Topics: Labor’s homegrown inflation crisis, Federal Budget

E&OE

RAF EPSTEIN:

Angus Taylor joins us. He is the Shadow Treasurer and in our Canberra studio. Good morning.

ANGUS TAYLOR:

G'day Raf. Good to be with you.

RAF EPSTEIN:

Look, no Coalition Treasurer delivered a surplus in nine years. Jim Chalmers has done it two years in a row. How much does that sting?

ANGUS TAYLOR:

The truth of the matter is, it's a windfall surplus Raf, with very big increases in personal income taxes being paid and of course, high commodity prices. But what we need is a structural surplus. Sadly, what we see in this budget is a shift to a $43 billion deficit in just over a year's time. And that's because they haven't done the underlying work on getting the structural balance that is needed. And of course, as you pointed out, it's a big spending budget. It's an election budget, 16% increase in spending over two years in this budget. That's because it's politically focused, it's not focused on solving the underlying problem we have right now, which is to slay the homegrown inflation dragon that is inflicting so much pain on Australians right across the board. Whether you're a pensioner, whether you're a hard working family trying to pay off a mortgage, whether a student, everyone is feeling that pain.

RAF EPSTEIN:

Just to go back to the question though, because it sounds like you're saying to me, you guys got all the bad luck, and they got all the good luck. You put a lot of credence on your better economic management, never delivered a surplus. They've done it twice.

ANGUS TAYLOR:

Actually, the Budget was in surplus from the moment that the Victorian and New South Wales economies opened up after COVID, which was a remarkable position to be in. But the point here is that we don't need a windfall surplus, we need a structural surplus. We need a structural balance. That means you've got to grow the economy faster than spending and this budget doesn't do it. The reason that's so important to your listeners, this is not some kind of esoteric economic argument. This is how you beat inflation. We know that because that's how we beat inflation in the 70s and 80s.

RAF EPSTEIN:

But inflation was higher under you.

ANGUS TAYLOR:

Well, inflation has had the result of smashing real disposable incomes in a way that we haven't ever seen before, in this country. 7.5% reduction in the two years since Labor's been in power, and that's clearly homegrown inflation. So we need a budget, we needed a budget, that was going to slay that inflation dragon. That meant having a structural balance, Raf. We haven't got structural balance in this budget. That's why there's still a lot of work for the Reserve Bank to do.

RAF EPSTEIN:

Hopefully we can get to the Reserve, the RBA, and I know they are Michelle Bullock's words, homegrown inflation. But just to go back to the inflation number itself. When you were voted out inflation was over 6%. Now it has halved to three point something. Why should we listen to you about inflation?

ANGUS TAYLOR:

Well, because this has become homegrown inflation. Don't take my word for it. Take Michelle Bullock's word for it, as you said a moment ago.

RAF EPSTEIN:

She said it's an element of it. I'm asking why we should pay credence to your words if it was higher under you.

ANGUS TAYLOR:

The truth is you got to play with the hand you've got. The hand that Labor has right now is one where they've got to deliver a budget that slays that homegrown inflation. My point is a very simple one, this budget is not doing it. The reason is this, because they have taken the fiscal rules out of the budget that were put in place by Peter Costello in the 1990s. They were very simple. They said you've got to get to a structural budget balance, you've got to make sure the economy grows faster than spending. The Treasurer has taken those rules out and that's allowed him to deliver a big spending election budget, which is exactly the opposite of what we need right now if we are going to slay this homegrown inflation dragon.

RAF EPSTEIN:

So what spending will you oppose?

ANGUS TAYLOR:

First of all you reestablish the fiscal rules. Secondly, we've already outlined a large number of areas where we're opposed to Labor government spending. Obviously, $45 billion of spending that we've opposed in the parliament in recent months.

RAF EPSTEIN:

Sure, but out of...

ANGUS TAYLOR:

Let me focus on a couple of things. 36,000 new Canberra-based public servants and adding bureaucracy right across the Canberra public service. That's not needed right now.

RAF EPSTEIN:

That's a bit down the side of the couch in budget terms, isn't it?

ANGUS TAYLOR:

Well, no, it's not because it adds a whole lot more cost that flows on from that. The second thing, which I think is incredibly important, is this budget includes $13.7 billion in handouts for billionaires, for their businesses. The production tax credits in this budget...

RAF EPSTEIN:

But they are a few years away though...

ANGUS TAYLOR:

You know, the thing about a budget is if you say you're not going to get to structural balance in the coming years, that creates inflationary pressures. It does matter. This is incredibly important. The idea that we get manufacturing going in this country and resources businesses going in this country, which we want to see and these businesses have historically been very, very important to Australia. But the idea we do that through production credits, you know, this has been tried in Australia in the past. It's been tried in countries across the world in the past, it has never worked. But that doesn't stop Labor from dusting it off. Billions in handouts for billionaires? That is not what we needed in this budget. The way to get those manufacturing businesses going is to get back to fundamentals, drive down the price of energy by getting more supply into the market, get approvals moving faster, get your industrial relations right, get rid of red tape. That's the fundamentals that make those businesses successful.

RAF EPSTEIN:

If that's the spending that you oppose, which is under the Future Made in Australia banner, according to the Federal Government. If you oppose giving that money to those industries, I presume the government will not be insuring any nuclear power plant? The government will not be subsidising any nuclear power plant?

ANGUS TAYLOR:

Any investment government makes or others make should be able to deliver a return on investment. If it's a commercial investment, that's what it should deliver. And that's our position and that will remain our position.

RAF EPSTEIN:

When I last had Peter Dutton in the studio, he was open to insuring nuclear power. I'm not aware of a nuclear power plant anywhere in the world that is insured by anyone other than government. There might be one or two, but governments need to insure nuclear power plants because no one else will. Are you, as Shadow Treasurer, prepared to insure a nuclear power plant?

ANGUS TAYLOR:

You're conflating a lot of things here.

RAF EPSTEIN:

Well it's subsidising industry.

ANGUS TAYLOR:

The question is whether any investment in an energy asset like a nuclear generator should be able to deliver a commercial return on investment. Absolutely, it should. That means it doesn't need to be subsidised, and certainly not subsidised with production credits. That is what is being proposed here, to give these businesses. Let's put this in perspective. This is like saying to a small business person who's listening to this program today, you're going to get government money for every unit of whatever it is you produce. You're going to get a piece of taxpayer money. So, that is not our policy.

RAF EPSTEIN:

You've established you don't like production credits. I get it. You're willing to subsidise nuclear but not critical minerals? Is that correct?

ANGUS TAYLOR:

Hang on, Raf. That is not correct. That is not what I said. I said, all investments whether its nuclear or other investments, made by government, including through Snowy Hydro which is owned by the government, should be able to deliver a return on investment. It's that simple.

RAF EPSTEIN:

Just onto the $300 energy bill relief. Are you going to vote for that? And do you think it could be or should be means tested?

ANGUS TAYLOR:

Yeah, good questions. The first point I'd make about it is that this is an admission that the government can't deliver, and won't deliver, its $275 electricity price reduction that it promised. It's failing on that because it hasn't focused on getting supply into the market fast, in order to ensure that we keep downward pressure on prices. So, that's an admission of failure. It is putting a band aid on a bullet wound. But, when you have a bullet wound and all you've got is a band aid, we're not going to get in the way of it. We think that it's such a desperate situation that's been created by Labor's failure to deliver on its promise, that we're not going to get in the way of it. Your question about means testing is a very fair one. We're certainly asking questions about that. I mean, why is it that the government is doing it in the way that they're doing? We'll be interrogating that.

RAF EPSTEIN:

Forgive me for interrupting, do you know if you could vote for it, but only vote for a means tested version?

ANGUS TAYLOR:

Well, they haven't given us the option. So far, we've got one option in front of us, which is $300 for everyone. There's serious questions being asked about that and I think with good reason. We'll ask those questions as well.

RAF EPSTEIN:

Just before I let you go, I thought we were gonna hear a lot about nuclear power plants before the Federal Budget. I think Peter Dutton mentioned nuclear power in his last Budget in Reply speech a year ago. Are you running away from your own policy if we haven't heard the detail yet?

ANGUS TAYLOR:

No. We have been an opposition that's been prepared to differentiate ourselves at every stage of the way and we will continue to. Nuclear power is a good example of that. We've done it on the Voice referendum. We're doing it in energy policy. I mean, this is the biggest shift in energy policy in this country that we've seen for a long while.

RAF EPSTEIN:

Are we getting some extra teasing details from Peter Dutton on Thursday night?

ANGUS TAYLOR:

We've been very clear about the sorts of sites we're considering, existing coal fired generation sites for instance. We've been very clear that that's about making sure we don't have to build 1000s and 1000s of kilometres of additional transmission lines with huge cost to customers. These are the points we've been making along the way. We will continue to make them. It's an important policy and it's a major differentiation between us and the other side of politics. We're doing it because we think this is the way to bring down emissions, drive down prices, and ensure we have reliability at the same time. A balance in our system with the full range of technologies is absolutely crucial to give ourselves a chance of achieving those outcomes.

RAF EPSTEIN:

You mentioned brown field sites. So you know, old places that used to have coal fired power. Is it then a logical conclusion... Most of the state's power, Victoria's power, still comes out of the Latrobe Valley. Is it a logical conclusion to think, right if the opposition wins the next election, you want to put in a big nuclear power plant in the Latrobe Valley?

ANGUS TAYLOR:

You're tempting me to make the next round of announcements on this policy, Raf. But I'm not going to be tempted. We've laid out that principle very clearly. Of course, we'll go to the next stage and how that principle is applied. I'm not going to do that on the program today. But the important point here is this is a major shift in policy. But it's one that can help to deliver an outcome that I think is the right one for our energy system and our country, can deliver a successful manufacturing sector, can deliver lower electricity prices for all Australians, and that's what we all want to see.

RAF EPSTEIN:

Thank you for your time this morning.

ANGUS TAYLOR:

Good on you, Raf.

ENDS.