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Transcript of doorstop interview: Camberwell, Melbourne: 24 August 2019: Coalition Government's achievements; US China Trade tensions; Post-Brexit trade deal; Australian economy; iron ore; Kevin Rudd



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24 August 2019

Doorstop interview, Camberwell, Melbourne

Subjects: Coalition Government’s achievements; US China Trade tensions; Post-Brexit trade deal; Australian economy; iron ore; Kevin Rudd.

JOSH FRYDENBERG:

Good morning. I want to start out with a shout out to the Australian cricket team, bowling out the poms for 67. How’s that! That’s a great result for Tim Paine and his team. All of Australia is with them in the coming days as they battle the poms for the Ashes.

Three months ago there was an election and the Australian people overwhelmingly endorsed the Coalition Government. But the election was not about us, it was about the Australian people, and what our policies would deliver for them.

In the last 3 months employment has growth by 84,000. We have a record number of women and young people in work. And we are building on the more than 1.4 million jobs that have been created since the Coalition came to Government. As we strive to create another one and a quarter million new jobs over the next 5 years. The tax cuts that we took to the Australian people and that we outlined in the budget have passed the Parliament. The most significant tax cuts in decades. Over 10 million Australians are getting tax relief and I can report today that the latest numbers from the ATO indicate that more than 12 billion dollars has flowed into the pockets of Australian consumers. Money to spend at the local shop, money to be spent with local tradies, money to be spent on the priorities of hard working Australian families. And since Scott Morrison became the Prime Minister, we have accelerated the tax cuts for small and medium sized businesses with a turnover of under 50 million dollars. We have extended the instant asset write-off to 30 thousand dollars, ensuring that millions of Australians who work in small business will be better off because purchases can be made and written off straight away, encouraging and increasing economic activity.

We have a 100 billion dollar pipeline of infrastructure spending with 160 major projects currently under construction and another 120 in the planning. These infrastructure projects will bust congestion in our cities and encourage development in our regions, and get Australians home to their families sooner and safer. We’ve passed our 5 billion dollar drought fund to ensure we can get the relief and support to those that are battling drought and we’ve also increased substantially the support that is available to the Australians who been hit by the worst floods in decades.

When it comes to health and education, we have been increasing spending on both significantly and one of the proudest achievements of the Coalition Government has been our ability, through our strong economic management, to be able to list more than 2,100 new drugs on the PBS. Most recently drugs for leukemia, for lung cancer and a range of other illnesses. We can only do this with a strong economy.

So the Australian budget is coming back to surplus for the first time in more than a decade, but we do face significant global economic headwinds and also challenges here at home. Globally the trade tensions between China and the United States are weighing negatively on the global economic outlook, affecting trade volumes, capital inflows and investment decisions. And domestically, the impact of the flood and drought has reduced farm output quite significantly and an impact also on food manufacturing.

But we believe we have the right policies to see Australia through these challenging times. Lower taxes, more spending on infrastructure, more jobs, record spending on health and education, and ultimately focusing on Australian families, on Australian workers and on the Australian people. Because we’re here to do a job to make their lives better, and that’s what we’re focused on.

QUESTION:

Have you asked the Treasury to examine the flow on effects of the higher tariffs on China and what that would do to key Australian exports to China? We’ve already seen a 28% drop in iron ore prices this month.

JOSH FRYDENBERG:

Well I’m working and talking to Treasury on a daily basis about the overall global economy and the impact of developments on us here in Australia, including the trade tensions. As you know the Coalition entered into a free trade agreement with China, and since that time in 2015 we’ve seen more than a 40% boost to our two way trading relationship. And our trade with China is our most significant trading partner. Over 215 billion dollars last year of two way trade. So we benefit from China’s continued economic growth, its an important relationship. But when it comes to those trade tensions, over overwhelming national interest is in having them be mitigated in having some of those tensions reduced, because we’re focused on a rules based trading system. We understand the Americans have some legitimate issues that they’ve raised about their trading relationship with China. But ultimately we believe in the World Trade Organisation as the key body to negotiate some of these disputes, and we believe in a transparent, open, rules based trading system.

QUESTION:

What impact though will it have on Australia’s economy?

JOSH FRYDENBERG:

Well obviously we’re already starting to see a downgrade in the global economic outlook by the IMF and the OECD have downgraded their numbers as a result of these tensions, and capital inflows have been reduced, investment decisions have been deferred. And when it comes to trade volumes which were up more than 5% just a couple of years ago, they’ve been coming down quite dramatically. So we are affected. When you have trade tensions between the two big players the United States and China it’s not just the protagonists who are affected, but it’s the by-standers as well. So Australia’s national interest here is very clear. It’s in China and the US coming to the negotiating table, being able to resolve their differences and for the transparent rules based trading system to be maintained.

The world has changed quite dramatically. Since October 2003 when George W Bush the US president and Hu Jintao the Chinese leader both addressed the Australian parliament in successive days. That was quite a remarkable event. And we as a country have always sought to have a strong productive relationship with both those countries. But the world has changed a lot since then, these are much choppier waters. And we are going to have to navigate those choppy waters to ensure that Australia’s national interest is always advanced.

QUESTION:

Obviously we’ve been talking about issues like this, often it’s from a big picture sense, but how do you think it will hurt Australian households?

JOSH FRYDENBERG:

Well, one in five Australian jobs is connected to trade. So, for Australia it’s about opening up new trading markets for us and we’ve been very successful in doing that. And it’s about having a diversified set of trading relationships. As you would have seen in the papers today, our priority is to get a free trade agreement with the United Kingdom post-Brexit as well as getting a free trade agreement with the European Union. We’ve been successful and Simon Birmingham and before him, Steve Ciobo, and others have been successful in getting a free trade agreement with Indonesia. This is a vitally important market for Australia, a country of over 250 million people. The Trans-Pacific Partnership was a key deal that Australia is now sitting at the top table with its partners and we’re striving to get the Comprehensive Strategic Economic Partnership which will include China and for the first time, have India in a regional agreement. That sixteen nation agreement will be very important and obviously ASEAN will be central to that. So from the Coalition’s perspective, we see new markets, free trade, a rules based trading system is an absolute priority for us. Since we came to Government back in 2013, back then, 26 per cent of our two way trading relationships were covered by free trade agreements. Now, it’s over 75 per cent and that number is going to increase in the months ahead and the years ahead. So for us, achieving these free trade agreements, strengthening our bilateral and multilateral relationships, like trade, is absolutely critical to creating more jobs for Australians.

QUESTION:

Do you agree with the Sydney University Vice Chancellor who says the China debate is creating a new white Australia?

JOSH FRYDENBERG:

No, I don’t. I think they are ridiculous comments to be very clear. The fact is, we need to have a mature debate about the impact of the rise of China and some of these tensions with the United States are having on the local trading system, having on geostrategic issues. It’s a reality. We can’t look at the world as we want it to be, we need to look at the world as it is and the realty is that there is growing tensions in the world. Some of those tensions are on our doorstep, so we have to be mature in having this debate and we do so with a clear sense of our national interest. Scott Morrison has made a number of very strong speeches in this regard. We won’t take a back step in saying what we think but at the same time our interests don’t always align with every other country in the world and there will be differences. We will prosecute our national interests. Marise Payne is doing that all the time as Foreign Minister, Linda Reynolds as Defence Minister, Simon Birmingham as Trade Minister. Those Ministers together with the Prime Minister and I are always engaged with our international counterparts. At every time and at every meeting, we will be promoting Australia’s national interests first and foremost.

QUESTION:

Does the Government have any specific plans going forward, though? So I suppose a 28 per cent drop in iron ore prices this month is pretty significant. Are you concerned about that and what has the Treasury actually done to examine those flow on effects?

JOSH FRYDENBERG:

Well, as you know that in the budget we set out a forecast price for iron ore and the forecast price was $55, so we’ve always been conservative with our budget forecasts when it comes to the iron ore prices. It is our largest single export commodity and when the iron ore price went up to above $120, obviously, that was producing more revenue for not just the companies involved but for state and federal governments. But we haven’t always expected that revenue to continue to flow with those elevated prices. We’ve always been conservative with our forecasts and that’s what you’ll see in the budget that I handed down in April of this year; conservative forecasts when it comes to commodity prices and any prices that have been elevated to the point that they have been in recent times is a bonus.

QUESTION:

You spoke about the importance of free trade and new trade deals to strengthening Australia’s economy. How soon do you think we can see a post-Brexit trade deal?

JOSH FRYDENBERG:

Well, obviously that’s dependent on the Brexit timetable, but what our Prime Minister and our Trade Minister have made very clear to the Government of the United Kingdom is that this is a priority deal for us, and they’ve made it very clear that it’s a priority deal for them. So the Prime Minister will have a good opportunity to talk to Boris Johnson on the sidelines of the G7 meeting. I had the opportunity to talk to my counterpart, the Chancellor of the Exchequer in the United Kingdom, not that long ago where we talked about free trade as one of a number of issues where we’re cooperating. So, that relationship is in good standing, and that agreement will be of benefit to both countries.

QUESTION:

Is there any deadline imposed on Britain? Do you think it could be (inaudible) by the end of the year?

JOSH FRYDENBERG:

Oh look; I’m going to leave those specifics to the Trade Minister, who is obviously taking responsibility for the details of that agreement. But both countries have signalled their intent to do this deal, and we’re very hopeful that will happen.

QUESTION:

One final one. Kevin Rudd says it’s a real risk that Australia could go into recession next year. Do you agree with him?

JOSH FRYDENBERG:

Well, there are challenging economic times. There’s no doubt about that, both domestically and internationally, and as the Reserve Bank of Australia has said, the most significant downside risk is those global tensions between China and the United States.

But also as Governor Lowe has said, the foundations of the Australian economy is strong. When we came to Government, unemployment was 5.7 per cent. Today it’s 5.2 per cent, and we’ve created over 1.4 million new jobs. As I said, when we came to Government, the free trade agreements covered about 26 per cent of our two-way trading relationships, now it’s above 75 per cent. We are putting in place $100 billion of infrastructure spending. We’re spending record amounts on schools and hospitals, because ultimately that’s the dividend you get from a strong economy, a strong economy is not an end in itself.

But also, the passage of those tax cuts are critically important to helping Australians earn more, and keep more of what they earn. I mean, more than $12 billion is out the door as a result of the tax cuts we passed through the Parliament. And we didn’t pass them with the support of the Labor Party. In fact, you hear the Labor Party and Anthony Albanese talk down the Australian economy every single day. But you know what their prescription was for the Australian economy that they talked down? $387 billion of higher taxes. And those higher taxes are still on their books! They still have as their policy a retirees tax, a housing tax, higher income taxes, taxes on family businesses, and taxes on superannuation. That’s what the Labor Party are still telling the Australian people are their policies.

You see, the Labor Party will always be the Party of higher taxes. We’re the Party of lower taxes, and when it comes to protecting and strengthening the Australian economy through these challenging times. Our policies are out there. Lower taxes, more infrastructure spending, 80,000 new

apprenticeships, cutting red tape, and obviously dealing with the real impacts of flood and drought. Our policies are clear, our policies are working, but ultimately, we are in the Parliament to serve the Australian people. It’s all about them, that’s our focus and that’s what Scott Morrison and his team are doing.