Interview with Laura Jayes, AM Agenda

15 November 2023

LAURA JAYES: Data out of the U.S. shows inflation has eased for the month of October. It's raised hope that the Federal Reserve won't lift interest rates again anytime soon. But what impact is this going to have on the Australian share market as it opens today, as well as our own domestic inflation. Joining me now is the Shadow Finance Minister Jane Hume. Jane, thanks so much for your time. I guess this is a reminder that Australia doesn't face this inflation problem alone. This is a global problem. And interest rates in the U.S. are still a bit higher than they are in Australia. So are we you know, cold comfort, but are we doing you know, a little bit better than the rest of the world?

JANE HUME: Well, in fact, data that came out of the economist yesterday show that Australia has a higher, more entrenched rate of inflation than any other country in the developed world that includes the US but it also includes places like the UK that has high inflation as well. This is a great concern. Yes, it's important what happens in the U.S., but it's more important that we deal with our domestic issues. Just yesterday, I asked a question of Katy Gallagher during question time, about Labor's plan to tackle inflation. And interestingly, she said that because inflation came to Australia later than it did the rest of the world, it's expected to come down later too. Now that is just economic nonsense and demonstrates the lack of understanding. Indeed, the lack of will to directly tackle inflation. There is no plan from this government to tackle inflation, which means that interest rates go higher for longer, which means their living standards come down, that our quality of life comes down and it is Australians that are paying the price.

LAURA JAYES: We're big traders, though, isn't it accepted wisdom among economists that that you know, whatever the U.S. does, and indeed China, Australia will follow. We're not, we're certainly not leaders when it comes to inflation.

JANE HUME: Certainly not directly and quite frankly, unless you can get your domestic issues under control, inflation will remain higher for longer. We already know that tradables versus non tradables inflation, the domestic aspect of that is still way too high in Australia. And quite frankly, labor can't keep pointing to other countries or other places and say this is their fault. They already pointed to Vladimir Putin and said it was Russia's invasion of Ukraine. That was the first problem with inflation. They’ve said it's a problem in the Middle East. They’ve said it's a problem with infrastructure spending in the states. But they didn't ever look at their own issues at their own spending, fueling the aggregate demand, the public sector part of aggregate demand and saying that's our responsibility and we will do something about it. At some point, when you govern, you have to take responsibility and that seems to be what this government has failed to do.

LAURA JAYES: Well, I accept that but uh, you deny that there are international factors pushing inflation?

JANE HUME: Of course there are international factors. There are always going through the international factors at play. But that's not the real problem that we're facing in Australia right now. Every single indicator tells us that that is the case, that there are domestic factors at play, and they're the ones that the government needs to take responsibility.

LAURA JAYES: Okay, what exactly are we talking about? What should they pull back on spending?

JANE HUME: Well, certainly there is $188 billion of additional spending and spending that the coalition would not have committed to prior to the last election. We've said that very clearly.

LAURA JAYES: We're now halfway through the term, so has that changed?

JANE HUME: Well, in fact, it just seems there seems to be adding fuel to the fire. And if you think about it, there was an additional $3 billion that was simply thrown out of the door after the last budget as a sweetener to the Greens to get their social housing policy through. A billion dollars here, a billion dollars there. Of course that's going to be adding to inflation.

LAURA JAYES: But Jane, are you saying that they shouldn't have spent that $3 billion dollars on social housing? I mean, housing is the number one issue at the moment up there with inflation.

JANE HUME: If you are going to spend money on social housing, which we don't disagree is an important issue, are there any KPIs? What is it that the states have been committed to this looks to me, like money that's been thrown after business as usual? Nothing. There's no additionality that seems to be attached to it. That is a real concern. The same goes for infrastructure spending that points to the states and they say this is their problem. They're fueling the inflation fire and yet at the same time, that not just fund the Suburban Rail Loop a project that has no business case that stacks up, but they've even yesterday just announced that they're going to double down and that's because it was a Labor election commitment, rather than a genuine piece of infrastructure that would add to productivity. If you cancel rail projects if you cancel road projects, what you're essentially doing is reducing the productive capacity of the economy. You're reducing the opportunity to open up new zones for housing. That could actually have a detrimental effect. On top of that, we know that because immigration is out of control. That is the only thing that is propping up the economy right now, we're actually in a per capita recession even though growth is still no continuing to languish along. But quite frankly, with half a million migrants in the last 12 months alone. If you rely on a migration program in order to grow your economy that's simply a ponzi scheme that doesn't stack up. Eventually, it will actually affect the quality of life of Australians that are here right now and it will fuel inflation even further.

LAURA JAYES: Well we can see migration is certainly an issue. Too fast too soon. Jane, we'll have to leave it there. You're being interrupted by your leader Peter Dutton. We're going to take you live now to the opposition courtyard at Parliament House.