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

I move:

That the Senate take note of the answers given by ministers to questions without notice asked by opposition senators today.

I'm going to start with a history lesson, and Senator Gallagher probably knows which history lesson I'm going to start with. It is the history of Medicare co-payments in this country. I want to take everyone back to 1991. Who was the Labor Party leader? Who was the Prime Minister? It was Bob Hawke. And what was happening to Bob Hawke in 1991? He was facing leadership pressures. And what did Bob Hawke, as Prime Minister, and his then health minister Brian Howe do, without consultation, in the 1991 federal budget? They announced a Medicare co-payment of $3.50 and a reduction of $3.50 in the rebate. So it lacks credibility for Labor senators to come into this place and try to suggest that it is only coalition members and senators who are interested in a sustainable health system.

Let me finish the story. What happened later in 1991? This is particularly important for the current Treasurer. What happened next? The Left and the Right and the ACTU ganged up on Bob Hawke, who, to be fair, was a very popular Australian Prime Minister, and guess what happened. A week before Christmas, Paul Keating became the Labor Prime Minister. I understand completely why Labor does not want to go back and hear about the horror story of its experience with Medicare co-payments.

This brings to an end the first week of Labor's second budget. What will be top of mind to many, many Australian families this weekend is just one word and the consequences of that one word, and that one word is 'inflation', the consequence of inflation being higher interest rates.

When Jim Chalmers attended the National Press Club yesterday he said he was 'supremely confident' that the budget would not add to inflation. They are very brave and courageous words by the Treasurer, no doubt. But we can't trust the Treasurer's supreme confidence that the budget will not drive up inflation, because just a year ago Anthony Albanese tried to tell Australians that life would be cheaper for them under Labor. Well, 12 months on, we know that is not true, as this country struggles with the very real challenge of higher inflation and rising interest rates.

We heard a little bit of commentary earlier in question time today about the remarks of Westpac Chief Economist Mr Bill Evans. Those remarks are important because Mr Evans is a trusted economist. Westpac is a significant banking institution in our country. I want to remind people of some observations Mr Evans made and why they have important implications for the budget and the analysis of the budget that will continue over coming weeks and indeed when we come back for Senate estimates. Mr Evans said:

Do I believe the rates relief I thought we would get—

that Australian families would get—

in February could be delayed? Yes.

Mr Evans is saying that he thinks rate relief and falling interest rates that people are expecting to happen in February next year are not going to happen, or the chance of them happening is significantly reduced as a result of the budget. What else did Mr Evans say? He also said:

The opportunity to cut rates as early as February starts to fade away—that's the one thing I'm worried about with regard to the budget.

He also said:

$20 billion going into the economy in the space of three years is what I would call big spending.

Those were Mr Evans's comments—not his only comments but, I think, some very pertinent comments when we think about the challenge that has now arisen as a result of the budget that was delivered on Tuesday night.

The budget will not be measured today, tomorrow, in two weeks' time or in three weeks' time but in a year's time, when we are still in this chamber. (Time expired)

Nita Green (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I'm very pleased to stand and take note of the answers provided today. And it does beggar belief, really, that those opposite—in defence of their actions on Medicare over many years; a decade of delay, of ignoring the GP crisis, of standing up every day and supporting someone who as health minister proposed a co-payment—want to go back to a policy that Labor supposedly was implementing when I was eight years old. It's two days after the budget, and the Liberals are going back to 1991 to try to defend their position, which is to not support the things we put forward. It's clear that they don't support these things. It's clear that they don't support a budget that's responsible, that's measured. It's clear that they don't support the measures in the budget to provide cost-of-living relief to everyday Australians.

Those on this side have been working really hard to get those measures into the budget, to get that relief out to Australian families, and we couldn't be prouder of the work that's been done to make sure that we're taking care of vulnerable Australians, that we're making more opportunities for more Australians and that we're building a strong future and a strong, resilient economy for our future. The budget strikes this balance between helping Australians through hard times right now and building for the longer term. We're delivering real cost-of-living relief and the biggest-ever investment in bulk-billing—the biggest-ever increase for bulk-billing incentives. It is something that needed to be done, and it's something that those opposite would never do, after 10 years of drilling Medicare down to the ground, starving GPs of resources. I am sure that if they were still in government we would have got to a point where Medicare was completely privatised. That is their legacy. But, in our budgets, we care about Medicare. We built it, we will protect it and we are strengthening it. That's what they're against. That's what we are for. We're lowering the cost of medicines on top of this, which is another thing it seems, from the questions today, that those opposite oppose. Funding the biggest pay rise for aged-care workers—that's what's in this budget. That's what is in this budget, but those on the opposite side say we shouldn't be doing it.

On top of all of this cost-of-living relief, something that's incredibly important is offering cost-of-living relief on electricity bills. That is something that was in the budget the other night. We're working with states and territories. And it was something we had in our October budget, because we're completely aware of how important this is for people. Those on the opposite side had the opportunity to support cost-of-living energy bill relief in the last year of their parliament, but they refused to support it.

We're creating opportunities that all Australians can share and we're making the services that we rely on stronger. Our plan will grow the economy, create new jobs, boost renewable energy and invest in skills and training. Remember that problem you also ignored—the skills crisis that you did nothing about for 10 years? It was already happening before the pandemic. It was made worse by COVID. And you had no plans other than paying interns $5 an hour to wash cars and getting Scotty Cam to come out of the woodwork and be on a TV ad. That was your plan to fix the skills crisis. We've put real money behind it in our budget, because we know that we need to get skilled workers into skilled jobs to make sure that Australians have those opportunities.

This is a responsible budget, it's a practical budget and it's one that works to clean up the mess of a wasted decade under the Liberals and Nationals. I'll give you one example of that neglect and decay. Townsville is the proud home of the Australian Institute of Marine Science. They're a fantastic organisation and they do important work in our oceans, making sure that we've got the very best marine science in the world. They do incredible work on the Great Barrier Reef. Under the previous government, we were at a point where the defunding and underfunding of this incredibly important institution was going to lead to job losses. Their equipment was out of date, they hadn't had a refurbishment of their premises for years and there were jobs on the line. In the budget the other night, we added $163 million to the budget of the Australian Institute of Marine Science. That is $163 million to get them back just to where they needed to be. That's what this budget does.

Slade Brockman (WA, Liberal Party) Share this | Link to 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.

Tony Sheldon (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Isn't it interesting? Before I start, these are the people who are giving lectures about interest rates and inflation and how to deal with the cost of living. They are the ones who started this whole rise of interest rates in this economy. They seem to forget that one of the big issues we had were their 22 consistently failed energy policies that put the pressure on our cost of living in this country. If you look at the budget, you clearly see that the Treasurer's assessment is that interest rates over the inflationary pressures is clear in the budget papers because it says the cost-of-living package is expected to reduce inflation by three-quarters of a percentage point in 2023-24.

You also have to realise the importance of this budget in getting inflation right and supporting our community. A $14.6 billion cost-of-living relief package has been critical to supporting hard-hit Australians. But what those opposite are saying is nothing because what they are actually saying is that we should turn around and do nothing, that we shouldn't turn around and support hardworking Australians, that we shouldn't support those people that are at such a disadvantage because of the increase in inflation that commenced under their watch.

Let's start looking at building the capacity to deal with shocks into the future. Eighty-seven per cent of revenue windfall over this budget and the last, compared to a 40 per cent average over the last governments, is the money that will be going into dealing with some of the issues that have put pressure on our spending within our budget. We have prioritised and saved almost $40 billion, and that has returned an 87 per cent revenue windfall over the budget compared to a 40 per cent average by the last government. These are significant figures because it puts us in a position to deal with future shocks in our economy. It's actually making sure that we have the capacity to deal with the future.

Quite clearly, when we go to these questions about what an economist has said, what those opposite leave out and who they fail to quote is ANZ's Adelaide Timbrell, Nomura's Andrew Ticehurst, National Australia Bank's Alan Oster on Tuesday, JP Morgan's Ben Jarman or ANZ's Richard Yetsenga. I might just quote Yetsenga in particular, because all of those previous economists have said that at worst this will be neutral, and many have supported the fact that this budget will have a positive effect on inflation. The particular quote from ANZ is that '$A14.6 billion in household support is the largest package of spending'. Yes! It says:

In Australia's $A2 trillion economy, this won't make the inflation challenge materially worse.

That's what was said. To hear those opposite deciding to quote Westpac—well, how about you quote everything that Westpac and Mr Evans said? Mr Evans said this:

I think those policies were necessary—

listen to that word, 'necessary'—

and I don't expect them to put upward pressure on interest rates in the near term.

These are some of the important aspects of what we've done in this budget.

Of course, what those opposite don't want to do is talk about the cost of living, because they haven't any plan for it. These are the same people that voted down having a strategy to put downward pressure on energy prices. These are the same people that have turned around and made sure that they wouldn't support secure jobs and better pay proposals for people to have the capacity to deal with the cost of living. They're the ones that turned around and didn't want to have people getting more secure jobs so that they can bargain more fairly. These are the people that turned around and refused to support the appropriate fee-free TAFE, cheaper child care, the expanded Paid Parental Leave scheme and introducing the domestic violence leave. These are all strategies they have been consistently trying to undermine or have opposed in this place.

The real question for those opposite will be the future reforms: same job, same pay; minimum work standards for gig workers; an objective definition of casual employment and the pathway to permanent employment; and making deliberate wage theft a criminal offence. Let's see what they do, because that will show them up for what they think about the cost of living. They are not about taking it on. They're not about giving people the opportunity to have a decent wage and a decent income. They certainly haven't got a plan to deal with inflation.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to take note of answers, in this case from Senator Gallagher to the first supplementary question by Senator Smith, who pointed out that the minister for aged care said, 'This is a budget that will put downward pressure on inflation,' and Senator Smith highlighted that that was 'in contrast to economists from countless banks and rating agencies who called this budget "expansionary"'. Senator Gallagher gave a response, and she mentioned, pleasingly, the concept of frameworks. It's really important that, if we're not just going to look at short-term perturbations but long-term impacts, we understand the consequences of the frameworks we have in place.

When we come to the issue of the cost of living—and I go here to the cost-of-living committee, which has been inquiring into that—I notice that in their interim report one of their key findings is that energy prices have risen and are a major contributing factor to the cost-of-living crisis in all sectors of the economy. What has that got to do with frameworks? The government's rejection of the expert opinion of a number of economists in terms of inflation—it's not the first time. They have form on that.

I was flabbergasted to see Mr Bowen say in response to a question in the House that every sensible economist would tell you that nuclear energy is the most expensive form of energy there is. I'm paraphrasing there. I haven't got his exact words, but that was the sense of his answer. The OECD, who, globally, are probably the most reputable group of economists looking at economic cooperation and development around the world, issued a report last year, in April, where they looked at the frameworks that countries put in place around their energy systems. On page 35 of their report, which was a strategic briefing on meeting emissions targets, they look at the levelised cost of electricity across the OECD for various forms of energy generation, and they highlight that 'the lowest cost option for generating electricity is long-term operation of nuclear power plants'. That quote is from work done by themselves and the IEA, the International Energy Agency, in 2020. But, as they highlight in their report, that is only part of the equation.

When you look at the systems costs and also the context in which we are seeking to reduce emissions by 2030 and getting to net zero by 2050, for anyone interested, I highly recommend looking at pages 37 and 38 of the report. The OECD highlight that as you constrain emissions and you take fossil based fuels out of the system—and you must remember that here in Australia our national electricity market still uses nearly 70 per cent fossil fuels—the costs will go up exponentially beyond about 2030. They say:

The policy implications of these systems costs findings are significant. It may be possible to reduce emissions to meet 2030 targets by growing the share of variable renewables in the mix. However, the costs of reaching net zero with high shares of variable renewables are likely prohibitive.

They go on to make the conclusion, which is backed up by the IPCC and the IEA, that the only way we can still have reliable, affordable power and reach net zero is to embrace a form of baseload power which is either hydro, if you have suitable conditions, or nuclear power. This is why so many countries—such as the US—are looking to double their amount of nuclear power.

To the issue of expense, they found not only that long-term costs of electricity show that it's cheaper but also that from a grid scale, as we seek to reduce emissions, the framework says it will be cheaper. If we look at the lived experience of nations like Germany, with high levels of variable renewables, they have the most expensive power in the OECD by a country mile. Nations like Canada, which has the lowest penetration of variable renewables, using hydro but also 19 nuclear reactors, have the lowest energy price in the OECD. In Ontario, the province which has those reactors in it—and the majority of their power comes from those reactors—it is among the cheapest in Canada. Frameworks matter, and the framework of this government will just drive up prices further.

Question agreed to.