Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

After having taken their eyes off the ball for the last 17 months, the government is now presented with a very, very serious economic challenge. When it was elected in May 2022, Australians made the decision that they trusted the new government to address matters that would be front and centre for many ordinary Australians. Unfortunately for those Australians, the first 17 months of this government has been squandered, and now the country's biggest economic challenge is bearing down on Australian families—bearing down on them as many of them would be preferring to get ready for Christmas.

Yesterday's decision to increase interest rates, the 12th interest rate increase under this government, has added significant pressure to many Australian families. They are living with cost-of-living pressures that are being driven by an inflation problem that is close to being out of control, and I will come to the comments of the new governor and the board of the RBA in making their decision in a few moments. In question time today the government was asked two important questions. It was asked what it is doing to decrease aggregate demand in the economy—because by decreasing aggregate demand you put genuine downward pressure on inflation. And the acting Leader of the Government in the Senate was asked what the level of mortgage stress being experienced across our country is. On both of those really important questions the answers were underwhelming and, some would argue, weren't even answered with any sincerity.

I think it's very important that we remind ourselves why it is that inflation is so dangerous, because for many Australians they will not recall the last time we had high levels of inflation. Inflation must be tackled as the most important economic challenge because it erodes people savings, it damages the economy, it makes it hard for businesses to plan and prepare for growth, and, most importantly, it hurts the poor disproportionately. It is the poor in our communities that pay the highest price if the government doesn't tackle the inflation challenge.

We've heard a lot in the last week or so about the independence of the RBA. I think it's important to think about that independence. What that independence actually means is that the RBA makes its own independent assessment and judgement on the performance of the economy through one lens, and that is whether or not inflation is operating within that two to three per cent band. Whether or not inflation is in that band is the result of a number of factors, but the greatest factor, the most important factor, is what the government of the day is doing to make sure inflation is operating within that two to three per cent band. When the RBA exercises its independent assessment of what the government is doing and whether the government is doing enough to control inflation, that is the independence. It is an independent judgement about whether enough is being done to control inflation. When you've had 12 interest rate rises since May 2022, the answer to the question, 'Is the government doing enough to control inflation?' has to be no.

We were told by the Treasurer, Dr Chalmers, that the inflation problem was caused by Ukraine. We have then been told that the inflation problem has been caused by the war in the Middle East. On the weekend, he said the inflation problem was caused by state governments and excessive infrastructure spending.

On what day will Dr Chalmers, the Treasurer, accept responsibility for what is happening in our economy with regard to inflation? All the commentators are now saying this is a home-grown inflation challenge. The RBA statement when it lifted the rate on Melbourne Cup day said that inflation 'is still too high and is proving more persistent than expected a few months ago.' It went on to say that 'prices of many services are continuing to rise briskly.' It went on to say that 'progress looks to be slower than earlier expected' in keeping inflation within the two to three per cent band. The government must do more.

Senators will note that the Hansard doesn't record silence! Senator O'Neill.