Dave Sharma (NSW, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

My question's to the Minister representing the Treasurer, Senator Gallagher. Monthly inflation figures that came out yesterday show that inflation is again out of control and firmly above the Reserve Bank's target band, both in underlying terms and the headline rate. Penelope Smith, the Head of the International Department at the Reserve Bank, said in a speech yesterday:

Factors that could push neutral rates higher include growing fiscal deficits …

Is the Reserve Bank right or wrong?

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

Sorry, I didn't hear the quote you read out. There was just a bit of noise.

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

Can we be really quiet? Would you remind repeating the quote, Senator Sharma?

Dave Sharma (NSW, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

I was quoting Penelope Smith, the Head of the International Department at the Reserve Bank, who said in a speech yesterday:

Factors that could push neutral rates higher include growing fiscal deficits …

Minister, is the Reserve Bank right or wrong?

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

I appreciate that, Senator Sharma, in terms of repeating that part of the question. I think we've always accepted that the government has a role to play in partnership with the Reserve Bank to ensure that inflation is heading down from when we were elected and get it back into band. Part of that is getting the budget in better shape. That's why our two surpluses, getting the debt down, getting interest on debt down, reducing the deficits—we've seen the most substantial turnaround in the UCB in a positive way since we came to government on record.

I know those opposite want to ignore all of those facts. We know that you promised a surplus and then never delivered one. We have. We have halved the deficit, and we are doing the hard work in ensuring we're getting the budget in much better shape and, at the same time, assisting households and Australians with cost-of-living help. We've done that. At the same time, we've repaired the budget. We are conscious of the role we play in our decisions on our budget, but we are proud of the record of getting the budget in better shape and providing assistance to households during periods when inflation was higher than we would've liked for longer than we would've liked.

We know that the job is not done. We know that there is more to do, and this government will do it. We will take the same approach we took in our first term, which is to look for savings where we can and reprioritise across the budget. If we get upward revisions to revenue, we will use that to pay down debt and improve the interest burden on that debt. All of that matters, and that's why we've taken that approach when taking our decisions. But we didn't have the same approach that those opposite had at the election, which was to slash and burn and hurt everyday Australians with their cuts.

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

Senator Sharma, first supplementary?

Dave Sharma (NSW, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Jonathan Kearns, the Chief Economist at Challenger and former RBA official, said yesterday:

Two factors mean the RBA is unlikely to be able to deliver 2.5 per cent inflation with the cash rate at that level: first, financing conditions remain easy; second, fiscal policy continues to provide some stimulus. The RBA needs to offset the stimulus from these two factors, and so a further cut is looking very unlikely …

Isn't it clear that your policies are contributing to interest rate rises?

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

I missed the end bit of that question, but I think I got the feeling of where you were going with that. The government has shown enormous fiscal discipline in the settings that we have in making sure that the decisions we take do not make the Reserve Bank's job harder. But we do not believe that the approach that those opposite took to the election—which was higher taxes and significant cuts on the budget, cuts to Medicare, cuts to pensions and a range of areas—

Anne Ruston (SA, Liberal Party, Shadow Minister for Health and Aged Care) Share this | Link to this | Hansard source

You can't just lie. That is a flat-out lie.

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

Senator Ruston, every time you criticise excessive spending, what you are talking about is the indexation of pensions. It's around Medicare.

Anne Ruston (SA, Liberal Party, Shadow Minister for Health and Aged Care) Share this | Link to this | Hansard source

Don't verbal me. Stop verballing me.

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

Well, those are the figures that you use, and you used them all through the election campaign when you cited the spending you were concerned about. That is what it related to. We hold you to account—

Sarah Henderson (Victoria, Liberal Party) Share this | Link to this | Hansard source

These are lies, Senator Gallagher. We know what you're like.

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

and we are conscious of the role that we play, including supporting Australians during periods of higher inflation.

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

Senator Henderson, withdraw.

Sarah Henderson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I withdraw.

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

Senator Ruston, I believe you need to withdraw as well.

Anne Ruston (SA, Liberal Party, Shadow Minister for Health and Aged Care) Share this | Link to this | Hansard source

The correcting the record?

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

Senator Ruston.

Anne Ruston (SA, Liberal Party, Shadow Minister for Health and Aged Care) Share this | Link to this | Hansard source

To assist the chamber, of course I will withdraw, but I still think the minister should perhaps correct the record.

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

Thank you, Senator Ruston. Senator Sharma, second supplementary?

Dave Sharma (NSW, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Minister, EY chief economist Cherelle Murphy said yesterday in response to the inflation figures:

If the re-acceleration in inflation is sustained over coming months … interest rate hikes are more likely than cuts in 2026.

Do you agree with this assessment?

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

I listen to a lot of economists, including many that are reported in the paper today, and, unsurprising to the chamber, there are different views. I will leave the commentary to others, and I leave the decisions the Reserve Bank makes to the Reserve Bank. That is their responsibility. They are independent of government. Our job is to get the budget in better shape, to pay down debt where we can, to return revenue to the budget and to ensure that services are being delivered in an efficient and effective way at the same time as delivering on our election commitments and making sure that we are supporting households. That is what we've done in the first three years, and we will continue that approach.