Simon Birmingham (SA, Liberal Party, Shadow Minister for Foreign Affairs) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. In question time on 15 May this year the minister said that we will reach an inflation rate with a '2' in front of it through the year. Minister, do you still believe that you will reach an inflation rate with a '2' in front of it through this year?

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

I thank Senator Birmingham for the question. In that answer on 15 May I was reflecting the Treasury forecasts which are contained in the budget. That is the Treasury advice to government on their expectations around inflation. So my comments, as I relayed them on 15 May, are accurate. And I would say that while the monthly CPI figures move around from time to time and don't necessarily measure the same things, we do have inflation at about half of its peak and certainly significantly lower than what we inherited when we came to government, and that is a welcome outcome. We are pleased with that, but it is still too high, and we want it to come down lower, which is why our calibrated and carefully thought-through budget, which has those measures that put downward pressure on inflation whilst also supporting households, is an important part of our plan.

The other part of our plan, obviously, and as I've talked about, is delivering a surplus—a second surplus—which is something those opposite were unable to deliver. We've delivered one surplus. We're tracking for a second surplus. The savings that we have found—none of that was delivered in the last budget of the former government, where I think there was $40 billion worth of spending and not a cent in savings, at a point when inflation was higher than it is now. So, we are making good progress. There is more work to be done. We recognise that people are under the pump, that households are under the pump. Hence our sensible cost-of-living relief, some of which comes in on 1 July. How many days away is that? It is four days away. That will assist families with some of those pressures.

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

Senator Birmingham, first supplementary.

Simon Birmingham (SA, Liberal Party, Shadow Minister for Foreign Affairs) Share this | Link to this | Hansard source

Minister, yesterday you stated that 'the RBA forecast and the Treasury forecast are very similar'. Treasury has forecast an inflation rate of 3½ per cent for the June quarter. The RBA has forecast a different figure, at 3.8 per cent for the June quarter. And of course inflation for the month of May is running at four per cent above both those forecasts. Is inflation still on track to reach the RBA's target band by 2025, or not?

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

The RBA are responsible for their inflation forecasts, and the inflation forecasts that they released in May 2024 were, from memory, a week before the budget was handed down. The Treasury forecasts had the benefit of the measures that had been agreed by the government in terms of formulating the measure. Outside of that, the forecasts between the RBA and the Treasury are, as I said, quite similar. And I think all of us in this place should be working to make sure inflation comes back to band as soon as possible, because that impacts households.

Those opposite have not come up with one idea of something they would not spend on in this budget that would have an impact, certainly in the next financial year, whilst they criticise it. So, you can go out and criticise everything the government is doing, but you haven't come up with one suggestion or one plan about how that might be achieved. (Time expired)

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

Senator Birmingham, second supplementary.

Simon Birmingham (SA, Liberal Party, Shadow Minister for Foreign Affairs) Share this | Link to this | Hansard source

Minister, this morning you said that there's no doubt that those 13 interest rate increases have really hit households. Minister, Australian markets are now pricing in a 78 per cent chance of another 0.25 per cent rate hike by November this year. How hard do you think a 14th rate rise will hit already-struggling Australian households?

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

The comment that I made this morning was accurate. We see in the consumption data, in retail trade and in a range of the other economic datasets the impact that those interest rate increases are having on households. I would say that inflation now is significantly less than it was when we came to government. Let's remember when the interest rate increases commenced: they commenced under you, Senator Birmingham. That is the economic impact.

Jonathon Duniam (Tasmania, Liberal Party, Shadow Minister for Environment, Fisheries and Forestry) Share this | Link to this | Hansard source

Oh, okay—it's all our fault!

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

No, I am merely pointing out the facts: when the RBA started their interest rate increases, it was happening in an environment where inflation was higher and you were in charge. We have managed to bring that inflation down. We want it to come down further, but we have done the hard work, through our fiscal policy and other measures, to make sure that is the case.