Topics: Labor’s homegrown inflation crisis, Federal Budget

E&OE

PETA CREDLIN:

But first tomorrow night, the Federal Budget surplus is predicted not because the treasurer has done the hard yards, but because our iron ore is in demand and prices are at record highs. Labor's struggling in the polls so Jim Chalmers will want to spend up big. But that's precisely what the Reserve Bank Governor is urging him not to do, or he risks spiking inflation and yet another round of rate increases. For more, and a preview of what we can expect tomorrow night, Shadow Treasurer Angus Taylor joins me now. Angus, we're looking as I said at a surplus tomorrow night, but it's a surplus built on the fact we're now selling our iron ore for prices in excess of $100 a tonne. Now, if we weren't, there would be no surplus. So it is a surplus built on good luck, isn't it, rather than good, sound economic management?

ANGUS TAYLOR:

Exactly right, Peta, it's a windfall surplus, not a structural surplus. And not just high iron ore prices, also higher coal and gas prices, which of course are commodities that this government has not shown a lot of love for. And also because inflation drives up the amount of personal income tax that people are paying, Peta. And what's happening here is the government is raiding household budgets to bolster their budget. And of course, that's why, it's one of the reasons why Australians feel poorer than when Labor came to power.

PETA CREDLIN:

So that people at home understand, the Opposition, like the media, go into the lockup tomorrow about lunchtime, you get a complete set of the books, you get your hands on them for a period of time, and you'll leave just before the Treasurer hands down the budget in the speech of the chamber, you'll go into the chamber for that. So when you walk into the room tomorrow and get your hands on the books, where are you going to be looking at first?

ANGUS TAYLOR:

Well, the first thing I'll look at Peta is whether there's a plan to beat Labor's homegrown inflation. We've seen inflation raging in this country, a 17% increase in prices for working families on average. And we're looking to see a plan that beats that homegrown inflation. We haven't seen it so far, we've seen two budgets that have been flops in delivering a higher standard of living for working Australians, we've seen a 7.5% reduction in Australians' standard of living and many Australians really doing it tough now as a result of that, Peta, so we want a plan for restoration. That means that the government has got to restrain its spending. So far, it's added $209 billion of spending, that's over $20,000 for every Australian household. I'll bet there's not many households out there that feel as though they've seen any benefit from that. And we also want to see a pathway to longer term growth, which is business led, particularly small business led, not led by government investment, which has been their focus today.

PETA CREDLIN:

What about this discrepancy on inflation and the danger of inflation today, between the Treasurer on one hand and the RBA and the governor on the other hand, because on the side of the governor who says it's a challenge, it remains a challenge, it would force them to use their lever of lifting rates if it isn't improved, is also the IMF. Is the OECD. On the other side, of course, is the Treasurer saying nothing to see here, those forecasts are wrong, it's actually going to come in lower. Now you and I have been around a while, we've seen plenty of treasury forecasts that are a long way off the money. Are you concerned about inflation?

ANGUS TAYLOR:

Oh absolutely. I mean, the Reserve Bank has set off the warning bells in the last couple of weeks. Meanwhile, the Treasurer has said that everybody's overreacting - his words - overreacting to the inflation. Well, I'll tell you, this homegrown inflation that Labor's brought about is causing so much pain across the board, Peta, not just an increase in prices. But it's actually helped to drive up the amount of tax that Australians are paying. And of course, it's driven up interest rates. So the idea that people are overreacting to this inflation, it can only come from this Treasurer, who I think is out of touch and doesn't really understand the economics of what households are facing right now.

PETA CREDLIN:

If I was in the lockup tomorrow, I'd be wanting to go straight to the immigration detail, because we know this is where the government has played around with the numbers to sort of inflate in an artificial sense, GDP at the other end. Now interesting to see how they're gonna play this tomorrow, because they keep promising Australians, who've had enough with the housing crisis or have had enough stuck in traffic, they're going to get these migration numbers down. But they've had to use it, as I said, to pump up their growth forecasts. So that will come at a cost either end of this seesaw, where do you think this is going to go?

ANGUS TAYLOR:

Well, you're absolutely right. So right now, we are in a GDP per person recession. That's a household recession that people are feeling right now. And that's a big part of the reason why people feel poorer. And so the only way they've been able to bolster their overall growth figures is by growing the immigration numbers. Now, they got up to over 530,000 last year. I mean, that's extraordinary number Peta, we were averaging closer to 200,000, when we were in government, and meanwhile, we're not seeing the houses being built that are necessary for that kind of growth. So it's got completely out of whack. They keep saying they're doing something about it, but there's no sign of the numbers getting back to a sustainable balance. And there's certainly no sign of housing catching up with that huge growth in population.

PETA CREDLIN:

Angus, I made a mention of this at the top of the show, but the Treasurer today was saying he's put billions of dollars aside in the budget for increases in the wages of aged care workers and child care workers. This is all predicated on a decision from Fair Work Commission saying the wages have got to go up. Now, fair enough. These people aren't highly paid. They have had increases though in recent years, but they're all private businesses, right? They all, many of them, are not for profit, but plenty of them are for profit. Why on earth should taxpayers pay the wages of anybody in a private business?

ANGUS TAYLOR:

Well Peta, you know, we all want to see the standard of living of all Australians go up, including aged care workers of course, and child care workers, who are so important to our economy. But the way to achieve that is to get lower inflation. That's the way you achieve it. And right now, with inflation raging, of course, it means that people are sitting there seeing that their bank balances are going backwards. The purchasing power in their pay packets are going backwards. And they want that addressed. Well, the way to address it is to fight and beat inflation. All roads lead to the same place. And it's the place that Labor's failed, to think, it's the issue that Labor's failed to address. We've seen two budget flops, neither of them have dealt with this homegrown inflation that Labor's created. And we're going to see another one the way it's going. I hope we do see a serious plan that's going to beat this homegrown inflation. But all workers are suffering from that, including aged care and child care workers.

PETA CREDLIN:

All right, good luck for tomorrow, Angus. I know it's like grand final day for you. We'll watch it all closely and watch it here on Sky News. Thank you for your time.

ENDS.