Jenny McAllister (NSW, Australian Labor Party, Assistant Minister for Climate Change and Energy) Share this | Hansard source

On behalf of the Treasurer, Dr Chalmers, I table a ministerial statement on the economy, and I seek leave to make a short statement in relation to the document.

Leave granted.

I am tabling the Treasurer's ministerial statement on the economy, which the Treasurer presented in the House of Representatives today. As the Treasurer said, Australians know that this government has changed hands at a time of instability, uncertainty and volatility around the world and at home. We want to be upfront with the Australian people about the international factors that buffet us and the domestic, economic and budget pressures that we are working through. We also know that Australians are already experiencing the consequences of these circumstances every day. We recognise that Australian families are under pressure. You see it when you go to the shops, when you fill up at the bowser or when your bills arrive.

The Liberals and the Nationals gave this country a wasted decade. Instead of investing in the Australian people, they invested in waste and rorts, missed opportunities and messed-up priorities, and fixing that mess is going to take time. But despite all these challenges we know this is also a period of great opportunity for Australia. We are already at work on our main task to build a stronger and more resilient economy. It's an economy that will be powered by cheaper, cleaner, more reliable energy and with Australians workers that have the right skills in secure jobs with decent wages that grow strongly and sustainably, and this is our chance to build a better future for all Australians.

As the Treasurer outlined in his statement, the Australian economy is growing but so are the challenges. Some are homegrown; some come from around the world, and to that extent Australia is not alone. The global picture is complex, and the outlook is confronting. The International Monetary Fund this week significantly downgraded the outlook for global growth in both 2022 and 2023. China's strict COVID-containment measures have had a substantial impact on their output and have made existing supply chain disruptions more severe. Russia's illegal invasion of Ukraine has undermined energy and food security and increased global prices.

In his statement, the Treasurer outlined new economic forecasts from the Treasury. These forecasts better reflect the economic circumstances, such as higher inflation and slowing global growth, that our government is dealing with. The Treasurer announced these forecasts well ahead of the October budget because, as a government, we consider that Australians deserve to know where our country is positioned.

There are couple of issues in the Treasurer's speech that I want to draw attention to, particularly around inflation and around the budget. While the Australian economy is outperforming much of the world, high inflation is impacting on Australian living standards in an environment where workers are not getting the wage rises to match the price rises. In the pre-election forecast, inflation was expected to peak at 4¼ per cent. It's now 6.1 per cent through the year to June and is now forecast to peak at 7¾ per cent in the December quarter this year. As the Treasurer has said, the current expectation is that inflation will get worse this year, moderate next year and normalise the year after. Higher interest rates combined with the global slowdown will impact on economic growth here in Australia. The revised economic outcomes and forecasts are expected to cut half a percentage point from growth for the last financial year, this financial year and the next financial year. So, instead of 4¼ per cent growth in real GDP last year, as estimated before the election, it is expected to be 3¾ per cent in 2021-72. Instead of 3½ per cent this year, it has been revised to three per cent, and next year, instead of 2½ per cent growth, we are looking at two per cent. It's largely driven by weaker consumption on the back of higher inflation and interest rates.

So, yes, the economy is growing, but there are challenges ahead. We have been upfront about those challenges that we have inherited, and that includes the trillion dollars of debt left by the previous government. We know that the government's last ditch re-election budget is chock-full of waste and rorts, with a series of expiring measures. We also know that there are long-term demographic challenges that come with critical and necessary spending.

I want to make a comment on the final budget outcome for 2021-22, which will be published soon. It's likely to show a dramatically better than expected outcome for a few reasons. Temporary factors like supply chain disruptions, capacity constraints and extreme weather delayed some spending, while low unemployment and volatile commodity prices boosted revenue. These are temporary factors, and we know that the short-, medium- and longer term pressures on the budget remain and are more pronounced.

You will see a full set of fiscal forecasts in the October budget, but the additional impacts of COVID related expenditure are already costing the budget an extra $1.6 billion this year. We also expect government payments to be around $30 billion higher over the forward estimates than forecast pre election because of issues like inflation and wage expectations. We also have a growing debt burden, left by the former government. It's at the highest level as a share of the economy since the aftermath of the Second World War, with deficits that stretch beyond a decade. That debt burden is growing heavier due to the impact of higher interest rates on repayments. Let us not forget that the former government was a government that, even before the pandemic, had more than doubled gross debt.

We want our budget in October to be about high-quality investments in the right priorities. We are already working on our audit of waste and rorts. The Treasurer and the Minister for Finance are going through the budget, line by line, to ensure that our spending is about building value. The budget will be an opportunity to deliver the commitments that the Australian people voted for in May. While we recognise that our choices are constrained by the fiscal situation, we have an economic plan to lift the speed limit on the economy. It is a plan with three elements. The first is to address the cost-of-living pressures, like cutting childcare costs and the costs of medicines on the PBS by up to $12.50 per script. The second is to grow wages over time. We have already demonstrated our commitment to successfully arguing for a decent pay rise for the lowest paid. The third is to strengthen supply chains and deal with the supply side of the inflation challenge, like investing in cleaner, cheaper and more reliable energy and addressing skills and labour shortages.

The economic statement today paints a challenging and confronting picture, but, as the Treasurer has said, the growing pressures on the economy and the country don't make our election commitments less important; they make them far more crucial. This is our opportunity. It is our opportunity to build a better future for our country and for future generations.