Jane Hume (Victoria, Liberal Party, Shadow Minister for the Public Service) Share this | Hansard source

I move:

That, in the opinion of the Senate, the following is a matter of urgency:

Labor's budget does nothing to fight inflation or deal with the cost of living crisis and instead has given no reason for the RBA to freeze interest rates, costing Australian families and businesses.

I rise to express my deep disappointment in the failure of the Labor government to address the cost of living, which is impacting every single Australian right now. It's not just a matter of public importance; for many families, it is the only issue that matters. On the first Tuesday of May this year, the Reserve Bank board, after its meeting and for the first time in a year, did not increase interest rates. The signal to the government could not have been clearer. The Reserve Bank board gave the Labor government an opportunity to lead the way and to help Australians that are doing it tough in Labor's cost-of-living crisis. It gave the government an opportunity to show leadership by reducing expenditure in the budget, by doing its bit to slow aggregate demand, to do a bit of the heavy lifting with the anti-inflationary tools that are at the government's disposal so that the RBA wasn't forced to use the only tool that it has and continue to ratchet up interest rates to bring inflation down.

But unfortunately the Labor government did not take up this opportunity and instead delivered a budget with $185 billion in new spending, with absolutely no plan to fight inflation. Not only that but, at a time when inflation has been above seven per cent for three quarters in a row, the government removed from its fiscal strategy its previous priority to get inflation under control. There it was in black and white in October 2022, but it was gone by May 2023. In October 2022 the Treasurer said that inflation was public enemy No. 1. He said it was the dragon that needed to be slayed. But by May 2023 the government had raised the white flag.

So, the RBA has no choice. The government forced its hand and last Tuesday, once again, it increased interest rates to try and get inflation under control. And the country groaned under the weight of increased financial pressure. Families cried out at the unfairness of the endless costs of living: rising energy prices, rising rents, rising grocery prices at the checkout and now rising mortgages, again—in fact, an additional $22,000 for a family that has a mortgage of $750,000. Where's the average family supposed to come up with that sort of money? But what choice was there? The RBA governor made it clear, time and time again, that getting inflation under control is the only priority, the No. 1 priority, is absolutely critical—that lowering inflation is the only policy that will deliver cost-of-living relief to all Australians.

And this isn't a political assessment. Independent experts are unanimous. It doesn't matter whether it's Chris Richardson or BetaShares economist David Bassanese or Bill Evans from Westpac. Let's face it, the Treasurer was quick to quote Bill Evans on budget night, but he said that the first cut to rates may be delayed given the spending in this budget. He said that, excluding the COVID response, the spending package in the budget was about twice as large as in previous budgets—twice as large. But it's not just their spending. There are additional taxes there, too—a truckies tax, a farmers tax—that will all be passed on to consumers, increasing their cost of living.

In the weeks since the budget we've seen markets, economists and now of course the RBA itself react to the budget by increasing their forecasts of inflation and interest rates. In fact, the budget itself forecast interest rates of 3.85 per cent ongoing. Well, how quickly that forecast disappeared. They all warned that there is more pain to come—more pain to come, caused by this Labor government. Labor's been in government for more than a year now. It's delivered two budgets, and it's been clear in both that Labor has no plan to tackle inflation. They are content to let the RBA governor do all the heavy lifting and then blame him afterwards—complain about him. Jim Chalmers called on the RBA governor to explain himself—well, what audacious hypocrisy!

Make no mistake: this is Labor's rate rise. This rate rise belongs to Labor. It's a consequence of a government that has let inflation get out of control and has failed to take leadership on addressing the biggest economic challenge that Australia faces today. Labor's budget did nothing to convince the RBA that that rate rise wasn't needed. What did the Treasurer think was going to happen when he delivered a higher-spending budget at a time of high inflation? Either he doesn't understand basic economics or he's ignored the warnings or he doesn't know what he's doing and he's happy to have Australians pay the price. Jim Chalmers and Anthony Albanese are the ones that need to explain themselves to the Australian people, not the RBA governor.