Face of Nation : Josh Frydenberg has had to mop up policy messes made by others in government on a number of occasions but now faces his riskiest clean-up task. He is in danger of becoming the Treasurer who lost the surplus if the economy does not pick up stoutly.
Today’s gross domestic product figures for the June quarter showed year-on-year growth of 1.4 per cent, the lowest since September 2009 when the global recession was still rampant. Mr Frydenberg maintained today his reassurances about the “fundamentals” of the economy and it is unlikely the nation is heading into a recession.
But there will have to be a lot of catch-up work to prevent the projections contained in the 2019-20 Budget just five months ago being trashed by a global downturn, domestic problems such as the drought, and low wage movements starving shops of customers.
At stake is the promised surplus of $7.1 billion, a relatively modest amount that could disappear should, for example, the Chinese economy be further squashed by the weight of tariffs imposed by the USA.
The surplus is largely a political creation designed to impress voters at the election. It’s delivery is more important to Prime Minister Scott Morrison’s economic management boasts than to the economy itself.
However, attaining it will require more growth, and to achieve that improvement could require spending the money meant to be in the surplus nest egg. Mr Morrison has written to premiers asking for joint infrastructure projects to be sped up to inject some pep into the economy.
And Mr Frydenberg has made clear the Government is banking on two interest rate cuts and one round of tax cuts producing a brighter GDP in the September quarter.
If disappointed by September, Mr Frydenberg could have to become the policy janitor again. It’s a role he has had before. Mr Frydenberg was in charge of reaching a target of 23.5 per cent renewable energy by next year.
Figures today confirm that target will be met, as was noted with a certain amount of preening by present Energy Minister Angus Taylor. Mr Taylor had opposed the target when Mr Frydenberg was minister.
“He wanted the renewable energy target to be abolished,” Dr Martin Rice of the Climate Council said. Mr Frydenberg had to withstand the attacks to set a course for the renewables result the Government will no doubt claim as a policy triumph.
This was part of the battle over energy policy that saw Mr Frydenberg able to get the structure and certainty of the National Energy Guarantee through cabinet and three times through the party room, only to have it blocked by an internal government rebellion by coal lobbyists. The consequence is that the Morrison Government still doesn’t have an energy policy.
As the new treasurer early this year, Mr Frydenberg had to manage the response to the ugly findings of the Kenneth Hayne royal commission into financial services, an inquiry Mr Morrison had fought against.
Mr Frydenberg had an embarrassing meeting, before cameras, on February 1 with Mr Hayne, who declined to shake his hand and dropped any attempt at amiability.
Then came the Budget, brought forward from May to April and primarily contrived to win an election rather than reinforce economic foundations in the longer term. A central feature was that surplus, which became a familiar promise from the Coalition during the May 18 election campaign. A failure to deliver would mean more than a loss of face for Mr Morrison.
