Topics:  Labor’s homegrown inflation, Labor’s housing tax, RBA Reforms 

 

E&OE   

 

ALI MOORE: 

Well, Angus Taylor is the federal Shadow Treasurer, and he joins you in the studio. Angus Taylor, welcome to Drive.  

 

ANGUS TAYLOR: 

Good to be with you, Ali. 

 

ALI MOORE: 

This is starting with a light question, but I tell you, what have you got a favourite memory of the MCG?  

 

ANGUS TAYLOR: 

I was just thinking about that. I have been to a couple of AFL games, but I have been to the test match and always a special day, always a special day the first day of the test match down here. And I've done that a couple of times, and had a wonderful, wonderful time.  

 

ALI MOORE: 

It is an extraordinary stadium, isn't it?  

ANGUS TAYLOR: 

It really is absolutely extraordinary. I mean, I'm from New South Wales, and I'd say the SCG is an extraordinary stadium too... 

 

ALI MOORE: 

But not quite the same.  

 

ANGUS TAYLOR: 

But not quite the same. I mean, hearing ball being shouted, and I'm from a rugby league, rugby union background, so I don't even know what that really means, but it's an incredible thing to participate in, even if you don't understand the game.  

 

ALI MOORE: 

Let's talk economics. Inflation is coming down, not enough, according to the RBA. But do you think we're getting closer to a rate cut?  

 

ANGUS TAYLOR: 

Well, I don't think we're any closer than we were before the last inflation figures, sadly, as the Reserve Bank Governor... 

 

ALI MOORE: 

Really? Even though we have seen a significant drop in both, you know, headline and underlying? 

 

ANGUS TAYLOR: 

Well, it was in line with consensus. And as the Reserve Bank Governor pointed out, we need to see sustained reductions, not just a temporary one. And we have seen a temporary reduction we know in electricity prices, we also know we're going to see a close to 50% increase in electricity prices over the next 12 months as those interventions come off. So the truth is that the reserve bank needs sustained reductions. We have been very slow to get back into the target range, and unlike countries around the world, we're not seeing interest rate cuts. So Canada, the United States, the UK, Europe, New Zealand, have all seen cuts, not yet in Australia.  

 

ALI MOORE: 

To be fair. I mean, if you look at what the Reserve Bank has said about that, they had a much more stimulatory action than we did. Their rates were higher, so they're coming off a higher base, if you like. Is it fair to compare them?  

 

ANGUS TAYLOR: 

Well, our inflation is higher than almost every other peer country in the world. That's the reality. And that means Australians are paying a higher price because they've got an extended period of higher inflation and higher interest rates than would otherwise have been the case, Ali. We're all paying a high price for that. You don't have to go far to see the pain that's being felt by households and businesses. I've just done a round table here in Melbourne with a bunch of local businesses, and the pain they're feeling is extraordinary, and their customers, of course. And we've seen a reduction in real disposable incomes, that's the standard of living, of 9% in two years. And that pain is very, very real. Now, government can be doing much more, we know, to beat inflation. It's not just the job of the Reserve Bank. It's also the job of the government.  

 

ALI MOORE: 

So what would you do if you had your hands on the levers?  

 

ANGUS TAYLOR: 

Well, you've got to get back to basics. You've got to do the things that we did back in the 70s. You do have to manage the growth in spending very carefully. You do have to make sure your industrial relations policies are good for both employees and employers, and that focus on enterprise, which was initiated by a Labor government under Bob Hawke, absolutely essential. We've been moving in the opposite direction. You do have to make sure your housing supply is in line with your population growth rate, and we haven't seen that. You do have to make sure you're getting rid of red tape, unnecessary red tape, that's impeding businesses from making investments and employing people and bringing down inflationary pressures. We've seen a reduction in labour productivity of 6.3% in two years. This is unprecedented, and Michele Bullock highlighted this in the statement this week from the Reserve Bank, that these levers or these outcomes are not where we want them to be if we're going to fight and beat inflation successfully. 

ALI MOORE:  

On the productivity issue, though, I mean, you would know yourself that for many years, under a Coalition government, productivity was an issue as well. This country's long had an issue with productivity. 

 

ANGUS TAYLOR: 

But Ali, nothing like this. We didn't see anything like a 6.3% reduction in labour productivity in two years. This is completely unprecedented. We haven't seen it before. It's disastrous. That just means there's less to share, whether it's for building schools and hospitals, whether it's for higher pay for workers, whatever it is, there's just less there, and we all pay a price for that. This is, you cannot have prosperity when numbers are going in that direction, and that's what they've done. Now, it's unusual for a Reserve Bank to really highlight this in the way that they did this week. But we had Philip Lowe, the former governor, come out today saying exactly the same thing, we have a really significant problem on the supply side of the economy, he's talking about productivity. And that's shown up very clearly, and it makes the job of fighting and beating inflation extremely difficult for a central bank.  

 

ALI MOORE: 

You're listening to the Shadow Treasurer, Angus Taylor, with you in the studio this afternoon. Angus Taylor, I'll come back to the Reserve Bank Board and the process of setting interest rates in a tick. But first of all, can I ask you about negative gearing, capital gains tax concessions. Just a really simple question, do you think it's reasonable that investors who have got 4, 5, 6, 15, 16 properties, I'm not talking about most people who might have one investment property. When you get to multiple investment properties, do you think it's reasonable that they reap the benefits of both negative gearing and the capital gains tax concessions?  

 

ANGUS TAYLOR: 

Well Ali, let's put this in perspective. We've got a Labor Party who is going down the path of not focusing on an investor with four or five properties, although it seems to me, they do want to get rid of that, but they're allowing industry funds and major corporates, big corporates, to own 4 or 5000 houses.  

 

ALI MOORE: 

But that wasn't the question, my question is... 

 

ANGUS TAYLOR: 

But that's the point... 

 

ALI MOORE: 

But the negative gearing applies to, I'm talking about individual property investors, we had, I think at least three of them who rang us yesterday, one had 14, one had 15, and one had 16 properties. Do you think that, even if you were in government, would you keep that? Absolutely no limit on how many investment properties you can negatively gear?  

 

ANGUS TAYLOR: 

Can I frame the choice here? The choice is incredibly important. It's, do we want mum and dad investors, a local plumber, a local nurse, a local teacher who owns a home and rents it out, they might have done it up and often they do as they do in my hometown, often. Or do we want big industry funds and big corporates owning 1000s of homes. 

 

ALI MOORE: 

But those mum and dad investors you're talking about, they don't have 16 properties. They might have one. They might even if they're lucky enough have... 

 

ANGUS TAYLOR: 

But Labor is saying it's okay for a big foreign fund or a big local fund to own 1000s of homes, but it's not okay for a local plumber to own four or five. I mean, we've lost... 

 

ALI MOORE: 

But they're not really saying that are they? I mean, they haven't made any chance at all. 

 

ANGUS TAYLOR: 

No, they are. They are pushing changes through the parliament now, and have been, to give subsidies and support to big industry and corporate investors who will own 1000s of homes. And then... 

 

ALI MOORE: 

But don't you want some of that investment... 

 

ANGUS TAYLOR: 

And then a moment later, they're talking about supporting the Greens with their policy of saying a local plumber shouldn't own four or five. I mean, this is, they've lost perspective here.  

 

ALI MOORE: 

Sorry, who in government has said that a local plumber shouldn't own four and five properties? That's, I've passed that by.  

 

ANGUS TAYLOR: 

They went to the 2019 election, of course, arguing that shouldn't be allowed. And you're putting that position now, and we have seen a secret plan being discussed in the papers over the last 48 hours...  

 

ALI MOORE: 

We haven't seen a plan. All we know is that Treasury is looking at it, and the government has said they won't change anything. That might be a Donald Trump plan for a plan, I think? An idea of a plan maybe?  

 

ANGUS TAYLOR: 

Well we had a senior Labor figure coming out in a very credible media outlet in this country saying that this plan was being worked on. And sadly, I think this is Labor going back to a policy where they lost the election in 2019, they want to go there again Ali. Ultimately, the big question for Australians is, what's our vision for housing in this country? And mine is a much more traditional one, where Australians can own their home they'll rent for a while. As they build up the capital they need, they'll rent it from a local plumber or nurse or teacher, rather than a big fund. And I think that's a better model for housing in this country. 

 

ALI MOORE: 

Let's look at the Reserve Bank. An independent review recommended creating two boards instead of the current one. So one border looks just at interest rates, the other one will look at the governance of the bank. The government wants to put those places, put those changes into place. You say, no, why?  

 

ANGUS TAYLOR: 

Well, because it became clear, over the course of the discussions with the government, which went for an extended period of time, that they wanted to sack and stack the board.  

 

ALI MOORE:  

Yes, I accept that that is the argument you made. But then the government addressed that by saying, well okay, all the existing board members can just shift over to the monetary policy board.  

 

ANGUS TAYLOR: 

They didn't do that.  

 

ALI MOORE:  

That offer was not made?  

 

ANGUS TAYLOR: 

They have said, you can either be on the governance board, or the monetary policy board, but you can't be on both. That was not our position. We wanted the current board to automatically move to the Monetary Policy Committee. Now, let me explain why this is so important. When you are fighting persistent inflation, amongst the highest levels of core inflation and the most persistent core inflation in the advanced world, you need stability of monetary policy and interest rate setting in this in this country. It became very clear that the government wanted to change out a number of those positions, and we were not prepared to stand for it. They wanted to sack and stack the board. Now they could have done something very simple. 

 

ALI MOORE: 

Can I just get to what the government offered. My understanding was that they did offer essentially what you wanted. 

 

ANGUS TAYLOR: 

No.  

 

ALI MOORE:  

They were addressing the any perception of sacking and stacking, and they were saying, you can shift across.  

 

ANGUS TAYLOR: 

No, that's not what they did.  

 

ALI MOORE: 

What did they actually... 

 

ANGUS TAYLOR: 

We asked them to automatically transfer the current board positions over to the monetary policy setting committee. They didn't do that. They indeed said, well you can be on one or the other. And there was a very opaque set of conversations that happened. 

 

ALI MOORE:  

Well, you have to be on one or the other if you're going to have two boards, that's just logical isn't it?    

 

ANGUS TAYLOR: 

But hang on. We wanted the current board to automatically go to the monetary policy setting board. Full stop. End of story.  

 

ALI MOORE:  

And my understanding is the Treasurer did not have an issue with that after conversations with you.   

 

ANGUS TAYLOR: 

That is not what was offered, that was not what happened. And it was not what was put to us, and it's certainly not what the Treasurer was doing. 

 

ALI MOORE:  

So that remains your position. The only way you'd accept it is if the current board became the monetary policy board. 

 

ANGUS TAYLOR: 

Yeah, because we knew from the start, I mean, we saw this from the start Ali. This went on forever. The Treasurer, we made this position very clear from the start. He didn't come back for an extended period of time. But we saw right from the start, the day the review came out, the Treasurer appointed two new board members without following the review process that he'd just accepted. It was clear that the purpose of the Treasurer in all of this was to put his people on the board. Now the independence and credibility and capability of the Reserve Bank is enormously important, and no time more important than now, when we're trying to fight and beat inflation. And it became very apparent to us that the Treasurer wasn't committed to that same level of independence. And frankly, in the two weeks leading up to when we made this decision, we saw many senior Labor Party figures coming out and questioning the board. And we saw this on multiple occasions, and including the Treasurer himself. And frankly, it's just not good enough.  

 

ALI MOORE:  

Angus Taylor, we're almost out of time. But I do want to ask you about your nuclear policy. I know Peter Dutton spoke earlier this week. He said he'll give the costings at a time of his choosing. I just have one question around what Peter Dutton said earlier in the week. Coal fired power stations will need to run for at least another 12 years. How is that going to work, given that the Australian energy market operator says around 90% of coal power generators will be shut by 2035 and even if they can keep running, the current operators say that they won't be profitable. So who's going to pay for it? 

 

ANGUS TAYLOR: 

Well, let's be clear here. What Peter Dutton was saying is that we shouldn't be shutting our current generators until we have replacement, and... 

 

ALI MOORE:  

Which could be ... 

 

ANGUS TAYLOR:  

But the truth is, we're not seeing replacement now. I mean, we're not seeing anything like the replacement that is needed for that baseload generation that we should be seeing. And the result is this. We're seeing state governments, including this state government in Victoria, doing secret deals where we don't know the terms of that deal. We don't know the terms of that deal, to extend the life of coal fired generators.  

 

ALI MOORE: 

Potentially extend the life. So is that what you would do? If you don't have the replacement, if you're waiting for your seven nuclear power plants to be built, would you underwrite them to continue? 

ANGUS TAYLOR: 

Well, I was in the position where a coal fired generator was closing when I was Energy Minister. And we said to AGL at the time, this is in New South Wales with Liddell, you either extend the life of that coal fired generator or it needs to be replaced. They refused to replace it, so we did it. And that's how the Kurri Kurri generator, which is about to to get going, came into place.  

 

ALI MOORE: 

So you'd actually, you'd build new coal fired generators to fill the gap?  

 

ANGUS TAYLOR: 

No, it's a gas generator. You need to make sure either they are fully replaced, or their life is extended. State governments are doing this now. So that's not a, that's not a controversial position. We're seeing Labor state governments in New South Wales and Victoria doing exactly that. Now we would prefer to get in and replace these generators as quickly as possible. And we've made the point that crucial alongside the renewables investment that we're continuing to see, will be gas investment as well. That will need to play a crucial role in the mix. So I don't think this is controversial. We're seeing state governments around the country pursuing the policy in line with what Peter Dutton talked about. 

 

ALI MOORE: 

Just one word. Can you give me a month, a week, maybe a date of when we might get the costings? No? 

 

ANGUS TAYLOR: 

I'm not going to be, I'll leave that to Peter Dutton. But I can assure you, when you see the costings, that this will be good economics.  

 

ALI MOORE: 

Angus Taylor, thank you very much for coming in.  

 

ANGUS TAYLOR: 

Good on you, Ali. 

 

ENDS.