Senate debates

Wednesday, 10 May 2023

Questions without Notice: Take Note of Answers

Answers to Questions

3:27 pm

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | Hansard source

I rise to take note of all the answers. There has been a lot of discussion this afternoon about inflation. The question is: has this budget done anything to fight inflation? Today's Financial Review, other esteemed publications and people like John Keogh have said that the big fib at the heart of this budget is that it will help the Reserve Bank to reduce inflation, when in fact Labor's policies are tipping a net extra amount, $44 billion, into the economy. He also said in the editorial of the Financial Review that it is a $44 billion stimulus to the economy which starts to feed in during this high-inflation year, and SNP global ratings agree that these handouts will add to inflationary pressure.

Given the government has spent over $100 billion since the election, it has decided to run an inflationary fiscal position. That is its right. But it should be honest if that is what it is doing. It is making the Reserve Bank's job much harder. That has been clear. It is unfortunate that a lot of people want to hug the talking points in these debates. But the truth is that the last coalition's budget was inflationary, this one has been significantly inflationary and that is hurting people who are the most impacted by inflation—lower and middle-income earners. So to walk around and argue that this is a deflationary position is not the case.

The fact that we saw the Reserve Bank feel that it needed to raise rates only about 10 days ago surprised economists. I think it is a very worrying sign that the government has chosen to plough another $50 billion into the marketplace, into the economy. It is very much a negative for those low- and middle-income earners, who are going to have to contend with higher interest rates because it is very likely, given that the federal government has decided to run at inflationary fiscal position, that the central bank will have to increase interest rates.

In fact, Chris Richardson, who is a well-known economist, said, 'I had thought the Reserve Bank was done and dusted but this has notably raised the chance that they will do another swing of the baseball bat.' Another market economist, David Bassanese from BetaShares, said it was 'unambiguously expansionary,' and Cherelle Murphy from Ernst & Young said 'inflation is already running at an annual rate of seven per cent and more than one in every four dollars spent in the Australian economy is by a … government.'

The central problem here is that the government has decided to fuel inflation. That is the decision they have taken, but they have not been honest with the Australian people that that is the decision they have taken. I understand why. Politically, it is very difficult to cut spending, and they have a lot of vested interests, lots of mouths to feed and lots of noisy stakeholders. But it is better to be honest about the problem. This has been done before by both parties of government. The Labor government did it in the eighties and we did it in the nineties. Spending was cut and hard decisions were made because there was recognition at the time that that would be the best time to protect low- and middle-income earners. This is not going to be a massive problem for the super-rich people in society. It is mainly going to impact people in the lower- and middle-income bracket. That's the issue that we have today.

The government predicted in the budget that they will basically halve inflation over the next 12 months and that we'll see an inflation number with a three in front of it, as opposed to a seven or a six in front. That is a prediction that they've put in the budget, and that is their right. I would say it is very bold to be predicting that inflation will be cut by 50 per cent when they are running a budget strategy like this. They don't seem to be able to say no to many of the rent seekers and blood suckers who are wanting to line up outside their doors and ask for more money. These are the unions and the super funds—all the usual suspects. That is going to be the great test for government now. They've been deceptive and we will ensure that they'll wear that crown of thorns if they fail to cut inflation.

Question agreed to.


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