18 December 2018
Transcript - #2018096, 2018

Interview with Sabra Lane, AM, ABC Radio National

Subjects: Mid-Year Economic and Fiscal Outlook.

SABRA LANE:

Mr Frydenberg, thanks for joining AM.

JOSH FRYDENBERG:

Nice to be with you, Sabra.

SABRA LANE:

The government’s announcement that it would deliver a surplus and bring forward the budget, was overshadowed by the resignation of Julia Banks and the Mid-Year Budget Update numbers were blotted out yesterday by the Broad scandal. How cranky are you about that?

JOSH FRYDENBERG:

Well, I’m just focused on delivering a stronger economy for all Australians. That’s my role as Treasurer and yesterday’s result showed that the books are in the best shape they’ve been in over a decade. It was a product of over five years of disciplined decision making. When we came to government, Sabra, unemployment was higher, growth was lower, investment was falling and there were deficits predicted for years to come. We’ve turned it around and next year…

SABRA LANE:

Alright. Sorry, I’ll stop you there. That’s a nice deflection away from that question. How cranky are you about it?

JOSH FRYDENBERG:

Well look, obviously I’d like to be focused and the media to be focused on the economic message and the economic numbers that we released yesterday. But Andrew’s conduct was unacceptable. He’s resigned. That was the right thing to do. But the Australian people are focused on and their government is focused on delivering them a stronger economy with more spending on health, more spending on education, infrastructure and defence and the other services that they need.

SABRA LANE:

Alright. The matter of Andrew Broad was referred to police on November 8. So the Nats knew about this for nearly a month and a half and the Liberals, apparently, were only told yesterday when Mr Broad resigned. How can you counter Labor when your biggest problem appears to be within?

JOSH FRYDENBERG:

Oh look, both sides of politics have had issues with their own personnel. We’ve seen that come to the floor and even in recent weeks with the Labor Party. But the reality is, the job of the government, the job of the Prime Minister, his Treasurer, the Deputy Prime Minister and all of us, is to deliver better outcomes for all Australians and on that count, we have succeeded over the last five years and yesterday’s numbers were really a  strong result, reflecting five years of hard disciplined decision making and it sets Australia up well for the future.

SABRA LANE:

Alright. But this scandal has taken some wind from your sails and it feeds the perception that the Coalition has a women problem or as some put it, a man problem.

JOSH FRYDENBERG:

Look, to be honest I think the Australian people overlook those issues and really are focused on the outcomes that the government can deliver them in terms of the essential services that they need and require, in terms of lower taxes, which we’ve done already with legislated tax cuts. And the next election will be a very sharp contrast between the Labor Party and their $200 billion of additional taxes. It doesn’t matter what the question is, to the Labor Party, the answer is high taxes.

SABRA LANE:

Well, sorry, I’m just getting back to your point. You think voters are going to overlook things like Barnaby Joyce, this matter, women quitting the frontbench over bullying, Julie Bishop also saying that the Coalition has a women problem?

JOSH FRYDENBERG:

Look, you will focus, Sabra, you will focus on these issues in every interview you do with the Treasurer. But the Treasurer is focused on delivering a strong, healthy economy, not as an end in itself, not as a trophy as the Prime Minister says put it up in the cabinet, rather as a means to an end, which is to deliver the services, the health and education and infrastructure and disability support to your listeners, to the people of Australia. And the fact that we have a strong economy has meant that we have been able to list 2,000 new drugs on the Pharmaceutical Benefits Scheme, to treat people with cancer. The fact that we have delivered a strong economy means we can put money into the drought stricken communities and we can invest in having a defence industry which is supporting jobs right around the country. This is the dividend from a strong economy.

SABRA LANE:

When will the government tell taxpayers what you’re going to do with the $9 billion you have put aside for revenue decisions made but not yet announced? That’s tax cuts, yeah?

JOSH FRYDENBERG:

Well Sabra, we’ve got obviously some decisions and announcements to be taken between now and the budget on April 2nd…

SABRA LANE:

Can I just, but, this was in a column yesterday that said ‘decisions made, not yet announced’. You have made a decision.

JOSH FRYDENBERG:

We have made decisions. But the key decision that we’ve taken is that we’re not going to increase taxes beyond the tax speed limit of 23.9 percent. Now the Labor Party at their conference have abandoned the idea of having a tax speed limit.

SABRA LANE:

Let’s, let’s stick to what the Coalition’s doing. You’re options are new tax cuts or bringing forward those already legislated or perhaps there’s something else up your sleeve?

JOSH FRYDENBERG:

Well, look, I’m not going to reveal it to you today, Sabra. But, what I can say to you is that there will be announcements between now and the Budget and obviously the Budget will be a key economic document leading into the election. But, yesterday’s results were no accident. They were the product of over five years of disciplined decision making and they reflected the best shape that the books have been in for over a decade and next year we’ll be delivering a surplus and we’ll be paying Labor’s debt back over the years to come.

SABRA LANE:

Just on that point, the budget is now $31 billion better off than what Treasury forecasted in May. Given that huge revision in such a short time, does it make sense to bake in permanent tax cuts into the budget, based on a surge in tax revenue via company profits and price boosts for iron ore and coal, increases that may just be temporary?

JOSH FRYDENBERG:

Well actually we’ve been very conservative with our commodity forecasts. I mean, when the Labor Party were in, they saw iron ore at $180 a tonne, we’re now seeing iron ore at $60 a tonne.

SABRA LANE:

Sorry, the point of the question, the point of the question is…

JOSH FRYDENBERG:

 The point is that we have been very, the point of the question and the point of the answer is to explain how we have been very conservative when it comes to our commodity forecasts. We have been very conservative in terms of managing the budget. We are not spending money that we don’t have. That is why we’re bringing the budget back into surplus. That is why we’ve turned a corner. That is why we’re seeing net debt to GDP going down from about 18, just over 18 percent today, to 1.5 per cent of GDP over the medium term.

SABRA LANE:

Wages growth is currently sitting at 2.3 percent. It is just above inflation. But MYEFO is still punting on 3.5 percent growth. Given the slow outlook, how dependent is the budget on that turnaround on wages?

JOSH FRYDENBERG:

Well, we actually did see the biggest jump in wages in three years, just a few weeks ago. As you say, the 2.3 per cent and we’ve heard from the Reserve Bank Governor that wages will continue to improve as the spare capacity in the economy is eaten into. We have seen in unemployment numbers, actually get revised downwards in these budget updates and that is a good sign for the economy because more people are getting into jobs with over one million people getting a job, over the time we’ve been in government. So, we will continue to see improvements in wages. But at the same time…

SABRA LANE:

And the focus of the question, how dependent is the budget on that turn around?

JOSH FRYDENBERG:

Well, the budget is dependent obviously on the strength of the economy going forward and we will see wages growth improve, just as we saw the biggest jump in three years, just a couple of weeks ago.

SABRA LANE:

Treasurer Josh Frydenberg, thank you for joining AM this morning.

JOSH FRYDENBERG:

Always a pleasure.