Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. Yesterday the Treasurer said in parliament: 'Bill Evans from Westpac, a very respected economist, said, "I don't expect them to put upward pressure on interest rates."' Today, Mr Evans said, 'The risk is that the stimulus that's in the economy in 2023-24 proves to be stronger than the Reserve Bank is comfortable with, and, therefore, they don't have the scope to cut rates as early as February.' He said, 'The timing of the first Reserve Bank cut will be the factor where the budget may have an implication.' Does the Treasurer still agree with Bill Evans, whose comments clearly show that Labor's budget risks interest rates being higher for longer?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I thank Senator Smith for the question. We are very confident that the budget is providing cost-of-living relief and important investment into services like Medicare—

Give me a second! In fact you've given me 12 seconds before the interjections start, so I appreciate that, Senator Cash—without adding to inflation. There is a fair bit of commentary about the budget, as you would expect two days later. However, Treasury provides advice to the government and supported us in finalising our budget decisions, and Treasury's very clear assessment is that this budget will not add to inflationary pressures, and that is clear right through the budget papers. The cost-of-living package is expected to directly reduce inflation by three-quarters of a percentage point in 2023-24, and I would remind those opposite that a reasonable proportion of the spending that's happening in this financial year is to do with the legacy pressures that we inherited from you. So it's spending that was continuing up and then it was stopping, and we are keeping those services and those agencies going.

I would note that it would be very unusual to get all the economists in Australia, particularly those that provide commentary, to agree on one point. It's thoroughly unsurprising that you would have a range of views. I note that there have been comments from Mr Evans from Westpac. In fact I had some discussions with Westpac yesterday, and I have a direct quote from Mr Evans where he says that he believes the policies—that's the investments we were making—were necessary, and he said, 'I don't expect them to put upward pressure on interest rates in the near term.'

Sue Lines (President) Share this | Link to this | Hansard source

Senator Dean Smith, first supplementary?

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Yesterday you told the chamber the budget was fiscally neutral, but today your colleague the minister for aged care said, 'This is a budget that will put downward pressure on inflation,' in contrast to economists from countless banks and rating agencies who called this budget 'expansionary'. Are you seriously arguing that the minister for aged care is correct and that the majority of Australia's leading economists are wrong?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

It would appear that Senator Smith wasn't listening to every single word I said in question time yesterday—I'm horrified! Out of everyone, Senator Smith, I expect you to. You're a man with the eye on the detail. I know that from appearing before you in estimates. But I think, if you go back and have a look at what I was saying, I was saying that the Treasury advice is that the cost-of-living package is expected to directly reduce inflation by three-quarters of a percentage point in 2023-24. I said it, in fact, in answer to your first question as well. So I think the answers given by Minister Wells are completely consistent with the answers that I gave yesterday. I said that it puts downward pressure in 2023-24, and across the forwards it is broadly neutral. That is the point that we have been making for the past two days. I would say— (Time expired)

Sue Lines (President) Share this | Link to this | Hansard source

Senator Dean Smith, a second supplementary?

Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Can the minister assure the Senate that not one of the measures in Labor's budget were thought to be inflationary in the independent Treasury advice you referred to in your first answer?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Budget is a range of decisions—hundreds, if not thousands, of decisions that work together. And the focus of the ERC has been very clearly to make investments where we can, to make a sensible cost-of-living relief package where we can find room to do so and to not have those measures add to inflation. We have been consistent across that from the beginning of putting this budget together to the release of this budget. It has been front and centre of our thinking, but we have had to accept that there is a need to provide some sensible, modest investments where we can afford to do so. You see those in the cost-of-living package. Where we can find room to support other investments like Medicare to make sure that bulk billing continues on, then we've made that as well. The Treasury advice was very clear. It cannot be clearer. Look forward to exploring this in estimates: that the decisions taken in this budget are not inflationary and they are reflected in the inflation forecasts in the budget. (Time expired)