Keith Wolahan (Menzies, Liberal Party) | Hansard source

Thank you to my colleagues in the chamber. It may be that we have to break and go to the other place, but we'll come back when that happens.

We have spoken so much about the cost-of-living issues facing Australian families, for good reason; it is the No. 1 issue facing families throughout this nation. It's one thing to identify a problem; the onus is on us to find solutions. We've spoken about the two key levers being fiscal and monetary policy. It is our contention and submission that all that work is being left to the Reserve Bank. The only blunt tool they have is interest rates, and that blunt tool hits a section of the economy and the nation harder than any other: young Australians who are paying off a mortgage.

We know that the average income has dropped in real terms by $8,000 for Australians. But, for those paying a mortgage, in addition to that $8,000 drop in real income is an average increase in repayments for a mortgage of $24,000—so $8,000 plus $24,000, for the average. As land increases in cost, and the cost of buying a house or a unit rises as you get closer to the city, like in seats like mine, those costs are exponentially higher. But we work in averages here, and, in my seat, housing is more expensive, food is more expensive and transport is more expensive, and people are earning less and hurting more.

If we leave it to the Reserve Bank, it means we're not turning our minds to all the tools we have in this place and in the executive through fiscal policy. I'd like to speak to two. One is spending and the other is productivity, and this government is not doing enough on either; in fact, it's not doing anything on either. Before we get to the particular tools you can use in fiscal policy, I'd like to briefly speak about trust. Trust in the institution of the executive, the government, and the institution of the parliament is paramount. These are serious problems, and Australians are hurting. But, if they don't trust us to look after their interests above our own, what's the point?

I've got a table in my office; I call it the pool room. If there's a particularly good report or article, that gets to go in the pool room.

An honourable member: Straight to the pool room!

Straight to the pool room! That table, the pool room, keeps building, and today I added another article to it. I keep this one here, and I keep coming back to it. It's the Edelman trust report. It's been running for about 28 years. It's an annual report, and this is the 2023 report about the trust barometer; I'm looking forward to seeing what it has to say in 2024! In 2023 they saw one of the greatest drops in trust in government since they've been running this report for Australia. We are not alone in this around the world, but the drop here sees, as a percentage, only 45 per cent of Australians trusting the government. That's not asked and conducted in a partisan way; it's conducted as an institution: 'The institution of government, do you trust it?' Sadly, with the way that real tax reform has been thrown in the bin, and the manner timing in which it has been conducted, weeks before a by-election, I'm confident—and I say it with regret—that that number will drop again this year when we see the Edelman trust report. Whatever the merits of the particular change—and we have supported that for good reason—how the decision was made matters and the timing matters, because Australians will be looking to this government to solve the serious problems that they have, particularly when it comes to spending and productivity.

With that I would like to turn to the issue of spending. Another document that is in the pool room for good reason is the 2023 Intergenerational report. I urge all members to come back to this document whenever they can.

A division having been called in the House of Representatives—

Sitting suspended from 16:40 to 16:52

My reference to the pool room in my office was not a reference to a billiard table; it was a reference to a table where documents and reports go if they have said something of note that's worth coming back to. One of those documents that lives in my pool room is the Intergenerational report. If you go to chapter 7, it talks about government spending. There are some alarming numbers in there about government spending. It's important to note that, along with increasing productivity, constraining proportionate government spending is key to keeping inflation down and, therefore, key to keeping interest rates and mortgage payments down.

When you look at issues of government spending, the whole Intergenerational report looks at a timescale that, with due respect to the press gallery, they are not really interested in. It is a timescale that goes back through many governments, and it will go ahead through many governments. There is a chart on page 144 that I urge all members to have a look at. It is chart 7.2, titled 'Real Australian Government spending per person'. It is measured in real dollars per person as at 2022-23 prices. So there's no claim that this is about inflation. It is not a story of inflation; it is a story of a real increase in spending. At the turn of this century, in 2001 and 2002, government spending per person in real dollars was just above $15,000. At the moment, it is just under $25,000 per person. I'm not going to pretend there wasn't a spike on the previous government's watch. That was, of course, because of the extraordinary circumstances of COVID. So there was a spike and then it came back down. The bit that comes back down is what I am referring to. It is now sitting at just under $25,000 of government spending per person in this country. If you look at the trajectory forward, you will see that in 2062, in just under 40 years, when another generation of Australians will be here, they will be paying, in real terms, $40,000 per person. That is not adjusted for inflation; that's in real terms.

If we as a nation are to continue to be a prosperous and free country that is able to provide all of the services that Australians want and expect from us, to allow people to have a standard of living that is better than the generations that have come before them—and that's why it's called the 'intergenerational report'—we collectively have to turn our minds to the issue of government spending. We have to. Of course, there is a variety of departments and ministries. You have just to stick your head out the window as you drive around Canberra to know how much of that money is spent on this town. It's a lovely town, but that is all money that is sent here by Australians.

Australia is changing. We're getting older, and there are certain challenges that come with that. We don't pretend they don't occur. The five fastest-growing areas are health, aged care, NDIS, defence and, No. 5, interest on government debt. Interest on government debt is the fifth-largest and fastest-growing expenditure item. We're caught in this vicious cycle whereby, in not properly pulling our weight in terms of fiscal policy, one of the fastest-growing areas contributing to inflation is government debt. We have seen this movie play out before. The then Labor opposition to John Howard didn't like that John Howard noted that Liberals would constrain government spending and therefore reduce interest rates. They didn't like that, but that's what the evidence shows. That's what the economic theory shows. It's not something that's just part of a talking point. We have seen what actually happens if government spending is unconstrained. That is something that all of us on both sides of the aisle need to turn our minds to.

I'd now like to turn to the second lever of fiscal policy, which is productivity. I'm on the House Standing Committee on Economics, and we are finishing up a report into productivity and dynamism in Australia. I thank all of the groups and individuals who have made submissions. I thank my colleagues on that committee from the government but also from the crossbench. It has been conducted in the spirit I hope future generations would appreciate. Some of the things we have learnt—without giving the game away for the report that we still have to sign off on—include that our economy lends itself to monopolies and oligopolies.

The theory behind monopolies and oligopolies—I will stick with oligopolies—is quite simple. It is an example of market failure where we're not truly competitive. Where there is a limited number of firms or providers, whether it's manufacturing or services, it will necessarily lead to a rise in prices. Australians know that. They know that when it comes to shopping for food, where you've got two providers, Coles and Woolworths, occupying 60 per cent of the market. They know that when it comes to airlines, where you have a dominant player in Qantas, who have only ever really had one other competitor. They know that when it comes to banks, where we really have a four-pillar banking system. And they know it in a variety of other areas. I love going to Bunnings and getting my Bunnings sausage, but it does strike me that a lot of smaller, family hardware businesses no longer exist. One of the appeals and advantages for oligopoly firms is that, in the short term, they get to offer discount prices, often at a loss. But we know from repeated history that, over the long term, those reductions are recovered many times over.

So we need to turn our minds to productivity, and there are so many options for us to look at to increase productivity, including actual tax reform. And this isn't the time to relitigate the stage 3 changes and what they mean for aspiration and opportunity in this country. But that change, removing the 37c bracket, was critical tax reform that wasn't just about productivity on a spreadsheet. It was productivity in our souls and in our minds, where young Australians who study hard and work hard say, 'I'm not in that bracket now, but I really want to be and I'm going to back myself to get there.' That's what aspiration is. It's not just a word. It's in people's souls and their minds and how they conduct themselves and how they act and the decisions that they make. It's the fire in the belly that has made this country great.

That's why we back aspiration. That's why we should look for policies that reward effort and aspiration. The true inequity in this country is that those who can truly afford to look down on their fellow Australians have got enough assets to engage accountants and lawyers to manage their affairs so they're not actually paying the sort of tax that young Australians seeking to get ahead are. They're not doing that. But I'm not here to relitigate the stage 3 tax reforms.

The other is industrial relations. Industrial relations are key to every sector of our economy and our society. When you listen to the minister bringing forward productivity-killing bill after productivity-killing bill, from the talking points you would think that we are living in a Charles Dickens novel—that we are in the early stages of industrialisation, where you've got big fat-cat bosses, and Oliver Twist and other poor, wretched creatures are living a slavelike existence. That's not the modern economy or existence that we have now.

I will come back to the documents in the pool room now, but we need to tell this government that, when it comes to looking after Australians, they are dreaming.

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