Good numbers for Oz Treasurer
Strong economy, but reform will be a challenge
For Australia’s new Treasurer Josh Frydenberg, managing the economy is probably a welcome relief from the months of poisonous infighting that laid the ground for his unexpected promotion.
The 47-year-old son of a Holocaust survivor seized the top economic job last week after Prime Minister Malcolm Turnbull was ousted by his own party. “The main thing that political instability does is just stifle investment and so weaken the economy,” says Mark Crosby, a professor of economics at Monash University. “There’s a hell of a lot to do on policy in Australia. But what Frydenberg can do in the next few months is pretty limited.”
Frydenberg inherits an economy on auto-pilot as high immigration and commodity exports underpin growth. But he must also grapple with weak wage growth that is limiting the spending power of heavily-indebted households.
For now, the rest of the economy is motoring along: growth is 3.1 per cent, well above the 2.5 per cent annual average of the past five years; the Budget is on track for its first surplus since 2008; the jobless rate is down to 5.3 per cent; and inflation is low at 2.1 per cent.
Frydenberg, who has postgraduate degrees from Oxford and Harvard, was formerly Australia’s Energy Minister, a notoriously difficult portfolio that partly sparked last week’s upheaval. “Clearly, I wouldn’t have liked to come to this role in the circumstances in which it occurred,” Frydenberg said in a radio interview this week. “That being said, you need to draw a line under the events of last week and move on.”
Australia’s new Treasurer said he takes inspiration from his efforts to forge a professional tennis career earlier in life — Frydenberg had wanted to quit school to focus on tennis, but his parents talked him out of it. He took a year off before starting university to pursue his sporting goal, before deciding instead on an academic path.
Frydenberg went on to earn honours degrees in both law and economics at Monash University and then worked at a large law firm. He attended the University College, Oxford, to study for a master of international relations degree in 1998 and later a master of public administration from Harvard.
Frydenberg worked as a political adviser to various ministers and then for Liberal Prime Minister John Howard; in 2004, he spent a month on a remote sheep station in South Australia working as a stockman. In 2005, he went to work at Deutsche Bank.
He comes from a close-knit Jewish family, his mother coming to Australia from Hungary, having lost family in the Holocaust.
While his background is compelling, the challenges ahead are vast, even if the Government manages to win another term. Australia has had little economic reform since the turn of the century and the Government recently abandoned corporate tax cuts for large businesses.
Sally Auld, senior strategist for interest rates at JPMorgan Chase & Co in Sydney, says the Scott MorrisonFrydenberg team is the most stable outcome of last week’s crisis.
“For markets and the economy, that was the best outcome, to the extent it represents continuity from the previous leadership,” she says. “The broad strategy around bringing the Budget to surplus won’t change.”
— Bloomberg
What Frydenberg can do in the next few months is pretty limited.
Mark Crosby, Monash University