Slade Brockman (WA, Liberal Party) Share this | Hansard source

I, too, rise to take note of the government's answers, and, sadly, again today we've seen the fact that this government has no capacity to understand, approach or deal with the economic challenge of our time, which is inflation. We had the finance minister in question time basically citing an economist who said the least worst about the budget is that it's not going to be inflationary. That's not passionate evidence that the government understand that they need to act to put downward pressure on inflation and not just do nothing, not just take their hands off the wheel and say, 'We'll leave that up to the Reserve Bank.' They've shown no capacity to understand that inflation is the key economic challenge of our time.

Yesterday in this place I started reading out some quotes from senior economists in this country on the impact of this government's budget. I'm going to continue that because I did not get through them all and because it's not like Senator Gallagher says—that there are just one or two economists out of a room of 100 who think this is an inflationary budget. Senior economists across a wide range of organisations have come out and said that this budget makes it harder for the Reserve Bank, not easier. The government has failed its first test.

David Bassanese, chief economist at BetaShares, said:

Contrary to all the talk of a surprise budget surplus for 2022-23, the 2nd Labor Budget under Treasurer Jim Chalmers is unambiguously expansionary, with a boost to GDP growth equivalent to around 1.5% over the next two years. This adds to the risk that the RBA will feel the need to raise interest rates at least once and possibly twice more in the coming months.

Goldman Sachs's chief economist, Andrew Boak said:

At a time when the RBA is lifting rates to contain elevated inflation and accelerating labour costs, we assess the budget's near-term boost to household incomes to have an incrementally hawkish read-through for monetary policy.

Yes, that is economic language but it means that interest rates are more likely to go up. USB economist, George Tharenou, said, 'We also now think the RBA is unlikely to cut the cash rate this year.' He said specifically, 'We formally pushed back our expectation of the first RBA easing to February '24.' It is a greater risk that inflation will go up and it is going to take longer for inflation to go down.

PinPoint Macro Analytics chief economist, Michael Blythe said:

Unfortunately, proposed fiscal settings look a little confused. Policymakers cannot claim that fiscal measures are both stimulatory for households and non-inflationary.

Mr Blythe said the government's decision to increase JobSeeker, single parent payment and aged-care wages had no inflation offset. He also said:

Nobody will begrudge lifting payments to welfare recipients, the lowest paid and essential workers. But the hard-hearted economist will point out the potential risks of boosting household spending power and adding to labour costs at a time of elevated inflation.

Yes, there are hard decisions that need to be made. They are hard decisions. Inflation is the key economic challenge of our time.

EY Oceania chief economist, Cherelle Murphy, said:

The government plans to spend more than it saved in the short term. In normal times the economy would easily absorb this stimulus. But inflation is already running at an annual rate of 7 per cent, and more than one in every four dollars spent in the Australian economy is by a state, territory, local or federal government.

This is an expansionary budget. It puts upward pressure on interest rates. It forces the Reserve Bank to consider continuing to raise interest rates further and higher than they have really had to in order to contain the inflation this government continues to ignore.