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

My question is to the Minister representing the Treasurer, Senator Gallaher. Minister, despite both your own and the Treasurer's attempts to blame the shocking national accounts figures on interest rates, independent analysis from the RBA and market economists has revealed those claims to be false. ABS data shows that inflation wiped out 4.4 percentage points of household income gains last financial year compared to higher interest rates, eroding 1.3 per cent, and increased taxes, reducing real income by a further 1.1 per cent. That's according to analysis by former RBA economist Jonathan Kearns, who said, 'The erosion by inflation is greater than that of interest rates.' Minister, will you correct the record for the Treasurer and acknowledge that inflation and higher taxes are eroding household incomes by three times as much as interest rates?

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

I thank Senator Sharma for the question. I think the Treasurer and I have both made very clear the fact that we inherited an inflation number with a six in front of it when we came to government, and that has moderated in welcome ways to have a three in front of it now. I'm sure Senator Sharma would have been most concerned about the escalating inflation challenge that we inherited and that we have actually responded to through our economic plan. Our economic plan is around moderating inflation, ensuring that we can provide some cost-of-living relief to households without adding to the inflation challenge and ensuring that we're getting the budget in much better shape. The Reserve Bank has made it clear that the two surpluses that we are delivering—one that we've already delivered and one soon to be finalised—are actually helping with the inflation challenge in the economy. I don't think there is anything surprising in the sense that we have outlined that price pressures across the world, inflation, global uncertainty and interest rates are being reflected in the national accounts. You can choose to selectively single out one element of what we've said, but we have said price pressures, global uncertainty and interest rates are being reflected in the national accounts. And, if it wasn't for our economic plan, whilst all of those opposite called to cut spending and slash and burn at budget time, we would have seen a much different set of results and that would have seen our economy in recession. The only people in the country that seem to want a recession are those opposite.

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

Senator Sharma, first supplementary?

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

Minister, to use your own words from Monday, the national accounts showed that growth across the Australian economy is slow, weak and soft, and it is no secret that growth is weak because interest rates have been lifted. Minister, while you seek to blame interest rates, what role has the 6.3 per cent collapse in productivity under Labor had in the economy?

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

It shouldn't actually be a surprise to me that the opposition come in here and raise all these concerns about inflation, when it's currently got a three in front of it and, when they were in charge, it had a six in front of it. On productivity, the fact is that we saw the worst productivity outcomes in more than four decades under their government.

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

Order! Senator Birmingham, I've called you.

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

As I said on Monday, I would look forward to support from the opposition for things like digital ID, for things like Jobs and Skills Australia and for other measures, like the Future Made in Australia, or like all of the effort that we are putting in. That's like our housing programs, skills, training and the Universities Accord, all targeted to a long-term growth plan for this country and all things that those opposite have either shown no interest in or opposed.

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

Senator Sharma, second supplementary?

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

Minister, when the ABS released monthly economic data in August, you proudly claimed the figures were evidence that 'our economic plan is working'. With the latest national accounts figures showing that productivity has plummeted, disposable income has crashed and the economy is in an entrenched household recession, will you repeat the claim that your economic plan is working?

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

Our economic plan is supporting economic growth in the Australian economy.

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

Not much!

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

'Not much.' So there's an acknowledgement there, by Senator Birmingham, that our economic plan is supporting economic growth. If you were in charge, with your $315 billion worth of cuts, we would be in a recession. And while it might be politically convenient for you to lobby for that and to argue for it, it would be a disaster for millions and millions of families around this country.

We would prefer our plan, which is about avoiding recession rather cleaning up afterwards, which is something that you seem to be advocating for. In policies outlined by the federal opposition, policies that you have put forward, there is $315 billion of cuts to budget spending. There has been an acknowledgement today by the Leader of the Opposition in the Senate that our plan is supporting growth in the economy.