House debates

Tuesday, 27 September 2022

Matters of Public Importance

Cost of Living

3:11 pm

Photo of Angus TaylorAngus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Hansard source

We are seeing an increase in interest rates that continues to flow through. The Reserve Bank has just raised interest rates by 50 basis points. The expectation in the marketplace is that they're going to raise interest rates another 50 basis points next week—it remains to be seen what the outcome will be, but that's the expectation—and that it will continue on beyond that. Indeed, we're seeing in the marketplace an expectation that cash rates will reach over 4.3 per cent by mid next year. The truth of the matter is that will result in mortgages of 6½ or seven per cent for a typical Australian mortgage, as we see the flexible rates flowing through, with people moving from fixed rates to flexible rates. That is a pain that Australians are going to feel, of a scale that we haven't seen yet, and we need to be ready to deal with it.

What we've seen from those opposite, most of all, is no plan at all. What we see is grim Jim, 'Grim Chalmers', as the commentator not the Treasurer, the forecaster not the leader, who's failed time and time again to take the opportunity, as interest rates have continued to go up, to lay out a plan whereby Australians will feel relief from these pressures. The question is: what should be in that plan? Ultimately, it'll have to be the government's plan, but there are three things I would like to point out that they could do, right here and now, to make a real difference.

The first is to release some of the supply chain bottlenecks we are seeing in the economy. We put forward a proposal to double the work bonus, to help pensioners and veterans, to increase the amount of work they do, to give more incentive for them, through the changes in the tax and welfare system that we have proposed. What this effectively does is reduce their effective marginal tax rate so that they can get on and do more work without being taxed. Right now, if you are a pensioner or veteran you're paying at least 50 cents in the dollar for every extra dollar you earn and, quite likely, significantly more. So it makes perfect sense to give them the incentive to get out there and work. Most of all, we want to see more Australians working. That will not only relieve their cost-of-living pressures but it will also relieve cost-of-living pressures for all other Australians.

The second thing is to make sure we don't kick off a price-wage spiral. We all want to see higher real wages in this place. What we don't need is a race between prices and wages. The last time we saw this was in the 1970s, and we know who lost. Workers lost. That's what happened. When you start a race like this, real wages will lose.

The third thing that those opposite can focus on is making sure they're not throwing fuel on the fire of these inflationary and interest rate pressures. The truth of the matter is they took to the last election $45 billion of additional off-budget spending, sneaky spending, which will just throw more fuel on this fire. So $18 billion of on-budget spending—but we know this is only the beginning. 'Grim Jim' told us earlier this week that—


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