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

The Treasurer has said two things on the matter of inflation in recent times. The first thing the Treasurer has said is that it is someone else's fault, that these are global factors. As Senator Smith said in his contribution, this is now an Australian problem—and it's an Australian problem because we know that the government is putting more money than it should into the economy, and that is adding to demand.

We also know that, compared to other jurisdictions that we generally compare ourselves to—our peers abroad—we have much higher inflation.

Steve Hamilton, who is a good economist, said in the Financial Review back in June that, after more than a year of government and amid the Reserve Bank's efforts, which included raising rates by another quarter of a per cent on Tuesday, 'the government's claims that this is all someone else's fault are increasingly untenable'. If they were untenable in June, they're absolutely ridiculous now, in November. Yesterday, Mr Chalmers said in his statements to the press that the government was helping the RBA, which I think is a very interesting turn of phrase because, of course, if he were helping the RBA, then he would be running a contractionary fiscal stance. The government has three options. They could be running an expansionary stance, they could be running a neutral stance or they could be running a contractionary stance. The position that the RBA would prefer—given that it's raising rates and smashing mortgage holders—is to have the government run its fiscal policy in line with the monetary policy and, therefore, run it as a contractionary position.

When Michele Bullock, the new governor, was at estimates last week, I was able to ask the new governor: What is the government's position here? What is fiscal policy in Australia doing? Is it expansionary, is it neutral or is it contractionary? Ms Bullock said that it is neutral. So the government is running a neutral position when it needs to be crimping the budget. It needs to be running a contractionary fiscal stance. We know from table 3.2 in the budget, which outlines the new spending decisions that have been taken, that Chalmers is spending $14 billion on new decisions in this current financial year.