James Paterson (Victoria, Liberal Party, Shadow Minister for the Public Service) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher, who's already ready to go, I see! Warren Hogan, an economist at Judo Bank, said on the ABC's 7.30 on Tuesday night: 'A big structural lift in government spending in the past decade, which has continued at pace in the last three years under this current government, is really all about recurrent spending. That, I think, is increasingly looking like a key factor why, ultimately, the problem we be faced with is that interest rates are not high enough to get inflation down.' Does the government take responsibility for the rise in inflation and consequential decisions by the RBA to keep the cash rate high?

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

I thank the shadow finance minister for that question. The Treasurer and I proudly present the budgets and the updates to those budgets to the Australian people and to this chamber. That has ensured that we have been able to invest in those key areas of service delivery.

Senator Paterson often cites increased government spending. What he doesn't say—what he never says—is the vast majority of that was going into things like increased pensions, increased support for people with a disability and increased payments. Some of that is influenced by higher inflation because those payments can be indexed. That is the bit that Senator Paterson never says out loud. They like to criticise spending, but they don't like to talk about the fact that much of that was demand driven programs, which are variations in the budget, but also that they are important investments.

When we came to government, we did find that there were areas where we needed to make additional investments, and people expected that. Whether that be in payments like the single parenting payment, or whether it be in Commonwealth rent relief to help people through some of those really difficult times, these were the areas that the government prioritised. We will continue to do so, whether it be investments in Medicare; whether it be investments in education so that needs based funding gets delivered to our children; or whether it be investments in early education and care—the work that Senator Walsh is doing—to make sure that every child, regardless of their situation, has an entitlement to early education and care.

We on this side of the chamber believe that it builds a better country if we invest in our people. The government has a role to play there. So while Senator Paterson sees increased spending as a negative, we see it as investment in the future of the country. (Time expired)

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

Senator Paterson, first supplementary?

James Paterson (Victoria, Liberal Party, Shadow Minister for the Public Service) Share this | Link to this | Hansard source

Griffith University Professor Graeme Hughes said:

This means homeowners must prepare for the cash rate to stay put for the foreseeable future. Adding to the pressure is Canberra's spending … effectively working against the RBA's efforts to bring rising prices under control.

Minister, do you admit the economic reality that growth in government spending running four times faster than the growth in the economy is now having real effects on prices, inflation, interest rates and real wages?

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

We've been very mindful where we have carefully calibrated our spending to ensure that it hasn't made the job of the bank harder. We have been dealing with those big global pressures that have led to higher inflation. The bank itself—I have heard Senator Paterson in interviews; I don't want to say you are misleading or misrepresenting the bank, but you've certainly got a different interpretation of what the governor has said in relation to that.

What you don't say is the things we have done to assist the bank in its work: deliver two surpluses and pay down debt by returning extra revenue back into the budget so we have less debt and less interest on that debt. Where we are investing, we are making a difference to people's lives. It's in the productive side of our economy, in our people and in those people's skills.

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

Senator Paterson, second supplementary?

James Paterson (Victoria, Liberal Party, Shadow Minister for the Public Service) Share this | Link to this | Hansard source

At present the RBA is having to do all the heavy lifting via monetary policy to get inflation down. Will the government consider any changes in fiscal policy to support these efforts, or is the government's attitude to higher prices and lower real wages, 'Nothing to see here'?

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

Again, I don't accept the proposition in the question at all, and I don't think and I don't believe that that is the bank's view. Again, the bank can speak for itself. But we are mindful of the role that the Commonwealth budget plays in our economy. We are mindful of our responsibilities to the Australian people to deliver the commitments that we took to the election.

But I think, when you look at your record, Senator Paterson—when your party was last in government—and ours, you'll see that your two deficits, two massive Liberal deficits, turned into two Labor surpluses, $100 billion worth of savings, $188 billion less debt and $60 billion less interest on that debt so that we have been in a position to repair the budget, to get it in better shape and to make sure that all the wastes and rorts that you had are being put into good investment— (Time expired)