Interview with Laura Jayes, AM Agenda
31 July 2024
LAURA JAYES: Joining me now is the Shadow Finance Minister Jane Hume. Jane, thanks so much for your time. Look, inflation still is historically low given where we've seen it in the last couple of years. What are you expecting today and whose fault is it?
JANE HUME: Well, whatever we see today we know that is going to be fundamentally important, absolutely critical in the RBA’s decision making next week and you're right. There are plenty of households out there with mortgages that are doing it really tough right now. We're hearing on the ground that a lot of them, this is simply going to push them to breaking point. What we do know is that no matter what the inflation result is today, it could have been so much lower. It could have been lower, had the Government used its fiscal firepower, not just relied on the RBA using monetary policy, to bring inflation back under control. Particularly that last Budget in May, there was hardly an economist in Australia that didn't say that that expansionary Budget was inflationary. It was actually going to make the situation worse.
LAURA JAYES: What should it have done Jane? Should it have not given households that energy rebate, should it have delayed the tax cuts?
JANE HUME: Well, certainly there is an argument to say that if you spend less, a very logical argument to say that if you spend less, if you don't expand, you know, if it's not an expansionary Budget, well then you dampen demand, overall demand. Why would you for instance, in a Budget, like the one we saw in May, include a billion dollar expenditure on solar panels, for instance. If you scatter money about throughout the economy, whether it be in people's pockets or whether in businesses, if you're driving expansion, if you're fueling expansion. Well, of course, you're going to push inflation up higher and we're seeing that now, not just in the inflation figures that we're expecting today, but in how that they are moving in a completely different direction to our overseas counterpart. Jim Chalmers is terrific at blaming anybody else for this problem. He'll tell you that there are pressures from overseas, but in fact, inflation is coming down. Interest rates are coming down in the US and the UK, New Zealand, Korea, Canada, Norway, Switzerland everywhere.
LAURA JAYES (INTERRUPTS): And all those places seem to be losing jobs too. Is that the quid pro quo here?
JANE HUME: Well we would hope not, if you can maintain a strong economy and that is possible, even when inflation is coming down.
LAURA JAYES (INTERRUPTS): But those economies who you mentioned, haven't been able to bring inflation down and maintain that job level, that's the point.
JANE HUME: Well, it really is the priorities that you're placing on the RBA. The RBA has one job. It has one job and that is to bring inflation under control, and even has to keep raising interest rates further and further in order to do that. Well, actually, it's a very, very blunt tool. Now it's an effective tool, don't get me wrong, it's timely. The moment interest rates go up, demand is dampened. But it's such a blunt tool because it really only hits those sections of society, like mortgage holders, landlords pushing up rent, you know, it's it's it's a very untargeted way of keeping inflation under control. Fiscal policy is a way that could have been used in a much more effective way to keep inflation under control so that the RBA doesn’t have to do all the heavy lifting.
LAURA JAYES: As you mentioned before, you wouldn't have spent, you’ve suggested you wouldn't have spent a billion dollars on solar panels. But would that have really brought inflation under control? I note that the target band has not been reached for 14 years.
JANE HUME: Well, neither would we have employed an additional 36,000 public servants. That 36,000 public servants is costing billions of dollars to the Budget bottom line, it artificially increases your employment numbers and most importantly, that's taxpayer money that's being used to do that. I'm sure that taxpayers have much rather than money in their pockets, particularly during a cost of living crisis. If the Government wanted to keep inflation under control, there are things that could have done. It chose not to. So whatever it is that we see today, whatever the number is, understand that the Government could have done more, it could have been lower, and the RBA’s decisions would be that much easier.
LAURA JAYES: Ok, just finally Rex. Should a Government bailout be on the cards here?
JANE HUME: First of all, I think it's really important to say that there are a lot of people out there hurting today and we're not talking about passengers who have been inconvenienced and certainly that's a big deal. But the employees of Rex, who really only heard about the fact that their own company is teetering on the edge in the last 48 hours, and there's a lot of families making some pretty tough decisions themselves right now. On top of that regional communities rely on Rex. I was up in Alice Springs just a few months ago with the Cost of Living Committee and we were talking to the Yipirinya School, who were saying that they actually rely on the regional airlines and the airport in Alice Springs to provide a reasonably priced airfares, because otherwise they can't attract the teachers to work in that school. People will simply won't come to remote communities or regional communities if they don't feel like they have access to big cities at a reasonable price.
LAURA JAYES: So there is a case for a Government bailout given that?
JANE HUME: I think the most important thing here is that the Government works closely with the executive of Rex, with the administrators, with the ACCC, with the regulators to make sure that there is an outcome that works for everybody. Because you know, what we're seeing is Anthony Albanese criticise Rex for making a commercial decision, to operate on roads where QANTAS was operating. Now, you know, fair go. A company is entitled to make commercial decisions that it thinks are in its interest.
LAURA JAYES: And as we sit here now, it wasn’t in its interest as it turns out.
JANE HUME: But you know, this is a Government that clearly isn't interested in having competition in the airline industry. We saw that with its decision to block Qatar from getting additional access routes to Australia. I think that they are barracking for one carrier here, but regional communities need Rex, they need to have competition in the airline, in our aviation system, and the Government should keep that first and foremost in it’s mind, because our regional communities will simply die a slow and painful death without accessible airlines and at affordable prices.
LAURA JAYES: But you’re not quite willing to leap to the Government bailout at this point?
JANE HUME: Well we're only two days into this process, I would very much hope that Anthony Albanese, rather than admonishing Rex, would actually work with them.
LAURA JAYES: Okay, does that mean a bailout should be on the cards though?
JANE HUME: I think Jim Chalmers has already said that nothing is off the table. The most important thing though, is that they work with the administrators and with the executive and with the ACCC to ensure that there is competition in our airline system and that the airlines are viable.
LAURA JAYES: Jane Hume, always good to talk to you. We'll see you soon.
JANE HUME: See you Laura.