Hats off to ABC News Breakfast Hamish Macdonald who this morning tried at least eight times to get a simple answer from the new Treasurer on how hed pay for new spending.

The last week or so has been a complete debacle when it comes to the new Prime Minister, Treasurer and Finance Minister constantly contradicting each other over the Governments fiscal rules.

Yesterday the Prime Minister boldly declared the rules were meaningless because there were exceptions to the rules.

This is what happens when you have a Liberal Party divided over and without fiscal rules and a new Treasurer clearly caught out with no explanation how hes meant to explain not offsetting billions of dollars in proposed new spending and tax cuts.


HAMISH MACDONALD, PRESENTER: You're allocating a lot more money. Billions more. Where does the money coming from?

FRYDENBERG: It comes from the Government's budget and we have made an allocation for this increased money, not just for Western Australia but for all of states and territories. All states and territories will be better off as a result of these reforms.

We've listened to the Productivity Commission, we have recognised that the way the GST formula is based is not sustainable in the long term because you had people in Western Australia, Hamish, who were getting 30 cents in the dollar in the GST.

MACDONALD: But its by far the biggest jump for WA.

FRYDENBERG: It is.

MACDONALD: Compared to the rest of the states and territories.

FRYDENBERG: Because they have been the hardest done by.

MACDONALD: $9 billion is that the amount that you have to set aside? Where does that actually come from? Where do you cut it from?

FRYDENBERG: We are obviously ensuring that we have fiscal discipline, and as you know, the Australian economy is growing at the fastest rate since the height of the mining boom in 2012

MACDONALD: So the money has to come from somewhere. Can't you give us a simple explanation of where you're getting $9 billion from?

FRYDENBERG: There has been improvements on both the receipt side and the payments. Receipts because more people are in jobs creating over 1,000 jobs a day. But also, less payments, particularly in the welfare space as more people find jobs and don't need the additional income support.

MACDONALD: So nothing is being cut from anywhere? Just better receipts?

FRYDENBERG: We have budget rules which we're sticking to

MACDONALD: So where do the cuts come from? Let's be honest about this?

FRYDENBERG: Hamish, let's be honest. The Australian economy is growing and we've seen improvements on receipts side, but we've also seen lower payments. The last time that the Labor Party delivered a budget surplus, the Berlin Wall was still standing.



MACDONALD: Can you just be clear, though, will anything be cut to fund these changes to the GST?

FRYDENBERG: We will run the economy in a fiscally disciplined way. There will be savings

MACDONALD: So there will be cuts?

FRYDENBERG: There will be savings where it is appropriate to do so.

MACDONALD: What will they be?

FRYDENBERG: You'd love me to reveal on TV today the Mid-Year Economic and Fiscal Outlook but you'll have to wait until December for that.