Allegra Spender (Wentworth, Independent) Share this | Hansard source

I move:

That this House:

(1) notes that the:

(a) Consumer Price Index rose 3.8 per cent in the 12 months to December 2025, up from a 3.4 per cent rise in the 12 months to November 2025;

(b) Reserve Bank of Australia (RBA) warned last year that the Australian economy could not sustainably grow faster than 2 per cent without running into inflationary pressure;

(c) RBA has downgraded Australia's medium term productivity growth forecasts to just 0.7 per cent, per year; and

(d) Government undertook an economic reform roundtable with progress made on areas including nuisance tariffs and environmental approvals; and

(2) calls on the Government to:

(a) introduce stronger impact assessments, scrutiny and executive accountability for identifying and discontinuing costly and ineffective regulation;

(b) rein-in Government spending, reinstate fiscal rules, reform the Charter of Budget Honesty and make ministers and departments more accountable for blowouts in budget measures;

(c) identify how technology and artificial intelligence can support better provision of public services and government effectiveness; and

(d) recalibrate Australia's patchwork of climate and industry policies to a framework that transitions the economy at the lowest cost.

Australians really saw with a heavy heart the increase in interest rates last week and the increase in inflation in the past couple of months. This is of real concern to all Australians. The big question is: what do we do about it? I'm making the argument that we need to have stronger action on spending restraint. The government needs to step up on this. But, long term, we also need much more powerful action on productivity reforms if we are going to permanently address what we are seeing right now, which is that, if the economy starts to speed up, inflation will pick up and then the interest rates will have to go up again.

There was a bit of a debate between the major parties last week on whose plans were worse for the economy and under whose circumstances spending would go up more. Everybody is partly right. But the truth is that where we are right now is not where we need to be. Spending needs to be addressed in its own right on the basis that it has grown far too fast. It's now at 26.9 per cent, which is the highest percentage of GDP for many years outside of the pandemic. That public sector spending is not consistent with a strong private growth economy given the current issues with productivity in the economy.

So what can we do on spending? First is bringing in those fiscal rules and reinvigorating the Charter of Budget Honesty, which has been ridden roughshod over by both the major parties for a period of time. We need to have a set of rules that basically say, 'You can't grow government spending faster than the long-term growth rate of the economy.' Then it is about the difficult choices in pulling back government spending and making sure that, for every dollar we spend, we're actually getting the best possible outcome.

A big area I see this in is infrastructure spending. The government has a pipeline of over $100 billion, with $32 billion overspent at the moment because of the confluence of public-sector and private-sector demand. Frankly, a whole bunch of those projects don't even have a strong business case to back them in the first place. I'm someone who has really significantly backed climate change policies, but they have to be done on a lowest-cost basis. For instance, the EV fringe benefits tax is an area where I think we should be pulling back, because there are cheaper ways of lowering carbon in our economy than through that tax.

Then the other question is: how do we make better outcomes with every dollar that we spend in the public sector? This is where the government has been very slow to move on using, for instance, AI and automation to better deliver public services. It took them 3½ years to give us an AI plan, which I've read, and it is not very good on the detail. Frankly, this is the opportunity to deliver better outcomes for the community without putting more pressure on government spending. I think this is the area where the government really needs to be much, much, much more ambitious.

Then it really comes down to how we help the private sector and the non-market sector drive productivity over time. The problem with driving productivity is that it's not a fast turnaround. I respect that the government has done some important work on things like the nuisance tariffs, the passing of the environmental laws and construction codes. Those are all useful things that the government has done. But it takes time to move productivity along. Again, that means going faster and harder and recognising that these benefits will take time.

This is an area where the government has said it will step up, in reforming regulations and measuring effectiveness in terms of regulatory burdens on business. But it's been around six months now since the productivity roundtable, and we're no closer to having concrete measures of how the government is going to do this. I haven't seen any stronger incentives for the government, in putting in the system, to say, 'This is how we're going to make it easier for people to do business.' It has to translate into real-world action on the ground. There's a lot of goodwill. I believe there's a lot of desire to do the right thing, but there's got to be pressure and a drive that we haven't yet seen from the government to really make a difference in these areas.

The government is also unwilling, it seems, to really, properly look at industrial relations reform. It has changed a lot of industrial relations in the last three years. There are many benefits to workers, but there have been no assessments of the relative cost to productivity and how to find the right balance there. I think this is where, if the government is serious about productivity, it could go back to the PC and say, 'Assess IR on the basis not of ideology but of benefits to workers, costs to productivity and how we get the right balance.' It is an area where I do want to see the government, frankly, be more ambitious. Finally, it is making sure that governments give quick answers to businesses, because agencies like the ATO and others take a long time to deliver answers. That is a problem for the government, for the productivity of businesses.

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