Ted O'Brien (Fairfax, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question goes to the Prime Minister, and it follows the Treasurer's earlier remarks about today's RBA statement. What the Treasurer didn't reveal about that statement is the RBA's forecast for headline inflation to peak at 3.7 per cent in the middle of next year—well above the target band—and not to return to the band until 2027. My question to the Prime Minister is: given the government's spending is running four times faster than the economy, isn't it time to rein the Treasurer in to stop his spending spree?

Hon. Members:

Honourable members interjecting—

Milton Dick (Speaker) Share this | Link to this | Hansard source

When the House comes to order! The Deputy Leader of the Opposition has asked his question. Nothing has started yet, so we'll just reset. You've asked your question; the Treasurer has the call.

Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I don't think the shadow Treasurer has thought through his question, because if he had, or if he understood the forecast released half an hour or so ago, or if he was being honest with the House and therefore with the Australian people, if he was talking about the forecast, he would point out that the Reserve Bank has revised down the contribution made by public spending to the economy. Either he doesn't understand that—which is troubling—or he does understand that and he's trying to be dishonest about it. Equally troubling.

When it comes to the Reserve Bank's forecast on inflation, the point that they have made in their Statement on monetary policy today is that they consider a number of the factors which drove up the inflation number in the most recent data to be transitory. They do acknowledge, as we do, that there are still inflationary pressures in the economy, but they say, when you compare quarter on quarter, they expect there to be a moderation in December. That's not necessarily my opinion; those are the words that the Reserve Bank put out in their Statement on monetary policy about half an hour ago. So he should be honest about it.

Similarly, when it comes to this idea—which is wrong—that government spending is the reason why we have seen an unwelcome tick-up in inflation in the most recent data, if he wants to say that government spending and government budgets are the decisive factor in interest rate decisions then he needs to explain those three interest rate cuts this year, including two after the March budget. If he wants to talk about what the Reserve Bank governor thinks about the government's fiscal position then perhaps he could read into the Hansard, as I'm about to do, what Governor Bullock said last week when she was asked about the fiscal position. This is what Governor Bullock had to say:

… we have got relatively low—

debt—

compared with many other countries, relatively low debt-to-GDP ratios. Our deficits aren't—we've had a couple of surpluses and the most recent deficit, in fact, is … quite small as well.

This view that the Reserve Bank governor has was shared by Fitch Ratings last week when they reaffirmed our AAA credit rating.

So I'm very happy to take as many questions as he can muster when it comes to the forecasts and when it comes to the fact that, even with the revised forecasts, the Reserve Bank is expecting inflation under this government to be considerably lower than the higher and rising inflation left to us by those opposite.