Interview with Peter Stefanovic, First Edition

2 September 2024

PETER STEFANOVIC: Well, a war of words between the treasurer and the RBA has escalated quite dramatically this morning, after Jim Chalmers claimed it's the Reserve Bank and it's high interest rates that are smashing the economy this after the RBA had already claimed it was reacting to high government spending. One thing is for sure here, none of this squabbling actually helps the Australian mortgage holder joining us live now the Shadow Finance Minister, Jane Hume, Jane, good morning to you. Thoughts. First on Jim Chalmers claim this morning,

JANE HUME: This is no surprise. Pete, it's a continuation of the war that Jim Chalmers has with the independent RBA. But the reason why it's no surprise is because these wars have been going on for two years now. You'll recall that when Labor first came to government, Jim Chalmers blamed overseas factors for high inflation. Then he blamed Philip Lowe, and now he's blaming his handpicked replacement for Philip Lowe, Michelle Bullock, for high inflation. At some point, he's got to turn the mirror onto himself and say, what is it that the government can be doing? What is it that I can be doing to bring down inflation? And it's certainly not an expansionary budget. In fact, we've had three expansionary budgets delivered by Labor Governments with an additional $315 billion in spending. And Michele Bullock herself has pointed out that public expenditure, that that government expenditure, is part of one of the drivers that's causing inflation to stay higher for longer. And now we're one of, we're the only G10 nation that has core inflation high as now as it was in January. In every other country, inflation's coming down here, it's staying higher for longer, which means that interest rates stay higher for longer.

PETER STEFANOVIC: So let me put this to you, then, is the RBA smashing the economy?

JANE HUME: Well, we know that real disposable incomes in Australia have gone backwards over the last two years. They've gone backwards by about 7.8% and that's caused by three things. It's caused by inflation, it's caused by interest rates, and it's caused by higher taxes. Now inflation is what keeps interest rates higher, and the higher taxes are part of that bracket creep that's also caused by inflation. So inflation is the root cause of the problem. If you're feeling poorer, you are poorer.

PETER STEFANOVIC: So it’s not the RBA?

JANE HUME: Over the last two years you've seen your standard of living go backwards. The RBA can only respond to the inflation which it finds itself in, and the problem is the Government isn't doing its fair share of the heavy lifting. It's turning the responsibility entirely over to the RBA.

PETER STEFANOVIC: To escalate tensions like this two days out from GDP figures, one assumes he's in for some pretty rough reading that will reflect badly on the Government this week.

JANE HUME: Well again, that would be a continuation of the situation we've found ourselves in for the last 12 months, where we've seen per capita GDP go backwards. We're actually in a per capita recession, and have been now for around 12 months or so. And again, this is driven by government decisions. Higher energy prices, industrial relations, that keeps everybody wrapped up in red tape, a highly regulatory environment, and, of course, higher taxes. All of these things are a handbrake on the economy. The most important thing that a government can do is drive growth through productivity and get inflation down by containing that natural urge of governments to spend it must be contained. Jim Chalmers has failed to do so.

PETER STEFANOVIC: But your messaging doesn't appear to be cutting through either. Jane, because in Newspoll this morning, the question was asked about inflation under the Coalition, 41% of respondents said it would just be the same. So what would you do better?

JANE HUME: Well, it's impossible to control inflation from opposition, unfortunately, but I can tell you that we would do things very differently indeed. Bring back that discipline to our fiscal strategy, to our budget processes, make sure we don't have that profligate, and ill disciplined spending on things like 36,000 new public servants. That's 50 new public servants every single day, hired by this Government. And I'm not sure Australians feel 50 public servants better served. There's $45 billion of off balance sheet funds that we've already said that we wouldn't have gone ahead with. There's 100 sorry, there's a billion dollars on Solar SunShot Solar panels, an industry in which we will never be competitive. Even the Productivity Commissioner said that we'll never be competitive in this industry, half a billion dollars on a quantum computing company that's based in America for our future made in Australia, again, the chief scientist said that will happen no quicker in America, then it would happen for the many Australian companies in quantum computing here. There are so many things that we wouldn't have done differently, from the big end to the small end right down to the $620,000 that Bill Shorten is spending on a speechwriter to make him sound more empathetic when he talks about the NDIS.

PETER STEFANOVIC: We are out of time. Jane Hume, thanks for your time, though. We'll chat to you soon.