Interview with Natalie Barr and Clare O'Neil

5 July 2023

NATALIE BARR: The Reserve Bank has hit pause, leaving rates on hold at 4.1%. The reprieve may not last long, though, with RBA governor Philip Lowe not ruling out future rate hikes as it battles to bring down inflation. But according to Shadow Treasurer Angus Taylor, that challenge shouldn't just sit with the Reserve and he's called on the Government to pull every policy lever at its disposal to help get it down. Let's bring in Home Affairs Minister Clare O'Neil and Shadow Finance Minister Jane Hume. Good morning, Clare. Is Angus Taylor right here? Can the Government do more?

CLARE O’NEIL: Well Nat, firstly, can I just say how relieved I am for the families right across Australia who are just getting that brief reprieve from the Reserve Bank there. It's felt almost like a relentless process of these rate increases and I know my families are just going to be breathing a sigh of relief that they've got a month to just adjust and see where things are at. Look, I don't agree with Angus Taylor. I feel like, you know, the opposition have got problems when we provide cost of living relief, which we've done at such an unprecedented level in the recent federal Budget. What we're trying to do is make sure that the Government itself is doing everything it can to help those families who are struggling at the moment and that's why we've seen that huge childcare package. We've seen the biggest investment in bulk billing in Medicare's history. We've seen energy cost relief. That's helping 5 million households and a million Australian businesses. And don't forget, we're delivering the first surplus in 15 years. So that's where we see we're getting that balance right between not adding to inflation but helping families where they need it.

NATALIE BARR: Well, but are you though, because inflation is what they're calling sticky, it's not coming down fast enough. Retail spending went up in May. Building approvals were even slightly higher. So it's not going down fast enough and this might be a reprieve, but people's mortgages have doubled, if not more in the last year. People are hurting out there and it's on your Government's watch.

CLARE O’NEIL: Look, Nat, I completely understand. You know, the discussions I'm having with my community at the moment are genuinely heartbreaking. People are really doing it tough. That is why the Government is doing everything it can on the cost of living side. Remember that big childcare package, the bulk billing incentives, lots of increases to payments that help Australians who are doing it the most tough. Now I can't pretend that that's going to make these problems go away. Remember, these are global issues. We've got all developed countries experiencing the same kind of problems. Our Government's focus is delivering responsible Budget management first surplus in 15 years. That is not anything to sneeze at, but at the same time, making sure that we're doing everything we can to help families and I think the fact that the Reserve Bank has stepped back a little bit does illustrate that we're getting the balance right. It's just a really hard time for families and for the economy.

NATALIE BARR: So Jane, when your Shadow Treasurer says that the Government should pull every policy lever at its disposal to help get rates down, what exactly do you mean by that?

JANE HUME: Well, essentially, the Government has to take control of its spending urges in order to send the right signals to the Reserve Bank to show that it doesn't have to do all the heavy lifting because otherwise it looks like you've got one foot on the accelerator and one foot on the brake and we know that the Government is already spending $185 billion more than the Coalition did in a budget just a year ago and not only that, but it found an extra $2 billion down the back of the couch even after the budget to give to the states for its housing policy. Now, that's not responsible.

CLARE O’NEIL: It's called a Budget surplus Jane.

JANE HUME: Well, a Budget surplus should be banked to the bottom line because you're planning to deliver only one budget surplus in this year alone. For the rest of the future, it's deficits as far as the eye can see. Good economic management doesn't happen in one year. It happens in consecutive years and that's what we want to see from this Government. That will be what sends the signal to the Reserve Bank. That will mean that it doesn't have to keep ratcheting up interest rates, which is going to hurt more and more Australian families, particularly the 800,000 Australian households that are going to move from fixed rates to variable rates at some time this year.

NATLAIE BARR: So Jane, are you saying don't help people? So I mean, people are out there struggling. We're hearing this morning that kids are going to school pretending to go to the toilet, then stealing other kids' lunches from their school bags because they can't afford to eat. I mean, this is Australia. It is ridiculous. So, Jane, are you saying don't help people, don't help them with electricity and don't help them with childcare?

JANE HUME: Nat, they're not being helped with electricity and they're not being helped with childcare. This is the thing. This Government came to office a year ago promising cheaper electricity, promising cheaper childcare, but because of inflation and because of those cost pressures, because of the decisions of the policy decisions that this Government is making, those electricity and childcare, they're all ratcheting up, not down. You wouldn't find an Australian out there that feels like they're better off today than there were a year ago. The only way to bring inflation down consistently, the only way to control the cost of living is to bring down those spending urges.

CLARE O’NEIL: There's actual measures in the Budget here. So yes, I accept you've got a different point of view about all this, Jane. I'm very interested to hear what cost of living relief the Government's provided that you don't agree with. Is it the energy price relief? Is it the bulk billing incentives? Is it childcare support? Is it the increase in rent assistance in this really difficult time for renters? All of those things are important there in black and white in the Budget, Jane. So I accept that you don't like the Government's cost of living measures but I just say let's not pretend that they don't exist. They're in the Budget in black and white, big investments, $14.6 billion in that last Budget, which is going straight into the households of families around this country who are doing it tough. So I get that this is a really difficult time. I just want Australians to know very directly that your Government is doing everything within our power to help you at this really difficult moment for your household Budget.

NATALIE BARR: Clare, on childcare, let's talk about childcare because we're hearing that rogue childcare centres have begun hiking up fees. So that is actually cancelling out the subsidy that you're giving families. What can you do about that?

CLARE O’NEIL: So firstly, Nat, the childcare package the Government's implemented would actually kick in this week is a huge benefit to Australian households. So for a family that's earning around $100,000 a year in combined income, they're going to get a whole day of childcare basically for free because of this package. It's going to be somewhere in the order of $1,700 a year in benefits to families. Look, it is true that at some times at this time of year, childcare costs do go up. And we accept that for some operators they will face increased costs. I can say that I have heard some stories about rogue operators. I watched your report from last night. We will come down on these operators like a tonne of bricks. That money is for Australian families who are doing it tough. That's where it belongs and there's an ACCC inquiry at the moment that's ongoing, that is watching those operators to make sure the fees don't go up more than their cost base is.

NATALIE BARR: Okay. So Clare, you can guarantee that childcare operators won't put their fees up and cancel out the help that you are giving to them.

CLARE O’NEIL: Look, that shouldn't happen and the reason that it shouldn't happen is that we've got really quality providers like Goodstart who are telling us that even with an increased cost base, a family on $100,000 is going to get a day a week of childcare for free, a hugely important investment and one of the great things about this Nat, is that childcare support helps not just the family budget, but it enables often the mum to go back to work for extra time, if the family wants that extra bit of income and for the woman to pursue her career. So it's a really good thing for everyone, good for the economy, good for the household, and we're really proud of that measure.

NATALIE BARR: Okay. We thank you both. We'll see you next week.