Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. In a recent interview, the Deputy Governor of the Reserve Bank, Andrew Hauser, said that inflation was well above target even before the conflict in the Middle East. Given that economists widely accept that fuel prices push up transport costs and business input costs across the economy, why didn't the Treasurer act sooner to get inflation under control when it was already above target before rising petrol prices risked pushing inflation even higher?

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

I thank Senator Hume for the question. I think both the Treasurer and myself have said a number of times, including before the Middle East conflict broke out, that inflation has remained higher than we would like for longer than we would like. But I would also point out, Senator Hume, that it is much lower than what we inherited when you left government. I think, in the May quarter 2022, it was 2.1 per cent, and it peaked that year at about 7.8 per cent in the December quarter, so it was higher and rising when we came to government. It has come down considerably since then, which is a good thing and something that those opposite should have welcomed at the time. I don't believe they did. We have seen a recent uptick in some of the latest economic data. Inflation, productivity and reform are all issues that the Treasurer and myself have spoken about for months, and we will continue to focus on that.

Our approach has been to repair the budget and repair the mess we inherited—the trillion dollars of debt and the massive deficits, which were increasing. It has been to pay down debt and pay down interest on that debt; to find savings; to repair the budget; and to invest in cost-of=living help, much of which you opposed for the entire term of the previous parliament. It has been to make sure that as inflation was higher, though coming down, we could provide that cost-of-living help, which we did. That is the approach that we will continue to take in the lead-up to the budget. It has been well recognised by this government that inflation has ticked up and is higher than we would have liked.

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

Senator Hume, first supplementary?

Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) Share this | Link to this | Hansard source

Deputy Governor Hauser warned that inflation may only return to the midpoint of the Reserve Bank's target range in the middle of 2028. This forecast was made before the conflict in the Middle East. Minister, why has your government refused to heed the advice of economists, contain government expenditure and act on bringing inflation down, leaving Australians to pay more for everything?

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

I would also remind Senator Hume that the economic plan, if you could call it that, that they took to the last election stood for higher taxes, lower wages, bigger deficits and more debt. That is what was produced on the eve of the election, when their costings, which they were ashamed of, were tipped out at the last minute. So to stand here and criticise our plan, which was about repairing the budget, paying down debt—

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

Minister Gallagher, please resume your seat. Senator Hume?

Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) Share this | Link to this | Hansard source

On a point of order, which is relevance, with 30 seconds to go I'd like to understand what the government is going to do, not what the coalition did.

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

Thank you. The minister has been talking about the government. Minister, please continue.

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

I would just remind those opposite, as we look for sensible savings in the budget, as we have done—we have found $114 billion—that the cuts the opposition took to the last election were to oppose age pension increases, to oppose cheaper child care, to oppose cheaper medicines, to oppose the record investment in public hospitals, to attack programs like free TAFE and prac payments and to reimpose the activity test. That was the plan from the— (Time expired)

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

Senator Hume, second supplementary?

Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) Share this | Link to this | Hansard source

Deputy Governor Andrew Hauser also warned that, if inflation expectations are not kept under control, it can lead to toxic high inflation that is 'bad for everyone'. This week, inflation expectations have surged to a three-year high of 6.1 per cent. Minister, because your government failed to act earlier to get inflation under control, are Australians now facing the toxic inflation that the deputy governor warned about?

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

The pressure that has come on inflation in recent times has been directly linked to the conflict in the Middle East. Anyone who suggests otherwise isn't looking at what's happening in the Middle East or reading the data that is coming out of that, including an oil price that's moved from about $60 a barrel to over $120. I think it's currently trading at about $100 a barrel. To omit that from your question really says something about the seriousness of the question you pose to me.

In relation to the work before government—and this is work that we are doing every single day—we are looking at how we get the budget in better shape, at how we find sensible savings without attacking the services and systems that people in this country rely upon, and at how we're managing inflation and addressing some of the productivity challenges in the economy. That will be our focus. (Time expired)