Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Hansard source

I rise to speak on the Appropriation Bill (No. 1) 2022-2023 and cognate bills and note that the opposition supports the passage of these bills. It has been a bipartisan approach for many decades to offer support to these bills. I would note, however, that supporting the bills doesn't mean that we support all the measures contained within them.

The context for the budget and this bill is at a macro level a very strong economy, a fundamentally resilient one. In fact, it's hard to see a country in the world whose economy has performed as well as Australia's has over recent months and years. Just two years ago we were staring down the prospect of permanent business closures, tens of thousands of deaths and an unemployment rate of 15 per cent. We know that a million businesses and four million jobs were saved during the course of the work that was done through the pandemic. Today we have more businesses than we had, strong terms of trade, record commodity prices, economic growth of over three per cent, and almost four per cent, in the last financial year and record low unemployment. That's a remarkable position to be in, in the circumstances.

We accept that not every decision made during COVID was perfect. They had to be made with a sense of urgency and in the face of great challenges, but the economic recovery we are seeing right now is a testament to the economic management through COVID. The Reserve Bank governor has made the point, as he sits and talks to other central bank governors around the world, such as when he was in Wyoming recently, that there was no other governor that felt they were in a stronger position than Australia's.

We also had a rapidly improving budget position. It is enormously important to understand that. We saw a $103 billion turnaround in the budget back in March, and from March there was a $43.3 billion improvement through to the end of the financial year. That was in the matter of just a few months. To put this in perspective, it's a remarkable outcome, because last financial year, from the moment that Victoria and New South Wales—the two biggest states—opened up back in October, from the beginning of November through to the end of June, the budget was actually in a cumulative surplus. That is an absolutely remarkable situation to have been in, to have a surplus running as soon as the pandemic—or the lockdowns, at least—came to an end. We were still facing the back end of the pandemic.

This was the snapback which was absolutely central to the previous government's strategy. We wanted to make sure there was a snapback, and there sure was—there's no doubt about that—with a remarkable turnaround in the budget. That trajectory continued in last week's budget, in the updated forecast for 2022-23. But the truth is that people aren't feeling that in their everyday lives. Across the board, there's no doubt about that. The pressures of inflation on household budgets are eating away at these national gains. That's very clear.

When I get around my electorate and around Australia I see some of those challenges people are facing, both on the household side with inflationary pressures and on the business side, particularly, with labour shortages. So it is right and proper that the top of the list right now has to be about dealing with those shorter-term inflationary pressures, and that needs a clear and comprehensive plan. A sound budget needs to be at the core of that plan, but it does need a clear and comprehensive plan.

We absolutely accept that no government can control the context within which their budget is brought down. Their plan has to recognise the context that it faces and those challenges, and we felt this during the course of the pandemic. Those challenges are what they are. You can't change them, but you can change how you respond to them. That's why we felt that the budget was an opportunity for the Treasurer to start outlining a plan to deal with the challenges in the economy that I've just talked about.

The test for the federal budget was simple: first of all, deliver that clear and comprehensive plan to consolidate the strengths of the economic and budget position that Labor inherited. Second, put downward pressure on inflation and interest rates and deal with those short-term supply pressures that businesses are feeling. In the longer term, make sure that we're set up for growth, for strong productivity and participation in the economy beyond the next couple of years. Finally, deliver on election commitments. This really matters. They were very strong election commitments made in the lead-up to, and in, May, and it's right and proper that we hold the government to account on meeting those election commitments.

The government had the opportunity to deliver a budget that met those tests, the shorter-term tests on dealing with those cost-of-living pressures and labour shortages and the longer-term tests to empower aspiration in enterprise, reasserting the role of productivity and lower taxes in driving strong economic growth. We said, and we'll continue to say, that we will back in any Labor policies and initiatives that are consistent with those tests that I've just laid out on the economic side. There's no doubt about that. There are a number of measures in the budget that we will back in because we think they are consistent with those tests, but, overall, there's no question that this budget was a missed opportunity.

I think the real question all Australians could reasonably ask is: why did we have a budget? It's ultimately a traditional high-spending, high-taxing budget. What we needed was a budget that recognised the importance of those issues that I raised, and that had, at the heart of it, a strategy that would deal with those shorter-term pressures that I'm talking about—in particular, a fiscal strategy that was going to take pressure off interest rates and inflation.

Economists will tell you that the most important thing you can do when you have an inflationary and higher-interest-rate environment is make sure that you have a balanced budget, that you've moved to a balanced budget, and that you have a fiscal strategy that's tightening, not loosening. In fact, what we saw in this budget was the exact opposite.

The budget deficit, as I said a moment ago, was all accrued in the first four months of the last financial year. That $31 billion was all in those first four months when we were still in lockdowns. The whole lot. There was an opportunity to take that and strengthen it. In fact, a number of economists said that this could be a pathway; with the right strategy, Labor could be moving us back into budget balance, if not this financial year then certainly next. But no. In fact what they did was expand the budget deficit out to over $50 billion over the next couple of years. It's very unusual for a Treasurer to come into the role and instead of saying, 'I'm going to improve the budget,' say, 'No, I'm going to make it worse.' That is what he did—he said, 'I'm going to make it worse.' That is going to have exactly the opposite effect of what we need on interest rates and inflation.

A number of economists—some of whom are not on our side of politics—have made the point that this is a fiscal strategy that is all wrong for the circumstances. Stephen Koukoulas, economic adviser to Julia Gillard—certainly not on our side of politics—said, 'This is a budget that leaves the Reserve Bank carrying the can on interest rates and inflation.' What does that mean? It means the Reserve Bank is going to have to keep raising interest rates, because the government is not doing its piece. That's the situation we have.

If you have a mortgage—and the average new mortgage we see in New South Wales now is upwards of $750,000—you are going to feel real pain from those rising interest rates. The market now expects the cash rate to go over four per cent and that leaves mortgages of six or seven per cent. That is where we're going. That is what the market is expecting right now. There is nothing in this budget that is taking that pressure off, and that is a huge missed opportunity.

The Treasurer doesn't like admitting this, but when compared with the March budget there is an extra $115 billion of spending. If you take the four years of the March budget and take the first four years of this budget and compare the two totals, there is $115 billion of extra spending. Labor does not like to admit it is a big-spending government, but it is—$115 billion. They like to say that they're banking the savings. There was an extra $145 billion on the revenue side and they're spending the vast majority of that. That is exactly what we don't need. Australians will pay the price with higher inflation and higher interest rates.

The budget had buried within it a lot more than that in terms of the pain it is imposing on Australians. There is a 56 per cent increase in electricity prices. Labor likes to give lots of excuses for this, but it promised a $275 reduction and now in its own budget there is a 56 per cent increase in electricity prices and a 44 per cent increase in gas prices. This isn't going to hit just households—and it will hit households very hard. It's also going to hit our energy intensive businesses. Businesses have worked hard over recent years—and I have worked with them closely—to keep in this country our aluminium smelters in places like Portland and Tomago and our alumina refineries in Gladstone and in the south-west of Western Australia. They are absolutely sensitive to those prices. If those prices go the wrong way, as Labor is predicting, the prospects for those businesses are very poor.

The budget also had embedded within it rising inflation—inflation rising to nearly eight per cent; rising unemployment—over 100,000 jobs will be lost; slowing economic growth; and, tragically for Australians—and this was a very clear election promise from Labor—no improvement in real wages in this term of government. So after all that talk during the election campaign about real wages going to improve, their own budget says that there will be no improvement in real wages in this term of government.

They have put up the white flag; they've given up. The Treasurer comes in and in that grim tone he puts on—it's doom and gloom—he tells Australians it is all terrible and he has no plan. That's not what they expect from the Treasurer. They expect the Treasurer to recognise the circumstances—the great strengths and the challenges of the circumstances that I laid out—and lay out a clear plan, but that is, sadly, not what we saw in the budget.

Steven Hamilton from the ANU's Tax and Transfer Policy Institute said that this budget delivers 'the weakest economic and fiscal strategy of any government since the Charter of Budget Honesty was established, and the exact opposite of the approach of a responsible economic manager'. Steven Hamilton from the ANU, which is just down the road here, is a highly respected economist. He also notes that the government is 'actively driving the budget deeper into structural deficit'.

The Treasurer acts as though deficits are something he can't control—they have nothing to do with him. It's true. The Labor Party demands of treasurers big spending—$115 billion. There's a long queue of ministers out there asking for more money. Stakeholders—there are a lot of people to pay off after that election. It's the $115 billion in the budget, as Steven Hamilton notes, that's actively driving the budget deeper into deficit. By failing to adopt a responsible fiscal policy, we will see higher interest rates and higher inflation than would have otherwise been the case.

On top of that, in the very budget week where they were talking about the challenges Australians are facing, they brought forward toxic industrial relations legislation that's going to take us back to the strikes and job losses of the seventies and eighties. I lived through those. I saw them. I saw the devastation that happened in industries. Small businesses were hit. Farmers were hit. Shearing sheds were burnt down not far from here, including in my electorate, back in those days. That kind of toxic industrial relations with multi-enterprise bargaining brought through in the very week of the budget is a hallmark of how badly this government is misjudging what Australia needs right now in terms of sound economic policy.

But there's another placeholder in this budget, we know. There's a big gap sitting there, waiting to be filled, and the Treasurer is looking for any opportunity to do this, and that's a gap for more taxes. There's no Labor Treasurer that didn't want to tax more. We know that the current Treasurer was an adviser to the previous Labor Treasurer Wayne Swan. He wanted to tax more. There's no doubt about that. Every Labor Treasurer that can tax more is a hero, and this one wants to do the same.

What the Treasurer wants to do is to get rid of the stage 3 tax cuts. These are tax cuts that are going to ensure that the vast majority of Australians are in a position where they know they can keep 70 cents in the dollar, or more if they work more. It's a simple rule of thumb. If you know you're going to get 70 cents in the dollar, you're going to put in, you're going to take risks, you're going to work hard, you're going to have a crack, and that's exactly what we want to see. We will take that fight to the Labor Party as they continue to fly these kites about more taxes, whether it's superannuation or this—or all sorts of other areas where they're talking now. There's nothing Labor doesn't want to tax. We are the party of lower taxes, and we will remain that way.

So this is a budget that was a missed opportunity. We hope the Labor Party will see the error of its ways. And we will back the sensible measures that were included within the budget.

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