Jim Chalmers on that same question:
This is a long-term challenge, as you know, and it needs long-term policy and long-term planning and shouldn’t make your policy based on kind of near-term spikes in prices. We all recognise at least the major parties recognise, that there will be a mix of energy sources and that that mix will change over time.
And it’s not just the Labor Party saying that energy costs will come down if we introduce a cleaner and cheaper energy into the system.
The investment community has been saying that for some time to their credit.
The peak business organisations have been saying that to their great credit. The contribution they have made to this conversation.
Now, getting cleaner and cheaper energy into the system is Australia’s biggest opportunity over the next decade or two and I think Australians are angry that we have been stuffing around with this for a decade now. All of this uncertainty created by a Government where some of the members say that net zero is rubbish and other members say that net zero is locked in, depending on where they are in the country, whether they’re in Kooyong or Capricornia, OK.
There’s a cost to that. There’s a cost to that to our economy and one of the reasons why we need a Labor Government and a key part of a better future for this country is to finally get on with the job of grabbing this incredible opportunity that we have, probably the most important opportunity that we have as a country and as an economy is to grab this thing, because if we get that cleaner and cheaper energy, we will unlock tens of billions of dollars in investment.
We will create hundreds of thousands of jobs and we’ll make energy cheaper, all the way from pensioners to working families to businesses as well. If we miss this opportunity, we should hang our heads in shame, but that’s what’s been happening. This opportunity has been going begging and it’s not good enough, it needs to change and it will change if there’s a Labor Government.
Q: Both of you claim to be able to control power prices. The Government says you’re responsible for bringing the prices down, the Labor Party says you can bring them down further. Wholesale power prices are on the march and they’re on the march because the Brice of coal is on the march. Can you both explain why that will not be the case in the future that that will continue to set the price of power in the marketplace and as wholesale power prices go up, so will retail power prices?
Josh Frydenberg:
So commodity prices have gone up and coal is one of these and that’s largely out of what has been happening in the Ukraine and it’s the expectation of treasury that those prices would start to normalise over time and that would play through to the energy system.
I do point out that electricity prices for households are down by about 8% in the last two years under the Coalition and for small businesses down about 10% and they doubled under the Labor Party.
The key here is to get the transition right and that is particularly important as we move to net zero emissions.
I used to be the energy and the environment minister and I’ve got the scars to show it. You got to get right is that transition to more intermittent sources of energy. I saw when Hazelwood was closed.
It was a dirty coal-fired brown coal source. Victoria went overnight from being a net energy exporter to being a net energy importer at times of peak demand. But they saw a spike in the wholesale price of about 80% at the time.
And I remember getting calls into our office and indeed other offices from pensioners who couldn’t afford the heating and they would have to sleep in bed with extra layers of clothes and extra blankets and the same pensioners were sweltering in the summer and couldn’t afford their cooling.
So the point here is that unless you get that transition right, the cost to both households, particularly the most disadvantaged members of our community who spend a higher proportion of their income, their disposal income, on electricity, and businesses which are hugely price-sensitive to energy input costs, like glass, like manufacturers of paper, steel, and other manufacturing goods, are all hypersensitive to getting electricity prices down.
So our focus is about a proper transition, ensuring dispatchable power like gas, bringing in more renewables into the system, having back-up storage like pumped hydro and Snowy 2.0, all of which hopefully will smooth that transition because inevitable we’re moving to a smaller carbon footprint.
That’s a good thing for the environment but also over time a good thing for the economy.
Q: A question to you both – can you tell us what you expect the annual cost of Medicare, aged care and the NDIS to be in 10 years’ time? And how you each believe the growing demand for these services should be paid for? And either of you prepared to have an honest conversation with the Australian people about this looming challenge for the country?
Josh Frydenberg:
Well, we have set out the forward costs in the IGR and in the case of all of those areas, they’re going to continue to grow up because we have got an ageing population and we’re also spending heavily in another key area which is disability support.
So the expectation is that while the NDIS today is about 1.2% of GDP, that’s going to go up to about 1.5% in the coming years as set out by the IGR.
We’re going to have to pay for all those services including hospitals, disability support, increased mental health support, and education. And the way to do that is to grow our economy and that is why I do defend the spending in productivity enhancing areas.
I do defend our record where we have created more jobs so that nearly 2 million more people are in work today than at the start of the – of when we came to Government. The way we’re seeing an improvement in the budget bottom line is actually moving people from welfare to work.
That’s how you improve the bottom line, that’s how you grow the economy, that’s how you pay for those increased expenditures and social services.
(IGR is the intergenerational report)
Jim Chalmers:
Every dollar that gets wasted or rorted in the budget is a dollar that can’t go to some of those fast-growing areas of important public spending.
Medicare is one, NDIS, as Josh said, is another, aged care is another, the defence – defence spending will need to go up as well and we have acknowledged that, too.
And so what we need to be able to do is to flick the switch in the budget not to austerity, but to quality so we can fund the things that we care the most about, including those four things I mentioned a moment ago.
If you take aged care, for a moment, we have got a $2.5 billion commitment in aged care which recognises that people are not getting the care that they need and deserve, they’re not getting the food they need and deserve.
The workers aren’t getting the support that they need and deserve and that’s a meaningful important commitment, a modest commitment, which will make a meaningful difference to people’s lives.
And so as we reorientate the budget away from the rorts and the waste that we have seen for much of the last 10 years towards more meaningful, more productive spending, then, of course, we need to factor in that some of the things we care most about are the things that cost more and more as time goes on.
If you look at the intergenerational report, I think one of the great tragedies, as an economics nerd, one of the great tragedies of the release of the intergenerational report is that it didn’t get the attention that it deserved.
What the IGR said release bid Josh and his department is that unless we change the way we go about things, we’re up for 40 years where the economy is smaller than it’s been for the last 40, we got 40 years of deficits, we got an extraordinary amount of debt with not enough to show for it and that’s why we need to start thinking differently about the budget and we have nominated areas where we can begin that task but the task should be there for whoever wins office in every budget until we can meaningfully pay for these commitments that we make to the Australian people.
Josh Frydenberg on that:
Well, the focus of our spending is creating more jobs and driving up productivity and I think both Jim and I would agree that we need to lift our productivity here in Australia and it’s a global challenge right now.
So the digital transformation – the 10-year $120 billion infrastructure pipeline, you know, Melbourne to Brisbane inland rail, getting food from the paddock to the plate that much faster, a second airport for Western Sydney, Snowy 2.0, a major energy project, they’re all nation-building projects that have begun on our watch and they’re all about driving higher productivity.
So we have also made significant changes to child care including $1.7 billion in last year’s budget which was designed to make it easier for 250,000 families who will save more than $2,000 a year.
So I would defend our spending, we have turned off the emergency support and with respect to taxes, our record is very clear – we are – people are paying lower taxes under us than the Labor Party, and if Jim had his way and introduced $387 billion of taxes at the liar taxes at the last election, the tax-to-GDP raise show would have gone to a record high of 25.9%.
Jim Chalmers:
Josh is fighting the last election again. Look, the point that I would make about this is the quantity of spending in the budget obviously matters a great deal. We pay interest on the debt that the Government has racked up and so it matters.
So you need to get maximum bang for buck. But what matters just as much, if not more, is the quality of that spending.
And if you stack up the record of the Government against the commitments that we have made in this – well, before this election campaign, over the course of the last three years, let me give you a couple of charges. The Government spent at least $5.5 billion of submarines that will never be built.
We think we should invest a little less than that, but around that in child care. But people can work more and earn more if they choose to.
I can go through lots of examples of this. Our spending is responsible, it’s carefully calibrated to deliver an economic dividend, whether it’s productivity, whether it’s participation, whether it’s other forms of economic dividend because the big challenge in the budget, which gets missed in the kind of conversation around the headline figures, is that we’re just not getting value for all of this debt.
And we want to get some value for it and we measure that by the economic dividend. There’s been a lot of waste, there’s been a lot of rorting of the budget over the best part of the last 10 years and by need to do much better than that.
Laura Tingle brings them both back to the question:
Well, neither of you have actually completely answered John’s question. Which was about spending and tax and also reflected what I was saying – we’re now in a different economic environment of rising inflation to one we had certainly in the last 20 years. So the question I’d like both of you to answer is – can you nominate actual discretionary spending cuts in terms of proportion of GDP that you’d be aiming for in the next three years? And with respect, Jim Chalmers, $3 billion is big – you know, a big deal in a trillion dollar… 3 trillion [Chalmers: It’s $3bn more than they have offered]… . And Treasurer you haven’t answered the question the fact that you really haven’t engaged in any serious discretionary spending cuts either. What is the task that we have to face and the taxpayers have a right to know about in the next three years?
‘Enough of this rubbish about tax’
Jim Chalmers has been waiting for this moment:
Well, the Treasurer has just lied to you. In every way that you measure tax in the budget, this Government has taxed more than the last Labor Government, that’s just a fact.
They have taxed more in total, they have taxed more as a share of GDP, they have taxed more per person and they have taxed more adjusted for inflation.
So that’s a lie. And we need to call it out when we see it. It’s one of those big furphies that gets dragged out in election campaigns in particular.
This tax cap that Josh talks about – 23.9%.
In the history of this nation, that tax cap has been breached four times. Every single time was a Liberal Government. Every single time.
No Labor Government has – got anywhere near breaching the current tax-to-GDP cap. There’s have some facts about this on the table.
This Government is the second highest taxing Government of the last 30 years and the highest taxing was John Howard’s.
So enough of this rubbish about tax.
Now, John’s question about how do we start to take seriously this fiscal challenge we have in the context of high and rising inflation? That is a key challenge that either of us will face, no matter who wakes up as the Treasurer on 22 May, it is a key challenge.
And we have already put on the table two ways that we think we can start to make a meaningful difference. John, you ask about discretionary spending cuts – we have announced $3 billion in trimming a budget which has gotten out of control when it comes to outsourcing, and labour hire and contractors and consultants in the public service.
And we have said that there is something that can be done responsibly, modestly, carefully, to change the way that we tax multi-nationals so they pay their fair share of tax. Josh has said before he supports that.
So I don’t know why all of a sudden he says he opposes it. We need to take this seriously. The budget’s got a trillion dollars in debt with not enough to show for it. Only one side in this election is being up-front with people about the task ahead.
Q: We have an inflation issue in this country now that’s been misjudged by the Treasury, the Reserve Bank, the budget forecast inflation at just 4.25% peacekeeping. The RBA says it’s now going to peak at 6%. So my question is to both of you, the budget tipped an extra $39 billion of discretionary spending into the economy at the time we already got inflationary pressures already. More commitments being made during the election. Labor is also pretty much matched most of the Government’s commitments and has some of its own spending priorities too. Are either of you prepared to make discretionary spending cuts or tax rises to help take pressure off the RBA on inflation and lifting interest rates? Or is this just a job for the RBA to keep lifting interest rates as high as they need without help from fiscal policy?
Josh Frydenberg:
Our plans have been set out in the budget and have been announced subsequent to the budget. Treasury was asked at budget estimates whether the announcements we made to ease the cost of living would have a material impact on inflation and they said, “No.”
And then if you look at the statement which no doubt you would have looked at the statement from the Reserve Bank yesterday, they were very clear – in their words, these are not mine, the main driver of inflation has been international factors.
And you had Moody’s come out yesterday and criticise the Labor Party for trying to politicise the cash rate increase. You see, Jim, can’t have it both ways.
He was criticising the Coalition when interest rates fell and yesterday he was criticising the Coalition when interest rates rose. And Moody’s called him out just yesterday in a statement which is very unusual.
And so the point here is it’s been the COVID pandemic and it’s been the war in Ukraine which have been the main drivers of the inflation. Now, importantly you raised the notion of higher taxes. Other countries in the world, like the UK and the US, have lifted taxes through the pandemic. We have not. We have cut taxes by $40 billion for households alone. And we increase that tax relief in the budget. It is a very different approach between us and the Labor Party and the Australian people need to know it. We are prepared of the discipline of a tax-to-GDP cap at 23.9%.
They are not. They took to the last election $387 billion of higher taxes, something that Jim said at the time he was proud and pleased of, yet now they’re trying to hide and not reveal what their true intentions are until they have a budget if successful after the election. That’s not good enough. We know the Labor Party will always tax more, they’ll always spend more, whereas our plans are set out very clearly in the budget.
(The government defended its net zero by 2050 plan, which was released with less than 13 pages, after criticisms it had released a ‘pamphlet’)
Jim Chalmers:
One of the reasons why the Government is maintaining almost exclusively a focus on Anthony and the Labor Party is that they’re hoping they can get all the way to the 21st of May without having taken any responsibility for this cost of living crisis which is punishing people right around Australia. And they have their little slogans about Anthony and about the Labor Party because they can’t defend their record, as I said before, spent more, taxed more, borrowed more and delivered less. And because they’re entirely bereft of a plan for the future. Now the two things you need if you want to pitch up for a fourth term is the ability to defend your record and a plan for the future and they have neither of those things and that’s why we get this pathetic point-scoring about Anthony. Anthony is one of the most experienced candidates for Prime Minister that we have had in Australia. He was in a key economic portfolio of infrastructure and he performed extremely well in it and so I think you can take all of this other rubbish from the Government in that light.
Q: My question is directed at the Treasurer. A lot has been made by the Prime Minister and yourself regarding Anthony Albanese’s lack of economic experience, in particular the economic portfolio and not having done a budget. In fact, you have said it earlier in your speech. Do you accept that many Australian Prime Ministers have been in the same boat including Robert Menzies, Tony Abbott, Bob Hawke, looking elsewhere you got Angela Merkel and you could look to the President of Ukraine being a comedian before he entered politics. Do you accept that they are effective leaders or have been effective leaders? And aren’t you reflecting back on them?
Josh Frydenberg:
Certainly not. What our major concern is with Anthony Albanese is what we have seen to date – which is after three years in opposition, a lack of a detailed economic plan. I mean, Jim put out a 13-page pamphlet and that’s what he calls his economic plan.
Three-quarters of it was sledging the Coalition and then the last few pages was talking about some multi-national taxes that they wanted to introduce which was a rehash of what Bill Shorten had talked about, and the other part of it was to have a review after the election and we know he wants to have a budget after the election if he’s successful, but he won’t tell us beforehand what’s to go into that budget.
The other is some more public servants. So I look at what Anthony Albanese has done with respect to his economic opportunity over the last three years to put an alternative plan and he hasn’t done so.
And so that is what is most damning of him. And he was found out early on in the campaign when he didn’t know what the cash rate was and he didn’t know what the unemployment rate was and as the Prime Minister said, it wasn’t whether a per cent was missing here – you know, 0.5% here or 0.5% there, he was just way off.
And I had said during the budget speech, of course, which was sitting across the table, the unemployment rate today is its equal lowest in 48 years at 4%. And he didn’t know what it was. Now, Jim would have known it because Jim has worked in this portfolio. But at the same time, he is the leader of the Labor Party and the choice is very clear – who is going to lead a Labor Government if they were successful? It would be Anthony Albanese, not Jim Chalmers.
Jim Chalmers:
I don’t think the Chief Minister will let me down for beating me to an Andrew Barr shoutout. I think this is one of the defining issues in the economy. We’re up for a sensible conversation about the optimal migration mix as we emerge from the pandemic.
My colleagues including Kristina Keneally and others have talked about trying to get that balance right between permanent and temporary. I think that is one of the big challenges.
But bringing people in even in sensible ways should never be a substitute for training people for opportunities as well. You know, I agree with something that Josh said – which is inevitably it is a mix between the two things.
Too often I think in the public conversation about skills and migration, people pretend that it’s one or the other and in reality, of course, it’s a mix of both. Now, our issue that we have with the Government is they spend a long time hacking away at training and skills and TAFE in our economy and now all of a sudden, the chickens are coming home to roost.
If you look at the Reserve Bank Governor’s statement yesterday, I thought one of the things that really leapt out at me was the issue that you raise about capacity constraints and skill shortages are probably the defining capacity constraint.
Now, training is a big part of it, we got a policy for fee-free TAFE, more than 400,000 places. That’s part of the story, but also child care is part of the story here. If we want a bigger workforce, we need to make it more attractive and easier for people to earn more and work more if they want to. That’s a story about parents returning to work as well. Our policies are geared towards this challenge specifically. We got inflation running out of control, we got real wages falling, part of that is capacity constraints domestically, not just the international issues that Josh likes to lean on. And so that’s what our policies are all about dealing with.
Q: Capacity constraints in the economy supply side issues are a big part of the rise in inflation and now interest rates. And also a big part of that story, the supply constraint story, is around the labour market – there’s severe labour market shortages. Business want two things – skills and a greater investment in skills, more upskilling for the nation. You both agree on that. They also want a boost to skilled migration. So we can get over the hump in the near term while we skill up the country. Why is neither of the major parties prepared to come to this election with a commitment to increased temporary skilled migration, at least for a temporary – sorry, for permanent skilled migration at least for a temporary basis.
Josh Frydenberg:
You won’t see from us cheap political opportunism when it comes to skilled workers. You will see that from the Labor party and we have seen that from the Labor party.
Those skilled migrants perform an absolutely vital role in our economy, helping to address some of those workforce shortages, whether it’s engineers on mining sites, whether it’s IT programmers in our telecommunications companies or whether it’s people working in our hospitality industry. And since we opened the borders in November, we saw more than 70,000 skilled migrants coming to Australia.
But it’s not just about skilled migrants, it’s also about labour mobility across state borders. And Andrew Barr is in the audience and we worked together around the council of federal financial relations table to get an agreement to occupational licensing changes which stayed in the too-hard basket for more than a decade. And what that will see is more than 150,000 people benefit as they move between states without needing a new licence, paying a new fee, a new qualification. And that’s going to provide more than a billion dollars of lift-off or benefit to the economy more broadly.
And then the third aspect of this – because there’s no silver bullet, but it’s skilled workers, it’s labour mobility and also training up the Australian workforce. And we put aside more than $3.5bn in the budget for 800,000 new training places with a fundamental structural reform to our skilling system, to replace what is known as the Naswad with the states and territories and to use the National Skills Commission front and centre, with more efficient pricing and a better model rather than untied grants to the states.
Our focus is on addressing some of those workforce shortages which are very real. But I do point out to everyone here, it’s a very clear contrast with Australia’s previous experience after coming out of recessions. In the 80s and 90s, unemployment remained elevated for up to a decade. This time around, when you speak to employers, the biggest issues is: “Where do I get more workers?” That’s good news for young people entering into the workforce and ultimately for our economy.
Both are asked when the reckless spending will stop.
Josh Frydenberg:
As you know the peak of the pandemic we saw payments go up to about just over 30% of GDP. Now they have come down to 27% of GDP and are going to come down further to just over 26% of GDP.
What we are seeking to do is to end that emergency economic support and we were criticised by Jim and his party for doing so. Jobkeeper, the Covid disaster payments, we were criticised by Labor when we brought that spending to an end.
What we want is the economy to normalise and that means ensuring that we focus on the things that will boost the productivity of the nation and will create more jobs – tax relief, investing in more roads … investing in water infrastructure and investing in telecommunications infrastructure.
Jim Chalmers:
We don’t doubt the government’s ability to make announcements, we doubt their ability to deliver them. And when you look at the spending in the budget, Josh wants to make an issue out of the things that we agree with the government on. I think Australians expect us from time to time to have the same view about some of the initiatives that he’s talked about.
But this is a government which has spent more, taxed more and borrowed more than the last Labor government, but delivered much less, but that’s because the budget is absolutely riddled with rorts and waste and that’s why it’s heaving with a trillion dollars in Liberal party debt.
So what Katy Gallagher and I have said is that immediately if we are elected to office, we will audit the wasteful spending in the budget, the rorts in the budget, to try to get the budget on a more sustainable footing so the spending in the budget, the investment in the budget, delivers a tangible economic return.
Josh Frydenberg responds:
It’s, of course, the Labor Party is always holier-than-thou, even though the paper showed the Labor Party were providing small grants in a whole range of targeted seats and we do know that the Labor Party in which Jim Chalmers was a shadow finance Minister ahead of the last election also had a park and ride scheme and Bill Shorten was announcing ahead of the last election. They’re about projects to get more people on to public transport.
But with respect to local community programs, they’ll always exist, have always existed and they’ll continue to exist but our focus in the lead-up to election day has been making a big announcement, big announcements about glucomonitoring for people with people with type 1 diabetes, big announcements about the income thresholds for concession cardholders to make it more available to 50,000 seniors, big announcements around the copayment for PBS medicines.
And so for – and also bic announcements about deeming. All of which – of all which – the Labor Party has simply copied us. So this is the Labor Party’s strategy: A small target strategy to forget about their addiction to higher taxes and simply to copy the Coalition.
There’s four policies that we have announced in recent weeks where – the Labor Party was quick to say, “Yes, we’ll do that.” Wasn’t their idea, but, yes, to do that, because they know we were the ones who came up with cost of living measures. We were the ones who took to a budget just matter of weeks ago measures to halve the fuel excise.
Things that Jim himself was questioning before we announced it.
We took measures to – to the budget which we’re implementing now to ease the cost of living. We recognise this is the number one topic of discussion around the kitchen tables of Australians. Australians are doing it tough right now and just as we had their back at the height of the pandemic, we have their back now. The Labor Party is simply trying to sneak into Government and to copy our policies which are designed to ease the cost of living for millions of Australians.
Q: I love my dog, Scully. I know we all love dogs. [Chalmers: We all love Scully]
I took Scully for a run this morning without incurring any cost on the taxpayer. But the Coalition has promised $320,000 for a dog park in the marginal Liberal-held seat of La Trobe and Labor’s promised 200,000 to upgrade two dog parks in the marginal seat of Macquarie. Given the level of debt and deficit, why is it a good use of taxpayers’ money to expend that money on pampered pooches in marginal seats? And is there any productivity gain to be made by spending money on dog parks?
Jim Chalmers goes first:
There is a time for investment in communities, but you need to make sure that that spending is well motivated, that it’s not politically-motivated, and what we have seen, partly because of your work and Katina Curtis’s work, is we have seen from the most wasteful government since federation, we have seen people in ministerial offices pouring over colour-coded spreadsheets, allocating money purely for political purposes.
This is one of the reasons why Australia doesn’t have enough to show for Josh’s trillion dollars in debt.
This is one of the big problems we have got. And one of the most egregious examples of this was the more than $600 million committed to commuter car parks.
Every 10th dollar of that, Josh committed to his own electorate. In some cases at train stations which soon won’t exist and he had to walk away from that commitment. None of them were even built and completed. Now, there is a problem in the budget with spending in politically-motivated ways.
Now, our commitments are typically working with local Governments or state governments or others to make sure that we’re getting maximum bang for buck, which should be the test. There will be commitments made by all parties around Australia, the key is to make sure we get value-for-money for that. There is not been enough value-for-money in the budget to last almost 10 years.
That’s why we got these high levels of debt and why we haven’t got enough to show for it and we are committed to doing better and we’re also committed to auditing this wasteful spending in the budget. Treasury and Finance within the first year of a Labor Government because Australians deserve better value-for-money for their cherished taxpayer dollars.
Jim Chalmers responds:
You’ve got to hand it to Josh. Even in the midst of a full-blown cost of living crisis, the most wasteful government since federation, taking for the first time to an election a trillion dollars in debt and almost nothing to show for it, and he’s still managed to find a way to give himself a little pat on the back.
And it is incredibly frustrating for Australians right around this country for the treasurer and the prime minister in the midst of this cost of living crisis for them to be telling Australians just how lucky they are.
Now Australians have had enough of this self-congratulation, they know after a decade in office the challenges in the economy are acute and they know that only Labor has a plan to take seriously and deal with these challenges.
And that’s why the economic plan that we released is all about how do we deal – how do we grow the economy in an inflationary environment?
How do we give cost of living relief over the long term, not just to get themselves through an election? You know, how do we get real wages growing again? How do we get some benefit from this trillion dollars in debt?
These are the key questions which are being ignored in this flurry of self-congratulation from the treasurer. Australians are not asking for too much from us. They just want us focused on their everyday concerns: How do they feed their kids? How do they provide for their loved ones? How do they service a mortgage with interest rates rising? How do they save for a holiday when their real wages have been going backwards for some time, not the last few months? These are the defining issues in the economy and they should be the defining issues in the election as well.
Now all of the numbers that Josh will tell you about commodity prices and all the rest of it, they are cold comfort for people who are doing it tough, and you can’t take credit for high commodity prices without taking responsibility for the rest of the mess that Australians in real communities right around Australia are dealing with.
Laura Tingle, as the moderator and president of the National Press Club asks the first question:
Let’s take a stocktake of what one of you will face after the election on May 21. Got a budget with unprecedented debt and deficits and in the budget that you handed down, treasurer, there was over $70bn of new spending, no savings and you basically relying on the economy growing to improve the bottom line. It’s now pumping more money into the economy as we speak and there are more election promises to come.
That stimulus is now working against interest rates and monetary policy which raised yesterday, of course, and with the [Reserve Bank] governor indicating we’ve got at least a year of rate hikes to deal with inflation. Further, the outlook for Australians based on what the Reserve Bank had to say yesterday was for further cuts in real wages in the next three years. So my question to both of you is: The arms of economic policy seem wildly out of sync now. What are you going to do about it?
Josh Frydenberg goes first:
You raise debt levels which of course are higher, as they are around the rest of the world, given the size of the shock that we have faced. But what we saw in the budget was a material improvement to the bottom line by more than $100bn, the fastest fiscal consolidation in more than 70 years in Australia.
We’re seeing deficits more than halve over the forward estimates and more than halve again over the medium term.
We’re seeing the debt, as a proportion of the size of the economy, more than five percentage points lower than what was previously forecast.
We have done so on the back of conservative commodity price assumptions, unlike the Labor party when they were last in government who baked in iron ore prices $180 a tonne. I’ve got in the budget iron ore at $55 a tonne, even though you’re selling today at $130 a tonne.
I’ve got thermal coal in the budget at $60 a tonne, even though today it’s $360 a tonne. And same with metallurgical coal – $130 in the budget even though it’s selling for $[I miss that] a tonne today. If these commodity prices stay where they are for another six months, that will be worth an extra $30bn to our budget bottom line.
But we took conservative commodity price assumptions and we saw that more people are going into work – three-quarters of the fiscal dividend that we saw and we banked in this budget came from having more people in work and fewer people on welfare. So our goal is to grow the economy, an economy that is expected to grow by 4.25% this year and 3.5% next year, an economy that is leading the world.
Josh Frydenberg finishes with this:
This is the choice – the Coalition under prime minister Scott Morrison who’s delivered a budget, who’s held a treasury portfolio, and Anthony Albanese who’s never delivered a budget, never held a treasury portfolio, doesn’t know what the cash rate is, doesn’t know the unemployment rate. That’s the clear choice for 26 million Australians.
