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

I move:

That the Senate notes:

(a) that under the Albanese Labor Government, the cost of everyday essentials has risen sharply—insurance up 39%, power up 38%, rent up 22% and groceries up 16%;

(b) failed policies have contributed to housing shortages, higher rents, persistently higher inflation, and increased exposure for families to further interest rate rises and higher mortgage costs; and

(c) there is an urgent need for action to address the worsening cost of living crisis facing Australian families and small businesses, driven by persistent inflation and higher interest rates, and exacerbated by the Government's reckless spending.

Australians are living through the most severe cost-of-living crisis in a generation. It is a crisis that has been made worse, not better, by the choices of the Albanese Labor government. This debate is not about slogans or ideology or misrepresentations; this is about outcomes. It is about whether Australians can afford to live, to rent, to buy a home, to raise a family or to retire with dignity.

Under this government the cost of everything is going up, and Australians are entitled to ask why. Australians don't experience the cost-of-living crisis through Treasury forecasts—I have to say some pretty bad forecasts, given what's now transpired—or spreadsheets. They experience the cost-of-living crisis through the weekly shop, the struggle to put food on the table, their rent notices, their insurance renewals and the crushing weight of higher mortgage repayments.

After nearly four years of Labor, Australians are paying more for the essentials of life. Insurance is up 39 per cent, energy is up 38 per cent, rent is up 22 per cent, health costs are up 18 per cent, education is up 17 per cent, and food is up 16 per cent. These are not luxuries; these are the basic costs of living that so many Australians are forced to pay and that more and more Australians are struggling to meet. The government's attempt to claim that the cost of living is easing has no credibility.

Just days ago, millions of Australian mortgage holders were hit with another devastating blow, the thirteenth interest rate rise under Labor in less than four years. For families already at breaking point, this was not an abstract monetary policy decision. This was a direct hit to household budgets. The average mortgage holder is now paying more than $20,000 a year extra in interest compared to when Labor took office. This is crippling. Within hours of the interest rate rise decision being made, millions of Australians received notice from their banks saying their mortgages were going up by 0.25 per cent.

This comes on top of grocery prices soaring, power prices soaring, escalating insurance premiums and rents that keep climbing. Despite repeated assurances from the government that inflation was coming down, we now know that that simply was not true. Inflation rose to 3.8 per cent in December, accelerating over Christmas, when family budgets were already under so much strain. The Reserve Bank, alarmingly, has now upgraded its inflation forecast and expects inflation to remain above the target range for at least another 2½ years, and the consequences are clear. Interest rates are higher for longer. Higher interest rates keep on crippling Australian families. Real wages continue to fall. There is slower economic growth and rising unemployment. That is the price that Australians are paying for poor fiscal discipline by this hopeless and incompetent Labor government.

Labor would like Australians to believe that this crisis is global, unavoidable and beyond the government's control, and this is simply not true. Australia's inflation problem has been kept higher for longer because government spending has been allowed to surge exactly at the wrong time when the economy is already operating at capacity and supply is constrained. This is not a controversial view; it is the consensus amongst every serious economist in this country. For instance, the AMP's chief economist, Shane Oliver, has stated very plainly:

The best thing that Australian governments can do to help bring down inflation would be to cut government spending back to more normal levels …

IFM Investors's chief economist, Alex Joiner, has warned that 'the fiscal guardrails have come off'. These are not political figures. They are independent economic experts sounding the alarm bells, and I want to particularly draw on the alarm bells sounded by the respected economist Judith Sloan, who has laid bare the core failure of this government's economic strategy. Her analysis in her recent article in the Australian, entitled 'Jim Chalmers thought he had discovered an economic secret sauce. He was wrong', is simple and devastating.

Australia does not have an inflation problem caused by insufficient demand. It has an inflation problem caused by excess demand in a supply constrained economy which is driven by government spending that is poorly targeted, poorly timed and poorly disciplined. Labor's approach has been to spray money broadly without adequate means testing at a time when housing supply is constrained, labour markets are tight, infrastructure bottlenecks are worsening and construction capacity is stretched.

The failure, the desertion by Labor, of the importance of means testing and a whole range of different programs has had dramatic consequences. When subsidies are paid regardless of income, wealth or need—which of course deserts the way Labor used operate when it used to provide government support to those who most needed help. We now see this government through its failure to means test child care and the five per cent deposit scheme—which is now open to anyone, including the children of billionaire families. That has a shocking consequence on this economy, pushing prices higher and forcing the RBA to respond with higher interest rates.

Such is the powerless state of the budget that we even saw the member for Corio and Minister for Defence, Mr Marles, announce a fire sale of more than 60 defence sites, which frankly is a shock, because it included the historic Fort Queenscliff. This represents a disgraceful betrayal of our community, the Geelong region in Victoria, and shows contempt for one of Australia's most significant historic defence sites. So the government is now so desperate that they are selling off our history. Fort Queenscliff was a very special place of service, sacrifice and national memory.

What a disgrace this government is, after more than 10 years of doing everything they could to sell off Fort Queenscliff which is one of the most significant Defence assets in this country. It was built in 1862 to protect Melbourne from potential Russian attacks, served as a vital costal defence hub and is now a centre of military history. So much of the fort is heritage listed by the Commonwealth, and yet this reckless and uncaring government could not care less about the impact that these sorts of decisions have on our community, on our state and on our nation. I can tell you, I'm going to fight this every step of the way, as I know other senators and members on our side of politics are going to fight in relation to some of these historic sites which play such an important role in our defence capability.

I do want to quote from this article by Judith Sloan because it really bells the cat about how incompetent this government is when it comes to curbing the cost of living and running the economy. She said, in part:

… here's the thing: it has become increasingly clear that Chalmers simply doesn't understand how the economy works. When confronted with the unwelcome CPI release last week, the Treasurer pulled out all the talking points given to him by Treasury and attempted to tell us that black is white.

Evidently, inflation is now all about the evil workings of the private sector. It has nothing to do with government spending.

She goes on to say:

The Treasurer is living on another planet if he thinks that the ramp-up in government spending is not making inflation worse. Just look at the figures. According to MYEFO, real government spending will increase by 4.5 per cent this financial year; it grew by 5.5 per cent last financial year. Government payments as percentage of GDP are close to 27 per cent, another record outside Covid and several years in the early 1980s.

We now see the RBA, the Reserve Bank of Australia, being forced to increase the interest rate, the cash rate, because of Labor's economic incompetence, because of its mess. The Reserve Bank only has one blunt instrument, interest rates, so when fiscal policy pours fuel on inflation, monetary policy must slam on the brakes. That is exactly what is happening right now, and Australian families are paying a very, very heavy price. This is a stark indictment of the government's economic mismanagement. The Treasury's secretary is urging restraint. The Reserve Bank board is urging restraint, and yet the Treasurer continues to accelerate spending.

So irresponsible is this Treasurer that he decides to deliver this five per cent deposit scheme—under our previous government, it was very constrained, means tested and targeted to first home buyers who most needed government help—and open the flood gates. Now, anyone can apply for this government subsidy. It is a disgrace, because it says everything we need to know about this government. It does not care about those who most need our help. It is spending money like a drunken sailor, supporting the children of millionaires and billionaires, with no regard for the impact that this is having on everyday Australians. Of course, we know that housing costs are a key driver of inflation, and we know that this scheme alone is driving up housing costs, making it tougher for those who are desperately saying, 'How, in this day and age, will I ever raise the money to buy a house?' This government's policies are making the problem worse.

Let's be clear about the scale of Labor's spending surge. In this financial year alone, Labor has added around $50 billion in new discretionary spending decisions—almost the value of the entire defence budget. Government spending is now growing 13 times faster than it was projected to grow under the coalition. Spending has increased from 24 per cent to 27 per cent of GDP—the highest level outside a recession in nearly 40 years. This is not responsible economic management; this is fiscal recklessness. This is a government that does not care about the growing black hole in our budget.

Why were voters not warned about this before the election? Why was this not disclosed properly in MYEFO? Why is the Treasurer still trotting down the street on his horse like the emperor with no clothes, pretending that everything is okay? It is not okay. This is a shocking cost-of-living crisis. So many Australians are suffering. Until this government restores fiscal discipline, Australians will continue to pay a very heavy price.

Richard Colbeck (Tasmania, Liberal Party) Share this | Link to this | Hansard source

The question is that the motion moved by Senator Henderson be agreed to. A division is required. There being no divisions on Thursdays after 4.30 pm, we shall return to the question at a later time.