Interview with Laura Jayes, AM Agenda
13 December 2023
LAURA JAYES: Well MYEFO, the Mid-Year Economic Budget Update will be handed down in just about an hour's time. So we will see whether the words fit the actions. Treasurer Jim Chalmers has been trying to position this Labor Government as responsible economic managers and we can judge when we see the details at 10:30 this morning. Joining me now is the Shadow Finance Minister Jane Hume. Jane, thanks so much for your time. What will you be looking for?
JANE HUME: Well, Laura, are we looking for a number of things. First of all, whether the savings that the treasurer continues to talk about are in fact genuine savings or whether they're real prioritisations in inverted commas, because let's face it, a saving isn't really a saving, if you spend it on something else. I'll also be looking to see where the revenue is coming from, because quite frankly, the tax take in this country has gone up by around 27%. The iron ore price is around twice that as it was forecast in the budget and let's face it, if you've got a windfall gain like that it's not coming from growing the economy. It's coming from just sheer dumb luck. So when this government talks about banking the savings from its windfall games, what it's actually asking for is a pat on the back for not spending money that it hadn't forecast that it was going to get and then had no actual responsibility for creating. I'll also been looking for as some of the things that aren't in the budget or aren't in MYEFO, for instance, are the aged care wage rises included in this MYEFO and the biggest save in the last budget was in fact from the NDIS, which came down from a 14% per year growth and expenditure to 8%. But what we discovered was that there was no policy to back that up. It was essentially just an expenditure cap without any policy substance. Now that the policy has been announced, we know that the government is going to have to pay off the states in order to create that lower level of spending on the NDIS. Will that payment to the States be included in this MYEFO as well? And of course, the most important thing is is this MYEFO going to demonstrate that the government is reining in its expenditure ambitions, because they're saying that the government, that the fiscal policy is in fact in lockstep with monetary policy, but monetary policy is contractionary unless this government can demonstrate that their fiscal position is also contractionary, or then they're just trying to pull the wool over your eyes. In fact, it's the RBA that are going to end up doing all the heavy lifting to reduce inflation and unless you reduce inflation, there is no way you can reduce the cost of living for all Australians.
LAURA JAYES: It does look like two surpluses in a row delivered by this Labor Government, something that your side of politics couldn't do?
JANE HUME: Well, certainly when the tax take is as high as it is, you know, Australians are paying the price for that surplus. In fact, we know that real disposable incomes in this country have gone backwards by about 8.6%, since Labor came to power and the reason why that is is threefold from inflation, from high interest rates and because there are higher taxes, those higher taxes are contributing to that windfall gain as our high commodity prices, but you can't expect to pat a government on the back for not spending windfall gains that it wasn't expecting in the first place. What is the government doing to actually grow the pie, to grow the economy? Because let's face it, we're already in a per capita recession. If it wasn't for those high migration figures, GDP would be going backwards.
LAURA JAYES: Jane, so let me get this clear. On the one hand, you're saying the government needs to rein in spending, but at the same time, you're saying it does need to spend. Can you just explain that for me and where you think the government should be spending money?
JANE HUME: No, I'm sorry. I think you misunderstood me there, Laura. Maybe I wasn't clear. We want to see the government reining in its spending ambitions. There is no doubt that nine years in opposition meant that this government came to power with a wishlist of things that it would like to do and of course, a newly minted Treasurer and Finance Minister find it very hard to say no to their colleagues. They've said, oh, there's no shortage of good ideas. But unfortunately, one of the great disciplines of government is the ability to say no, to make sure that the government is spending only where it's not going to cause more damage to the economy. Now quite frankly, if you look at this government's agenda, whether it be energy, whether it be industrial relations, it's actually creating productivity sapping policies, not things that are going to grow the economy unless you can sustainably grow the economy and make sure that your spending doesn't grow at a faster rate than the economy or you're setting yourself up to go backwards in a in an unsustainable way. So should this government
LAURA JAYES: So should this government spend to ease the cost of living?
JANE HUME: Well, this government has already started spending to ease the cost of living but quite frankly, it's only putting a band aid on a bullet hole. The only way to sustainably bring down the cost of living is to reduce inflation. The only way to reduce inflation is to make sure that your fiscal position is in line with your monetary policy position. If you don't make your fiscal policy and your monetary policy align, it's like having one foot on the brake and one foot on the accelerator and that's not a way to run the economy. We want to see Labor rein in its spending ambitions. Let's face it, Australian families are having to make some really tough decisions right now with their household budgets. This Labor government should be doing the same.
LAURA JAYES: Okay, but it's in a pretty good fiscal position. If you're talking about surpluses. Yeah, I can see the underlying spending and what that might mean for the years ahead. But should there be any direct payments to those families doing it tough?
JANE HUME: Well, they've already made direct payments to families that are doing it tough, but quite frankly, those families will continue to do it tough if inflation continues and inflation here is homegrown. It's not just me saying that, it's Michelle Bullock saying that, the OECD, Chris Richardson, Cherelle Murphy, economists across the board are saying government spending is actually making the inflation situation worse.
LAURA JAYES: What would you do? What would your side of politics do?
JANE HUME: Well, I think you have to rein in those spending ambitions and rather than in and rather invest in productivity creating policies, not like making your workplace less flexible, not like putting ideology over reducing power prices and increasing supply and energy.
LAURA JAYES: So you’re talking about IR?
JANE HUME: No, no, you have to grow the economy. There's absolutely no doubt about that. But you do that through pulling policy levers that create productivity. You can't simply give wage rises to everybody without having that accompany productivity, or you're going to make the inflation situation worse. You don't need to believe me or the Coalition, you can believe Philip Lowe. That was what he said six months ago and yet it seems that the government has done the exact opposite. You have to have a government that is taking inflation seriously and it has to have a plan to tackle inflation head on, not just leave all the heavy lifting to the RBA. If the government does that, essentially it's failed in its duty to reduce the cost of living, because the cost of living will stay higher for longer, inflation stays higher for longer.
LAURA JAYES: We will wait to see what Jim Chalmers comes up with at 10:30 this morning, Jane Hume, great to talk to you.
JANE HUME: Thanks so much, Laura.