Claire Clutterham (Sturt, Australian Labor Party) Share this | Hansard source

The Treasurer has been repeatedly clear that he takes responsibility for his role in the fight against inflation. He's been clear that inflation is too high, and no member of this government has shied away from that. The Treasurer is fighting hard. We know that inflation is significantly lower than its peak and significantly lower than when we came to government, but that is history, and we know it is too high. The Treasurer has also been clear that the economy, including productivity, cost of living and growth, is central to the Albanese Labor government's agenda. Increases to productivity and growth are what this government's policy initiatives are directed at, as are help and assistance to Australians with the cost of living.

Inflation and what drives it are not linear. It's not black or white, one thing or another. It's an oversimplification to blame government spending. Governments of the day have the privilege and responsibility to take measured and practical steps within their sphere of reference to tackle inflation, but condemning the Treasurer for this and that is an easy shot that does nothing to assist the Australian voter. Australians know that contributors to inflation are a mix of fluid and ever-changing factors that need to be constantly monitored and adapted to. Factors like the time of year, private demand, climate, the labour market, global challenges—more real than ever—and government policy all play a role in the ingredients that make up inflation. Sometimes one factor plays a bigger role, sometimes smaller. It's not linear, and it's not as simple as saying, 'Just cut this,' 'Just do that,' or, 'Just change this.' It is certainly not as simple as just alleging that the so-called out-of-control spending is the primary and only cause or saying that if you didn't spend on one thing, like the $25 billion spent on public hospitals in partnership with states and territories, inflation would be lower. Bare allegations of this nature do not assist the Australian voter. Slogans regarding petrol and fire do not assist the Australian voter. Facts do, and what also assists is an understanding that governments do actually need to spend at the same time as endeavouring to finding efficiencies and savings and undergoing departmental reform and budget restructure. That is what this government seeks to do.

With respect to the facts, claims that government spending is now a very large share of the economy are exaggerated. Reserve Bank estimates that were published on the Reserve Bank of Australia website after the Reserve Bank of Australia met in February 2026 estimated that what we now know as public demand or spending by all governments, federal, state and local, expanded by 2.2 per cent during the course of 2025. Consumer spending expanded by 3.1 per cent. Home building expanded by 5.5 per cent, and business investment expanded by 2.5 per cent. Both public and private sector wages have been growing sustainably, around an average of 3.5 per cent in recent years, with no sign of the significant spike that occurred in the 1970s and which saw considerable upward pressure on inflation. This government has a deliberate mandate to get public and private sector wages growing after the decision of the previous government to deliberately keep them low by design. Wages have moved, but sustainably and not significantly, putting to rest the suggestion that the public sector wage bill is inflationary.

On that basis, inflation is expected to peak in mid 2026, and, in quarterly terms, underlying inflation is forecast to start slowing from the June quarter of 2026. This peak is one of the factors as to why the May 2026 budget is being crafted through the lens of responsibility as a solid, future focused plan directed at productivity, spending restraint and tax reform. There is an ambitious agenda on tax, and the centrepiece of that is income tax cuts for all Australian workers. When it comes to tax policy, lower taxes are the policy of the Albanese Labor government. The Treasurer has been clear. The objective of the budget would be to lift the speed limit on the economy so that it can achieve higher growth with lower inflation and so that Australian workers can earn more and keep more of what they earn.

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