Interview with Pete Stefanovic, First Edition

13 May 2024

PETER STEFANOVIC: That's the bold prediction from Treasury this morning that inflation will hit the target range of two to three per cent by Christmas. Joining us live, the Shadow Finance Minister Jane Hume. Jane, good to see you thanks for your time. So there is quite a discrepancy here between Treasury's timings and the RBA's that was like what, six days ago? 12 months is the difference. So you buying that?

JANE HUME: Well, it is a vastly different forecast from the Treasurer to the RBA, the independent RBA and really this is for the Treasurer to explain exactly why he is so optimistic about inflation. Because quite frankly, it can only be from one or two things. Is it because his high expenditure is in fact keeping interest rates higher for longer meaning the RBA has to do more of the heavy lifting, and of course that will bring consumption down and that's why he thinks inflation will fall? Is it because he thinks that unemployment is going to increase? Is it because he thinks that the economic conditions in Australia are going to worsen and that will dampen consumption? All of these things need to be explained by the Treasurer. Because otherwise we wouldn't see this significant difference between his inflation forecasts and the independent RBA's inflation forecasts.

PETER STEFANOVIC: His argument is that yeah, the RBA doesn't have the data that he's got. So he's certainly backing it up. And if it's true, Jane I mean, that's a pre-election sales pitch for the Government. That would be a pretty good one.

JANE HUME: Well, I'm scratching my head and looking at those announcements that have already been made and wondering which ones of those are actually driving inflation down. Australians have been paying the price for the failed policies and wrong decisions and misplaced priorities of this Government. Now for two years, people have seen that their real disposable incomes have gone backwards by about 7.5% In the last two years alone. If Australians are feeling poorer, it's understandable. It's because they are poorer. And we simply can't afford to have another failed Budget on our hands because that will only make things worse. What we really need now is that back to basics agenda, whereby we restore the fiscal guardrails of old having those tax to GDP ratios, making sure that expenditure is less than economic growth forecasts rather than more and more importantly, ensuring that we have a structural surplus or structural balance to the Budget rather than these windfall gains. Chris Richardson has said that there's that the problem with the decisions that the Government are making right now is that they're making permanent promises on the back of temporary good news. That's a real mistake. We also want to see a government focus purely on taming inflation because that is what's driving the cost of living crisis Australians are facing.

PETER STEFANOVIC: Well I mean that’s taming inflation isn't it? If it gets to two to three per cent by Christmas, I mean, that's taming inflation.

JANE HUME: They have to explain how they're going to do that though Pete because quite frankly, there hasn't been a single Budget announcement so far, that has demonstrated that commitment to term inflation are quite the opposite. The Government seems to be on a spending spree and particularly around industry subsidies that are actually going to fuel inflation further.

PETER STEFANOVIC: Okay, onto your Budget Reply. What can you say about the Stage Three revamp and what reward there might be for highest earners?

JANE HUME: Well, what I can tell you about the Budget in Reply is that it will reinstate the values of the Liberal Party getting back to that back to basics agenda. Making sure that we ensure that the private sector can do what it does best rather than doing its job for them. We as a Coalition are always going to be committed to lower and simpler and fairer taxes. And we will make sure that our tax policy is announced well in advance of the next of the next election, whether it's in the budget and reply, well, I'm afraid Pete it's a big career limiting move for a Shadow Finance Minister to pre-empt Peter Dutton’s Budget in Reply on Thursday night and I'm sure you'll tune in.

PETER STEFANOVIC: That's fine. Yeah, but I mean, there will be changes on the Stage Three front. I mean this has been suggested for a long time now.

JANE HUME: Well, eventually, I can absolutely guarantee you that we will be announcing our tax policy to go to the next election. What we have already said is that we will reinstate those instant asset write offs to levels that we saw prior to COVID rather than cutting them back because that doesn't you know, that's not subsidies to big corporation, that helps small business which of course, is the engine room of our economy. It does seem that this Labor Government is persistent in pursuing its ideological objectives with big industries. Funding solar panels, for instance, billion dollars towards solar panels. Or half a billion dollars towards an American quantum computing company, as part of its Made in Australia policy. What we want to see is small business get ahead, have those opportunities to be rewarded for the effort and risks that they take. And that can only be done with a concerted policy agenda, that is aimed at small business not big ideological agendas.

PETER STEFANOVIC: We'll leave it there. Have fun this week, Jane.

JANE HUME: Thanks very much Pete.