Growth figures a repudiation of Labor critics, Josh Frydenberg says

Josh Frydenberg says figures are a ‘repudiation’ of Labor critics of the government’s strategy.

Prime Minister Scott Morrison, centre, with Treasurer Josh Frydenberg, left, and Senator Mathias Cormann, right, in Canberra. Picture: Getty Images

Josh Frydenberg says the national accounts figures are a “repudiation” of Labor critics of the government’s economic strategy, despite Australia facing the slowest growth since the global financial crisis.

Economic growth sank to 0.5 per cent during the final three months of the 2019 financial year, leaving annual growth at 1.4 per cent – the slowest rate since 2009, in the wake of the GFC.

The Treasurer on Wednesday said the continuing growth was a sign of the national economy’s resilience and a repudiation of people like former prime minister Kevin Rudd who have warned of the perils of recession.

“The message out of today’s national accounts is the Australian economy continues to grow, the Australian economy has shown remarkable resilience,” he said in Canberra.

“And these numbers are a repudiation of all those who have sought to talk down the Australian economy.

“Can you imagine Labor putting $387 billion of higher taxes at this time when we have such a challenging domestic and international economy?”

Mr Frydenberg also reiterated Scott Morrison’s message earlier today that the upcoming September quarter figures would show the full extent of the impact of the government’s tax cuts on the economy.

“Those tax cuts were not reflected in these numbers. That is really important to understand,” he said.

“The policies that we are putting in place, that’s the tax cuts, that’s the infrastructure spending, that’s the apprenticeships, they’re all designed to boost economic activity.”

Labor’s treasury spokesman Jim Chalmers hit back at Mr Frydenberg’s attacks and said if the Treasurer was proud of today’s growth figures then he was “out of touch.”

“When will it dawn on this government that finger pointing and blame shifting and excuse making won’t get the economy growing again?” he said.

“This government likes to pretend that they are doing a good job managing the economy but the facts tell a very different story.

“If the Treasurer thinks that these weak economic growth numbers are good, then he’s even more out of touch than we feared.

“The government needs to bring forward a budget update so they can fix up their forecasts and so they can responsibly fund a proper economic plan to get the economy moving again.”

Earlier, Scott Morrison said he could not see Australia entering a recession.

The Prime Minister said on Tuesday that the GDP figures would show that Australia is still doing better than many other developed economies.

When asked if Australia is in danger of entering a recession, he said he could not see that.

“I can’t see us going into that territory,” he told 3AW’s Neil Mitchell.

“Let’s remember: Germany just had a negative quarter of growth, the UK just had a negative quarter of growth. Australia hasn’t.

“Today’s growth figures will show over the year a softness … what we will see is that in a tough climate we are actually battling away quite well.

“I’m not surprised by the difficulties we’re seeing globally at the moment. When we put the budget together in May I said we should cut taxes, we should spend more on infrastructure, I said we should invest more in skills transitioning.”

Mr Morrison rubbished concerns from some industry leaders that the tax cuts have not had an immediate effect on a flagging economy, based on falling retail spending this quarter.

“That’s a ridiculous comment. The figures coming out today are for the June quarter. The tax cuts were passed in the September quarter,” he said.

“I am concerned (by falling retail sales) … you cut taxes, you build infrastructure, you invest in skills. That happened in the September quarter and figures we’re talking about today were for last quarter.

“You can’t govern by rear view mirror.”

Finance Minister Mathias Cormann signalled the full impact of the government’s tax cuts would not be fully known till the end of the year.

Senator Cormann said the economy was in a stronger position for the tax cuts, compared to the tax increases Labor would have brought in if it had not lost the election in May.

“Tax cuts that started to be paid to the bank accounts of Australians from the middle of July, you know, obviously would not have had as much of an impact, as you seem to think, they should have had in the July data,” he told ABC News.

“It’s an economy that is in stronger shape than it would have been if the Australian people had elected a government at the last election that would have increased taxes instead of reducing them, as we have.

“About $14 billion in income tax relief has been handed back to the Australian people over the last two months … That obviously is having a beneficial impact across the economy as we speak.

Mr Morrison and Josh Frydenberg have this week sought to play down expectations, looking to a stronger result in the September quarter as the Coalition’s income tax cuts take effect. They have also pointed to the bounce in capital city house prices as evidence of economic improvement.

Senator Cormann reiterated that figures from the September quarter would end up showing an improvement in economic growth ahead of the mid-year budget update.

“I think you’ll find that when we have that conversation about the third quarter for 2019, I think you’ll find that the economy and real economic growth will start to strengthen again and we will have a more positive outlook into the future,” he told ABC News.

“We’re pursuing an agenda for growth with lower income taxes, with more increased investment in infrastructure and ambitious deregulation agenda and ambitious free trade agenda.

“All things designed to make the economy more resilient and stronger in the face of increasing global economic headwinds.”