Topics: Petroleum Resource Rent Tax; inflation; tobacco tax; Defence spending; aged care pay rise; proposed JobSeeker increase; Budget surplus; core inflation; Snowy Hydro 2.0; Stuart Robert’s resignation.

E&OE

DAVID SPEERS:

Angus Taylor, welcome to the program.

ANGUS TAYLOR:

Thanks for having me, David.

DAVID SPEERS:

So the Coalition did begin this review of the Petroleum Resource Rent Tax. Do you support the change the government's landed on here?

ANGUS TAYLOR:

We've only just seen it, David. So it's very hard to comment without seeing the detail. Look, these are complex taxes. Last time Labor brought one in was under Wayne Swan, Jim Chalmers was in that office. It was a complete dog's breakfast. It didn't collect any real money and it was a complete failure. So they're very complex. The devil’s in the detail. I'm not going to comment until we've seen the detail, David. But you know, more broadly, we want to see a budget that is going to put downward pressure on inflation and the real test for everything that the government is doing now, is it is it putting downward pressure on inflation? If you want to get prices down, typically you don't tax it more. So that's going to be the test we’ll apply and we'll see when we get more of the detail.

DAVID SPEERS:

And I'll come to that inflation challenge. But just sticking with the gas industry, has anyone in the industry been talking to you and saying, you know, we'd rather you deal with the government instead of them running off to deal with the Greens.

ANGUS TAYLOR:

I talk with the energy companies all the time but they're all shrouded in secrecy. They haven't been able to give us any detail because the government runs these processes now with non-disclosure agreements so it's impossible to have a detailed discussion under those circumstances.

DAVID SPEERS:

But are they giving you that sort of message though, in principle that they'd rather you work with the government on this?

ANGUS TAYLOR:

I think the gas companies all have their own positions. I'm not going to comment on where they all sit. That's up to them, David, but what I will say is, you know, we need a budget now that takes pressure off inflation. We've got to fight inflation. We've got the worst inflation, core inflation in the G7. It's above the US. it's above the UK, Canada, Europe and it's not coming out of Russia. This is not Vladimir Putin's inflation. This is Labor's inflation.

DAVID SPEERS:

Okay, I will come to that, as I say, but just one more on this gas tax that's been announced today or the PRRT. It's notable that the Coalition was very quick to oppose the superannuation tax change. On this one, from what you're saying this morning, you're at least open to looking at this proposed change?

ANGUS TAYLOR:  

Well, we haven't seen it. I mean, these are as complex as you get, resource rent taxes, which is partly why Labor botched it last time and Jim Chalmers was there. So will they botch it again this time? I don't know. I haven't seen the detail, David.

DAVID SPEERS:

Do they pay enough tax? Their earnings are up, like three times what they were a couple of years ago. $91 billion in earnings. Are they paying enough tax?

ANGUS TAYLOR:

They’re paying a lot of tax at the moment. But put that aside, David, I've got a proposal that apparently, we're going to see in the not too distant future. That's what we've got in front of us and our fight right now is with the inflation, which is rampaging through our economy right now.

DAVID SPEERS:

Just on another tax. Do you support the increase in the tobacco excise that the government announced during the week?

ANGUS TAYLOR:

Again, we've only just seen that and we'll work our way through it. But look, as I say, again, David, you know, when you're trying to fight inflation, when you want to get the price of something down, hitting it with a tax is not the obvious answer. So you know, what we want to see is a budget that's fighting inflation because that will be a Budget for all Australians. Not just a Budget for a few or hitting the friends… supporting the friends of Labor and hurting others. This has to be a Budget for every Australian. Inflation is hitting everyone and everything and that's why fighting inflation has to be the top priority.

DAVID SPEERS:

Let's look at the spending side of the budget. We know the Coalition thinks the government should be spending more on Defence over the next four years and should be spending more, expanding access to the age pension as well. Are there any other areas you think we should be spending more?

ANGUS TAYLOR:

We've said that the Defence budget should be within the envelope that's already been established and that money should be used well the way to spend more … 

DAVID SPEERS:

I thought Andrew Hastie was saying spend more?

ANGUS TAYLOR:

Well, let's be clear. The way to spend more is to have a strengthening economy because it's set as a percent of GDP. So what we need, David, is we need an inflation fighting Budget that leaves us with a strong, fast growing economy and that puts us in a position where areas like Defence can get the funding that it needs and that's got to be the priority for this Budget.

DAVID SPEERS:

What about the increased spending on aged care pay? The $14 billion that's been announced to boost the pay of aged care workers. Do you support that?

ANGUS TAYLOR:

Yeah, that was the decision by the Fair Work Commission. I mean it was a decision by the Fair Work Commission. We've always said those independent decisions should be left independent and we'll honour that. What I would say is that Labor in your line of questioning will go from one group to another group to another group. Everyone is being hurt by inflation. The whole lot of us. Every product across the board is being hit by inflation and so if you want to help all Australians, all vulnerable Australians, not just the ones you can identify, and the ones you're picking out, if you want to help all vulnerable Australians, you've got to get that inflation under control.

DAVID SPEERS:

Okay, but we need to talk about the various ways you do that. So the aged care pay rise, the Coalition never said the government should fund it. Are you now saying you're okay with the government funding this?

ANGUS TAYLOR:

What I'm saying is we respect the decisions of the Fair Work Commission.

DAVID SPEERS:

No but for the government to pay for that.

ANGUS TAYLOR:

We’ll work through … Look, we're going to work through each of the spending decisions that come out in this Budget in the context of the budget. The critical point here is inflation is impacted by the overall Budget, not just any individual initiative. So we've got to look at this overall budget when we receive it and it needs to be a Budget that's going to fight inflation, that's going to take that pressure off all Australians. It is a big tax on everyone and this is the best way for all Australians, including aged care workers to be better off, to make sure that there's lower inflation, and they get stronger real wages as a result.

DAVID SPEERS:

Alright. I suspect to know the answer to this one, too. But I've got to ask. JobSeeker. What about that? Should that be increased?

ANGUS TAYLOR:

Well, you know, the truth of the matter right now, David, is we've got over 430,000 vacancies in the economy. That's almost as many vacancies as unemployed Australians. We haven't seen that ratio in living memory. This is an extraordinary situation. The priority right now has to be helping people into work and making sure we've got downward pressure on inflation when they get into work so that their real wages are strong. So that's got to be the priority and I think Australians understand that. I mean if you walk down the main street of any town or suburb these days, you will see work wanted signs in the windows. There's a lot of jobs around. Our challenge is to get people into work and that's why policies like the one we announced on pensioners, the work bonus, is so important, it gets more people into work.

DAVID SPEERS:

So that sounds like a no to increasing JobSeeker?

ANGUS TAYLOR:

Well, as I say, we'll look at each of these policies in the context of the Budget. But I’ve got to say, there's a lot of vacancies out there, David, and the priority’s got to be getting people into work, not cash splashes because the truth of it is inflation economics is different. If you throw money at it, you make it worse. That's what's so different from what we've experienced in the recent past.

DAVID SPEERS:

Alright. Well let’s talk about inflation. If that is the big thing the government has to do, how should they do it?

ANGUS TAYLOR:

Well, first and foremost, you've got to commit to it. You've got to commit to making sure that it is your priority and we know that means managing your budget carefully. Look, a drover's dog can deliver a budget surplus this year. We know that and we saw a budget surplus from the moment the Victorian and New South Wales economies were opened up in 2021 through to the election, the budget was in surplus. So the government's inherited this situation and they can deliver that in the short term. The challenge is this though, David, the real test is can they deliver budget balance on an ongoing basis because that will take pressure off and the key to that is not taxing more. It's managing spending, making sure the economy is growing faster than spending. That's how we did it between 2013 and 2019 and it worked.

DAVID SPEERS:

But can you just give us one idea as to what they should do to put downward pressure on inflation?

ANGUS TAYLOR:

Well I will emphasise again. The first and most important thing is commit to budget balance. They took their commitment to budget balance out of the last budget.

DAVID SPEERS:

Commitment’s great but what's one idea to put downward pressure on inflation?

ANGUS TAYLOR:

I mean, I will come back to that, but emphasising commitment, because if you don't commit to something, you're unlikely to ever achieve it, David, and that's why it's so important. But we've already said in recent months there’s $45 billion of spending, $18 billion of interest costs associated with that which we disagree with.

DAVID SPEERS:

But none of that's causing inflation now, right. You're talking about things that are still being legislated and set up, these off budget funds. What right now is going to put downward pressure on inflation?

ANGUS TAYLOR:

Big spending governments are inflationary, not just spending now but into the future, that's how it works and we saw in the last Budget, Labor adding $115 billion of spending over the estimates, over those four years, versus the March Budget the October Budget added $115 billion of spending. There's another $45 billion of spending that which we've opposed because right now, that's not what we need. $18 billion of interest costs associated with that, David and that's inflationary. So these are things the government can do. They are showing no signs of it. We hope for the best, of course, and we'll plan for the worst and we'll see what comes out of the Budget.

DAVID SPEERS:

So the Coalition couldn't produce a surplus in nine years but you're saying there should be surpluses in every year of the next four years for Labor?

ANGUS TAYLOR:

Well, they inherited a Budget between when the economies in New South Wales and Victoria opened up in late 2021 through to May that was in surplus. That's what they inherited. So the real issue is, are they going to capitalise on that and deliver into the future? We did have budget balance in 2019, we did have budget balance. We inherited a trajectory to $650 billion of debt, we brought that down, we got back to budget balance, the pandemic hit, and we were back in budget balance immediately that the economies opened up. That was a remarkable outcome and a remarkable situation and one that Labor doesn't want to talk about because it puts pressure on them to deliver sensible outcomes to manage their spending, and to take pressure off inflation. Because … you go David.

DAVID SPEERS:

No I was just going to say, so you are blaming Labor for the inflation problem we've now got, but you're not giving them any credit for being able to produce a surplus?

ANGUS TAYLOR:

Well, I'm blaming Labor for not taking responsibility for bringing down inflation. I mean we have the highest inflation in the G7. The highest core inflation in the G7.

DAVID SPEERS:

I’ve heard you make this point a few times during the week. There’s actually some G7 economies where inflation is higher than Australia, not in Germany, Italy, the UK, but in in those where it's lower, like the United States, notably, interest rates are a hell of a lot higher than they are in Australia, you've got to acknowledge the full story here, haven't you?

ANGUS TAYLOR:

Core inflation in Australia is higher at 6.6 per cent – core inflation – then these other economies across the G7.

DAVID SPEERS:

Headline inflation.

ANGUS TAYLOR:

So we are facing … well, you know, core inflation is what economists look at, David, for good reason. So we are in a situation where this government isn't taking responsibility. It added $115 billion of spending. There's all sorts of extra spending it's looking at now. The more the Treasurer talks about restraint, we know the more he's planning to spend. That's the doublespeak we're getting from Labor right now.

DAVID SPEERS:

Just on a couple of other issues quickly. Another two-year delay announced for the Snowy Hydro 2.0 scheme. We don't know what the full cost is going to be now. Do you still think this is a project worth continuing with?

ANGUS TAYLOR:

Yeah, I think it is. But I mean, Labor should be holding its contractors to the terms of their contract. Those contracts were strong and firm, and they should be holding them to the terms of the contract. They'll have to explain to you why they have chosen not to do that. But I've got to say, you know Chris Bowen, when it comes to these projects, he's more focused on fighting the Coalition then he is on fighting inflation. These are important projects to make sure we put downward pressure on prices. He's given up on his $275. He needs to get on with the job.

DAVID SPEERS:

And Stuart Robert has announced that he'll be quitting politics. The Coalition has just been through a bruising and ultimately unsuccessful by election in Aston. Now you're facing another one in Fadden? Is this another test for Peter Dutton?

ANGUS TAYLOR:

Look, I think all elections and byelections are … they're all tough, David. They always will be but I do think it's a test of whether Labor’s going to get inflation under control in the economy and as I said …

DAVID SPEERS:

A test for Peter Dutton though?

ANGUS TAYLOR:

Well, I think it's a test for whether inflation is being dealt with. Look, the truth of the matter is, we know there is no bigger conversation around the kitchen table right now than this inflation that is hitting. It’s a tax on everyone and everything and we want to see a budget that deals with that and no doubt that will be a feature in the coming months, including in these byelections.

DAVID SPEERS:

But this is Fadden though. Surely … how confident are you? Surely the LNP can hold Fadden?

ANGUS TAYLOR:

Well, as I say, every election, and every byelection is tough. That's the nature of modern politics …

DAVID SPEERS:

Things aren’t that grim for the Coalition, are they? Fadden?

ANGUS TAYLOR:

(Laughs) Well, they're always tough. But look, the point I would make is the real test right now is this inflation test. You know, I was out in Sutherland, I was down in Adelaide, elsewhere all around Australia over the last week or two and there is no conversation that even comes close to this one. In households in businesses. This is a big tax that's rampaging through our economy, hitting everyone and everything.

DAVID SPEERS:

I think we got the point of inflation. So you should get a swing to the Coalition, then surely, if that's the case?

ANGUS TAYLOR:

(Laughs) Well, you've got Antony Green, who's going to give you your commentary, David. I'll focus on the issues and I think I've been pretty clear about those issues.

DAVID SPEERS:

Angus Taylor, you have indeed. Thank you very much for joining us.

ANGUS TAYLOR:

Good on you. Thank you, David.

ENDS.