Interview with Tom Connell, Afternoon Agenda

26 September 2024

TOM CONNELL: Joining me now Shadow Finance Minister, Jane Hume for more on this. Thank you for your time. There are things moderating in these latest figures, so we'll try glass half full. That'll be my question to you. You can answer it however you want, I guess. Clothing, housing, including rent that is coming down, albeit slowly, transport, travel and the trimmed mean is down. It's not just the headline. Do you want to tell voters out there, ‘yes, things are getting slightly better’?

JANE HUME: You are a glass half full kind of guy Tom, because, of course, the real problem is that inflation has stayed too high for too long. That it should have come back much earlier than this if we wanted to see interest rates dropped back as well. The Reserve Bank have said that inflation is two things. It's homegrown, which means you can't blame overseas factors, and it's also sticky, which means it's too hard, it's been hard to bring back down into band. And they've also said that one of the drivers is that growing public sector spending, and that's, of course, fiscal policy, whether it be state or federal. The Reserve Bank is doing all that it can with its monetary policy tools, but it's only got one, and that's interest rates. So we would like to see interest rates come back sooner, but unfortunately, the Reserve Bank have said that they're not expecting that core inflation, that underlying inflation to come back to band now until 2026 so that'll be cold comfort for those people that have mortgages that are waiting to see interest rates drop now, but as inflation stays higher for longer than interest rates have to as well, unless the government does its fair share of the heavy lifting.

TOM CONNELL: I reckon the RBA almost has two weapons, the rate hike or cut, but also hinting or telling people it won't come for a while. But anyway, park that to one side. I just wonder if they're making sure we don’t get ahead of ourselves.

JANE HUME: Inflationary expectations I think is the phrase you're reaching for.

TOM CONNELL: There you go. See your portfolio. You put it in better words than I did. I've got to stop complimenting you during this interview. I'm going to go hard now. The energy rebate, so I read today. Current calculations are, when this comes off, the cumulative effect could be a 43% increase on bills depending on where you live in the country. Will you have to keep this in some form if you win government, to avoid a pretty dramatic bill shock?

JANE HUME: Well, of course, that is something that the RBA have pointed to as one of the reasons why headline inflation has come back. But they've said that they will look through that headline inflation, those temporary subsidies, and look at that core inflation figure. There are some arguments to say that when the government uses taxpayer money to subsidise things like energy, that in fact, that can be more inflationary. That's one of the reasons why inflation is staying higher for longer. So I would be very interested in seeing the analysis on that, whether it be from Treasury or whether it be from other sources, as to why that would be a good idea. If we want to see inflation come back, and we do, we must, because inflation is the ultimate cost of living killer. Well, then there has to be a better way.

TOM CONNELL: But the level of that is that something you'd have to look at, because, as I said, that level of bill shock and remembering the timing of it, if you win an election, what two months in the first thing that people remember a Coalition government would do is oversee a 43% increase in energy bills?

JANE HUME: Well, I would have hoped that energy bills would come down through different means. I mean, let's face it, our energy…

TOM CONNELL: but you're saying it won't under Labor, You're not gonna have a policy that fixes it in two months. So you're saying this would be the reality, and Labor's policies don't lower it.

JANE HUME: Well, our energy policy would be fundamentally different. We want to see more supply go into the system, and the artificial interventions in the energy market, which potentially are pushing up prices further, should be removed, but it must be…

TOM CONNELL (interrupts): but that's not gonna happen from May to July,

JANE HUME: …that’s the only way we're going to sustainably bring energy prices down.

TOM CONNELL: So you wouldn't, you wouldn't commit.

JANE HUME: That’s the real issue.

TOM CONNELL: You're saying no.

JANE HUME: Well, what I'm saying is that our energy policy would be fundamentally different. We would hope that you don't need to have these artificial and temporary energy subsidies using taxpayer money, rather that…

TOM CONNELL (interrupts): But you will in the short term.

JANE HUME: …your energy supply was substantial.

TOM CONNELL (interrupts): You can't change the system in two months.

JANE HUME: Well, I think it's an awful lot that you potentially can do. You know, on getting into government that would make our energy system more efficient, and having a renewables only one size fits all approach we can see now is pushing energy prices up. We want to make sure that we say that we're open to new supply sources. Yes, there has to be renewables, but there also can be more gas into the system, and this Government does seem to have a war on gas, which is going to be the only thing that maintains that renewable base load power in the medium term. And then we've said that we'll have nuclear energy in the longer term. It's a very, very different approach…

TOM CONNELL (interrupts): long, long term

JANE HUME: …to energy supply. Well, it's a very different approach to energy supply...

TOM CONNELL (interrupts): You’re talking long term, I wanted to talk short term.

JANE HUME: Would hopefully mean that households don't need to have those energy subsidies delivered by redistribution of taxes.

TOM CONNELL: I get what you're saying medium and longer term, but clearly that wouldn't take effect by next year. Anyway, I've had my go there. Why don't we ask about negative gearing, capital gains tax just finally, you're an evidence based politician. Will you wait and see what labor produces and the modeling and maybe a holistic approach to policy, before saying, No, we're opposing it.

JANE HUME: Well, I'm very pleased to see that you clearly think that Labor do have as a policy or negative gearing and a policy to reduce capital gains, because at the moment, methinks they don't protest too much. There's modeling, clearly that's been done, and not only that, but it's Labor officials that are reporting on this in the papers yesterday, which is so it seems to be something that no one's really picked up on. This is Labor reporting their own policy and then denying that they've got the policy, that they have any plans to change things. But we know Tom that when Labor said they haven't got any plans to change things, that that's code because they didn't have any plan to change the stage three tax cuts. And then they did. They didn't have any plans to change superannuation and superannuation taxes, and then they did. Now they've got no plans to change negative gearing or capital gains tax on residential property. Let's see what they come up with.

TOM CONNELL: I better ask you this question. You're a Saint supporter. Where are your allegiances on Saturday?

JANE HUME: This is a proxy war, you know, the Grand Finals, the proxy war Brisbane, which is where Peter Dutton is from, and Sydney, which is where the Prime Minister's from. So I'm barracking, I’m barracking for Brisbane this time…

TOM CONNELL: You’re not putting..

JANE HUME: And I know you’re a Brisbane supporter.

TOM CONNELL: Yeah, you're trying to suck me in there. But you can't turn this into politics. This is meant to be the fun bit of our lives.

JANE HUME: Politics is the fun bit of our lives Tom, surely.

TOM CONNELL: I should say that, shouldn't I? All right. Jane Hume, thank you. Talk soon.

JANE HUME: Good luck on Saturday.

TOM CONNELL: Thank you. Thank you.