Topics: Reserve Bank decision; collapse in living standards under Labor.  

  

E&OE    

 

PATRICIA KARVELAS   

Angus Taylor, welcome to the program.  

  

ANGUS TAYLOR   

Good to be with you PK. 

  

PATRICIA KARVELAS   

Is this a great day for Australians who have a mortgage? 

  

ANGUS TAYLOR   

Well, it's welcome relief. There's no question about that, Patricia and the fact of the matter is, Australians have been suffering under elevated inflation, high interest rates for an extended period of time now, but it's been a long time coming. We've seen interest rate cuts elsewhere in the world. Australia has been at the back of the pack in bringing core inflation down, and in that time, a typical Australian household with a mortgage has paid an extra $50,000 in interest rate costs compared to when the interest rate increases began. So it's long-suffering Australian households who are welcoming this today. No question about that. But I should say that also within what the Reserve Bank put out today was an important forecast, which pointed out that it's going to be a long way back. Living standards have collapsed in an unprecedented way in Australia, more than any other time in our history, and further downgrades in living standards came out in the Reserve Bank's forecast despite the interest rate cut. So it's a long journey back to where Australians were when these interest rate increases began.  

  

PATRICIA KARVELAS   

The Treasurer Jim Chalmers said when he addressed the media this afternoon that the worst of the inflation challenge is behind us but that they're not being complacent about it. Do you agree that the worst of the inflation challenge is now behind us? 

  

ANGUS TAYLOR   

Well, it's very important to understand that there's no expectation here that prices are coming down. And of course, we still have core inflation above the target range, and indeed, over the longer term, we've got an increase in the expected inflation from the Reserve Bank forecast. So there's still some way to go to get back to the midpoint of the target range. The Reserve Bank has made that point. They're very cautious. In fact, we've seen Michele Bullock cautious and hawkish in her comments just in the last few minutes. So it is a long way back here. The prices aren't coming down. They're continuing to rise. The question is at what pace PK, and importantly our living standards won't get back to where they were when these interest rates began and when Labor came to power until 2030 that's a long journey back to where we were.  

  

PATRICIA KARVELAS   

Michele Bullock says we cannot declare victory on inflation yet. Do you agree with her sentiment? 

  

ANGUS TAYLOR   

100 per cent. I mean, she is absolutely right in making that comment, and it's been a long journey. It's been a long journey, and sadly, in terms of living standards, we've still got a very, very long way to go under the government's plan. Now, the job of government is to try and accelerate Australians pathway back to the living standards they had before this began. But right now, on the government's plans, we're not talking about until 2030 or beyond, and these forecasts today from the Reserve Bank suggest that it's going to be an even longer journey than we thought.  

  

PATRICIA KARVELAS   

Well, on that issue, I mean, you make the point about being the back of the pack, but we're actually kind of at the front of the pack when it comes to low unemployment. That's a pretty important metric too, isn't it Shadow Treasurer? You want people to be in jobs, there's no doubt that their cost of living has been difficult, but isn't trying to achieve a lowering of inflation while keeping unemployment low a worthy objective? 

  

ANGUS TAYLOR   

Of course, it's a worthy objective, but so too is making sure we maintain people's living standards and increase their living standards. 

  

PATRICIA KARVELAS   

Your living standards collapse, though, if you don't have a job, right? I mean, it's such a fundamental part of life, given it's still low when we are walking what is a very narrow path. Do you give the government and the RBA some credit for keeping us on a path where people have remained in employment through this very difficult period? 

  

ANGUS TAYLOR   

Well, you know, it's always good to see employment, but the truth is that you'll have many people who watch this or see this, who will be having to work extra hours over and above what they had been working. We're seeing many Australians taking on a second job, record levels indeed, taking on a second job, taking on extra hours, small business people who are working their fingers to the bone, I see every day in my electorate to make ends meet. So when you do see an unprecedented collapse in living standards, there are consequences. It's true. Of course, we don't want to see unemployment, but the shock here from the poor economic performance and the poor economic management we've seen over the last two and a half years is being felt in an unprecedented collapse in living standards. And I should say that collapse is unparalleled too PK. No other peer country around the world has seen anything like what we have over that timeframe. And that tells you that there is a lot of pain being felt by Australian households. We have a long journey back. The job of government is to work out how to accelerate that journey. But the key to standards of living, the key to beating a cost of living crisis, is good economic management, and that's how you deal with the underlying source of the problem we've got here.  

  

PATRICIA KARVELAS   

Michele Bullock has been asked, of course, in this very important press conference she holds, which a lot of Australians I know have been watching over the afternoon, whether we can sustain unemployment levels of 4.25% to hold inflation within the RBA target band. She says that there's been a big debate, of course, about that, as you know, but I just want to get your view. Do you think it's worth trying to keep unemployment at those low levels? Because there is the counter argument that employment, unemployment has to rise, that people have to lose their jobs. What's your view? Do people have to lose their jobs? 

  

ANGUS TAYLOR   

PK, I'm going to resist the temptation of getting into a debate, it's quite a technical debate about the so-called NAIRU, the non-accelerating inflation rate of unemployment, and that debate has been around in economics for a long, long time. Of course, the Reserve Bank will be thinking very long and hard about that. But what I will say is the shock here - 

  

PATRICIA KARVELAS   

But I do think viewers might want to know -  sorry, that was a bit rude, I don't mean to interrupt -but just on what viewers might want to know is, under a  Coalition Government, we're on the cusp of an election, is it your view that you've got to pull money out of the economy and unemployment needs to go up to get to the inflation kind of vision you have? 

  

ANGUS TAYLOR   

Well, I would say the key here is to get demand in balance. What we've seen here is that, if you want to get interest rates down in inflation sustainably down, you've got to balance supply and demand. So what's the key to that? Making sure that government isn't unduly boosting demand. We've seen households doing the work PK, I mean, this is this point was made in the statement from the RBA today that we've seen very strong public demand, but very weak private demand. Now to translate that into common sense language, what that means is that it's households who have been tightening their belts. Government hasn't tightened its belt, and the result is Australians have paid a high price for that. They're doing the work to bring inflation and interest rates down when really government should be doing the work to make sure it contains that growth in spending. That's how you get the balance right. That's how you sustainably bring down inflation and maintain a strong jobs market. But this is clearly not the pathway that's been chosen by Labor, and one of the consequences of that, as I say, is an unprecedented and unparalleled collapse in our living standards. 

  

PATRICIA KARVELAS   

The Governor has also said that today's decision shouldn't be seen as meaning that we're going to have further rate cuts suggested by the market. She said, the market has suggested this, shouldn't be seen that way. She was asked if it was one and done, you know, one interest rate cut, and that's it wouldn't quite, you know, declare that it's only going to be one. But don't you think families deserve more than just one interest rate cut? 

  

ANGUS TAYLOR   

Well, you know, of course I would love to see families getting substantial improvements in their standard of living, which means sustained lower inflation, sustained lower interest rates and sustained strong jobs market. I mean, that's we all want to see that PK, but as the Reserve Bank Governor rightly pointed out, the journey back to that outcome, and in particular the standard of living we had when this all began, and that happened to coincide with the new Labor Government. It's a long journey back. We've got a long way to go here. Declaring victory on this - 

  

PATRICIA KARVELAS   

Inflation was quite high under the previous government, and the first interest rate rise did, of course, happen under the previous government, to just, you know, on the facts.  

  

ANGUS TAYLOR   

But let's be clear, I will respond to that. PK - 

  

PATRICIA KARVELAS   

There was a six in front of it but - 

  

ANGUS TAYLOR   

We've seen 12. Well, core inflation was lower than that. I mean, and core inflation is the number that, of course, the Reserve Bank looks at. So you know, they are Labor's talking points, but I'll give you the underlying facts.  

  

PATRICIA KARVELAS   

Well, no, sorry. That, that's a fact, that inflation was at that level, and the interest rate rise did happen under the former government. That is not a Labor talking point. That is a fact. 

  

ANGUS TAYLOR   

Well, we've had 12 interest rate increases under Labor and one cut. 

  

PATRICIA KARVELAS   

That's true. 

  

ANGUS TAYLOR   

And we've seen the biggest collapse in our standard of living in history, and unparalleled by other countries, peer countries in the world PK. I mean, this has been an economic catastrophe for Australian households. make no mistake. about it. I see that every day when I'm out and about on the ground, including today, I was out in Sydney talking to a young family who are just struggling to make ends meet because of the interest rate increases and the price hikes, which have been substantially higher for them and many families than we've seen in the CPI. 

  

PATRICIA KARVELAS   

Angus Taylor just finally, according to Newspoll figures that were published today, fewer than a quarter of voters believe that inflation would have been lower under Coalition government. Doesn't this suggest that your argument that you would have managed the economy better and the cost of living crisis better is failing to resonate? That's quite a startling figure, isn't it? 

  

ANGUS TAYLOR   

Well, I'm not going to comment on polls PK, as I don't comment on Reserve Bank - 

  

PATRICIA KARVELAS   

That means a lot of people are not buying this argument that things would have been better under your alternative, right?  

  

ANGUS TAYLOR   

Well I think there's, I think, as a result of the disastrous economic circumstances Australian facing right now, I think as a result of that, Australians are deeply cynical about the situation they're facing, and I completely understand that. I see that out there every single day, but what they do know is they can't afford another three years, like the last three years. Because they are poorer than they were three years ago. They are suffering greatly for the circumstances they've faced. And the truth is we know good economic management is the way to beat the cost of living crisis and in our time in government, inflation sat at just over 2% it's been well over 4% since Labor has been in power, and that's simply too high.  

  

PATRICIA KARVELAS   

Angus Taylor, thank you for joining us this afternoon. 

 

ENDS.