Tuesday, 9 May 2023
Matters of Public Importance
The Senate will now consider the proposal from Senator Dean Smith, which is also shown at item 13 on today's order of business, namely:
The only cost of living relief that helps all Australians is getting inflation under control
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
With the concurrence of the Senate, the clerks will set the clock in line with the informal arrangements made by the whips.
When the Treasurer, Mr Chalmers, gets to his feet at 7.30 this evening and when, as is the custom, Labor members of the House of Representatives get to their feet at the conclusion of the speech, there's only one thing that Australian voters and Australian families need to think about: has Mr Chalmers's second Labor budget delivered a plan to reduce inflation in our country? I say that because it is the inflation challenge which is the very, very most important and the very, very most urgent. I want to quote three people about the perils of inflation. The first person is someone who is well known to all of us: the Governor of the Reserve Bank. The second person is someone who is also very well known to many of us: Ronald Reagan, former President of the United States. Then I want to focus on Peter Costello, former Treasurer of our country.
At Senate estimates recently, I had an opportunity to ask the governor about inflation in our country and whether or not Australians had actually forgotten about the corrosiveness of high inflation rates. The governor said in response to my question: 'I don't know whether there's a poor understanding, Senator Smith. I think people have forgotten. For many years, inflation varied between maybe 1½ per cent and 3½ per cent. We all got very exercised if inflation was half a percentage point away from two or 2½. That was the world we were living in. People have really forgotten how corrosive inflation was.' Why is inflation corrosive? It's because it erodes your savings, it entrenches income inequality, making it worse, and it really hurts the poor. I think we've forgotten about that because, as the governor said, it's 30 years since we lived in that world. One of the perils and one of the very, very few downsides of our long run of economic prosperity in this country is that people have forgotten about the corrosiveness of inflation.
I can see that Senator Faruqi is very excited to learn what President Reagan might have said about inflation. President Reagan said, 'Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.' That's what the former President of the United States said. I see Senator Faruqi nodding her head in affirmation. President Reagan went on to say: 'We are victims of language. The very word "inflation" leads us to think of just high prices. Then, of course, we resent the person who puts on the price tags, forgetting that he or she is also a victim of inflation. Inflation is not just high prices. It's a reduction in the value of our money, when the money supply is increased but the goods and services available for buying are not.' Those remarks are from former President Reagan.
And now, of course, we go to Mr Costello, who would have to be regarded as one of our most successful treasurers, if not our most successful Treasurer. Mr Costello said:
As you know we have been budgeting for a surplus, we have been aiming to produce a surplus because that is important to lay down funding for the future, for the expenses that we will have to meet and also it is consistent with good economic policy.
He went on to say:
We have now eliminated the $96 billion of net debt that Labor left the Australian Government when it left office. Our Budget is in surplus for the 9th time in 10 years:- in 2006-07 a forecast surplus of $10.8 billion. We have established a Future Fund which has begun to save for the future. With these savings the next generation will be able to meet the challenges of their time.
Mr Costello's contribution then was very, very important because the bigger the budget surpluses the wiser the economic management. Then we can have a higher degree of confidence that downward pressure is being put on inflation and that governments are doing everything that they can possibly do.
No doubt we'll hear in lots of contributions this afternoon about the perils and the corrosiveness of inflation, but to understand it better I encourage people to go to this month's statement on monetary policy to see for themselves what the RBA continues to say about the persistence of inflation in the Australian economy and the ways to beat it. (Time expired)
YMAN () (): Thank you, Senator Dean Smith, for raising this matter. It's a great opportunity for me to explain what the Albanese Labor government is doing to ease cost-of-living pressure on families, who we know are doing it tough at the moment. Since we were elected nearly a year ago, we've been delivering cost-of-living relief. It has been our top priority, and we've been working each and every day.
I'm incredibly proud to be part of a government that is delivering cheaper child care for families, expanding paid parental leave, strengthening Medicare, reducing the cost of medicines and getting wages moving. This is a government that understands the pressures that everyday Australians are facing and is taking action, unlike those opposite, who wasted almost a decade in office and still managed to rack up a trillion dollars in debt. The Liberals and Nationals have failed to learn the lessons of the election and have opposed our cost-of-living measures at every step.
The centrepiece of the Albanese Labor government's second budget will be $14.6 billion of cost-of-living relief over four years, which will ease pressures on Australians. Our cost-of-living plan will directly lower price pressures and the CPI in 2023 and 2024. This is in addition to $11.3 billion to support a 15 per cent increase to award wages for aged-care workers and improved paid parental leave and cheaper child care beginning on 1 July 2023.
The Albanese Labor government is delivering responsible and targeted relief that will not add to broader inflationary pressure in the economy. Inflation has been driven largely by Russia's illegal invasion of Ukraine and by the former government's economic mismanagement, and we know how important it is to get it under control. Our plan for inflation can be broken down into three parts: relief, restraint and repair. We're delivering targeted relief for Australian households, we're cleaning up the mess left by the Liberals and Nationals through efficient and responsible spending and we're repairing supply constraints through cleaner and cheaper energy, the National Reconstruction Fund and more affordable housing.
Speaking of housing, the Albanese government is dedicated to delivering on our promise of more affordable housing and more social housing, and we hope to achieve real change in this space through the Housing Australia Future Fund. The $10 billion fund has passed the House of Representatives, and we now need the Senate to get behind this important bill. The fund will deliver 30,000 new social and affordable homes in its first five years. Anyone—and I mean anyone—who is serious about more affordable housing should support this bill, yet here in the Senate we have an alliance between the Liberals, the Nationals and the Greens, who are saying no.
The Greens' opposition to our Housing Australia Future Fund is not just working against affordable housing; it's a cynical political tactic as well. They use the housing crisis for their own political gain, peddling reckless and unrealistic policies to those who are struggling, and, when an opportunity comes to deliver change, they say no.
Housing experts across academia, industry and community support the fund. PowerHousing Australia described it as a transformative reform. The Community Housing Industry Association declared it was absolutely urgent that the Senate support the package. The Urban Development Institute of Australia said, 'Every day that passes is costing them, the Australian people, more and more.' The Property Council said, 'The quicker all of these mechanisms are up and running the better.' And National Shelter described it as 'the most critical housing legislation to be brought forward for the past 10 years'.
Given the state of housing in this country and this broad support, it's beyond disappointing that the Greens are standing with the coalition to stop this bill. The Greens can't be taken seriously on this. They have used the crisis to garner support and even shamelessly fundraise for their own political party. If the Greens were serious about their concerns in the rental market they would be taking action right here in the Senate. Instead, they say whatever will help them win more votes and refuse to take action, making the housing crisis was. We know too well that what happens when the Greens side with the Liberals and Nationals against progressive reform— (Time expired)
What a pathetic motion this is from the LNP. They were in government for nine years, and what happened? Inequality increased, house prices spiralled out of control, the national energy network basically collapsed, and wage stagnation and insecure work became entrenched. And here they are with a motion that boils down to barracking for more cuts to government services and higher interest rates.
The unfortunate thing about this motion is that it seems to be precisely the approach that the Labor Party has taken to tonight's budget. Instead of helping renters or people in poverty, the Labor Party is choosing to give more than $254 billion in stage 3 tax cuts to billionaires and the already wealthy. The budget's big winners are very wealthy men. That quarter of a trillion dollars could be used to lift people out of poverty. Labor could solve the housing crisis, not just gamble on the stock market. They could wipe student debt. They have the power to help people, and they are choosing not to. In this cost-of-living crisis they have prioritised a wafer-thin surplus, they've prioritised the already wealthy, they've prioritised fossil fuel subsidies, they've prioritised nuclear submarines, and they're prioritising handouts to property investors. Yet every day in the real world people are skipping meals, they're being forced to choose between paying electricity bills and keeping a roof over their heads, they're choosing between heating and eating, between medicine and rent. That's what's actually happening out there—and I thought a fundamental job of government was to make sure that people had their basic needs met and that they could live life with dignity.
This is a budget that delivers for property investors and the already superwealthy. Under Labor the problems that ordinary people are facing will get worse. It's more than disappointing; it's a betrayal. I thought we had an election and changed the government. It seems we didn't get to change the policies. Labor is spruiking its supposed $14.8 billion cost-of-living package, but this budget spends far more than that on tax breaks for wealthy property investors who own multiple properties than it does on any of the cost-of-living promises.
We've heard a lot about 'nobody left behind' by this government, but there must be an awful lot of nobodies out there, because this budget leaves plenty of Australians behind. It leaves low-income people behind. It will leave students behind. It will leave renters behind. It will leave disabled people behind. It will look after the top end of town, though—those quarter of a trillion dollars in stage 3 tax cuts baked into the budget. Budgets are about choices, and this government tonight is choosing to back the winners, and it's leaving the rest of Australia behind. For shame.
I'm very pleased to rise in support of my good friend Senator Dean Smith's motion in relation to inflation. We should remember that inflation is, in practice, the greatest tax of all. I want to quote from a book that I frequently quote from in this place called Basic Economics. It's very appropriate that I quote from this book following the contribution of the Leader of the Greens in this place. This is what it says in relation to inflation:
… inflation is in effect a hidden tax. The money that people have saved is robbed of part of its purchasing power, which is quietly transferred to the government that issues new money.
Inflation is not only a hidden tax, it is also a broad-based tax. A government may announce that it will not raise taxes, or will raise taxes only on "the rich"—however that is defined—but, by creating inflation, it in effect transfers some of the wealth of everyone with money, which is to say it siphons off wealth across the whole range of incomes and wealth, from the richest to the poorest.
So not only is inflation a hidden tax; it is a regressive tax and it affects the poorest in our community. It affects those in our community who have the fewest options in how they manage their economic affairs. Typically, we're talking about low- and medium-income earners.
I want to take issue with some of the contribution Senator Payman made in this debate when she defended the government's proposed housing fund. Let me say this about both the housing fund and the so-called National Reconstruction Fund. The fact of the matter is that the government has successfully passed the legislation for the National Reconstruction Fund and is proposing the housing fund, which will total $25 billion of extra borrowings. The government is actually proposing for the housing fund to borrow $10 billion today and invest that to hopefully generate returns in the future which can be invested in housing. That is the proposition. So, instead of simply paying for housing as we go, year by year, they are proposing to borrow $10 billion, to issue $10 billion worth of bonds or however else they propose to raise this money, go into the market, borrow additional money and then seek to invest it.
If you want to know the weakness in that sort of strategy, all you need to do is look at the 2021-22 annual report of the Future Fund. It's the Future Fund which is going to be commissioned with the role of investing the $10 billion. If you look at the results of the Future Fund for the period ending 30 June 2022, you will see the dangers involved in that sort of strategy. In the year ending 30 June 2022, in relation to the Future Fund, because we are in a high-inflation environment, a very difficult environment for investors, the chairman, Peter Costello, said:
In a year in which global equities and global bonds fell by more than 10% each and where the Australian stock market fell 6.5%, the return of -1.2% was a pleasing outcome.
Not even taking into account inflation, running in Australia at seven per cent, the Future Fund generated a return of minus 1.2 per cent. And it was the same with respect to the other funds which are administered by the Future Fund, including the Medical Research Future Fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, the Future Drought Fund, the Emergency Response Fund and the DisabilityCare Australia Fund. All of them went backwards. Every single one of them went backwards even before you add the inflationary impact.
So the government is essentially going to be spending a bucketload of money under this budget and it has to go out and borrow that money. There is a bond issued at the moment, which will be closing on 10 May, tomorrow, to raise $800 million, with an interest rate of 3.25 per cent. You can go onto the Australian Office of Financial Management website and see this. But what horrifies me is that on 21 November 2024 the government is going to have to refinance some $41.3 billion which currently has an interest rate of 0.25 per cent.
I am very pleased to follow the good senator from Queensland. It's always lovely to get an economics lecture, to get these books brought out and to get quotes from Economics 101 or Economics for Dummies. Let me bring this out. What's this? I have a book here. What is it? Oh, it's on 10 years of Liberal-National government. What does it say? It says that the Liberal-National government doubled the debt before the pandemic. It says that the Liberal-National government doubled the debt before the pandemic and left taxpayers with $1 trillion of debt when they were kicked out of office. That's what it says.
Let me quote a little bit more from this book of Senator Scarr's, 'Economics for Dummies 101': the Liberal and National parties oppose the NRF and the housing fund. I wouldn't be surprised if the Liberals and Nationals opposed more manufacturing in regional Australia. I wouldn't be surprised if the Liberals and Nationals don't support funding social and affordable housing, because the real economics lesson that Australians learned at the last election is that the Liberals and Nationals are not the economically responsible managers that they tell people they are. Australians know that this inflation crisis that we are dealing with and the real pressures that they are under are a direct result of the previous government's 10 years of messy budgets, rorts, waste and not fessing up to the Australian people about the challenges that we face. That's exactly why, when it comes to our budgets and the way we are treating the economy, the way that we are speaking to Australians, being upfront and honest with them, the Albanese government has a plan for addressing inflation challenges in the economy. It's about relief, repair and restraint—one of those words that wasn't in Senator Scarr's book. The word 'restraint' wasn't in any of the former Liberal-National budgets and it wasn't in any of the colour-coded spreadsheets.
Responsible budgets can provide and will provide cost-of-living relief. We've seen this announced already by our government. We've seen measures to deal with cost-of-living relief in the previous budget in October. I want to run through a few of those now, because these are some of the things that the Greens say we're not doing enough of when it comes to cost-of-living relief. The $14.8 billion of cost-of-living relief we are delivering in this budget—we need to deliver that, but we need to do it in a way that does not add to inflation. It's incredibly important that we do that. That's why we're doing things like making sure that we have energy bill relief for thousands of Australians—something that those opposite voted against the last time they had the opportunity. Will they vote against it again? We'll have to see. But you can't stand in here and complain about inflation and the way that it impacts on Australian families and also walk into the Senate and vote against energy bill relief. You can't do those two things, because it says you are not actually fair dinkum about making sure people have money in their pockets to pay their bills.
We're making sure that we're making changes to the single parent payment, lifting the age from eight to 14, an incredibly important measure for thousands of families, but particularly for thousands of women in Australia. We know that most families on that single parenting payment are women, and over 50,000 women will be recipients of that change. We are making sure that aged-care workers get a pay rise, a pay rise that they had to fight and scramble for under the last government. Our government is funding this pay rise for some of our hardest workers and making sure that they get the money that they deserve. We're providing skills and training funding for childcare workers to make sure that they are able to meet the demand that we will see in the future.
We're delivering cheaper child care, we're delivering cheaper medicines and we're making sure the cost-of-living relief is at the centre of our budget and the centre of our response to this inflation crisis—something that those opposite ever seem to understand, no matter how many economics degrees they have, no matter how many economics books they want to bring into the Senate, no matter how many times they want to quote from learned professors. This is about families, and that's what Labor budgets do.
In the words of Ronald Reagan:
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident.
Reagan was right. Inflation is bad, obviously. It is just like a slow leak in your fuel tank. You can still drive but you don't get as far. Inflation increases the cost of living, that feeling of dread when you open your power bill—where's my $275? You're making decisions every day about what you're forced to go without. Maintaining a roof over your head costs more. Rents are up. Mortgage repayments are up. Your wallet is empty. Every week you go to the supermarket, you have less in your basket for the same amount of money. Your children know something's up because all of a sudden you're saying no a lot more.
So who drilled the hole in your fuel tank? Was it (a) the Reserve Bank; was it (b) the government; or was it (c) both? Well, I'll answer that question for you: it was both. The answer to our inflation woes is for the government to stop wasting money. Low debt is a policy for our youth. Today's public debt is our children's problem tomorrow, and I believe in protecting children.
I rose in this place before last year's first Labor budget, and I posed a question, channelling that great political drama The West Wing, on whether the Labor Party had a secret plan to fight inflation. The conclusion at that time, and after we saw that first budget handed down, was that they didn't have a plan to fight inflation.
It remains very secret, Senator McDonald. In fact, it remains so secret that, until this day, we see no plan to fight inflation.
As Senator Dean Smith said in speaking to this motion, inflation is a scourge. Anyone who has lived through periods of high inflation—whilst I was young, I do remember the high inflation of the 1970s and the effect it had on my family and their farming business—knows just how corrosive, how destructive and how damaging it is. Why is it so corrosive? Because it erodes everyone's buying power. It erodes the value of the money in your pocket, the value of the money in your bank account and the value of the money in your pay packet. It leads to massive declines in real wages. That's what we're seeing.
This government—particularly when it was in opposition, admittedly—used to talk a lot about real wage increases. We don't hear them talk about real wage increases anymore, because they have overseen in their first period in government the largest declines in real wages we've seen in decades. The last coalition government actually delivered real wage increases. You might not know that if you just listened to this government, because this government tells big porky pies. They've actually delivered massive declines in real wages, and that is through their inaction on inflation. They have left all the heavy lifting to the Reserve Bank. They have done nothing in terms of the economic levers they control to put downward pressure on inflation. I'm a great believer in the 'bootlegger and Baptist' theory of economics, and I say: why? Why would they have done that when they know how corrosive and damaging inflation is? It is because inflation does have an upside to governments. Inflation means that the real value of government debt is over time eroded, and this comes at the direct expense of taxpayers.
So, whilst this government may talk about dealing with inflation through targeted cost-of-living relief, I ask everyone out there who's listening to this whether they feel they have received anything from this government to help them with the cost of living. I suspect the vast, vast majority of those listening to me today would say the government has done absolutely nothing. Things have just got harder, harder and harder, as they've seen their mortgage interest rates skyrocket, the costs of food—groceries, fresh fruit and vegetables, meat and dairy products—skyrocket, the cost of housing go up and the cost of recreation increase.
All of these factors are even more highly magnified in rural and regional Australia. I was lucky enough in the last few weeks to spend a few days in Geraldton, to the north of Perth, and a few days in Albany, about 4½ hours south of Perth. In both those places, you see the corrosive and damaging effects of skyrocketing inflation. You see the pressure on people in supermarkets, where suddenly they are having to pay so much more for their bread, so much more for their meat, so much more for their dairy. The added cost of transportation to regional areas piles on top of the already high cost of living in the bush. You didn't see the price of petrol much under $2 a litre in and around Geraldton, particularly in the regional areas an hour or two outside of Geraldton. This is the cost of inflation. This is the cost of this corrosive, hidden tax on the mums and dads, the small businesses and the farming families of this country, who face these cost-of-living pressures every day, and, tonight, the pressure is on this government.