Topics: Quarterly CPI

E&OE

ANGUS TAYLOR:

Well, quarterly inflation data out today and it's clear that Labor's homegrown inflation crisis is raging. Not only did inflation come in above expectations, we see prices are going up, but inflation is accelerating, inflation is accelerating. And what is very clear from this data is it is homegrown. It is absolutely homegrown. We see when we break up the inflation data, that domestic inflation - homegrown inflation - is running at 5%. At 5%. Whereas international inflation - tradables inflation - running at less than 1%. So, the Labor government cannot hide from this, the Treasurer cannot hide from this. This is his inflation. This is Labor's inflation and they need to deal with it. Now, the implications of this are extraordinary. We have now amongst the highest levels of inflation of any advanced country in the world. The Economist tells us it's the most persistent of any advanced country in the world and there's no solution in sight. Australians are feeling deep pain. And to give a sense of this, since Labor's come to power, their inflation, their homegrown inflation, has hit food prices by 10%, education 11%, housing 12%, insurance 26%, electricity and gas 18% and 25% respectively. And we see today that the risk to higher interest rates or interest rates that are higher for longer is very, very real - a number of economists are saying this. That is what two years of Labor's homegrown inflation does to Australian households.

Now, it didn't need to be this way. It didn't need to be the case that we've got a record number of Australians having to take on a second job to make ends meet. It didn't need to be this way that we've seen discretionary spending from households having to be slashed in order to make ends meet. It didn't need to be the case that Australians need to dig deep into their savings, deep into their savings, to make ends meet. And it didn't need to be the case that we see insolvencies at record levels, with an economy that is shuddering to a halt with a household recession, a family recession, GDP per capita going backwards for three quarters in a row at the same time as we've got Labor's raging homegrown inflation.

There is a better way. A back to basics agenda that manages government spending, that makes sure there isn't waste - $209 billion of extra spending since Labor came to power, over $20,000 for the average Australian household. And the Treasurer is now out there telling us he's going to spend more. He's making very clear signals that that's his intention in this budget, he's going to spend more and that drives up inflation and interest rates. That puts more pain onto Australian households. As I say, there's a better way, making sure that we've got the competitive, productive workplaces that we need, not handing over our workplaces to union officials. Making sure we're getting rid of the red tape, approving critical projects, making sure that Australians get the energy price reductions that they were promised the $275 and there's absolutely no sign of that appearing. That back to basics agenda is what this country needs but it's not what we're getting from this Labor government and its homegrown inflation. Happy to take questions.

JOURNALIST:

Shadow Treasurer, economists have been saying they want to see a contractionary budget, but that didn't include support for lower income earners. Do you agree the government should still be prioritising targeted support for those struggling the most?

ANGUS TAYLOR:

Well, what they should be prioritising most of all is getting inflation and interest rates down. That should be the top priority of this government - getting rid of its homegrown inflation, dealing with the source of the problem, not the symptoms. When we get lower inflation and lower interest rates, absolutely everybody benefits. That's the point. That's the point. We all benefit from lower inflation and low interest rates. And that's why that needs to be the focus for the government. We've got a situation right now where the government has the foot on the accelerator, and it seems to be pressing harder on the accelerator, as the Reserve Bank has the foot on the brake. And the fear is that they're going to have to press harder to fight against the government. That is the last thing we need. We've seen this all before. We saw this through the 70s and the 80s. We know the answer. It's very, very clear. Economists understand the answer to this. It's not more spending, it's getting back to basics. And we're not seeing that from this government.

JOURNALIST:

On the inflation readings today, I mean, service inflation across areas like education, health, insurance, rents, they're continuing to rise. Is there a case for further intervention from the government here in the May budget to try and curb these costs, sort of like we've seen with the energy price relief that they've offered thus far?

ANGUS TAYLOR:

You know, the real problem with inflation is that it's across the board. We're seeing it in groceries, we're seeing it in insurance, we're seeing it in rentals. We're seeing it in everything that people buy. Education, we see it in health in these numbers that have come out today. When it's across the board, you've got to go to the source of the problem. You can't put a band aid on a bullet wound, you've got to go to the source of the problem. And the failure of this government is that it hasn't gone to the source of the problem, because it's addicted to spending. We've got a Treasurer, who's addicted to spending. We've got a Prime Minister who's addicted to spending. He's come out with his MIA Bill in the last little while. When it comes to inflation, that's Missing In Action Bill. That's exactly a replica of the bill in the United States that is driving inflation there and we're seeing the same pattern here. The test for this Treasurer, and this Prime Minister is to bring down a budget that goes to the source of the problem, that puts downward pressure on inflation and interest rates by managing the government's budget, just as households are having to manage their budget. That's how you beat inflation, you get a government that knows how to manage its budget, that manages its spending, that doesn't spend the windfall gains from high commodity prices, that doesn't take from household budgets in order to bolster their budget, that manages their spending to bring down inflation and interest rates. And that has to be the top priority.

JOURNALIST:

Interest rate futures are now pricing rate cuts until 2025. If that's the case, if that is borne out, I mean, what pressure will that inflict on households?

ANGUS TAYLOR:

Well, it's even worse than that. We see long term interest rate futures now above the current interest rate. So that's a disastrous situation, a sharp increase today. It's clear that this is much worse than expectations. It's clear that the markets have already come to their view that Labor's homegrown inflation crisis is here to stay and that's a very sad indictment on a government that has absolutely failed in its number one goal, according to the government at least, which is to bring down inflation. Of course, it's never had a plan to bring down inflation. And the risk, as you rightly point out now, is we have interest rates that are higher for longer, and that Australians have to suffer more under a government that is really not dealing with the source of the problem.

JOURNALIST:

Shadow Treasurer, HECS debts are set to increase by 4.8% on June 1, there's a [inaudible] changes to HECS indexation in the budget. Is the Opposition supportive of this idea? What's your stance?

ANGUS TAYLOR:

I'll tell you what we're supportive of - get inflation and interest rates down and HECS payments will come down. It's really very simple. When you go to every one of these things - health, education, insurance, groceries, rental, buying a house, the mortgage costs on a house - all of those things can come down if you do the right thing as a government, if you beat this homegrown inflation crisis, and that means dealing with the source of the problem. Putting downward pressure on interest rates and inflation. $209 billion of extra spending under Labor, who let's see how much more they come out with in this budget. The true test for Labor is can they bring down a budget where they get off their spending addiction, they deal with the source of the problem, they take their foot off the accelerator and bring down interest rates and inflation in the process, which is good for all Australians, including students.

ENDS.