2 July 2019
Transcript - #2019089, 2019

Interview with Sabra Lane, AM, ABC Radio

Subjects: Coalition’s tax relief; Labor’s high tax agenda; interest rates; defence spending.

SABRA LANE:

Joining us now is the Federal Treasurer, Josh Frydenberg. Good morning and welcome.

JOSH FRYDENBERG:

Good morning. Nice to see you, Sabra.

SABRA LANE:

Are you in technical breach of your first election commitment? There is no income tax offset of $1,080 by the 1st of July because it hasn't passed Parliament yet.

JOSH FRYDENBERG:

Well, if it passes Parliament this week the Tax Commissioner has said that it will be available to Australians next week and that's why it's so important that we get this legislation through. We took it to the Australian people, they endorsed it by voting in the Coalition, they rejected Labor's $387 billion worth of taxes that they were seeking a mandate for. And we know from the Reserve Bank Governor that these tax cuts will boost household disposable income and household consumption and that will be good for the overall economy.

SABRA LANE:

The Government won't split its Bill. Why not, given that you get parts one and two in a flash this afternoon?

JOSH FRYDENBERG:

Well, we're not dancing to the Labor Party's tune. I mean, earth to Albo, you lost the election. And it's time Labor learned the lesson of their election loss. It's time they heard the Australian people from their so-called listening tour. The reality is Australians want tax cuts, not tax hikes and that's what they told the political parties at the most recent election.

SABRA LANE:

Phase three of the tax plan costs $95 billion. What government services, what government spending will be cut in five years to make up for that?

JOSH FRYDENBERG:

We're actually increasing funding on schools, on hospitals, on roads, on mental health, on a whole range of areas…

SABRA LANE:

But where does that $95 billion come from?

JOSH FRYDENBERG:

Because what you get from tax cuts, not only rewarding aspiration and encouraging effort, but you actually get a stronger economy because you are boosting household consumption. You are ensuring that there is greater economic activity across the economy and our tax cuts, as was indicated in the Budget, were baked into our forecasts. And our forecasts will continue to see the Australian economy grow, but also see surpluses delivered and we are going to deliver a surplus in 2019-20, the first in more than a decade. We're going to pay back net debt by the end of the decade as well. 

SABRA LANE:

The Government argues that this phase three is stimulatory. How can it be stimulatory given that those tax cuts won't take place until half way through the next decade?

JOSH FRYDENBERG:

Well the tax package in full provides both short-term relief which you refer to, the $1,080 for people who earn up to $126,000, but also long-term structural reform. And so we're abolishing a whole tax bracket, the 37 cents in the dollar tax bracket, and we're reducing the rate from 32.5 cents down to 30…

SABRA LANE:

How is that stimulatory now?

JOSH FRYDENBERG:

It's about long-term reform. It's actually about creating certainty in our tax system. It's a real virtue to have certainty when you're planning for your future and we want Australians to be rewarded for their effort. Now, the Labor Party have shown in their flip-flopping on this particular package of legislative measures that they don't believe in tax cuts; they fundamentally are opposed. The Shadow Cabinet put to the Australian people the $387 billion of higher taxes, it's still largely the same under Anthony Albanese, and Jim Chalmers who was a co-architect of those higher taxes is now the Shadow Treasurer.

SABRA LANE:

Politics is the art of the possible. While it looks like, at the moment, they're not in favour, you've still got a Senate crossbench there. You've got Centre Alliance saying it's in favour, Cory Bernadi. You need just one more to vote for this and you'll get that through. Jacqui Lambie, are you talking to her?  

JOSH FRYDENBERG:

I have spoken to Jacqui Lambie, had a constructive discussion. It was early in the piece and I also congratulated her on her re-election to the Parliament. Mathias Cormann has been in consultation with her and you know, we are focusing on delivering these tax cuts for the Australian people as they endorsed at the most recent election. 

SABRA LANE:

And is she sounding favourable?

JOSH FRYDENBERG:

Well, look, I'm not going to go into the detailed conversations other than to say we're having constructive dialogue with the crossbenchers. They understand the importance of this legislation to the economy, but they also understand that the Australian people spoke with a very clear voice just six weeks ago. 

SABRA LANE:

The Reserve Bank meets again today. There's a lot of talk about the fact that they might cut interest rates again for a second month running. The economy isn't in robust health right now. What additional firepower have you got up your sleeve should things turn nasty? 

JOSH FRYDENBERG:

Well, we do have an economic plan to get through these economic headwinds. And they are serious headwinds, let's not understate what we've seen with the tensions between China and the US and the impact that has had on trade volumes and the global economic outlook…

SABRA LANE:

Have you got something up your sleeve?

JOSH FRYDENBERG:

Well, what we've got is the plan and the plan is tax cuts…

SABRA LANE:

So, there's nothing…

JOSH FRYDENBERG:

Can I answer the question, Sabra? In relation to tax cuts, they're the equivalent of two 25 basis point rate cuts. The $100 billion of infrastructure spending, we're looking to get that out the door as soon as possible with projects that are shovel ready. And then of course there is the skills, the apprenticeships. The PM's outlined what we're doing on deregulation. We're looking at industrial relations reform. We're basically driving productivity across the economy with a whole series of new initiatives.

SABRA LANE:

Alright. Two quick points. You were an Environment Minister. Your reaction to Japan's decision to recommence commercial whaling.

JOSH FRYDENBERG:

Well, the Foreign Minister and the Environment Minister will make a formal statement later today. But obviously, we're deeply disappointed. Australia has had a very different view on whaling to our Japanese friends, both on scientific whaling and clearly now on commercial whaling. We have been at the forefront of global efforts to conserve whales. I mean, we supported research through the Southern Ocean Partnership. We supported new sanctuaries and we're not very pleased with what we've seen in relation to commercial whaling.

SABRA LANE:

Alright. In terms of China and the United States, we've got a senior defence analyst, Hugh White, saying that we should be spending an extra $30 billion in defence now because we can't rely on America.

JOSH FRYDENBERG:

Well, we certainly can rely on America as a fundamental ally of Australia. The ANZUS Alliance, which was put in place by, dare I say it, Sir Robert Menzies more than half a century ago, is absolutely essential to Australia's security. But, at the same time, we're investing even more in our defence forces, bringing it back to two per cent of GDP compared to the 1.6 per cent which was under Labor which was the lowest defence funding since the time of appeasement back in 1938.

SABRA LANE:

Alright. Josh Frydenberg, the Treasurer. Thank you very much for joining AM this morning.

JOSH FRYDENBERG:

Good to see you.