Interview with Peter Stefanovic, First Edition
4 August 2024
PETER STEFANOVIC: Well let's keep that conversation going now with the Shadow Finance Minister Jane Hume. Let's start with the RBA. It's the first of a two day meeting today, Jane. That data last week, it pretty much means the cash rate will be unmoved when that decision comes down tomorrow. So, if that's the case, it's not getting any worse for mortgage holders. That's a good thing, right?
JANE HUME: Well, we'll see what the RBA's decision is based on, not just last week's inflation data, but on a broader set of figures, including what Tom was just talking about, the situation in the US. That will play into the RBA's decision inevitably. You know, we're already in a per capita recession here in Australia. Growth in the last 12 months was only 1.1%, in the last quarter 0.1%. Essentially, the economy is grinding to a halt and of course, the thing that really is keeping us in positive territory is high levels of immigration. 1.3 million new migrants into Australia, just in the last two years alone. I think the scariest data is the one around productivity, because you cannot have growth without productivity. Productivity has gone backwards in this country around 5.8% just in the last two years and the reason for that is pretty simple: high energy prices, inflexible industrial relations, red tape and of course, high taxes are dragging productivity down. You cannot have wage rises without inflation unless you get productivity up.
PETER STEFANOVIC: There are real concerns. You mention the US there, there are real concerns that the US might even fall into a recession because the Fed Reserve has kept rates too high for too high for too long. Are you concerned that might be the case here as well?
JANE HUME: Well, these are the questions that I'll be asking a series of economists, including those from the RBA, when they appear in front of the Cost of Living committee, which is going to meet next, this coming Wednesday, immediately after the RBA's decision. That will give the RBA an opportunity to explain the thinking behind the decision that it takes and give us an indication as to where it might go to in the future. I know that there are thousands of mortgage holders out there in Australia right now that are concerned that one more interest rate rise may well push them over the edge. That’s why it's so important to get the economy under control.
PETER STEFANOVIC: Yeah, It's not just the homeowners. It’s cafes, restaurants, 11,000 business closures a year.
JANE HUME: Yeah that's exactly right. The RBA, sorry, the Cost of Living Committee is also going to be looking at the rate of insolvencies which are at record highs at the moment. These are worrying indicators for the Australian economy. There is a lot of people out there that are not feeling like they are coping, that they're keeping their heads above water, keeping the lights on in their businesses or being able to pay their bills at home and there's a good reason for that. Real disposable incomes have gone backwards by around 7.8% in the last two years. That means that if you're feeling poorer, there's a good reason you, in fact, are poorer than you were two years ago.
PETER STEFANOVIC: Okay, Jane, um, just on to the airlines now, the Government is today going to announce a plan to crack down on anti-competitive behaviour, that's regarding airport slots at Sydney Airport. They're dominated by the biggest players in town, Qantas and Virgin, obviously. But a new manager of those time slots will be appointed today. This is according to the Transport Minister. How necessary do you think that is?
JANE HUME: It's extraordinary that it's taken the failure of an airline as important as Rex for Catherine King to move on something so important as competition in the airline industry. Let's not forget that it was only 12 months ago that we discovered that Qatar Airways had been blocked from additional slots at both Sydney, Melbourne and Brisbane airports. That would have provided an additional 28 flights to Australia from those countries, which would have brought the prices of airlines down. So Australians were paying more for airfares than they needed to because of the protection racket that this Labor Government were running, essentially for Qantas.
PETER STEFANOVIC: Might that have extended into your old Government, though? Should decisions have been made then as well regarding slots?
JANE HUME: Well, it was very difficult to make logical decisions on what to do with airlines during Covid when no airlines were flying. The urgency really occurred post, post-Covid, when we saw the extraordinary inflation of airline prices that fed through to our broader inflation figures. But more importantly, it stopped Australians spending that money to go home and visit families, those that had come from overseas and those that wanted to travel further. That was an artificial inflation of airline prices because of decisions that this Government was making and they had every excuse in the book, if you recall. First of all, they said it was human rights. Then they said it was maintaining Qantas profit. Then they said it was because they wanted to maintain jobs in Australia, protect jobs in Australia. It seemed to me that they had every excuse under the sun not to make a decision. It's taken two years to get to where we are now.
PETER STEFANOVIC: Jane Hume we're out of time. Good to see you though, we'll talk to you soon.