Interview with Kenny Heatley, First Edition

11 November 2024

KENNY HEATLEY: Joining me live now is Shadow Finance Minister. Jane Hume, good to see you this morning. Jane, thanks for coming on the program. If Donald Trump requests that we lift defence spending up to 3% of GDP to keep AUKUS on track, how should we respond?

JANE HUME: Kenny, Peter Dutton already responded in last May's Budget In Reply, that Australia should be focusing on its defence spending and indeed increasing that in order to address and face the geostrategic challenges that we have, both in our region and around the world. Our concern is that Anthony Albanese has either delayed or kicked down the road some of that defence spending that he has already committed to. Last time Labor were in government, our defence spending reached its lowest levels since World War Two. It took a Coalition Government to bring our defense investment back up to that two per cent of GDP, you can see from a future Coalition government that we would maintain our commitment to making sure that we have capability for our men and women in uniform.

KENNY HEATLEY: Okay, so you think two per cent is the right figure, not three per cent?

JANE HUME: Well, two per cent was the right figure a decade ago. Unfortunately, we're coming from a long way behind. Now we need to focus on making sure that our capability in our region is enhanced, and that those projects that would enhance that capability are not delayed or kicked down into the medium term. And that's the concern that we're seeing from the Albanese Government now.

KENNY HEATLEY: Okay Treasurer Jim Chalmers is expected to say today in a keynote speech, that Australia should expect upward pressure on inflation and a decline in exports under US President Elect Donald Trump's plan to impose steep tariffs on China. Would you agree with that assessment?

JANE HUME: The US is Australia's strongest ally, and when the US does well, the rest of the world does well also. At the last time that Donald Trump was president, he put tariffs on certain metals, but Australia, the Coalition Government in Australia, managed to secure an exemption from that tariff. I have no doubt, that strategic relationship, the very important economic and strategic relationship that we have with the US will come to the fore with the new President Elect Donald Trump, when he takes over the Presidency. We know that it is going to be a changing economic environment. Unfortunately, my concern is that Australia is less resilient economically than it could have been had we have got inflation under control earlier? Because inflation has stayed higher for longer, we are more vulnerable to changes in the global economic environment.

KENNY HEATLEY: Yeah, but could a Trump trade war force the RBA to jack up rates, meaning that the Government's ability to exempt Australia from tariffs will be a crucial cost of living factor ahead of the election.

JANE HUME: We would hope that it wouldn't come to that, that the very good and strong and deep relationship that Australia has with the US that has, you know, it's gone back decades. It started with ANZUS. It's now been deepened with AUKUS. And there are not just strategic interests in AUKUS, there are also economic interests, both for Australia and for the US in that relationship. We would hope that the relationship goes so deep and so wide that we wouldn't, that that's not a concern that we would have. However, it is going to be important that we maintain both economic resilience and diplomatic tact in order to make sure that that relationship maintains its strength.

KENNY HEATLEY: But if there are impending price pressures coming from the States, does that put even more restraints on the Government and the Coalition to not promise to give out cash handouts and cost of living relief, which might add to inflation?

JANE HUME: There is no doubt that one of the lessons of the US election is that the economy matters, that hip pockets matter, and that a resilient and strong economy is fundamentally important to all Australians. That's why we've been saying now for years that government spending is making inflation worse. And this Government's decisions are making your life harder, making interest rates stay higher for longer and playing out in that backwards movement that we've seen in real disposable incomes. And Australians are paying a price for the decisions that the Government is making. When we move into a new economic environment with the Trump administration, while we are absolutely certain that we can maintain those ties and those important economic links, it is important that we maintain a strong Australian economy, and the decisions made here serve the best interest of Australian hip pockets.

KENNY HEATLEY: Okay, Shadow Finance Minister Jane Hume appreciate it. Have a great day.