Daniel Mulino (Fraser, Australian Labor Party) Share this | Hansard source

This motion deals with the way in which some of the significant medium-term global economic challenges that have hit Australia are being dealt with. A couple of years ago, some major international ructions affected all of the major economies in the world. There was the post-COVID supply chain issues and the illegal invasion of Ukraine, and the impact they had on energy prices and food prices. All of these impacts led to a global surge in inflation, which Australia wasn't immune from. That led to a cost-of-living challenge, which affected the most vulnerable in our community. The government made clear from the start that, in dealing with that challenge, the most important thing for the living standards of our most vulnerable people is to deal with inflation. What I want to talk about is the fact that the best way to deal with inflation is for fiscal policy and monetary policy to work together. If that doesn't happen, you are not going to deal with the underlying economic challenge that is impacting on people's lives.

We have seen a series of interest rate increases, which was unfortunately a necessary part of dealing with this broader economic challenge. In conjunction with that, the government has put in place a number of targeted but responsible measures, which have provided assistance to the most vulnerable. There have been a number of components of that—rental assistance, cheaper energy bills, cheaper medicine and assistance for child care. In the labour market, there have been a series of very important measures, including the government supporting the case for an increase in the minimum wage, which I might add those opposite opposed, tooth and nail, both in the election campaign and since. The government has also supported a material increase in wages for people—mostly women—working in the aged-care sector, and we've strengthened workers' rights and workers' voices through a series of important industrial relations bills.

All of these measures have meant that people are taking home more and that people are getting direct assistance, but it's important to note that the way in which the government has provided that assistance has not added to inflationary pressures. This is something which has been confirmed by the Reserve Bank, by Treasury modelling and by all of the major economic commentators out there, including all of the chief economists at the big four banks, and on and on it goes. The government has provided assistance, as it should—and the people in my own community have been talking about the way they've been struggling—working hand in glove with the Reserve Bank.

What we also find is that the government has adopted a responsible fiscal position on short-term fiscal uplift—in other words, the increase in revenues, compared to what was forecast, that arose on the government's balance sheet as a result of a stronger than expected labour market and stronger than expected revenue from resources, at least in the previous financial year. The government has banked the vast majority of that. In fact, it has banked far more of the cyclical uplift that the previous coalition government did. It has been managing finances in a way that is very responsible. It's doing it in a way that puts downward pressure on inflation but which, at the same time, allows the government to provide targeted assistance to those most vulnerable.

That's the government's overall approach, and what we see is that inflation has in fact come down materially from a reading of around 8.4 per cent on a monthly basis some 14 months ago or so to a monthly reading now of less than four, and a quarterly reading of 4.1 per cent. So inflation has come down a long way; it's not mission accomplished but it has come down materially and, at the same time, while it's very unfortunate that unemployment has risen, it has risen less than had been forecast. So in terms of the narrow path that we're trying to walk to reduce inflation and to do so with the least possible disruption to people's purchasing power and to the labour market, we have managed to achieve that in a way that's better than what most had forecast would be possible 18 months ago. So the strategy the government is putting in place is a responsible strategy but also one with targeted assistance to those that need it.

Then of course there are the changes to the stage 3 tax cuts, which complement all those measure and which do it in a way which improves bracket creep—and also labour supply, by around 930,000 hours per week. So this is a responsible and effective overarching economic strategy. The job is not done, but we are well on the way.

See this speech in context