PATRICIA KARVELAS:
We were warned that interest rates would rise but few expected them to rise by this much and this soon. Labor is blaming the former government saying it's inherited a suite of budget problems. Angus Taylor is the Shadow Treasurer, and he joins me now. Welcome to the program.

ANGUS TAYLOR: 
Thanks for having me PK. 

PATRICIA KARVELAS:
You're calling on the government to rein in its spending to ease inflation pressures. But isn't that a bit hypocritical given you just handed Labor a trillion dollars in debt?

ANGUS TAYLOR:
Well, what we've handed them is $100 billion turnaround in the budget and that's the biggest turnaround in the budget in over 70 years. 

PATRICIA KARVELAS:
On the back of high commodity prices. 

ANGUS TAYLOR:
Well it was more than that. It was because what we saw in the pandemic was a series of initiatives we had to take that were targeted, that were temporary. We didn't go for the excessive initiatives Labor wanted, like the $6 billion bribe to people to get vaccines, but sensible initiatives we had to do. But they were targeted and temporary, and that's why we were able to achieve $100 billion turnaround. Now we are seeing a situation with global inflationary pressures. We don't blame the Labor for that, which are worse than expected. The World Bank today laid out just how dire the global situation is, and that's the right time to contain budget spending. If you want to contain inflation, if you want to contain interest rates, you need to contain spending. And that's why we think for instance, the $45 billion that Labor has committed to in off-budget spending is not necessary. Now is not the time to spend that money. Now is the time to pull in the budget belt and make sure that households aren't competing with government to borrow money and paying more than they otherwise would have to.

PATRICIA KARVELAS:
Okay, the Albanese Government has been urged to shield those on fixed incomes from the rising cost of living by providing $1,000 in emergency energy debt relief payments. And that's an ACOSS call. They say that this is now urgent. Do you think people on those fixed incomes deserve that help?

ANGUS TAYLOR:
Well, it is a very tough time. I mean, what we saw yesterday was a very tough day. Three and a half million families that have a mortgage are going to be paying more. Around $200 or more for typical mortgage a month. So it is a very, very tough time. But as I say, the best thing government can do is to pull in its belt. 

PATRICIA KARVELAS:
So these people shouldn't get $1,000. 

ANGUS TAYLOR:
We'll consider any proposal that is put to us by the government. We're in opposition now. It's for them to look at what initiatives we should be taking. What we don't need is fueling the inflationary interest rate fire. We don't need that. That is very clear. The RBA sent a very clear message yesterday, a very clear message and that message is that we are facing very strong inflationary and interest rate pressures. It’s an appropriate time for government to take the right measures to prevent those extra inflationary and interest rate pressures on households and businesses. And as well as that the government needs to be very careful about how wage increases are achieved. We all want to see higher wages. Absolutely. But it should be on the back of productivity. We shouldn't be creating a race between prices and wages. Because historically whenever you create that race wages lose so the right measures here from the government is what's needed.

PATRICIA KARVELAS:
But you're saying contradictory things. You’re saying wages, you know, wage rises would be an issue, although you support wage rises, you can't say both things Angus Taylor.

ANGUS TAYLOR:
No, no, no, no. You can. 

PATRICIA KARVELAS:
How?

ANGUS TAYLOR: 
Because there are good wage increases and the wrong wage increases. So we will see …

PATRICIA KARVELAS:
What are good wage increases and what are wrong wage increases?

ANGUS TAYLOR:
Productivity driven. Productivity driven.

PATRICIA KARVELAS:
So why don’t the people on the lowest wages in the country, the minimum wage earners who are doing some of the most difficult jobs, not jobs, like you and me, the most difficult jobs in the country. Why don't they deserve to ensure that their wages keep up with inflation in this incredibly difficult situation?

ANGUS TAYLOR:
We all want to see higher wages. We all want to see interest rates contained, we all want to see inflation contained. There is a right way to go about this. If we go back historically, and when you go about it the wrong way and we have precedence on this in the past and in my lifetime, where government did it the wrong way. Fueling inflation and interest rates with higher spending without a focus on productivity in driving wage increases, that only ends up with what we had in the 70s and 80s. And it's not something we want to see here. We will see the economy damaged if the government pursues those sorts of policies, and we will see people worse off and we don't want to see people worse off. This is a very tough day. This is a very tough day for Australian households, PK and a sensible government that knows what it's doing is what's needed here. It was disappointing to see that Albanese, the new Prime Minister did not even take questions on this issue when asked about it. 

PATRICIA KARVELAS:
Well let’s go … you’re making a political point about him not taking questions. It's been observed by many that when you're in another country, and obviously he's trying to build this relationship with Indonesia, also build our trading relationship which we desperately need to do, that ultimately, you know, you kind of make it pretty difficult on that stage when you're trying to build that relationship if you're talking about domestic matters.

ANGUS TAYLOR:
Well, I was with Scott Morrison overseas at times when he took questions on domestic matters. I mean, these are really big issues for Australian households. Nothing hurts more than hearing that you going to be paying up to $200 or more a month on your interest rate bills. And that's likely to increase again in the future. $300 if you add in the past increase and more expected. The Reserve Bank signaled that very strongly. So these are big, big issues. The government needs to be on it and as I say they can take sensible actions right now. 

PATRICIA KARVELAS:
You say, you say though, that you think that wages, wages increases should only be delivered with productivity. Where were your policies on productivity? I can't remember any.

ANGUS TAYLOR:
Well, $100 billion of infrastructure investment, budget initiatives that included giving incentives to small businesses to invest in skills, to invest in digital improvements. I mean there's a whole range of initiatives that were in the budget that focusing exactly on this.

PATRICIA KARVELAS:
Yeah but if you look at Australia's rates of productivity, they’ve stalled and that was under your watch. 

ANGUS TAYLOR:
Which is why we need to see the right measures being taken by government. And that includes not fueling inflation and interest rates with extra spending, PK. And that is, you know, this, this was clear throughout the election campaign. Labor made a deliberate choice to spend more on a series of initiatives that we felt were unnecessary, we felt would only add fuel to the interest rate fire. And now is the time to say no. These aren’t appropriate initiatives to take at the moment

PATRICIA KARVELAS:
You've said your aim is to restore the Liberal Party's core economic values to win back disaffected voters. What does that actually look like?

ANGUS TAYLOR:
Well, it means focusing back on aspiration. It means focusing on the needs and the opportunities of people in the suburbs, in the regions who are the backbone of the country. Small businesses, for instance. I was out in Western Sydney yesterday around Liverpool, talking to small business people, to people in the housing industry, about their aspirations, about the businesses they're building. And I'll tell you what they don't want to see. They don't want to see a government that's adding fuel to the fire on rising interest rates and rising inflation. That's what they don't want to see. So this is … we are right at the heart in this discussion today of what really matters to middle Australia, to those hardworking Australians that pay the taxes that allow us to deliver the services that give us a strong economy, that employ people, that drive investment and they are the people, they are the businesses that we need succeeding in the coming years. And government policy has a real impact on that.

PATRICIA KARVELAS:
If you're just tuning in, you're listening to ABC RN Breakfast. Patricia Karvelas with you and the Shadow Treasurer Angus Taylor is our guest. Nationals’ Leader David Littleproud said on the weekend that you as a former Energy Minister would have been able to pick up the phone and force gas companies to give Australians more gas. Is that really true, that you would have just picked up the phone and just fixed this, our soaring bills would not be soaring because you picked up the phone?

ANGUS TAYLOR:
Well PK, there's no question we are facing global inflationary pressures on energy as we are on so many other things like building materials and fuel and other factors. So we accept that for sure. But it is also true that working closely with the gas industry historically in our time in government meant working with them to get more supply into the system, both short term and longer term.

PATRICIA KARVELAS:
The Resources Minister told me yesterday she has been making these calls. She has very substantial relationships with these companies. What makes you think that you'd be more effective than her?

ANGUS TAYLOR:
Because we did it. I mean this is the long and the short of it. If you go back to 2017 when we put the Australian Domestic Gas Security Mechanism in place, a part of that was carrying a big stick and being able to say to the gas companies, “Ok, we expect you to do the right thing.” Both short term and long term. The quid pro quo is government needs to work with them to get supply out, to get rid of state government moratoria that are unhelpful, to make sure the right investments and regulatory frameworks have been created by government for this and that's exactly what we did. Now, I'll give you a very stark illustration of this. We made a series of commitments to investments in storages, in pipelines, in transparency in the market and Chris Bowen called those initiatives “B.S” – I won't use the full word he used – and “a fraud”. That is not how you get the gas industry to work with you to solve these problems. 

PATRICIA KARVELAS:
Well they are working with this government.

ANGUS TAYLOR:
It may well be, it may well be Madeleine King is making phone calls. But Chris Bowen is the Energy Minister and he needs to work with the gas industry to make sure we've got the solutions here. Now over time, we can add more renewables and dispatchable renewable energy whether it’s through hydrogen batteries, pumped hydro like Snowy 2.0. They can all help. But in the short to medium term, gas is going to be a critical part of our energy and industrial system and that means working closely with the gas industry, making sure …

PATRICIA KARVELAS:
Well they are working closely with the gas industry. So, I just don't understand how you think that driving down bills … I just don't think it passes the pub test to be honest.

ANGUS TAYLOR:
Let's look at the facts. I got to the facts … no, no, no. Give me a chance here because you’re making an assertion. 

PATRICIA KARVELAS:
I am based on the current state of our energy market. You know, you make all sorts of claim but right now Australians are looking at soaring bills and you were only in government a couple of minutes … weeks ago so it’s kind of strange to make the argument right now. 

ANGUS TAYLOR:
Well, I'm going to make the argument so let's go to the facts. In the lead up to the election, we saw the domestic gas price sitting at around a quarter of the international price. The international price escalated up to around $50 a gigajoule. We were seeing Australian prices down around $10 or $15 a gigajoule. Still higher than we would have liked but over time we worked closely with the gas industry. I spoke with a number of the senior gas executives in the lead up to the election, indeed, even during the election campaign and made it very clear what our expectations were. We always understood very clearly that our role was to work with them to get more supply out and their role was to get more supply in to contain prices and that is exactly what occurred. So they're the facts PK and the facts are really important in this discussion.

PATRICIA KARVELAS:
I just have to ask you before I let you go. I think this is a really key issue. Can I ask you about your fellow front bencher Holly Hughes’ claim that Labor doesn't have a mandate because 68% of voters chose someone other than Labor in the election. That's her claim. It's not my language. Of course, we have preferential voting in this country. The Australian Electoral Commission has intervened saying that the Senator’s claims are misleading, because we do have a system which you would think we need to defend. Do you think the government has a mandate?

ANGUS TAYLOR:
Well, it depends what issue you're talking about. Where they have made clear election commitments that were put to the Australian people, it’s clear they won the election. There's no ambiguity about that.

PATRICIA KARVELAS:
There isn’t is there. That’s the point.  

ANGUS TAYLOR:
But I tell you where we can get very clear on this, PK. We have a changing economic environment around us as we speak. The global context is changing and some of the commitments that were made by Labor in the current context are extremely unhelpful. The $45 billion that they committed in off-budget spending that will simply fuel higher inflation and higher interest rates. That's what we don't need and now's the right time for Labor to make the decision to drop those initiatives, to take the right economic decisions in the interests of those Australians who are …

PATRICIA KARVELAS:
But Labor does have a mandate on an integrity commission, on climate change action. Those things central to their campaign, and as you say, they've just won a majority.

ANGUS TAYLOR:
Well, they've won a majority, but if you take a number of those measures. What we got from Labor during the election campaign was vague promises. As the specifics come in, we'll consider them in an appropriate context, recognising they won the election, of course, but at the same time, recognising that the national interest has to be our focus, and we'll be holding them to account on doing the right thing by all Australians.

PATRICIA KARVELAS:
Okay, we're out of time. Thanks for coming on. 

ANGUS TAYLOR:
Thanks PK. 

PATRICIA KARVELAS:
That's the Shadow Treasurer, Angus Taylor, and you're listening to RN Breakfast.