19 November 2018
Transcript - #2018079, 2018

Interview with Kieran Gilbert and Laura Jayes, First Edition, Sky News

Subjects: Labor’s property tax; APEC summit; MYEFO; and energy policy.

KIERAN GILBERT:

Let’s bring in the Treasurer, Josh Frydenberg. Thanks very much for your time.

JOSH FRYDENBERG:

Good morning.

KIERAN GILBERT:

Your thoughts on this story? Because this morning we’ve already spoken to respected economist Chris Richardson from Deloitte Access Economics who says that to suggest it would be a nuclear bomb is overstating it in terms of its impact on the economy. And he says that while it will have some impact, it’s nothing like the warning from John Symond this morning, Treasurer.

JOSH FRYDENBERG:

Well, we’ve seen Citigroup, Riskwise, CoreLogic, the Master Builders Association, the Property Council, Aussie John and many, many others highly critical of the impact that Labor’s plan to abolish negative gearing as we know it and to increase the capital gains tax on property investments will have on property prices.

I mean, Bill Shorten and Chris Bowen say it themselves, that their policy is designed to reduce people’s property prices. We’ve already seen property prices come down to what the RBA says is a sustainable level, but under Labor’s policy anybody who owns their own home will see it worth less, and anybody who rents their own home will end up paying more.

And the people who will be most affected are not necessarily rich. They’re the 58,000 teachers, 41,000 nurses, 20,000 police and emergency services personnel who have put aside a little bit each month for their own nest egg to save for their own economic future. That’s who the Labor Party is hurting with this policy.

LAURA JAYES:

But Treasurer, do you agree with John Symond? Is this likely to cause a recession?

JOSH FRYDENBERG:

Well, I’m as the Treasurer, I don’t, I am very careful about using that particular word. But, what I would say is that it will cost jobs, is that it will hurt the economy, it will endanger our AAA credit rating. I mean, we have just had Standard and Poor’s and Fitch say that a big drop in investor demand in the housing market would be bad for the economy and a big drop from investor demand in the housing market will come from Labor’s policy. That’s what it is designed to do.

And the Labor Party can’t have it both ways; they can’t say when they came up with this policy at a time of rising house prices that the policy was perfectly timed. But now that prices have come down that it is also perfectly timed, they can’t have it both ways.

KIERAN GILBERT:

Well, it is wrong to suggest that John Symond is against reform of this sector. And again he makes the point today that there is scope to do so for wealthy investors. Why doesn’t the Government look at that?

JOSH FRYDENBERG:

We are not changing negative gearing; we have made that very clear.

And what John Symond is focussed on is Labor’s policy that they’re planning to take to the next election and they’ve doubled down. I mean, Chris Bowen has said only in recent days on Sky that…

KIERAN GILBERT:

He also said that there is room for reform.

JOSH FRYDENBERG:

… that he will not change, that he will not take, change his policy between now and the election, and that they are going to implement it as soon as possible. That’s the Labor’s position and that’s what Aussie John was commenting on, that’s what the Master Builder were commenting on when they said it will cost 32,000 jobs and see 42,000 fewer dwellings built. We are not changing negative gearing, so it’s going to be a clear contrast at the next election between Labor’s new property tax and our policy, which is to keep negative gearing as it is.

LAURA JAYES:

So, your intention is to allow people to negatively gear as many properties as they like? Ten, fifty, if they wish?

JOSH FRYDENBERG:

Well, this is one of the myths that the Labor Party is promoting. Because 70 per cent of people who negative gear have no more than one property and about the same number, 71, 72 per cent of people who negative gear only deduct less than $10,000 a year. And two-thirds of those people, Laura, who negative gear, have a taxable income under $80,000. So, the Labor Party will set-up this myth that it is really for the top end of town, it is not, and it has helped keep rents low, which is really important particularly people who are struggling to pay their rental bills from month to month.

KIERAN GILBERT:

The APEC summit has wrapped up in PNG with no communique for the first time in nearly three decades of that summit’s history.

The tensions between China and the United States very much for all to see, particularly on the trade issue where China does not want to be redefined, this has come down to a technical definition, but whether or not it’s a developed or a developing country. Is it time now for China to accept, with its growth and its size that it is no longer a developing nation?

JOSH FRYDENBERG:

Well, certainly its economy has been growing very strongly and Australia’s been the beneficiary of that, but when it comes to trade, Kieran, Australia’s position is very clear. We understand some of the legitimate concerns that have been raised by the United States, but we also want to ensure that all parties are working through an open, transparent rules-based trading system.

We are a net capital importer, we’re a trading nation, our currency is the fifth most traded currency in the world, we have $800 billion worth of imports and exports every year and one in five Australian jobs is related to trade.

So, when it comes to the China US trade tensions, we would love them to simmer down, for cool heads to prevail because for Australia, China is our number one trading partner and the United States our number one investor and we want them to get along.

LAURA JAYES:

Treasurer, I know you’re deep into MYEFO at the moment and we will see it soon, given the state of the economy at the moment, will there be any new income tax cuts and do you rule out bringing the current ones forward on a more timely timeline, if you like?

JOSH FRYDENBERG:

Well, good try there Laura to throw the rod into the water, but I’m not going to bite on that. We obviously…

LAURA JAYES:

So, you don’t rule it out?

JOSH FRYDENBERG:

No, what I am saying is I am not going to get into the pre-MYEFO speculation. I’ll leave that to you. But you’re right, we are in that preparation period, as you know, we’ve announced that we’re bringing forward the tax relief, tax cuts for small and medium-sized enterprises.

Labor did a backflip on that and it went through the Parliament which was good for 3.3 million small and medium-sized businesses. But what we have seen overall with the economy and this will obviously be reflected in the next round of National Accounts and Budget numbers is that the Australian economy is growing strongly, 3.4 per cent through the year.

Last week, we had wages growth, which was the best in three years. Unemployment has fallen to five per cent and good job numbers are coming in each month and of course our AAA credit rating has been reaffirmed and the Budget is coming back to balance.

KIERAN GILBERT:

Yeah, okay. Well that…

JOSH FRYDENBERG:

It’s a good record.

KIERAN GILBERT:

Certainly sounds like a yes to Laura’s question. We can expect some income tax cuts relief sped up. I might take that as a yes. Let’s look at the energy debate.

Obviously, you designed the National Energy Guarantee. Looks like Labor might take your handy work and run with it. We’ll find out later in the week. But this poll today, the Ipsos poll shows that there’s a big chunk of the population who still believe emissions reduction is their top priority.

Forty-seven per cent of those surveyed think power bills, 39 per cent surveyed say emissions reduction. It’s not something you can ignore is it?

JOSH FRYDENBERG:

Well, we’re not. We’re not Kieran. I mean, the fact is, emissions on a per capita of GDP basis are now their lowest in 28 years and when we came to government five years ago, Labor was going to dramatically miss our 2020 emissions reduction target.

Now we are going to dramatically beat our emissions reduction target for 2020 and I’m very confident that we will beat our 2030 target as well. And we’ve got a good track record as a country of doing our fair bit to reduce emissions.

But at the same time, you can’t pursue irresponsible policies to reduce emissions without understanding the impact it will have on power prices and when we see Labor’s policy later in the week no doubt that will come into sharp focus, because the last time they were in government power prices doubled, they ignored the warnings on gas exports and we had that dreaded carbon tax. There’s nothing to suggest that Labor’s policy this time will be any different.

LAURA JAYES:

Well, Josh Frydenberg, we look forward to seeing the details of MYEFO. We thank you for that hint and your time this morning.

JOSH FRYDENBERG:

No, no hints! There were certainly no hints. Bye bye.

LAURA JAYES:

Okay, Josh Frydenberg thank you for your time.