Interview with Nic Healey, ABC Shepparton

6 August 2024

NIC HEALEY: Major pressure points of most households, and major pressure points for social services. You talk to anyone who's working food relief or housing support, they are having a rough time at the moment. That's just two areas feeling the pinch at the moment. Yesterday, along with Federal Member for Nicholls Sam Birrell, Liberal Senator for Victoria, who is also Shadow Minister for Public Service, Finance and Special Minister of State, lot of titles, Jane Hume in Shepparton, speaking to local business owners about the economic impacts they are seeing from these costs of living rises. Senator, good morning to you.

JANE HUME: Great to be with you Nic.

NIC HEALEY: Why Shepparton? Why don't you in town here? What did you want to hear?

JANE HUME: Well, one of the titles, which you left off that rather extensive list, is I also chair a Senate Select Committee on the cost of living, and that has allowed me and a number of my Senate colleagues to travel right around the country, speaking to different communities, different geographies, different industries, different sectors of our economy, about how the cost of living is biting them, not just the cost of living, but also the cost of doing business. Where those real pressure points are, what the drivers of the cost of living are, and some implementable and practical solutions that we can recommend to government how to deal with it. And Shepparton was my stop yesterday, today, as well with my good friend Sam Birrell, and we spoke to the community sector, we also spoke to some businesses directly, one on one with a few businesses, and also in a business forum. And while there was some very common themes, there were also some unique challenges that were faced by shipping.

NIC HEALEY: Well, that's what's interesting, because I would have assumed that going around, you'd hear the same refrains over and over. But what's unique? What are you hearing that's different?

JANE HUME: Well particularly in a town like Shepparton, where there's a pressure on housing that came up over and over again, and getting rid of that red tape between levels of government, particularly on housing, was one of the pressure points that we're feeling here. The other is the increased demand, and this is quite common in other places as well, the increased demand for those food support services. So FoodShare, Glen at FoodShare was telling us that they've seen essentially kneeling, nearly a doubling of demand and new people coming for their services that have two incomes, they might have a mortgage. So these are new clients that are seeking help now, and that's when you can really tell that the cost of living is beginning to bite, and then those working poor, if you like, people that would otherwise be considered middle class, are suddenly out saying, ‘hey, I can't get by’. If the Reserve Bank raises interest rates one more time, if my electricity bill goes up one more time, if my insurance bill becomes unpayable, there is going to be a breaking point.

NIC HEALEY: But what do we do? I mean, we know these issues, and we know that sort of, you know, we keep seeing these rate rises, is trying to break the back of inflation. You know, many, many people commenting that the RBA has a hammer, so they're going to use a hammer. It's the only tool in their arsenal. What do we do?

JANE HUME: That's exactly right, and inflation is really one of the great driver of the cost of living. Unless you get inflation down, the cost of living will keep going up. Now there's two ways to get inflation down. You can use your monetary policy. That's what the Reserve Bank does, and you're right. It's only got $1 shared you know, it's only got interest rates so and it's got one job, and that is to get inflation down, and it will keep ratcheting up interest rates, as long as inflation stays between is above that two to 3% target band, which it has been. It's been too high for too long. But the other tool that you have is your fiscal policy, your budget, a government's budget. State and federal, but federal in particular, obviously, is my neck of the woods, and the governments, we feel, aren't doing everything that they can do with their fiscal firepower to get inflation down. Particularly, their budgets have been quite expansion. When you spend more in your budget, you're essentially putting money into the economy. So that's a little bit like having one foot on the brake with the RBA and one foot on the accelerator with the Government, and that's a great way to bust the engine.

NIC HEALEY: What options are there? I mean, people need that support. And you know, the saying goes, a government with money in the bank is a public who are suffering. You know that that is what governments are supposed to do is spend for the public.

JANE HUME: Yes, and there are ways that the Government is attempting to deal with the possibility that could potentially be making the situation worse. We know that they're given energy supplements, for instance. And you know if you're in dire straits, well, of course you appreciate that. But the problem is it's not dealing with the cause of the crisis, which is high energy prices. So how about you deal with high energy prices, which is about putting more supply into the system, rather than just putting on the band aid, a one off subsidy. Housing is the same. We absolutely need more supply of housing, and that needs all levels of government to work together. It can't necessarily be just the Federal Government or just the State Government or just local government.

NIC HEALEY: That is a long term fix. I mean, no one doubts that housing supply is a huge issue. Maybe different models of housing could be a better way of looking at it but we need more housing supply. That's of no help to someone who's two weeks away from being homeless.

JANE HUME: Yes, that is true. But unless we can deal with the cause of the cost of living crisis, get inflation under control, you're simply going to snowball the problem escalate it even further, because inflation is the thief of the night that a road to purchasing power up means that you with the same amount of money, you can buy less over a 12 month period, it eats away at your savings. So you know, the elderly, for instance, that might not have a mortgage, or, you know, might be on an index pension, they still suffer from it as well. But the most important thing is inflation reduces your standard of living. It reduces your quality of life, which is why it must be a priority. And no one's saying it's easy. It's hard decisions that governments need to take but some of the things that they have spent money on, I think, are a demonstration of the priorities that they have. Don't just give you what exactly on the day that the government, the Federal Government, the Labor Government, announced that they were going to give the FoodBank, such an important institution, $14 we also uncovered that they were spending $40 million on an advertising campaign for Stage Three tax cuts that everybody gets automatically. Now I think that's crazy. If you're serious about getting inflation down, your expenditure priorities should be on what is going to help most, not what suits your purposes.

NIC HEALEY: Couldn't agree more on that, to be honest. But I mean, when we're talking, when we say $14 million and $40 million, that's very little money in the grand scheme of things, that is pocket change.

JANE HUME: Well, yes, you're right, but there are much bigger examples that we can point to. For instance, the $450 million spend on a referendum that quite clearly nobody wanted, even though we knew that nobody was that it wasn't going to get up quite you know, months in advance, there's been a billion dollars spent on subsidizing solar panels, an industry that, quite frankly, we're probably never going to be competitive in half a billion dollars on a quantum computing project that's being run out of America that is no more competitive than Australian versions of that project. So there's, there's plenty of decisions that the Government making right now that are essentially creating an expansionary budget, an expenditure budget that is sending signals to the market, that is keeping inflation high.

NIC HEALEY: Sure. But you know, as well as I do that the budget isn't one giant pool. It is not just one block of money, and you can't away from it. It's earmarked for different areas. Innovation has its own budget.

JANE HUME: Well, yes, it certainly does. You're right. However, there is one pool of revenue, and when the expenditure is a demonstration of the priorities of the Government, I think that expenditure, for instance, in energy is one of the most important sectors that we can have, and cutting red tape, allowing new energy to come online is probably one of the great drivers of productivity, for instance, particularly for businesses, and particularly in Victoria. Victoria has a history of manufacturing and a legacy, economic legacy that has been driven by cheap energy prices for years that's gone. We've already, as a society, decided that we don't want cheap wages. We want people to earn a lot of money, but you can't have a genuinely thriving manufacturing sector if you don't have either cheap energy or cheap wages. We're not going to do cheap wages. We must do cheap energy. That must involve bringing more supply into the system.

NIC HEALEY: With the greatest apologies Jane, we're nearly at the news, but thank you so much for coming in.

JANE HUME: It’s been so good to be with you.

NIC HEALEY: Senator Jane Hume in town talking cost of living. Talking solutions to the cost of living as well.