Tuesday, 6 September 2022
Questions without Notice
My question is to the Minister representing the Treasurer, Senator Gallagher. In July this year the Reserve Bank governor issued a warning to the new government:
… an important consideration is how inflation expectations and the general inflation psychology in the community evolve. If inflation expectations shift up and businesses and workers come to expect higher rates of inflation on an ongoing basis, it will be harder to return inflation to target … It is in our collective interest that this does not happen.
Does the minister agree with the Governor of the RBA?
Yes, I do agree with the governor on those comments, but I would also draw Senator Patterson's attention to the comments that the governor has been making for some time about wages growth essentially being a handbrake on the economy and advocating for sustainable and sensible wages growth, which we haven't seen now for a decade, and that is a problem in the economy. So, yes, the governor is right to raise concerns around having wages rise exponentially and out of control, but that is not what we are seeing in this country. The problems with inflation are not being driven by wages, because wages haven't been moving anywhere because it was a deliberate design feature of those opposite to keep them suppressed and, at best, stagnant. We have to find the balance. We need sustainable, sensible wages growth for working people—
President, a point of order on direct relevance: the quote from the RBA governor that Senator Paterson read had no reference to wages growth, which has been the dominant feature of everything the minister has been going on about for close to a minute now in her time. The question and the quote relate specifically to broader inflationary impacts and expectations across the economy.
Thank you, President. I believed I answered the question. I'm happy to deal with it in the supplementary, but I think I have been directly relevant. I think that goes to some of the challenges facing the economy at the moment, which the RBA is dealing with on the monetary side and we are dealing with on the fiscal side: getting that balance right, making sure that we're not adding to inflationary pressures and also making sure that working people are getting a bit of a crack at it and getting some suitable compensation to deal with those increasing costs of living that they're experiencing from rising inflation. I would say the announcement being made by the RBA today will add to some of those pressures on households, and the challenge is for the bank and the government to work hand in hand to make sure we're doing what we can to ease those pressures on people.
I thank the minister for her answer to my primary question and her agreement with the RBA governor that we should not add to inflation expectations. But, only eight days after the governor issued this warning, the Assistant Treasurer said prices for goods could go up '10, 15 or 20 per cent' and went on to predict hyperinflation and strikes. He later predicted a very rocky 12 months for the Australian economy. Given that the Assistant Treasurer's language and his position add significantly to the market's inflationary expectations, have the Treasurer, the Minister for Finance or the Prime Minister counselled the Assistant Treasurer on the impact of his comments on inflation expectations?
I'm going to take a bit of a punt on the fact that Senator Paterson is quoting selectively and has crafted that question himself. The government's expectations for inflation are outlined in the Treasurer's statement that he made in July—that is, that we would see inflation peak at 7¾ per cent in the December quarter. That is the government's position on inflation, and I think it aligns with the RBA's.
I welcome the Minister for Finance clarifying that the Assistant Treasurer doesn't speak for the government on inflation. Today the Reserve Bank has raised interest rates by 50 basis points again—the fourth rate rise now under this government. The RBA is having to lift interest rates to address skyrocketing inflation. Why are the Assistant Treasurer and his colleagues continuing to ignore the RBA governor's warning and predicting hyperinflation and economic tumult?
Honestly, the nerve of these questions really is staggering. We inherited an economy with rising inflation and rising interest rates. Let's not forget this. As a result of nine years of you guys, with wasted opportunities, wrong or failed priorities, 22 energy policies, an energy crisis that we also inherited, a skills crisis that we also inherited, terminating measures that just drop off into the ether and a budget in a mess that we also inherited, we are dealing with the realities of what happens when you have a Prime Minister with 10 portfolios or more because he didn't trust any of you. He didn't trust any of you, and we're dealing with the mess.
You have correctly anticipated that, Madam President. On relevance: the question was about the Assistant Treasurer disregarding the advice of the RBA governor about inflation expectations, not the other matters Senator Gallagher was going to.
The question was in part about that, but it was also about the Reserve Bank increasing interest rates today, skyrocketing inflation and a number of other things, so I do believe that the minister is being relevant. Minister, please continue.
Thank you, President. You're right in your ruling; the preamble was accusatory and ignored the fact that nine years of this mob had left the economy and the budget in a complete shambles, and nobody in the government is disagreeing with the— (Time expired)