Dave Sharma (NSW, Liberal Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance (Senator Gallagher) to questions without notice asked by Senator Bragg today relating to interest rates.

Senator Gallagher was asked by my colleague Senator Bragg about the level of mortgage stress seen in Australia. Findings in the last few weeks demonstrate just how acute this mortgage stress is. A Finder survey found that 13 per cent of mortgage holders have extended their home loans in the past 12 months in order to lower their repayments. That's 429,000 people across Australia who have extended the term of their home loan, which will lower their monthly repayments but increase the amount of interest they pay over time. Roy Morgan Research from the last quarter shows 1½ million mortgage holders are at risk of mortgage stress—that's some 30 per cent of mortgage holders altogether. Since May 2022, that figure is up by 707,000. It's no wonder. We have seen 12 consecutive interest rate rises under this Labor government. That's four percentage points in interest rate rises. That means that, if you have a mortgage of, say, $750,000, you're paying an extra $30,000 a year in interest alone, which is $2,500 per month.

On top of that, living expenses have gone up drastically. Last week, the inflation figure for the month of May came out and showed that prices are increasing at a four per cent annualised rate in Australia. We are the only advanced economy where inflation is growing at four per cent or above. We saw that the inflation figure has actually accelerated. In the month of April, it was 3.6 per cent. Earlier in the year, it was 3.2 per cent. In the United States inflation is at 3.4 per cent, in the Eurozone it's 2.4 per cent, in Canada it's 2.9 per cent and in the United Kingdom it's two per cent. Australia's inflation is at four per cent and getting higher. We've seen, for instance, over the past two years the prices of food, the stuff you buy at the supermarket to feed your family, go up by 11 per cent. We've seen housing prices go up by 14 per cent. We've seen rent go up by 14 per cent. And we've seen the price of electricity go up by almost 22 per cent. We've seen the price of gas go up by 22 per cent.

If you couple the increased cost of life's basics with increased mortgage repayments, it's little wonder that Australians are feeling worse off. And they're not wrong to feel that. If you look at the figures, real net disposable income per person—which is really the best measure of how well off you're feeling—has fallen by almost nine per cent over the past 18 months. Real living standards in Australia are effectively back to where they were in 2017. If you're an average full-time earner on $95,000 a year, you've seen your real disposable income fall by $8,000 per year, or about $150 per week.

Householders are being hit by a triple whammy. They're being hit by higher interest repayments. And, as we've seen, the Reserve Bank are now concerned that the next move in interest rates might be up. People are being hit by higher personal income taxes, because high inflation is pushing them into higher income tax brackets, meaning that they're paying more tax but their living standards have not improved. And they're paying more for life's basics.

This week we've heard a lot of crowing, really, from those opposite about how much better off Australians are going to be—indeed how thankful Australians should be—because of these tax cuts they're getting and because of electricity bill relief. Well, if you're on $95,000 a year, the tax cut you'll get from these amended stage 3 tax cuts is about $2,000 a year, or $40 per week. As an electricity rebate you'll get about $300 per household, spread over the course of a year. But, as I said before, we've seen real disposable income for an average full-time earner fall by $8,000, or $150 a week. So, the government is giving you back a very small amount of what they've taken from you in a higher tax take by pushing you up into a higher income tax bracket and what you're paying in terms of higher interest repayments and what you're paying out of your pocket for life's essentials.

The RBA's minutes from their last board meeting were released earlier today, and they said that if inflation expectations were to rise materially it would require significantly higher rates to bring inflation back to target. Well, since that Reserve Bank board meeting we have seen inflation expectations rise materially. We've seen a monthly inflation figure of four per cent, which is significantly higher than the markets expected, significantly higher than last month's figure and significantly higher than in advanced economies around the world. You would now have to think that government's fiscal policy is only making the Reserve Bank's job harder and making it more likely that they will have to raise interest rates.

Jana Stewart (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

We know on this side of the chamber that household budgets are under real pressure and real strain right now. We know that, broadly speaking, cost of living is front of mind for lots of Australians. That is why it is our No. 1 focus, too, as the Albanese Labor government. Australians and certainly the people in my home state of Victoria are concerned about the cost of living. They're concerned about their ability to keep a roof over their heads and put food on the table. We know that these cost-of-living pressures are felt right around the country. That's why on this side of the chamber we believe in supporting all Australians, not just some. That's why we're supporting hardworking Australians to earn more and to keep more of what they earn. As of yesterday, all 13.6 million Australian taxpayers have received a tax cut, thanks to the Albanese Labor government, and I will come back to that a little later.

There are a number of things that go to reducing the pressure on household budgets right now. We are providing energy bill relief, with $300 credited towards household energy bills over the next year and an additional $325 for small businesses. We are freezing the cost of PBS medicines for every Australian. We have supported a third consecutive pay rise for 2.6 million workers. We've supported funding to build more homes in every part of this country. We are working to deliver a future made in Australia. The list goes on. Labor is supporting Australians with cheaper child care, fee-free TAFE and—in the biggest ever investment—the expansion of bulk-billing as of 1 July. Families can also access an extra two weeks of paid parental leave as of 1 July. All of this is part of our longer-term economic plan: helping Australians right now, working to bring inflation down and supporting women's economic participation.

I said I would come back to tax cuts. As of yesterday, the average Australian, earning $73,000 a year, got a tax cut of $1,504. That is $804 more than under Scott Morrison's plan. These tax cuts will ensure that hardworking Australians earn more and keep more of what they earn. We know that tax time can be stressful and complicated, and we know that folks are busy juggling multiple things at any one time. So, we've automatically applied the tax cuts so that Australians don't need to take any action. You will just get extra pay, thanks to the tax cuts. That's what the Albanese Labor government believes in. We believe in supporting Australians and in making life better for everyone.

That is especially true for Australian women. We know that our cuts support women, who are overrepresented in the low- and middle-income tax brackets. Our tax cuts will help women keep more of their hard-earned money. All 6½ million women taxpayers in Australia are receiving a tax cut this year. The average tax cut for women will be around $1,650. That is $1,650 of hard-earned money that women taxpayers can now keep in their pockets. We know that 90 per cent of women taxpayers will receive a bigger tax cut this year than they would have under Scott Morrison's plan. It comes as absolutely no surprise to anyone that almost every woman in Australia is better off under an Albanese Labor government. It's clear from our budget that women are absolutely a priority for our government, whereas those opposite have neglected and underinvested in women.

We also support younger Australians. Our tax cuts are supporting young people to thrive. Young Australians are doing it tough, and we're committed to helping them. All 1½ million Australians aged between 18 and 24 received a tax cut yesterday, with an average of $1,007.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

It was seven weeks ago, to the day, that the Labor Party and Jim Chalmers delivered a budget. Their budget was based on the premise that inflation would be less than three per cent by Christmas. That's the promise they gave to the Australian people. In seven weeks, the entire premise of the government's budget has effectively been blown out of the water; it's past its use-by date. This year's budget has lasted about the same amount of time as a bottle of two-litre milk on the shelf; it's now stale and out of date. It's clearly not fit for purpose for the economic conditions that we face right now.

The government were delivering a budget banking on inflation trending down. That's the advice they say they got from the Treasury. The government were shocked by the inflation figures that came out a couple of weeks ago. The whole premise of the budget—the state of the spending in our budget—has been proven to be totally wrong and not appropriate for the massive economic battle that every Australian family is facing right now. All Australian families are on the front line, struggling to put their budgets together. It's tough to plan what they can spend and what they can scrimp on to make sure ends meet. They have to make changes. Sometimes they have to make changes every month, when interest rates go up and when the electricity bill is higher than expected. Then there are the grocery bills. It's amazing these days when you go to the shops and you look at your trolley and you look back at the register and have no idea how it is costing that much. But it is and so people have to make changes.

I think now the government really has to make changes. They have made the decisions on a $500 billion budget. It's a much bigger budget than that of the average mum and dad. They are spending $500-odd billion a year of your money, and they got it wrong. They should now adjust that budget. They should issue a new budget. They shouldn't go home for six weeks. We're about to go on a break from parliament, but they shouldn't go on holiday. The government need to work harder now because they got it so wrong and they need to redesign the entire budget. It is only making things worse for the Australian people.

Seven weeks ago, the government made big hay of the fact that they were going to give us all $300 of your money. That's $300 they raised by taxing you and they'll give it back to you over the year through electricity rebates. They wanted a big pat on the back for giving people some of their own money back. To put this $300 in context, if interest rates go up in August, as the market now expects, if the Reserve Bank lift interest rates in about a month's time, then the average Australian mortgagee will be facing an increase in their repayments of $1,000 a year. The government made big hay of giving people this $300, but, if the interest rates go up 25 basis points—they've gone up 12 times in the life of this government and they may go up another tick—there's $1,000 again the same families will have to find. That $300 rebate won't mean that much at all. The reason for that increase, if interest rates do go up, the government has to take responsibility for. It's because they have let spending get out of control. They keep saying they deliver surpluses. But the surpluses are because of the mining sector and the massive boom we've had there. It's nothing to do with them.

You can go to a table in the budget. On about page 90 of every budget there's a table which outlines what the government has done what effect the government's decisions have had on the budget. In this year's budget, they increased spending. Their decisions increased spending by more than $20 billion. Last year it was exactly the same—more than $20 billion. Those two budgets together, the first two full Labor government budgets, have been the biggest spending budgets on this metric, outside of COVID, since the days of Kevin Rudd and the global financial crisis. That's the decision they made. They pumped in an extra $40 billion through our nation's economy while it was overheating. At least Kevin Rudd had the excuse of the global financial crisis. Spending some money made some sense. He went too far and for too long, but it was in the right direction. This is the complete opposite direction. We've been saying for over a year now, since their budget last year, that they were adding fuel to inflation fire. Now those fires are raging out of control in this country in a way that no other developed country is having to experience. As my friend Senator Sharma said earlier, in Europe and North America their inflation rates are much lower than ours and trending down. We're going in the opposite direction because of this government.

I would say the government really needs to not have a break. It needs to keep working and a bit harder because Australians are having to work very hard to pay for the economic mistakes of this government.

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

We recognise that Australians are under pressure right now. But, more than that, we're actually doing something about it. That's why we are helping all Australians with the cost of living. From 1 July, we are delivering a tax cut for every Australian—not just some, not like what was proposed from over on the other side. It's for every Australian. We are delivering $300 energy bill relief for every Australian household and $325 for eligible small businesses. We are putting a freeze on the cost of PBS medicines for every Australian. Every Australian who has a Medicare card will get a PBS freeze on their medication for 12 months. For pensioners and concession card holders, that will apply for five years. So $7.70 will be the cost of the medicine for five years. That is a huge assistance for people who we recognise are doing it tough out there right now.

We are also delivering a third consecutive pay rise for 2.6 million workers. We know those on the other side don't like workers. Their DNA is to keep wages down. We know that. We've heard it. It's part of their economic plan. But ours is to try to lift people up and recognise that they are doing great work out there. We're providing more funding to build more homes in every part of the country. In relation to the tax cuts, I want to recognise that there are over 45,000 taxpayers in my duty seat of Braddon who will get a cut from 1 July. From yesterday, 45,000 taxpayers in the seat of Braddon in Tasmania will get a tax cut, and about 48,000 residents in my duty seat of Braddon will be beneficiaries of PBS medicines. We are delivering cost-of-living relief in many ways.

If we're talking about the tax cuts, I can say that miners will get an average tax cut of $3,729 a year. That's $72 a week. Construction workers will get an average tax cut of $1,879, or $36 a week. If you're a healthcare worker—these are the people who look after us when we are unwell and need help—you'll get an average tax cut of $1,354, or $26 a week. Again, it doesn't matter where you live or who you are, you will get a tax cut under the Albanese Labor government. As I said, that comes on top of all the other relief that we're providing.

But those opposite aren't happy, are they? They're not happy that the government gave every Australian a tax cut, not just those on the highest of high incomes. That's what they wanted to do. They have said they would absolutely roll these back. In fact, today Mr Angus Taylor, who is in the other place, described our cost-of-living relief as handouts that are ultimately going to make it worse. Honestly, handouts? We are assisting people. He has let the cat out of the bag. He has confirmed that the coalition oppose all of the cost-of-living relief that's being rolled out this week to try to help Australians.

They don't not want every Australian to get a tax cut. They don't want every household to get energy bill relief. They don't want millions—literally millions—of Australians, among many of whom are pensioners and people on healthcare cards, to get cheaper medicine. Why wouldn't you want that? Why wouldn't you want to help people and give them a hand up? But, no, they don't want to do that. What about extra paid parental leave? Why wouldn't you want to give that to people to encourage them to get back into work? We're doing all of that around making things here in Australia, our Future Made in Australia policy. All of these budget measures are part of a longer-term economic plan that is helping Australians right now. But it is a longer-term economic plan. It's working to bring down inflation and it's planning that future made in Australia.

Those on the other side push manufacturing and 'made in Australia' out the door, overseas, on a boat—ta-ta, see you later! But, no.

Jana Stewart (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Shame!

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Yes, shame on them, Senator Stewart. But, no, what we are doing is investing in Australians right here, in a future made in Australia, to provide jobs for our kids and our grandkids so that they have some security in their future.

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

For foie gras.