Take note of Ministerial Statement – 28 July 2022
Today we heard a very grim picture of the economy from the Treasurer, particularly when it comes to the very point around inflation. That 6.1 per cent inflation figure revealed yesterday was not unexpected, but that doesn’t make it any easier for Australian families who are already struggling with the costs of living at the moment and the soaring costs of living, not just in the last couple of months since we’ve been in government but for the last couple of years under the coalition government. If we do not combat inflation, if we don’t take it seriously and we continue to undermine the living standards and the pay and conditions of Australian workers, there will be further economic pain for many, many families. That’s why we are seeing central banks all around the world raising interest rates, using the powers at their disposal to take action on inflation. But this is tough for all Australian families—increasing mortgage repayments and increasing the cost of servicing debt more broadly. And every extra dollar that Australian families have to find to service their mortgage is a dollar that they can’t use to buy the essentials and pay the bills, the essentials and the bills that are getting more and more expensive every day.
This is the insidious spiral of inflation. The inflation that makes these rates increases necessary has been exacerbated by the decade-long lack of investment in our skills and training in our TAFEs and in our universities. Making things here in this country, our domestic manufacturing sector, has been decimated—all thanks to the previous coalition government, after the last nine-and-a-bit years. They failed on skills, energy and ensuring that we had a very strong sovereign capability when it came to manufacturing.
The Treasurer provided a look under the hood of the Australian economy, and it was sobering. There are a number of international factors that are impacting Australia’s economy. China’s response to its COVID outbreaks has significantly constrained the productivity capacity of its economy, putting further pressure on an already fragile supply chain around the world. Russia’s unprovoked and illegal invasion of Ukraine has also undermined energy and food security and put upward pressure on the price of essential goods. We’ve seen global economic forecasts cut this week, and it’s expected that the revised domestic forecast will cut half a per cent from growth for the last financial year, this financial year and the one after. This is a result of high interest rates combined with the global economic slowdown. And with the coalition leaving a trillion dollars of debt, these high interest rates are having a significant impact on the government’s balance sheet. The Treasurer has stated that interest rate repayments on the coalition’s debt will be the single largest expense of the government—more expensive than Medicare, more expensive than the NDIS, more expensive than education.
There is no doubt that these are significant challenges. But I appreciate that we have a Treasurer, and indeed a government, that is being upfront with the Australian people. Jim Chalmers didn’t stand up and say, ‘Everything is rosy, it’s all great and no-one should worry.’ This is in stark contrast to the approach that we saw under the previous administration, who, just a couple of months ago, were on the campaign trail bragging about their economic management ability, suggesting that Australians should be grateful that they had a coalition government. Well, unfortunately, this doesn’t match up with the reality of our Australian economy. That’s been all just spin—short-term slogans designed for the re-election of a government that was tired. Fortunately, for members on this side of the Senate, Australians saw right through the Liberal and National parties.
The budget that the Albanese Labor government has inherited was and seems to be bursting with some waste and rorts—and we are intent on cleaning that up—hidden mismanagement and low-quality spending, and, again, a trillion dollars of debt with not enough to show for it. Government spending should be measured against how effectively it supports the services and the projects that Australians rely on, not measured against how many votes it can win at the next election. The times that we live in are tough, and each extra dollar that government spends is becoming a lot more expensive as interest rates rise. We simply cannot afford the political ideologue of the previous government and their wastes and their rorts.
I want to draw the Senate’s attention to the Treasurer’s comments on wages. There have been some commentators—and politicians, for that matter—who have suggested that rising wages are somehow a major contributor to inflation and that the primary focus of the federal government should be on constraining wage growth. This suggestion does not stand up to scrutiny, in my opinion. We are experiencing soaring inflation despite real wage growth averaging just 0.1 per cent for the past decade. That was largely due to the previous government’s policy of deliberately keeping wage growth low. This is not the policy of this government, of the Albanese Labor government, and we saw that when we first came in. One of the very first acts of Prime Minister Albanese was to ensure that the government put a submission to the Fair Work Commission asking that those on the lowest wages in this country get a pay rise. It is more urgent than ever that we get wages moving again so that working families have the ability to keep up with inflating prices of essential goods and services—prices that are determined by dozens of different economic factors, not just wages.
We should not indulge those who want to continue constraining wages and making it tough for workers to get ahead, let alone keep up with the soaring cost of living. This is a shallow idea that has been pushed by those who want to see the economic policies of the previous government continue. This is not what Labor stands for: we are tackling these challenges because Australian families need a government that is on their side. They do not need more of the awful economic management that we have seen in the past decade.
It’s important to note that our government does not see the tough economic times ahead as a cause for delaying or scrapping our election commitments. In fact, the economic plan that we took to the election is now required more urgently than ever. We must invest in our childcare sector, ensuring that there is cheaper child care, ensuring that there are people at the front line who can provide that essential service—predominantly for women, so they can also get back into the workforce and add to our productivity in this economy. We must bring down the cost of medicines to provide the cost-of-living relief that so many pensioners and seniors have been calling for, for some time. We must take the speed limits off our economy by investing more in accessible TAFE and our universities: two great areas of government that we should put more money into, not less, investing in our children, in our students and in the future leaders of this country.
We also have to invest in cleaner and cheaper energy, and in growing advanced manufacturing. That’s been the crucial part, or the missing link, I think, in this place for some time. I’ve spoken at length about how we need to invest more in our manufacturing sector, not relying on overseas products but making much of that here in this country. And we must be responsible in how we go about repairing our budget, by tackling the coalition’s mismanagement, their waste and their rorts but also the missed opportunities. There were many missed opportunities over the 9½ years, and this work is already underway through our audit of waste and rorts. There are many reasons to be optimistic, and the Treasurer also outlined them today. Australians have a government that is on their side, that backs them. To be honest, we’ll be ensuring that we get the best value for money when it comes to our budget that we’ll hand down later this year in October. We are committed to working not just with them but for them to build a better future. The Treasurer noted that the character of the Australian people is our greatest resource: our ability to come together to confront those challenges and overcome them. So Australians should be confident that, while there are tough times ahead, we will get through them.