Topics:  National Accounts, Labor’s homegrown inflation, NSW Liberal Party  

 

E&OE   

 

PATRICIA KARVELAS:  

Let’s return to the economy where Australia has recorded the lowest annual economic growth since the early 1990s, excluding the covid pandemic, that’s a key caveat there. Now, you just heard from the Finance Minister. The Shadow Treasurer Angus Taylor joins us now. Angus Taylor, welcome.  

 

ANGUS TAYLOR: 

G’day PK. Good to be with you.  

 

PATRICIA KARVELAS: 

Persistently high interest rates are hitting people pretty hard. In fact, government spending is clearly keeping the economy growing at all, though it’s pretty anaemic growth. Wouldn’t it be dangerous to cut government spending back now?  

 

ANGUS TAYLOR: 

Well can I start by saying it’s worse than anaemic growth. What households, what Australians feel in the economy isn’t the aggregate outcome, it’s the outcome per person, per household. And of course, that’s going backwards, it’s gone backwards now for six quarters in a row, 18 months. And the result of it is that Australians’ standard of living has fallen by 9% since Labor came to power. So it’s a disastrous economic situation. But economist after economist has come out in the last 24 hours and said the government has got its policy settings wrong. And in fact the problem here is the government has got its foot on the accelerator, as the KPMG chief economist put it, and the Reserve Bank’s foot is on the brake. And it’s not a sustainable situation. Cherelle Murphy has said the lack of coordination between fiscal and monetary policy means the path to low and stable inflation is slower than it needs to be, and so on. So we’re seeing this consistently and the reason is this: the economy is crunched on the supply side. Productivity is in freefall this quarter, 0.8% down in the quarter, over 6% since Labor came to power. And under those circumstances, if you add to spending, if you add to government, it adds to inflation and that’s the situation that economists are making very, very clear right now.  

 

PATRICIA KARVELAS: 

The Reserve Bank Governor has said there will be no interest rate cuts this year. She’s speaking today, as I mentioned to Katy Gallagher as well, so we’ll find out more later of course. The Deputy Governor talked about the economy running a bit hotter. Did the RBA get those things wrong, if you look at the GDP number?  

 

ANGUS TAYLOR: 

I’ll tell you what’s been wrong, is the government’s forecasted policies. I think that’s where the focus should be. You'll remember well, PK, before the Budget the Treasurer making a big deal of his forecasts and how he got it right and they got it wrong. Well, two weeks or just a matter of weeks after the Budget, it was clear that the government had got it completely wrong. And this is the point. The Reserve Bank has one lever, it's interest rates. The government has many, many levers. Whether it's productivity policies, industrial relations, immigration policy. Energy policy, they have lever after lever available to them to get the economy back on its feet. They're not using them. That is very, very clear and the result is we've got an absolutely disastrous situation for households. We had Jim Chalmers yesterday patting himself on the back, but if this was his plan, I tell you what, it's a disastrous situation for Australians.  

 

PATRICIA KARVELAS: 

[Inaudible] I heard rather  - if I can get that word out - I heard Saul Eslake also speak yesterday, an independent economist, and he said that Jim Chalmers might have something to crow about too. He argues that in fact if you look at where we're getting to and it's taking, yes, a long time, you're absolutely right about that, but we've also been able to keep unemployment low. Isn't that a worthy desire and achievement? 

 

ANGUS TAYLOR: 

Well, of course we all want to see strong employment, but the problem is standards of living have collapsed. 9% in two years PK, this is absolutely disastrous. Sinclair Davidson from RMIT made the point in the last 24 hours, “all the economic indicators are going the wrong way”. I'm quoting him “and what is the government doing? Fighting with the RBA”. This is truly a disastrous situation and Australians are feeling it. I mean it doesn't matter what the numbers say, what I see every single day out there is, they've seen the purchasing power of their pay packets go backwards indeed, for working families, we know the number is around 9%. We have seen their real disposable incomes collapse again, 9%. They know productivity is in the hole, it's down 6% since Labor came to power. All the settings are going the wrong way and we're seeing the results, we're seeing the outcomes on the ground. I certainly see it in my electorate and I see it right across this great nation as I travel around and there's no sign of that stopping. 

 

PATRICIA KARVELAS: 

Katy Gallagher kept on the table, I mean didn't make an announcement but kept on the table the option of stimulating again or providing families and Australians with more relief, if clearly they make an assessment that this is persisting and we're seeing this very low growth and we, you know, as you've acknowledged, households are doing it tough would you back that? 

 

ANGUS TAYLOR: 

Well, we haven't seen any proposal. 

 

PATRICIA KARVELAS: 

No, but I mean the concept that if they continue to be struggling. 

 

ANGUS TAYLOR: 

Well, I try not to speculate on hypotheticals PK, so we'll wait and see any specific proposal they've got. What I would say as a matter of principle is you don't solve the cost of living crisis like this by throwing money at it. The government is now fighting on two fronts. It's fighting everybody, frankly, but it's got two fundamental problems. Number one is inflation is stuck. Our core inflation hasn't moved since January. Unlike every other major advanced country in the world, it's higher than every other major advanced country in the world. And that's why we're seeing interest rate cuts in other countries, but not in Australia. But at the same time, GDP per capita going backwards now for 18 months, 6 consecutive quarters completely unprecedented. So just throwing some money at it, I've got to tell you, every economist I've just referred to will tell you that's the wrong answer. It's not going to solve it. You've got to get back to the supply side, get the fundamentals right and this is a government, whether it's on industrial relations, on energy policy or immigration policy, on red tape, is not moving those levers in the right direction. 

 

PATRICIA KARVELAS: 

So you think, despite the fact that we're seeing this very bad level of growth, negligible really, you still think cuts are necessary? 

 

ANGUS TAYLOR: 

I didn't say that, I said managing spending growth is critical and that's why -  

 

PATRICIA KARVELAS: 

OK, we're using different language for the same concept, right?  

 

ANGUS TAYLOR : 

Well it's not. It's not. I mean, you know, we've been very clear on this. We're not about cutting essential services. What we are about is saying that now is not the time to spend money on initiatives that are not going to help solve the underlying problems that we're facing as a country, and that's why we've opposed many initiatives in the Parliament that are just not the right initiatives for the time. You don't solve a cost of living crisis by throwing money at it, that frankly is putting a band aid on a bullet wound and that's not what we need right now. We don't need the government with its foot on the accelerator while the Reserve Bank has its foot on the brake. But we do need a government that gets these underlying settings right. I mean, we do have to make sure that we sort out the Union officials in the construction sector, deregistering the CFMEU, putting the ABCC back in place. We do have to make sure we get rid of red tape and approvals processes and we're seeing major projects being disapproved right now without warning to the investors involved. We do need to make sure our immigration rates are in line with our capacity to build houses and that clearly hasn't been the case. In fact, the numbers show us that an increase in population of over 1.4 million since Labor came to power, this came out yesterday. So on setting after setting the government has it wrong, PK. And the result is, as I say, it's an economic catastrophe for Australian households. 

 

PATRICIA KARVELAS: 

Can I just take you to something completely different, but I think very important to ask you Angus Taylor before I say goodbye, the chaos within the NSW Liberal Party, why is the NSW branch so dysfunctional and does it need a Federal Executive takeover? 

 

ANGUS TAYLOR: 

Well, I think it does need a Federal Executive takeover. We don't have enough minutes in the remainder of the interview to discuss all the ins and outs of the NSW Division. What I will say is this, we need to have a functional division to make sure that as we go into the Federal Election, we have the candidates in place, we have the campaign machinery in place, to be competitive and win that election. We owe that to our supporters and Members. We also owe it to the Australian public. Democracy works well when political parties are strong and capable of campaigning and putting good people on the ground and that's our focus. That's why this takeover has happened and that's the work we will do between now and the next election. 

 

PATRICIA KARVELAS: 

Thanks for joining us this morning. 

 

ANGUS TAYLOR: 

Good on you. Thanks PK. 

 

ENDS.