Andrew Charlton (Parramatta, Australian Labor Party) Share this | Hansard source

Some budgets age well and some budgets don't age very well. Joe Hockey's budget in 2014 certainly didn't age very well. Most of the measures had been abandoned within the year. In the UK, Liz Truss's budget didn't age very well in 2022, and within a month it was clear that her measures were disastrous. But other budgets do age well, and events validate their measures and show them to be right for the times. The third budget of the Albanese Labor government, now just a few weeks old, has been validated by subsequent events and judged to be right for the economic conditions that we find ourselves in. Most of the criticisms of that budget that we heard very strongly over the last couple of weeks have been shown to be relatively unfounded. Let's go through some of those criticisms one by one.

First, we were told that the energy relief that was provided to all Australian households in the form of a $300 rebate would be inflationary. This was probably the dominant topic of commentary around the budget—that this measure, which the government felt was so important to help people with the cost of living, would ultimately be detrimental because it would push up inflation and interest rates. Well, we had an adjudication of this yesterday. The Governor of the Reserve Bank sat in a Senate estimates hearing, and here's what she said about the measure: 'It is helping people who clearly are hurting at the moment, but I don't think it's material in terms of our forecasts for inflation.' So, in spite of all those fears and concerns and that scare campaign about the impact of that $300 payment leading to higher inflation and higher interest rates, the Governor of the Reserve Bank has completely debunked that and said that it won't impact her forecasts for inflation and obviously, therefore, can't impact the trajectory of interest rates. So that's a measure that, despite criticism at the time, has aged pretty well. The criticisms have been proved wrong.

Second, the second-most trenchant criticism of the budget at the time of its announcement, was that it was a big-spending budget. The shadow Treasurer, on 14 May, said, 'This is a big-spending con job.' He said:

… Labor has added $315 billion of new spending, at a time when we need restraint.

Well that criticism has not aged well over the last 48 hours. The Australian economy, as predicted, has been very weak in the last quarter. And while two weeks ago the shadow Treasurer wanted a bigger budget surplus and bigger budget cuts, I doubt he would say the same thing today in the face of a weakening economy. Now he has to acknowledge that budget cuts would have had a devastating effect on the economy and would have been completely inappropriate for the economic conditions that we find ourselves in.

Third, the third-biggest criticism of the budget, was that it would have a negative impact on real wages. Again, the Governor of the Reserve Bank gave strong testimony on this just this week. The governor said that real wages have been negative—she was referring to the previous decade—but then said, 'We expect real wages to start to rise basically from now.' She went on to say, 'They are rising now.' So the Governor of the Reserve Bank's verdict on real wages growth and the economy over the last 10 years is that we've come out of a very dark tunnel, a period of significant low—in fact negative—real wages growth, but we can see the light at the end of that tunnel. Labor's policies have brought real wage growth back, and we expect to see the pay packets of workers moving forward in real terms.

Each of these criticisms have proven over the last two weeks to be unfounded. In fact, the budget has done a good job of managing what many commentators call the narrow path. The narrow path involves working to bring down inflation over the course of this year without crashing the economy. We're really proud to say Australia remains on that narrow path while many other countries have fallen off it. There are recessions in Britain, in Japan, in New Zealand, in Finland, in Ireland, but Australia remains capable and is showing that it can bring down inflation without leading to a large spike in unemployment or a serious economic downturn. That's why this budget has proved to be right for the times and why it has suited the economic conditions of the moment.

Proposed expenditure agreed to.

Remainder of bill taken as a whole and agreed to.

Ordered that this bill be reported to the House without amendment.

See this speech in context