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

My question goes to the Treasurer. The RBA's forecast shows that, if it were to offer any further rate relief, inflation would not get back to the 2½ per cent target. Noting the national accounts show government consumption still growing faster than household consumption, will the Treasurer admit that, with his foot on the accelerator and the governor's on the brake, he is making it impossible for the RBA to offer further relief?

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

Not for the first time, the shadow Treasurer's foot is in his mouth. The reason for that is that the Reserve Bank made it very clear, in the course of coming to its decision earlier in the week, that government spending had nothing to do with it. They didn't mention it in the press conference. They didn't mention it in the press release. When they released their updated forecasts, they downgraded their expectations for public spending in our economy.

I acknowledge that there are a number of challenges, but one of the welcome developments in our economy is that the private sector has been taking over. In fact, over the last two or three quarters, the private sector has been resuming its rightful role as the primary driver of growth in our economy. In fact, for the last two quarters, public demand has made no contribution to growth. The shadow Treasurer really ought to know that. In a week where the opposition leader's judgement has been repeatedly called into question, I wanted to say that I think it's a credit to the strategic nous of the Leader of the Opposition to give the shadow Treasurer a question, because nothing does the shadow Treasurer's leadership ambitions more harm than to stand him in front of a microphone that's turned on.

I already answered this question earlier in the week, and I made it very clear earlier in the week that. If he is saying that the budget is the primary determinate of movements in interest rates in our economy, we've had three interest rate cuts this year, including two interest rate cuts since the budget I handed down from this dispatch box in March. If he wants to be honest about the view of the Reserve Bank, I encourage him to check out what the Reserve Bank governor said about the two surpluses that we have delivered and the fact that, in the third year, the deficit is much smaller than what we inherited. Because of all of that, debt is much lower compared to other countries and also, I would say, compared to what we inherited from those opposite.

The last point I would make is that the shadow Treasurer is precisely the last person that I will take advice from when it comes to responsible economic management. He is the guy that wanted to borrow hundreds of billions of dollars to build nuclear reactors, which would push the price of electricity up, not down.