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

My question is to the Treasurer. The RBA governor confirmed what the Treasurer would not, which is that government spending contributes to pressure on interest rates. Confirming what we all already knew, the governor said:

That's logical. It's mathematical. That's what happens.

Given economists, former RBA board members and now the RBA governor have all acknowledged government spending contributes to inflation and the latest interest rate rise, why can't the Treasurer?

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

Once again—dishonestly conflating two different things. The idea—

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

Manager of Opposition Business, on a point of order?

Alex Hawke (Mitchell, Liberal Party, Shadow Minister for Industry and Innovation) Share this | Link to this | Hansard source

Again, the Treasurer is imputing a motive to a member asking a simple question, and it's out of order for him to make that suggestion.

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

I listened carefully. It's a different category from the earlier one where he accused the member of deliberately doing something. It's his opinion that he is asserting at the moment, and that's why I'm ruling it in order.

Alright. I can fix this pretty easily by getting the Treasurer to change that wording to make sure it complies.

An opposition member interjecting

That's why I'm agreeing with the manager. So, when I'm on your side, make sure you listen carefully. We'll fix this and then we can move on.

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

The more divided they get, the more desperate they get. The point that I'm making is those opposite have tried to conflate two very different things. The idea that public demand is part of the calculation of aggregate demand is not contested by anyone, and that's what they're pretending that we are contesting. We are not. The question isn't whether public demand is part of aggregate demand; it's whether public demand was responsible for the bigger than expected tick-up at the end of last year, and plainly it wasn't. Those opposite should stop verballing the governor of the Reserve Bank and look at what the governor actually said.

The governor said, on Friday, that she was surprised how quickly public demand retreated and how much private demand accelerated. That's the same factual point that they made in the statement on Tuesday and is the same factual point that I have been making during the course of last week, yesterday on Insiders and this week. In fact, the budget has improved in both updates last year—quite significantly in the December update and there was a budget improvement in March as well.

I remind the member again—as I had to remind the shadow Treasurer—by his own logic, there would be more inflation and higher interest rates if they'd won the election and implemented the member for Hume's policy for higher deficits this year and next year at the same time as he wanted to increase income taxes on all 14 million Australian taxpayers. In a lot of organisations, that would get you marked down; in that one, it gets him promoted.

The same people who say now that inflation and rates are determined primarily by budgets weren't saying that last year when inflation was falling and rates were cut three times. They should stop conflating two very different things. I don't expect much better from the member for Fairfax, but we should expect better from the member up the back.