17 December 2018
Transcript - #2018091, 2018

Interview with Ali Moore, Mornings, ABC Radio Melbourne

Subjects: Mid-Year Economic and Fiscal Outlook; Australian embassy in Israel; and Victorian state election results

ALI MOORE:

Treasurer, welcome to the program.

JOSH FRYDENBERG:

Hi Ali, nice to be with you. 

ALI MOORE:

Lots of people think that you have a nice little war chest and you should be spending it on infrastructure.

JOSH FRYDENBERG:

Well, the results today are the product of more than five years of hard work, disciplined decision making including more targeted and restrained spending, as well as putting in place tax cuts for small business people and for households and families.

So, today the first job we need to do is to deliver a surplus and the second job we need to do is to pay back Labor's debt and we still have a bit of that to do.   

ALI MOORE:

So, what are you going to do with the money, though? It is a war chest, isn't it, leading into a federal election?

JOSH FRYDENBERG:

Well, actually in the MYEFO today there is more money for aged care, there is more money for hospitals, over $1 billion of extra funding for a community hospitals program, there is more money for schools, there is significantly more money for infrastructure, particularly water infrastructure, as well as a major small business package which will see $2 billion made available to increase access to finance for small businesses, as well as accelerating the tax cuts and the tax relief for more than 3.3 million small businesses that employ around seven million people. So, there are a number of individual measures in this MYEFO which is good news for the people of Australia.

ALI MOORE:

There are reports, and I have to say of course I wasn't in the lock up and the lock up only finished a little while ago and it is obviously quite complicated, but the reports say that you've got $2.4 billion in foregone revenue in 2019-2020 and that increases over the next year. What is the measure that you have budgeted for that you haven't announced?

JOSH FRYDENBERG:

Well, Ali what we are doing is ensuring that we can make decisions that help us grow the economy into the future and of course, we are committed to targeted spending but also to reducing taxes.

And we have a tax to GDP ratio, which is effectively a speed limit on where taxes should go, and we say they shouldn't go above 23.9 per cent. They are just above 23 per cent today and that is a big difference between us and the Labor Party because the Labor Party have said that they are going to dispense with any notion of a tax to GDP speed limit and that is because they've got $200 billion of new taxes.   

ALI MOORE:

But, you're not answering that question. Where is the money? You have obviously budgeted for it. Are you going to bring some personal tax cuts forward? Are you going to announce new ones?

JOSH FRYDENBERG:

Well, Ali, we have important decisions to take. We will do that in a very methodical and careful and deliberate manner, and that is what is going to occupy our time between now and the Budget.

ALI MOORE:

How sustainable is this increased revenue growth. We had an economist on earlier who was pointing out that while jobs growth is strong, that is not flowing through to wages. That is an old story and not just an Australian story, it's a global story. But you've got a Budget forecast of 3.5 per cent wages growth. Are you being a little optimistic? 

JOSH FRYDENBERG:

Well, what we have said in this update is wages growth will improve over time. And that is consistent with what the Reserve Bank Governor has said. We saw an increase in what is called the Wages Price Index, which is a euphemism for wages growth, of 2.3 per cent just a few weeks ago and that was the best result in a number of years.

Inflation, as you know, is low at 1.9 per cent and interest rates are at historical low levels as well, but at the same time we want to see improvement in wages and that is why we are investing in productivity linked infrastructure, that is why we are providing tax cuts, that is why we are encouraging competition in the market place.

But if you want to know what won't increase wages, that is higher taxes, more industrial disputation and more rules around the workplace which will limit the flexibility that Australian workplaces so desperately need.   

ALI MOORE:

So, that same economist who was talking about jobs growth, some describing you as a lucky Treasurer, do you feel lucky?

JOSH FRYDENBERG:

Look, there is a good result to be seen today. But, it's not the product of an accident or luck. It is the product of hard work by the Coalition Government since we came to office because when we came to office, unemployment was at 5.7 per cent, now it is down to five per cent.

When we came to office, growth was at 2.1 per cent, now it is at 2.8 per cent, faster than any G7 nation except the United States. We saw investment in the non-mining sector falling dramatically, now it's been increasing dramatically.

And of course, we inherited $240 billion of accumulated deficits from Labor, which we are busy moving towards surplus and repairing their legacy, their mistakes and their mess. So, that is not the result of luck, that is the result of hard work by a Government that is determined to ensure spending restraint and taxation restraint.  

ALI MOORE:

Treasurer, if I can just ask you about another issue over the weekend. Scott Morrison announced that the Government would recognise West Jerusalem as the capital of Israel but the embassy is not moving until there is a peace agreement.

That seems like a big step back from what was originally floated and it seems to have upset Israel, which doesn't recognise the divided Jerusalem, the eternal and undivided capital of Israel, there is no West and East.

JOSH FRYDENBERG:

Well look, Ali, the Prime Minister has made a very extensive speech on the subject and I think it was an excellent speech…

ALI MOORE:

…you're not disappointed?

JOSH FRYDENBERG:

I welcome the Prime Minister's announcement. He went through a considered process and what he has announced is consistent with Australia's long-standing position of supporting a two-state solution…

ALI MOORE:

But you said yourself before this decision that it was flawed thinking to believe the international strategy to hold out for moving embassies would encourage the peace process; but that's exactly what we've done.

JOSH FRYDENBERG:

We have taken a very considered decision after a very considered process. And I welcome it Ali and I think that this is consistent with the two nations in future sitting- living side by side hopefully in peace, security and harmony.

But what also the Prime Minister did call out in his speech were some of the double standards we've seen in the United Nations and as he said, the standard you walk by is the standard you accept and I think that they were pretty wise words, particularly in light of what we've seen in the General Assembly.

ALI MOORE:

There wouldn't be many instances though in global affairs that Australia is on the side of a very small group and in this instance it's Russia, the Czech Republic and Panama, the only other three countries that make the West-East Jerusalem distinction?

JOSH FRYDENBERG:

Well, the Prime Minister has announced our position. I would commend everyone to read the speech, Ali. I think it outlines our nation's interests, as well as our nation's positions on a number of important issues, namely the voting at the United Nations, the Iran deal, as well as the status of Jerusalem and I think what the Prime Minister has done is to be welcomed and it's a clear enunciation of Australia's national interests and now Australia's position.

ALI MOORE:

Just a last question, and obviously we talked about war chests at the very beginning but you are heading into an election. There were, I don't know if you picked up one of the national newspapers over the weekend and almost choked on your Weeties but they had a poll, it was funded by the unions, suggesting that you might be in trouble in Kooyong even though that has long been considered a very safe seat. Are you confident about the next federal election?

JOSH FRYDENBERG:

Well, I will put my best foot forward, and the party's best foot forward, and I am confident that I can continue to deliver for the people of Kooyong as I have faithfully done in the past.

I was first elected in 2010 and I've been very fortunate to win the respect and the support of my constituency since then but no seat is safe whether it's a Liberal or a Labor seat.

Politics is very fluid but that being said, I am confident that come the next election, the people of Kooyong will hear and see our plan and obviously they know that they are best represented by a Liberal and National Government.

ALI MOORE:

Well, they obviously didn't feel that in the state election that's just happened.

JOSH FRYDENBERG:

Well, in the state election and federal election, as you know, there are a whole series of different issues that are at play. At the same time, we have seen Victoria being a difficult battleground for the Liberal Party. We have lost five out of the last six state elections, but at the same time we have won four out of the last six federal elections.

I will be working closely with the people of Kooyong, as I have done over the last period of time since I was first elected and hopefully, I can win their support at the next election. But I don't take anything for granted, we are certainly not complacent and I will be working to continue to deliver the local constituency.

ALI MOORE:

Josh Frydenberg, many thanks for talking to us this morning.

JOSH FRYDENBERG:

Always a pleasure.