Interview with Tom Connell, NewsDay

22 September 2023

TOM CONNELL: Let's get more on this from the Shadow Finance Minister Jane Hume. Thanks for your time. So it's official, a $22 billion surplus. Do you want to give any modicum of credit at all to the Labor Party?

JANE HUME: What I will say is that any surplus is a good service surplus. However, the real test of a government is whether it can maintain those surpluses and already Jim Chalmers has waved the white flag on that and said that he won't be able to deliver one next year. I think we can safely say, Tom that this surplus was caused by three things. One was the economic position that the Labor government was midway when it came into government because of the decisions made by the last government and improving budget bottom line. Record low unemployment with a downward trajectory, and of course, those triple A credit ratings which are so important to a well functioning economy. But second, of course, was those high commodity prices. Twice the iron ore price per tonne, then was forecast in the budget which said around $60 per tonne, but in fact, it was around $120 per tonne, which is a very significant difference. And then of course, thirdly, inflation which causes bracket creep and means that the tax take is much higher than it ever was anticipated to be and you can see that through the tax to GDP ratio, which is now perilously close to that 23.9% cap that the Coalition imposed but the Labor government has removed. So we're paying more tax to get this surplus and the high commodity prices are, lets fact it, probably unsustainable.

TOM CONNELL: So so on that spending though, the spending aspect cause you talk about the tax that GDP rate there. If Labor were the profligate spenders that the Coalition make them out to be if they really just threw money everywhere, we wouldn't have a surplus. There was also, within the budgets handed down, spending restraint.

JANE HUME: Well, that's a great Labor talking point, Tom. But in fact, they spent around $185 billion more than the Coalition government would have done and of course, that spending actually fuels aggregate demand that pushes inflation up further, it means that inflation stays higher for longer, which means that the RBA has to do all the heavy lifting to bring it back down.

TOM CONNELL: Just just on that I think this is important to clarify that $185 billion, that's a figure over what 10 years because the implication there is you say they've spent it and lit a fire under inflation. There is not $185 billion of extra spending that has happened already, is there?

JANE HUME: Actually, you know, you can see already in this budget, just in the last budget alone, just in one year, there was significantly more spending than would have occurred had the Coalition come to government and more importantly, they're forecasting even more spending on things like aged care, NDIS you know, all of these things, health care. All of these things are now growing exponentially. And rather than saying but what are we going to do?

TOM CONNELL: Well they were already growing exponentially though?

JANE HUME: But rather than saying what is it that we are going to do to reform those areas, they're simply a shrugging the shoulders and saying, 'What are we going to do, we're going to have to tax more?'.

TOM CONNELL: Well hang on, there's a full review the NDIS that Labor says they're going to rein in and control spending. On the flip side for the Coalition, what did you do when you were in government?

JANE HUME: Actually, all right. I'm so glad you raised this one Tom because when we were in government, we proposed a series of reforms to NDIS to try and rein in that exponential growth that were rejected by Labor. Now that Labor are in, they've looked at that growth and said, 'actually, we do have to do something about that'. So what they did in the budget was rather than allow that 14% growth trajectory, which is where it was on to remain, they just capped it at 8%. They said it's only going to grow by 8%. We asked the question 'how is that going to happen?'. And they said, 'we'll work that out later'. Now that's not a budget solution. That's a prayer and a promise, but it's not delivering now. They say that NDIS 8% growth is going to be explained in the report that comes out in November. But more than half of the budgetary year is gone. And anybody that's an expert in the field of the NDIS will tell you that no restraint has occurred just in the last six months alone.

TOM CONNELL: So on the NDIS, what was actually proposed? Are you talking legislation taken to Parliament and rejected and if so, how much was going to be saved? What was the Coalition putting on the table here? A dollar figure or percentage figure.

JANE HUME: Tom, you've got me on the spot here on a policy area that is not my own. I wish Senator Reynolds was here because she was the one that was working on this in the last government and she's probably the right person to ask but I do know-

TOM CONNELL: Hang on, you brought this up, I don't recall but I could be wrong.

JANE HUME: You don't recall any work that has been done on the NDIS?

TOM CONNELL: I don't recall legislation-

JANE HUME: There was.

TOM CONNELL: brought out and here's what we'll save and have been rejected by Labor.

JANE HUME: Labor had said that any cuts to the NDIS would be rejected. They did that in the last term of Parliament. Now that it's their turn in the hot seat, they've realised that they cannot simply allow the NDIS to grow unsustainably, because the most important thing is that we can deliver on the promise of the NDIS to those who need it the most. But the problem is they haven't simply you know, they haven't actually worked out how to do that yet. All they've done is promised a reduced amount of spending. That's not how you create a budget.

TOM CONNELL: It's a fair story to tell on the rhetoric Jane. And I'm happy to be corrected by you or Senator Reynolds, and with anyone else on some specific proposal. Look, I feel like my memory is not what it once was pre-two young children, so maybe I'm wrong.

JANE HUME: It's a sign of age.

TOM CONNELL: Wrong side of 40 now, it's official. Let me ask you this, though, because you mentioned a bracket creep. Is it time for a serious conversation in Australia to index income tax and stop the power in politicians hands to occasionally delve out income tax cuts?

JANE HUME: Well, there are lots of elements of taxation that aren't indexed. Not every tax is indexed and income tax traditionally hasn't been. Does that prevent a conversation about how to make taxes more efficient, fairer, ideally lower? I don't think it does. Bracket creep is probably one of those elements that would be considered in a more holistic assessment of whether we could have lower, simpler and fairer taxes which is something that the Coalition government is committed to.

TOM CONNELL: Okay, but what about that conversation on indexation? Wouldn't that be something then rather than the occasional tax cuts and bracket creep doing the heavy work then we just get something set in stone.

JANE HUME: Tom, while I would absolutely love to talk thought bubbles with you on national television about policy ideas around tax reform. This is probably not the appropriate place to do that. The appropriate place to do that would be with my colleague, Angus Taylor, who is the Shadow Treasurer and will be responsible hopefully in the next government for making sure that your taxes stay lower and are simpler and are fairer.

TOM CONNELL: You know, reducing taxes permanently might be more than a thought bubble. Anyway, I'll let you and Angus discuss that. You can get back to me as to how that went. Talk again soon, Senator Jane Hume. Thank you.