Interview with Charlie Pickering, ABC Melbourne Drive

4 September 2024

CHARLIE PICKERING: Australia's gross domestic product, or GDP, has grown by only 0.2% in the June quarter and 1% over the last year, according to numbers released today by the ABS. While it is in line with market expectations, the concern is that excluding the pandemic period, annual financial year economic growth is the lowest it's been since 1991-92, the year that included the gradual recovery from the 1991 recession. So what does this mean for you, and what does it mean for the economy? To talk about it I'm joined by Jane Hume who's the Shadow Finance Minister and Liberal Senator for Victoria. Good afternoon Jane.

JANE HUME: Good to be with you, Charlie.

CHARLIE PICKERING: Thank you for joining us. Now, in real person language, what does slow economic growth mean for your average person?

JANE HUME: Well, it means that essentially your standard of living is going backwards. Your quality of life isn't as good as it was before and there's less opportunities for you and for your family. That's what sluggish or anaemic or indeed absent economic growth can do to an economy.

CHARLIE PICKERING: So can you just, and this is purely, I don't mean to interrupt, I just want to clarify something I don't understand is like, if it's a 0.1% growth, how is someone's standard of living going backwards? I'm just asking so I can understand what you mean by that?

JANE HUME: Well, in fact, productivity has gone backwards in this country. It's gone backwards by around 6.3% just in the last couple of years alone. And living standards have collapsed when you measure it by real disposable income. So your real disposable income has been eaten away because of three things because of interest rates, because of inflation and because of tax. And of course, when your real disposable income goes backwards and you've got less to spend, well, that means that your standard of living goes backwards too. And that's what we've seen in this consumption data, which is what drives GDP, drives economic growth. And indeed, the Treasurer has come out today and said that without government spending, there would have been no growth in the economy at all. So private sector spending and private sector investment is basically zero or going backwards.

CHARLIE PICKERING: Now, you mentioned the Treasurer there. He warned this week that the Reserve Bank's 13 interest rate rises were smashing the economy. And he had this to say today:

(excerpt)

I just see what I said earlier in the week as a statement of fact. It's been borne out in the figures that we've released today, that we've received today, that the ABS has released today. Interest rates are having an impact on household budgets and slowing the economy. I think that's self-evident and not especially controversial.

(end excerpt)

CHARLIE PICKERING: Do you agree with the Treasurer that the interest rate rises from the RBA is what is slowing the economy down?

JANE HUME: Certainly interest rate rises are slowing the economy down, but the reason why we've had those interest rate rises is because the Government has failed to get inflation under control. Now there's two ways you can get inflation under control. You can use your monetary policy. That's the RBA that's using its interest rates. And it's very effective. But it's only got the one tool in the shed to tackle inflation. And that's interest rates. Whereas the Government can use its fiscal firepower to get inflation under control too. And it can do that in a much more targeted way. That's something that this Government has failed to do. And in fact, it's had expansionary budgets, that have stimulated the public sector spending side of the economy. And that's meant that inflation has stayed higher for longer, which means that interest rates have stayed higher for longer. So yeah, it's inevitable that public consumption will go down when interest rates are high. But that doesn't mean that that's out of Jim Chalmers control. In fact, it does seem he's entirely abrogated responsibility for tackling inflation to the RBA and said that managing the economy is all too hard, but that's the Treasurer's job.

CHARLIE PICKERING: The RBA clarified that government spending is not the reason why inflation is high. Are they wrong when they say that?

JANE HUME: They said that it was one of the key drivers of inflation. Now it said it wasn't the only driver, but it's certainly one that is within the Government's control and one which they have failed to, a tool that they have failed to use in order to meet their responsibilities of managing the economy well. Instead of showing fiscal restraint, the Government's pushed an additional $315 billion into the economy. And of course, that is going to mean that inflation stays higher for longer.

CHARLIE PICKERING: The RBA also cited consumer spending and China's slowdown as bigger influences on Australia's economic trajectory than government spending. Do you agree with that? And are they things that are within the control of a Treasurer?

JANE HUME: Yeah, I heard the Treasurer say that too, that somehow the economic growth figures that we've seen today are an inevitable consequence of global uncertainty. I think that was the phrase he used. But if that's the case, why is growth not slow in every other comparable economy? In fact, it does seem that both inflation is coming down, interest rates are coming down and growth is going up in comparable economies. That's not what we're seeing here. And that's why we have called on the Government to do more, to make sure that Australian living standards don't collapse further. At the moment, they've collapsed around 8.7% in two years. Productivity, as I said, has gone backwards by about 6.3%, 1% just in the last quarter. Household savings have gone down by about ten, a little over 10%. Mortgage payments have almost tripled. Personal income taxes are 25% higher. So you can see exactly why Australians are doing it tough. This is not your imagination. If you're feeling poorer, it's because you are poorer.

CHARLIE PICKERING: But as you say, they're people's savings have gone down and their mortgage payments have gone up. That's squarely on interest rates. Is it time for the RBA to wind it back?

JANE HUME: Well, the RBA has one job and that's to get inflation under control back into that 2 to 3% band. That's in its charter. But as I said it's only got one tool with which to do it and that's interest rates. So if Jim Chalmers was serious about getting inflation under control and getting the economy back on track, he'd be working with the RBA, not against the RBA making their job that much harder. What we want to see is productivity embedded back into the economy and the private sector start driving growth. We want to make sure that there is, you know, more energy supply in the system that will bring sustainably energy prices down, that will help businesses. We want to see industrial relations laws far more flexible so that they work not just in favour of the employee, but the employer as well. And they don't push up costs and make it harder to do business. And we've got to see the removal of red tape, whether it's in approvals or reporting obligations, that businesses have to follow, rather than focusing on growing their business. That's the only sustainable way to get the economy moving again. But the decisions that the Government are making now are having the opposite effect. So Jim Chalmers can't abrogate responsibility for this flaccid GDP. In fact, the policy decisions that the Labor Government are making the situation worse.

CHARLIE PICKERING: I'm speaking with Senator Jane Hume Shadow Minister for Finance and Senator for Victoria. You say that Jim Chalmers should be working with the RBA, my memory is good enough to know that when interest rates went up under the Coalition Government, they were very critical of the RBA at exactly the same time and said that was the RBA doing it and not to do with them. I'm just curious, given you said the RBA have one job and that's to tool about with interest rates to keep inflation low. What could Jim Chalmers be doing with the RBA, an independent body? How could he be working with them differently? What specific things could he be doing?

JANE HUME: Well, let me first just correct you slightly. I think you might have verballed a previous Coalition Government. I mean, A - we didn't see any interest rate rises for a very long time, right up until we were in caretaker mode in 2022. And I think what you're meaning is that the RBA is an independent body. It makes its decisions about interest rates entirely independent of government. And that is true. But the most important thing is to get your economics right so that your monetary policy, that's the RBA and your fiscal policy are working in the same direction, rowing together, if you like. Otherwise, it's like having one foot on the brake and one foot on the accelerator, and that's no way to manage an economy.

CHARLIE PICKERING: Would our energy prices be better had they not been such policy uncertainty and confusion from the private sector, who had to sit on their hands because of a lack of a coherent energy policy for a number of years under the Coalition? And is that why we're in the predicament we're in today?

JANE HUME: Well, I think you would have seen gas prices, in fact, go down under the Coalition's energy policy, whereas in fact, they've gone up in the last two years, gone up significantly. And there's more and more intervention in this market, which is turning new investors away, particularly from gas. And unless we inject more gas supply into our energy mix, we're going to continue to see energy prices rise because we haven't got that 24 over seven baseload power as coal exits our system. That is going to be the transition fuel as we go to more renewables and hopefully one day supported by 24 over seven nuclear emissions free energy, a long way off in the future. But certainly gas is an important part of that. And the more you intervene in the market, the more you turn new investors away.

CHARLIE PICKERING: We'll save the discussion of the realistic nature of ambitions towards a nuclear Australia for another day. There is something else I would like to ask you about, though. And the Coalition supported the Albanese Government putting the CFMEU into administration. They've now launched a High Court challenge. Here's the former CFMEU president, Jade Ingham yesterday.

(excerpt) Whether you like the CFMEU or you hate the CFMEU this attack should concern anybody in this country that cares about our country and that cares about our democracy. That is why we are raising awareness. That is why the High Court challenge has been lodged. It's our belief that these laws are unconstitutional, undemocratic and they are definitely un-australian.

(end excerpt)

CHARLIE PICKERING: Are you concerned that the bipartisan move that you supported could be unconstitutional?

JANE HUME: Well, I think that both sides of politics have always felt that a High Court challenge of these laws was inevitable. But that's why the Coalition have consistently said that administration is only the first step in bringing the CFMEU under control. Now it's up to the Government, obviously, to defend its legislation. Yes, the Coalition supported it. But is the Government's legislation in the meantime, though, the Government can do more and what it should do is immediately bring back the two bills that the Coalition introduced to the parliament to bring order back to the construction industry, the bills that we introduced restore that tough cop on the beat, the Australian Building and Construction Commission, and also introduce some integrity measures specifically to keep criminals out of the industry, because we know that corruption and crime in construction costs Australians every day, it costs Australians that are buying a home. It costs Australians that are trying to improve roads and public transport. It costs every taxpayer in the bloated building bills to government. So the cost of building infrastructure in Australia has increased by 30%, and the involvement of the CFMEU on those building sites has only added to those increased costs. So we're calling Mr. Albanese to say if he's serious about controlling the rogue union, he should back those bills next week when the Parliament returns.

CHARLIE PICKERING: And as we talked about just last hour, there are a number of unions. The average union worker out there is female and working in the health industry and they want the CFMEU cleaned up as well. I think we all do. One very quick thing before I let you go and thank you for your time this afternoon, Senator Jane Hume. Yesterday, a number of your colleagues, including Michaelia Cash, were on X yesterday urging people to celebrate National Flag Day, which I must confess in my 47 years as an Australian, I didn't know was a thing. Did you celebrate Flag Day yesterday?

JANE HUME: I absolutely did, I celebrated with a fun fact. In fact, a couple of fun facts. Did you know, Charlie, that the Australian flag is the only single flag to fly over an entire continent and that it was the first flag chosen through a national competition? There were over 36,000 entries, and they were hung up in Melbourne's Exhibition Buildings. It took them six weeks to hang them all up and six days to choose the winner, and the winner won 200 pounds, which was more than the average year's wage back then. So there you go, I do know a lot about the Australian flag.

CHARLIE PICKERING: Oh, Michaelia Cash could be on a winner. I thought it was just a little bit of thinly veiled nationalism, but it turns out for flag enthusiasts such as yourself, it's a good opportunity to hit the factoids. I do appreciate that. No problem. Shadow Finance Minister and Senator for Victoria, Senator Jane Hume Thank you for your time.

JANE HUME: Thanks, Charlie.