Andrew Bragg (NSW, Liberal Party) Share this | Hansard source

I very much appreciate the opportunity to speak on this matter of public importance, and it is true that the government has not been able to address the cost of living. In fact, the government has increased the cost of living since its election some 15 months ago. That is most notable in relation to the cost of a mortgage, which, for many Australian families, is more than $1,000 extra a month. They're having to find that in what is already a high inflationary environment where the basics are more expensive than they were just a year ago.

The question is: what is it that the government can do here? Many people bring their grievances into these chambers, and it's not always clear to me what exactly they're asking the government itself to do. What actually is the government in control of? The government is in control of its fiscal policies. It can set its budget. It can run its affairs in relation to how it engages with the central bank, which runs monetary policy. On the issue of fiscal policy, that is where I think the government has gone wrong. They have made decisions in their two budgets to increase expenditure when economists and the experts have been calling for spending restraint. The government have decided to spend more money. Now that is, through the budget, causing inflation to increase. But the government has also been fond of establishing off-budget funds, which the International Monetary Fund has warned are increasing the risk of inflation in Australia. The reality is, here, that inflation is running higher in Australia than it is in many comparable countries, including the United States, because the Australian government has decided to run an expansionary fiscal policy. There's some debate about whether that is a neutral policy. The only reason it could credibly be regarded as a neutral stance is because of the hilarious energy caps, which is effectively the government legislating away inflation. If it was that easy, then you would just pass a law that says we're going to have no more inflation. The idea that that is the fiscal position of the country is laughable. That is one thing the government can control.

The other thing the government can control is the way it engages with the central bank. The government have decided to engage in a lot of 1990s style interference with the Reserve Bank by ending Philip Lowe's term. They spent a lot of time campaigning against Philip Lowe, sending their backbenchers out to attack Philip Lowe personally for doing his job. Then, of course, the axe fell on Mr Lowe. There was a public debate about whether the government would appoint a Treasury official or maybe someone from the unions, who knows, to run the Reserve Bank, which is reminiscent of the 1990s experience. We've seen two decades of independence, not interference, in terms of the Reserve Bank. The government have interfered massively here. They have now decided to appoint Michele Bullock, who I think will be a very fine governor, and I welcome her appointment.

But it's the way that you do things that counts. There was a bit of a try-on there for a while, a bit of a sense that maybe they were trying to cow or bully the Reserve Bank and punish them for doing their job, because, of course, the Reserve Bank in raising interest rates is doing the heavy lifting that the government has not been prepared to do. The government should be running a contractionary fiscal policy. That's what the government should be doing. I know it's hard to cut spending, but ultimately, the least you can do is not agree to new spending, which is where we are with this government and $42 billion in new expenditure taken in decisions in this budget estimates period. Ultimately, that is the position we are in. The government have decided to spend more money than they need to, and that is fuelling inflation. That is causing the Reserve Bank to increase interest rates, and that is causing mortgage costs to be higher than they should be and certainly much higher than they have been under the Liberal Party. At the end of the day, Labor is playing to its true colours. It is making mortgages more expensive, and the cost of living is much harder.