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

My question is to the Minister representing the Treasurer, Senator Gallagher. On Tuesday, in response to a question from Senator McGrath, you said that in many countries inflation peaked higher than it did in Australia. You went on to say, 'So, it would make sense that our return to inflation to a target range will be later than in those other countries.' Minister, why is inflation staying higher for longer in Australia than in countries where it hit an even higher peak?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

The point I made earlier in the week is the correct point—that the inflation challenge arrived in this country later than it did in similar economies around the world. Obviously when your inflation challenge is going along the trajectory that we have seen in this country it will take time to come down. That's what we've seen in other countries as well. That is what happens. In many of those countries it peaked higher than it peaked here, and it is tapering off now, as it is here in Australia.

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

No it's not; it's getting worse!

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Well, I'm sorry if you don't accept the data, but that is what the data shows. The government has the responsibility to deal with this inflation challenge that we inherited from the failure of your government to make the necessary investments, particularly in the productive side of the economy and also in areas like the energy transition, and others, which you failed to address. We are now addressing it, and we are ensuring that the decisions we take don't add to the inflation challenge in the economy. That has been supported—as much as you don't like to admit it—by the new Reserve Bank governor, by the Treasury secretary and by the ABS in the data that they have provided on the monthly inflation figures, where we've seen that the decisions that this government took to put downward pressure on inflation, despite your opposition to it, have actually taken half a per cent off CPI. That is the result of the decisions that the government have taken, and we're doing that, we're repairing the budget and we're investing in the productive side of the economy—dealing with housing, skills and the energy transition all at same time.

Sue Lines (President) Share this | Link to this | Hansard source

Senator Smith, a first supplementary?

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

Speaking of governors of the Reserve Bank, the former governor of the Reserve Bank, Mr Lowe, told Senate estimates:

All the evidence is that if inflation stays high for too long, expectations adjust and that ultimately leads to higher interest rates and more unemployment.

Minister, with even the government admitting that inflation is now staying higher for longer in Australia, are you failing the former RBA governor's test, with Australians now having to endure higher interest rates and risking more unemployment?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Thank you. The language I used—and it seems to have confused those opposite—is language that I've used for some time in this place, and, indeed, for the Treasurer. I would draw your attention to the RBA's recent Statement on monetary policy, where they have updated their forecast on CPI. They remain largely in line with the forecasts that we released as part of our budget in May. And I know it really kills those opposite, but we have words from the new Reserve Bank governor saying that the decisions that we are taking are good and enough in terms of our fiscal strategy. Yes, I know you didn't like that at estimates, but that is what they said. We've got the Treasury secretary's evidence, and we have got the evidence coming directly out of the ABS.

Sue Lines (President) Share this | Link to this | Hansard source

Senator Smith, a second supplementary?

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

The Economist has published data showing that inflation in Australia was more entrenched than in the United Kingdom, Germany, Canada, the United States, France, Italy, Spain, South Korea and Japan. OECD data shows that real household income has fallen faster in Australia over the last year of the Labor government than in any other advanced economy. (Time expired)

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

The government has a plan; you just choose to ignore it. You just choose to ignore it and oppose it at the same time and then criticise us. That's your plan—ignore, oppose and criticise. Meanwhile, we're rolling out cost-of-living relief, getting the budget in much better shape and investing in energy, skills and housing. Indeed, you quote from the Economist; how about I quote from the IMF:

The Government has saved the bulk of the recent revenue windfalls, indicating a desire to maintain a fiscal stance supportive of reducing inflation and pursue prudent fiscal policies.

Did you see that? You just put that in the outbox, didn't you? Better not use that; that's not useful! We've got a plan, we're rolling out the plan and the plan is working. The ABS data shows just how our plan is working in relation to child-care costs, in relation to electricity— (Time expired)