program; we want to ensure that the Australian community is stronger, small business is back, infrastructure is being built, and that we are better managing population growth.

MICHAEL ROWLAND:

Ok, we’ll have to leave you there. Finally Treasurer, an election called within days, is that the plan?

JOSH FRYDENBERG:

Well obviously that’s the Prime Minister’s call. We’ll be ready to fight an election when it comes, but the choice will be clear: we’re for lower taxes, Bill Shorten’s for higher taxes.

MICHAEL ROWLAND:

Josh Frydenberg, thank you so much for joining News Breakfast.

JOSH FRYDENBERG:

Thank you.