Simon Kennedy (Cook, Liberal Party) Share this | Hansard source

Those on the other side want to talk about reckless spending. Right now, under this Treasurer, public spending as a percentage of GDP is the highest it's been in 40 years outside the pandemic. It's easy to talk in abstractions—percentages of GDP, aggregate demand, fiscal settings. But what does it all mean? It means $21,000 a year more in interest to the average household on their mortgage. It means we're paying $50,000 a minute—every single minute. In the time I will take to do this speech, that's $250,000 to the government debt just on interest alone.

The Treasurer's own budget papers show around $50 billion in additional discretionary spending this financial year alone. Economists are clear about what this means. KPMG's chief economist recently said:

Government spending, which has been adding to aggregate demand … needs to … be reined in to help better balance the demand and supply pressures driving the current push up in inflation.

EY's chief economist has warned that elevated government spending could contribute to more rate rises this year. The RBA's own forecasts are banking in at least another two rate rises. We've had 13 rate rises under this Labor government, and recently the Reserve Bank's own governor, Michele Bullock, acknowledged that government spending is adding to inflationary pressure and, when this inflationary pressure persists, the Reserve Bank must push up interest rates.

The Treasurer tries to hide and obscure this fact with weasel words. He likes to talk about private and public demand and saying private demand has been stronger than public demand. But what do these weasel words obscure? He does not talk about government spending, because in private demand it contains mountains of government spending—NDIS payments, health payments, social security transfers, energy rebates and battery payments. All this government spending shows up in private demand. This is why we have the Treasurer obscuring the fact, talking about private demand, because he thinks he's fooling the Australian people that it is not about government spending. There are mountains of government spending in that private demand. That presentation of the facts obscures the fact we have the highest government spending in 40 years today, outside of the pandemic.

Inflation was 3.8 per cent in January, but guess what? Domestic inflation, the homegrown inflation, is running at 4.9 per cent. This is the highest of any developed economy in the world. Why is Australia so different? Why are we different from the USA? Why are we different from the EU? Why are we different from Japan and all these other advanced economies? It's because of the government spending. It's because of Jim, 'Jimflation' and the government spending. Recently I sat down with a single mother in Sans Souci. After 13 interest rates, she could no longer afford to pay the mortgage in her unit in Sans Souci. She has lost the deposit. It's eaten away. She got a bargain basement loan in COVID, but after 13 interest rate rises, an average of $21,000 a year more, she's had to give it up in tears thinking about that money she's worked for and put away in the bank that is now evaporating away.

When fiscal policy is expansionary while the economy is operating at near capacity, monetary policy—interest rates—must tighten further. The Reserve Bank recently said two per cent economic growth is the speed limit for our economy. Any economic growth above that just pushes inflation. Well, we are growing at two per cent, so every time this government increases government spending, you pay more at home. Your money becomes worth less. The prices of everything go up, and you get left footing the bill. And haven't the prices of everything gone up? Childcare costs have gone up 11 per cent in the past year. Energy prices have gone up 32 per cent alone in the last year and over 40 per cent since Labor came to office. Groceries remain elevated. Insurance remains going up as well. Even still, this treasurer is spending more and more and more. Government spending is not predicted to go down next year; it will continue to increase. So, if Australians are tightening their belts, if the mother in Sans Souci is tightening her belt, the Treasurer must do the same and start reducing government spending.

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