Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The Senate will now consider the proposal from Senator Dean Smith:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

High inflation makes life difficult for everyone, damages the functioning of the economy, erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality, which demonstrates the urgent need for the Albanese Labor Government to come up with a plan to get inflation under control.

Is consideration of the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

With the concurrence of the Senate, the clerks will set the clock in time with the informal arrangements made by the whips.

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

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Thank you very much, Senator Smith. I've always regarded you as one of the gentlemen in this place, and you've just proven you're up to the task of not only completing a speech but jumping in to make sure the Senate continues and to give me an opportunity to respond to what you said. I'm going to talk about Senator Smith in absentia in your role over there and not to you as the chair, because I do want to make a few comments on the contribution that you've just made in this matter of public importance.

I do want to note here in the chamber with some concern that Senator Smith seems to have spent the past 18 months completely oblivious to the work of the Albanese government in tackling the inflation that does so regretfully hurt the pockets of Australia's hardest workers. That's what inflation is. It's not a vague measure of economic performance. It's a real number that eats into the wages of working Australians, and it does that when they fuel up, when they buy groceries and when they buy life-saving medicine.

Unfortunately, Senator Smith has missed the $23 billion the Albanese government has been delivering to everyday Australians to assist them through this time. Where was Senator Smith when we saved Australians $180 million on prescriptions? Where was Senator Smith when we supported 11.6 million Australians to see a GP with no out-of-pocket costs? Where was Senator Smith when we were saving families $1,700 a year on child care? I can tell you where Senator Smith was: he was with all of his colleagues, and they were opposing all of that support for the Australian people. They said no.

If the senator wants to talk inflation, let's talk factually about inflation. This is not happening in Australia in isolation. This is a global phenomenon, and no amount of wishing it were otherwise can actually create a debate that is based on fact in this place. The illegal invasion of Ukraine threw global markets into chaos everywhere and put serious inflationary pressure on a number of essential goods right across the world. By March of that year, inflation had hit 5.1 per cent and, when the Albanese government took power, it inherited inflation at a rate of 6.1 per cent. On top of that, the crisis in the Middle East and oil production cuts have continued to hit Australians already doing it tough, but in September of this year inflation dropped to 5.4 per cent, and that is because, while the coalition members and senators in this place whinge and whine, the Albanese government has been delivering for Australians. While global energy prices are soaring. the Australian Bureau of Statistics says that we've brought household rate rises down from the estimated 18.6 per cent to just 4.2 per cent. Our inflation-tackling policies have brought child care down 13.2 per cent instead of people with kids in care experiencing a 6.7 per cent increase without support.

These things really do help the Australians who are most vulnerable through the crisis that we're facing, along with all those who participate in the global economy.

Senator Smith asked when the Albanese government is going to deliver a plan for inflation. Let's be clear that part of that is tackling it responsibly, while looking after Australians. A $23 billion plan has already brought the inflation rate down by ½ per cent, and I do recall that Senator Smith may well have been with me at estimates—not the most recent one, but the previous one—when that was the evidence of the former Reserve Bank governor. The Albanese government's economic policies have received the endorsement of the International Monetary Fund, and the RBA is acknowledging the important work that the government is doing in containing inflation. All of that has been done while we have delivered a budget surplus that the previous government, the coalition, couldn't manage, even after 10 years of tightening the belts of working Australians.

We know that the LNP— (Time expired)

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Well, here we are: rents going through the roof, mortgages going through the roof, the price of food going through the roof, the price of essential services going through the roof and millions of Australians struggling to make ends meet—struggling to afford the basic necessities of life. And what's the government doing? What is Labor doing about this? Firstly, they're allowing the RBA to put up interest rates continually and thereby punishing the people who are not actually the cause of the inflation that's happening in Australia.

I say that Labor is 'allowing' the RBA to do this because, of course, section 11 of the RBA Act 1959 gives Labor, gives the government of the day, the power to override the RBA on policy matters like interest rate rises. Labor is not only refusing to use this power but proposing to abolish that power—to give it away—in one of the final surrenders to neoliberalism in this country. It's an absolute disgrace! Labor has to do more; it has to override the RBA and stop the RBA putting up interest rates. It has to back in renters, mortgage holders and ordinary Australians, who are struggling to make ends meet, by overriding the RBA and putting in place a corporate super profits tax that would make it harder for the big corporates to engage in profiteering and price gouging.

The cost of Labor's stage 3 tax cuts is an astonishing $313 billion over a decade: $313 billion, with more than half of the benefit of those stage 3 tax cuts going to the top 10 per cent of income earners. Those earning more than $200,000 a year will get a tax cut of nearly 10 grand a year but people on less than $45,000 will get nothing. Bankers, CEOs, federal parliamentarians, doctors and lawyers will get nearly $10,000 per year while people who are struggling to make ends meet will get nothing from the stage 3 tax cuts. How can Labor proceed with these stage 3 tax cuts for the top end while millions of Australians are getting smashed by rent increases, mortgage increases and the major supermarket chains gouging food prices, making it all the harder for people to make ends meet? Shame on Labor!

Andrew Bragg (NSW, Liberal Party) Share this | Link to 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.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Bragg, I would just remind you to refer to people in the other place by their correct titles.

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

Mr Chalmers is spending $14 billion in this year—a cumulative total in new decisions taken in the most recent budget of $42 billion. So the government is running at least a neutral—or perhaps an expansionary—fiscal position. The budget papers tell us that, and the Reserve Bank has underlined that with its statements to the Senate last week. Why is this the case? I believe this is the case because, no matter how well intentioned the government may be, the government is unable to say no to its favourite vested interest. It's unable to turn off the spending tap, and it's been unable to stop delivering policy only for their fellow travellers and the rent-seekers and the bloodsuckers that run the Labor Party's preselections and man their polling places. The policy support that the vested interests of the unions and super funds get is backed up by the Commonwealth budget, because the Commonwealth budget is engineered to support their vested interests.

Unfortunately, the people paying the price for Labor's inability to say no are the mortgage holders. Around one-third of Australians have got a mortgage, and these people are paying the price. We are not headed in the right direction here. It's all about the trajectory. If the budget position were contractionary, then you could imagine that the Reserve Bank would be able to stop what it's doing. But I believe that, sadly, the Reserve Bank is going to be forced to continue to increase rates because the Commonwealth government is sticking more and more money into the economy because it can't say no to the unions and all the other bloodsuckers and rent-seekers that are part of the modern Australian Labor Party's movement. The reality is that we are stuck with having stubbornly high inflation. While our competitors around the world are able to manage inflation, we are stuck in the lane of having persistently high inflation, which is going to hurt all mortgage holders in Australia.

Jess Walsh (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

We know that Australian households and businesses are doing it tough right now. Whether it's global cuts to oil production, the war in Ukraine or the conflict in the Middle East, the challenges coming at us from around the world are being felt around the kitchen tables of hardworking Australians.

That is why addressing inflation is the centrepiece of our economic policy. We are making responsible economic decisions while targeting spending at those Australians who need it most. We're making the responsible decision to reorient the budget from wasteful spending to productive spending; we're making the responsible decision to bank the first surplus in 15 years, returning revenues to the budget bottom line; and we've made the responsible decision to have infrastructure spending independently reviewed so that we can ensure that infrastructure is deliverable, provides value for money and is targeted at those projects that Australians need.

You don't have to take my word for it, and you don't have to take the word of anyone on this side of the chamber about this, because the International Monetary Fund has backed the Albanese government's responsible budget management and highlighted our policies to address cost-of-living pressures. The IMF have concluded independently that fiscal and monetary policy are working together to address inflationary pressures. Michele Bullock, recently appointed Governor of the Reserve Bank, said the same. Indeed, it feels like I was at a different round of Senate estimates hearings to the one my colleague the deputy chair of the Senate economics committee was at. That's because Governor Bullock was asked by Senator Hume at estimates two weeks ago what more government could be doing in fiscal policy, and these were the words Governor Bullock responded with:

I actually think that what they're doing at the moment is good.

When Senator Hume asked if it was 'enough', the governor responded that indeed it was enough and that the decision to bank revenue and not spend it was very positive and, in fact, helpful. I'll repeat those words from Governor Bullock:

I actually think that what they're doing at the moment is good.

The causes of inflation are well known at household tables around the country: war and, most recently, petrol prices and broken supply chains, which have been caused in no small part by a wasted decade from those opposite, who decided to throw manufacturing off a cliff and stop making things here instead of backing it in and investing in it. That's why we haven't wasted a day in investing in rebuilding Australian manufacturing by investing in the National Reconstruction Fund and in training and skills to address skills shortages across the economy. As the Treasurer said on budget night, our task was to restrain spending to check inflation while doing our best to help people struggling to make ends meet. Our cost-of-living package was targeted to do just that, being a comprehensive plan that's delivering around $23 billion of support targeted to where it's needed most, from electricity bill relief to cheaper child care, rent assistance, Medicare bulk-billing, cheaper medicines, income support payments, fee-free TAFE, more affordable homes, expanding paid parental leave and getting wages moving again. Just this month, we've tripled bulk-billing incentives to support 11.6 million eligible Australians, including children, pensioners and other concession card holders, to access a GP with no out-of-pocket costs. We know that the relief is working. ABS data shows that, without our energy rebates, prices in the September quarter would have been 14 per cent higher. The cost of child care has come down in the same quarter and, without our efforts, would have risen by 6.7 per cent.

Whether it's the RBA governor, the Treasury secretary, the ABS or the IMF, they all point to economic policy helping to drive down inflation. We are taking a strong and measured approach, we are getting the budget back on track, we are returning revenues to the bottom line and we're targeting much-needed cost-of-living relief to those who need it the most. The experts tell us that it is working. Our economic plan is delivering. So we will continue to invest sustainably in the future and provide the sensible economic management that the country needs.

Tammy Tyrrell (Tasmania, Jacqui Lambie Network) Share this | Link to this | Hansard source

Rising interest rates are a new hit on top of an already painful situation. The basics—water, power, home loans and groceries—are all on the up, squeezing household budgets to the brink, and, for those on Centrelink, all your choices are hard choices. The government needs to be clever about saving where it can while also easing the cost of living. It needs cheap ways to help people pay their bills. Here's a tip for immediate action: stop taxing JobSeeker payments. These Centrelink payments tick up a bit every so often due to indexing, but they're still taxed as income. Previously this wasn't an issue because a year on JobSeeker didn't push you over the tax-free threshold, but the tax-free limit isn't indexed like payments are, so for over a decade these tiny increases have nudged the base rate of JobSeeker up and up.

What's the result? A single renter on JobSeeker will lose the equivalent of two weeks of payment to income tax this financial year. They'll have to navigate the maze of a tax return, and the government will have to chase them up if they don't. There are costs there for both parties in time, energy and cash. You won't find many people excited about paying an accountant out of their JobSeeker money. This isn't going to raise a lot of money from any one person, but, for any one person being hit by it, it's devastating. Ask those making far less than the 99 per cent of the nation how they feel about losing nearly a thousand dollars due to nonsensical policy. And that's what this is; it's a policy misstep that hits the poorest, making them even poorer over a sum that the government wouldn't bother to bend over to pick up from the floor. The government could take a bit of heat out of the cost-of-living crisis for hundreds of thousands of the poorest Australians with a simple fix. If pensions aren't taxed, why is JobSeeker?

Hollie Hughes (NSW, Liberal Party, Shadow Assistant Minister for Climate Change and Energy) Share this | Link to this | Hansard source

It seems extraordinary to me, with the pain that families are experiencing at the moment, that members of the government, those opposite, are continuing to get up and tell us how great everything's going. Nothing's their fault, obviously! We know they have absolutely no sense of propriety or honesty when it comes to looking in the mirror, but, according to them, everything's going great—it's all going great guns. Their economic plan's fantastic. Everything's working well. Everyone's cheering them on. Why don't you just tell Australians that they just should shut up and stop whinging because they've got it so great under the Albanese government? It is just extraordinary that this government is continuing to cause so much pain through its ideologically driven agenda. It spends taxpayers' money like it is going out of fashion, with no transparency and no detail.

We heard Senator Farrell today say that they're going to be in government for a really, really long time. And I can tell you that that sent a shiver up the spine of millions of Australians, because I think the 32 per cent of Australians who voted to put this government in may be starting to get a little bit of buyer's remorse. It is just unbelievable to come in here and consistently say, 'We're doing fantastic job tackling inflation. We're doing a fantastic job,' and say, on childcare fees, 'They're saving so much money.' But you obviously don't read any papers or go and talk to anyone, because you'll hear from those that utilise child care—and that's not every Australian—that what your rebate increase did was actually push fees up. The centres pocket the rebate, and families are paying either the same or more. This has not really delivered very much for many families at all.

We just heard from Senator Walsh about the energy prices and that the energy prices could have been up 14 per cent higher—not just the fact that they already are up by at least 13 per cent, if not more when you come to gas. The fact is that their argument is, 'We know it's up, but it could have been up by more.' This energy relief that they say was such a great boon for households didn't go to all households. It went to a very small group of households. And it was only a one-off payment. It's actually no solution to the rising power prices. We know that's being partly driven by this race to renewables and that they are going with taxes rather than technology as they race towards an ideological zealotry within the renewable sector, absolutely putting the pain onto Australian families.

This is like a fairy floss party that we're seeing in government at the moment. Everything is a bit of a sugar hit and no substance at all.

The Prime Minister, when he is in the country, has nothing to say about the economy. He is consistently running an ideological agenda with his activist mates and corporate associates. He spent $450 million of Australian taxpayer money on a referendum that the Australian people absolutely said no to. It was clear they would say no but he pushed ahead spending that money on an ideological crusade, instead of doing any work to rein in spending.

Yesterday saw the 12th rate rise since this Labor government came to power. These are the highest rates since 2011, back when they were in power last time. It is funny how that pattern seems to continue. A family with an average mortgage of 750,000 now needs to find an extra $24,000 a year—$24,000 a year! The average monthly mortgage repayment when the coalition left office was $2,670. It is now $3,994. That is an increase of 50 per cent. That is how much Australians are hurting. We know when mortgage holders are hurting, rents go up. The median rent for a three-bedroom house nationally was $340 a week; it is now $665. We know that on the East Coast it is a lot higher than that. One hundred and fifty dollars used to get you quite a few bags of groceries. You'll be lucky to get two now. Families have to make choices, not about whether or not they go on an overseas holiday; they are now having to decide if their kids can continue to do sport. But don't worry, you guys are telling us you are doing everything you can and, apparently, it is all tickety boo in Labor land.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

That will conclude the debate on the matter public important because the time for discussion has expired.