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

When I saw that the member for Hume was raising a motion on macroeconomics, I thought to myself, 'Members of the government are really going to have to bone up on our material, because this is going to be a very erudite, very rigorous and compelling presentation we're going to receive.' So I went to my handy fiscal strategy evaluation handbook, which is a handbook that evaluates various fiscal strategies by their short- and medium-term impacts on prices. I was flicking through when I found one approach to fiscal strategy, and it was 'coffee mug, back in black'. I flicked to that section and it said: 'The short-term impact on prices in the economy is an increase in ceramic prices.' It gave some examples, of the tulip mania and other examples of price spikes, but it said that, in 2020, there was an example of where the price of coffee mugs spiked to $35 a mug as a result of this strategy, and the medium-term impact of this strategy was an increase in waste management services, as thousands of mugs were sent to municipal waste service centres. So this strategy had no positive impact on prices.

I flicked to something more traditional, 'fiscal responsibility'. I found a quote from the IMF, which said that 'fiscal tightening makes it possible to increase interest rates by less, in order to contain inflation'. What I found when I looked at that and compared it to the government's strategy is that the government has, in fact, brought down consecutive surpluses, after having inherited a $78 billion deficit, and that the government, not only having done that, has banked high proportions of the fiscal uplift that has occurred during this term, as a result of stronger labour markets, as a result of stronger nominal wages—which is part of our design—and as a result of higher resources prices, and that the budget is $215 billion better off. So it becomes clear from the fiscal strategy evaluation handbook that fiscal responsibility is better than 'coffee mug, back in black'.

Then I looked at another couple of policies. One was 'nuclear pipe dreams, SMR'. I had to go to the glossary, and that said it was 'small, mythical reactors'. That led to a short-term price rise in paper costs, as a result of a flurry of press releases. But what it said was that, in the medium term, there was no macroeconomic impact on energy production for 20 to 25 years after the announcement of this policy. There was no extra production in the energy network. But what it did find was that there would be massive, skewed allocation in the capital markets, which would lead to higher energy prices.

I flicked to an alternative policy, 'clean energy transition'. What that found was that clean energy transition led to higher certainty in energy markets, better and more efficient capital allocation and lower costs for capital. It found that the clean energy transition dealt with environmental externalities. It found that it was skewing the energy market towards lower marginal cost producers, putting downward pressure on energy prices. It also found that clean energy transition was most effective when it was coupled with effective cost-of-living measures.

One example of those were the measures introduced by the government in 2023, voted against by those opposite, which led to electricity prices rising far less than they would have if those opposite had got their way. They increased 6.5 per cent, having had the government intervention, versus 14.5 per cent if the opposition had had their way and there had been no intervention in markets. Again, the fiscal strategy evaluation handbook and looking at the impact on prices showed that 'clean energy transition' was a far superior policy for prices, both in the short-term and the long-term, compared to 'nuclear pipe dreams, small mythical reactors'.

Then I went to a couple of case studies and there was 'inflation trajectory, Morrison government', where inflation was tracking up, where inflation was handed over to the incoming government with a six in front of it, and where there was the highest quarterly increase in a decade. Then I looked at 'inflation trajectory, Albanese government', and what I found there was that there was the subheading 'inflation down'—that inflation had more than halved; that inflation was significantly lower than what they'd inherited, both in terms of core inflation and headline inflation.

So the fiscal strategy evaluation handbook came in quite handy, to rebut some of the very sophisticated macroeconomic arguments put to us. It showed very clearly that fiscal responsibility, clean energy transition and the government's strategies are the best way to deal with the inflation problem.

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