Interview with Raf Epstein, ABC Melbourne Drive

10 May 2023

RAF EPSTEIN: Jane Hume joins us. She's the Shadow Finance Minister and one of the Liberal Senators in the great state of Victoria. Jane Hume, good afternoon.

JANE HUME: Great to be with you, Raf.

RAF EPSTEIN: Is it fair people on JobSeeker are going to get less in a fortnight then you will receive from tomorrow just in your travel allowance? Is that fair?

JANE HUME: Well, I think that's a very strange comparison to make. I mean, let's face it, JobSeeker is not supposed to be a wage subsidy. It is supposed to be a safety net that helps people move from one job to another. Now, it's never been the Coalition's policy to raise Jobseeker above and beyond the index rate, and it is indexed twice a year, it moves up with inflation. So it's very different from most people's wages in that regard. But the Government has decided that it's going to provide an additional $40 per fortnight now, that's less than the $50 that was allocated during COVID by the Coalition or permanent allocation there. But, that's the decision that the Government has chosen to make. 

RAF EPSTEIN: Are you supporting that? This works out at a bit less than just under $3 a day. Is the Opposition going to support that increase? 

JANE HUME: Well, as I said, it was never a Coalition policy, we’ll obviously have to take it through our party room processes. All of these policies really do need to go to their Shadow Ministers, make sure that they're covered off through the party room, and then we'll come out with opposition policies.

RAF EPSTEIN:  Do you want to be against people living in poverty, getting three bucks extra? 

JANE HUME: Well that's exactly why we take it through our Shadow Ministers and through the party room processes and all of those issues and the effects of those policies are then discussed. But of course, there are other implications for large expenditure commitments like this and that's the fact that they do in fact, have an inflationary effect and, and while we know that these are cost of living measures that the Government has taken, the only way to sustainably bring down the cost of living is to reduce inflation and in fact, the objective of reducing inflation was removed from these Budget papers. The concern is that some of the decisions that have been made may actually make the situation worse. So while you might be trying to do good you can actually do harm.

RAF EPSTEIN: Can I come back to the inflation question, I just want to step through things if I can. They did deliver a surplus, are you a little bit jealous that they did what you couldn't do?

JANE HUME: Well, I'm going to quote Angus Taylor here, but you know, a drover's dog could have delivered a surplus. 

RAF EPSTEIN: You guys couldn't? 

JANE HUME: Well, we didn't get we didn't get a chance and to be honest, we actually did deliver a balanced budget, we delivered our budget before. Now, hang on, you're asking me about COVID. Hang on, you're asking me about a budget deficit and we didn't deliver a budget deficit, we delivered a balanced budget, at the end of 2019, at MYEFO.  I know, I was there and I was pretty excited about the fact but of course, it's MYEFO, nobody really talks about it and then of course, COVID hit and the reason why we could throw the kitchen sink at COVID and make sure that you know the lives and livelihoods were protected was because we had that strong fiscal position, we bounced back after COVID really strongly, which was terrific, and entirely intentional and when we lost Government the Labor Party inherited that really low unemployment rate, and improving budget position and a turnaround of $115 billion. So not just the Budget in 2022, in the March Budget of 2022 and then, of course, inflation starts kicking in and you know, the Labor Government has taken advantage of this high commodity prices, the bracket creep, that's, you know, recently that's part of that inflation increase that has really pushed up people into different tax brackets. So different Governments face different problems.

RAF EPSTEIN: If they inherited a really strong balance sheet from you, didn't you also give them inflation, you can't claim credit for a strong balance sheet, and then say the inflation had nothing to do with you?

JANE HUME: Well, every Government faces different problems and we know that our problem in the last parliament was COVID, the biggest health threat, sometimes economic threat.

RAF EPSTEIN: Well hang on, if you gave them a healthy balance sheet, did you give them the inflation?

JANE HUME: Well, we know that inflation is caused by many things and one of them was the fact that economies bounce back right across the globe, including in Australia, and there was that, you know, problems with supply chains as we were coming out of COVID and it was the beginning of the Ukraine war. The problem is, though, it doesn't really matter where the problem came from. It is this Government's problem to solve, in the same way that we didn't cause COVID. But it was our problem to deal with. Now, the problem is the Government isn't dealing with that. In fact it's shirking its responsibilities and if it does shirk those responsibilities to use fiscal policy to bring inflation down, well, that means that it is giving all of the responsibility to manage inflation to the RBA who keep having to push up interest rates and inflation is a priority. The reason why it's a priority is because it erodes your purchasing power, it eats your savings. It reduces your standard of living and of course, it stops real wage increases. These are things that affect all Australians, not just cohorts of Australians, but all Australians. That's why it should be the Government's number one priority.

RAF EPSTEIN: The Coalition just seems a bit confused today, because all day the Coalition has been saying, look, the Medicare funding does not help enough people. But at the same time, the Coalition says the Government is helping too many people, and thus fueling inflation, or you say the Government is fueling inflation. So what's the Coalition saying? That the Government is helping too many people or not enough?

JANE HUME: I think you're simplifying the arguments too greatly, Raf. Budgets are all about priorities and about decisions. They're all about choosing the way to best spend taxpayer money and let's remember that every dollar that goes out of the door comes from Australians. 

RAF EPSTEIN: We have heard that it's not helping enough people, you can't see a GP without an out of pocket expense. I just that I don't think it's a simplified simplification at all. Are you saying the Government's helping too many people or not enough people?

JANE HUME: Well, on this particular measure, it's only targeted at families with children under 16 and concession cardholders, it's not really dealing with the root cause of the problem and one of the root causes of the problem is a workforce shortage, particularly for doctors. So we would have liked to have seen a measure introduced that would address that issue, because again, it's a little bit like dealing with the cost of living crisis. Unless you're dealing with the root cause of the problem, which of course, is inflation, well, then you're just scratching the surface, it's like a band aid over a bullet wound, we want to see the bullet wound dealt with.

RAF EPSTEIN: Are you embarrassed at all that they're giving doctors extra money, so people can see medic, see a doctor, without any out of pocket expenses? The last time Peter Dutton was Health Minister, he wanted patients to pay more out of pocket, does that embarrass the Coalition at all?

JANE HUME: I was actually surprised at this measure last night, because I think it's been largely misunderstood. When people talk about assistance to see a doctor, what they think they're doing is I think that subsidy they think is going to them, it's not necessarily going to the doctor. So we'll unpack that and also, we will say just exactly how many people this will affect and, and it is only an incentive for doctors. It's not compulsory. So I haven't actually understood yet. It's only a few hours after the Budget was delivered, the sort of behavioral implications for this measure and that is something that is important. It's not just how you spend the money, but how efficiently you spend the money. I haven't seen it yet and you know, I don't understand yet the modeling that shows that this is going to dramatically change behavior and make this situation better.

RAF EPSTEIN: Peter Dutton when he was Health Minister wanted me to pay more out of my pocket when I saw the doctor. Is that embarrassing? 

JANE HUME: Raf, you're talking about a policy proposal from a decade ago, I'm talking about a Budget that was delivered last night and the Budget that was delivered last night had this measure in it and I don't understand exactly how it is going to benefit the majority of people who are affected.

RAF EPSTEIN: My time is short, final question, the stage three tax cuts that your Government designed and helped to legislate. You're very concerned about inflation, a quarter of a trillion dollars worth of tax cuts beginning in a year's time. How can that do anything other than fuel inflation?

JANE HUME: Well, if you believe the Budget papers, by the time these tax cuts kick in, there shouldn't be any concern about inflation. Now, I'm not entirely sure about that. Perhaps that is the case. Perhaps that is the case because the RBA will have to pull its levers that much harder and certainly that's what you know, Chris Richardson and UBS and Goldman Sachs and other commentators and economists are saying that because of the settings of this Budget, the RBA is going to have to do a harder job and all the heavy lifting.

RAF EPSTEIN: Just in Jane Hume’s opinion, are the stage three tax cuts inflationary? 

JANE HUME: Well, the stage three tax cuts are essentially addressing the most important and the biggest feature of this Budget, which is bracket creep. Because more people are paying more tax than ever before and they're doing that because inflation is eroding their purchasing power. Their wages are going up and they're moving up into new tax brackets, the stage three tax cuts, in fact, remove an entire tax bracket. It's a very significant taxation reform. 

RAF EPSTEIN: Do you think the stage three tax cuts will be inflationary?

JANE HUME: Well, stage three tax cuts will put more of your own money back into your pockets, quite frankly, after what Australians have been through just in the last 12 months. With high inflation, after they've been through the last 12 months seeing their purchasing power erode. Seeing their savings eaten away, seeing their standard of living go down, and quite frankly a Budget that was delivered last night. That doesn't do all that much for most Australians that are doing the heavy lifting right now with paying higher mortgages, paying high cost of insurance and paying more at the grocery. I think they probably deserve to keep a little more of their own money.

RAF EPSTEIN: Jane, thank you as ever, I don't have a talkback question because they usually start in that area, but I won't. Thanks so much for your time. 

JANE HUME: Thanks Raf.