ANDREW LEIGH:
Good morning everyone, my name is Andrew Leigh, the Assistant Minister for Competition, Charities and Treasury.
Labor knows that Australian families are doing it tough right now. This week we had the inflation figure come down at 7.3 per cent for the year. Australians are feeling inflation in their regular balancing the household books. Labor knows inflation is a huge challenge and that was why tackling inflation was a central theme of the Budget that Jim Chalmers brought down this week. If you’re a family planning to have kids then our cheaper child care reforms are taking the pressure of child care costs for 1.26 million families, 96 per cent of families with children in care. If you’re thinking about buying a home, then our Housing Australia Future Fund is aimed at producing some 40,000 social and affordable homes, putting downward pressure on house prices. If you’re looking at buying a car, we’re reducing the taxes on electric vehicles. If you’re looking at getting an education, then hundreds of thousands of fee‑free TAFE places will take the pressure off. And if you’re sick, then our reforms to reduce the cost of medicines, are again, helping Australians with cost of living pressures. Labor recognises that cost of living is a huge issue for many Australian households.
One of the most extraordinary statistics to come out over recent weeks is the fact that real wages in Australia now are lower than they were 10 years ago. After the decade of Coalition mismanagement Australians, after inflation, just haven’t gotten ahead. And the focus of our Budget has been to tackle inflation while bearing in mind the role of the Reserve Bank. The Reserve Bank right now is raising interest rates in an attempt to curb demand, to deal with inflation through the demand side. So an unfunded cash splash through the Budget would have simply fuelled inflation and led the Reserve Bank to raise rates still further. And that’s why we had our carefully targeted calibrated supply‑side measures.
We’re very conscious too that in the long run, increases in living standards are driven in increases in productivity. We’ve just had the lousiest decade of productivity growth in the Post‑War era. And that’s why Labor is so concerned about boosting women’s labour force participation, about creating those extra vocational training places, plus 20,000 additional university places. That’s why we’re committed to rewiring the nation, modernising the electricity grid, to boost manufacturing jobs. And it’s why we’re focusing on improving the quality of the national broadband network, an essential productivity driver.
Within my own portfolios, we’ve been getting on with the job of competition reform, with a competition Bill passing the parliament this week. We know that a dose of competition reforms is required to deal with the significant challenges we have in the Australian economy now – with rising market concentration and a falling start‑up rate.
But rather than fresh ideas to deal with Australia’s economic challenges this week, we got from Peter Dutton just a reheated idea of raiding your superannuation to pay for housing. An idea which Malcolm Turnbull once described as ‘the craziest idea I’ve ever heard’. Respected economists make clear that this would make Australians poorer in their retirement and would drive up house prices. Making housing even less affordable than it is today. That’s why Peter Dutton in 2017 criticised the very same idea that he was spruiking on Budget night. It would be great if the Opposition was coming to the party of focusing on discussing what the Australian economy needs. But instead we have recycled bad ideas from a Leader of the Opposition who, I think everyone recognises, doesn’t see economics as his strong suit.
Very happy to take questions.
JOURNALIST:
Australians are about to be dealt another interest rate rise, what would you to say to people that are worried about that?
LEIGH:
Interest rate rises are a decision of the independent Reserve Bank, and certainly we don’t comment on the decisions they’ve made. But if you look at the market forecasts, and they do have interest rates peaking at higher than they are today. We understand as a government that’s a pressure on Australian households. Our job is not to make the Reserve Bank’s job harder, it’s to make Australian households’ jobs easier, and that’s why we’re focusing on cheaper medicine, cheaper child care and building more housing.
JOURNALIST:
With interest rates rising, real wages falling, are you worried about the mental health of Australians with all these financial pressures?
LEIGH:
Inflation is a scourge in Australia as it is around the world. We need to get on top of inflation. As the Treasurer said, we need to slay the inflation dragon. That’s why it’s critical that fiscal and monetary policy work together and that’s why it’s so important that there’s a Federal Government bringing down a Budget that’s in line with what the Reserve Bank is doing. We know that it’s an important part of putting downward pressure on power bills to get more renewables into the system. And the climate wars, waged in large part by the people who are now the Leader of the Opposition and the Shadow Treasurer have led to a renewables investment strike, and have led to higher power bills for Australian households.
As one example of that, you can just look at my own jurisdiction of the ACT. From 1 July 2022, the ICRC announced that power bills in the ACT would be decreasing 1.25 per cent. Because the ACT is 100 per cent renewables, it’s the only jurisdiction in the country that is seeing its electricity prices go down right now, rather than going up as they are around the country.
JOURNALIST:
Westpac are forecasting that inflation is going to be 8.5 per cent by December, your forecast is significantly lower than that, do you have safeguards in place if inflation does get that high?
LEIGH:
One of the things that the Australian Bureau of Statistics has done recently is to move to a monthly inflation indicator, because it is really important that we’re measuring inflation better and measuring it more frequently. There’s still a great deal of uncertainty among economists as to the trajectory of inflation. The case in the United States is now that what was originally goods inflation has bled over into services inflation. We haven’t seen the same pattern in Australia, which means that there is still greater potential for inflation to come down more quickly, still greater potential for what Paul Krugman calls ‘Team Transitory’ to be right. But it is a concern, it’s a key focus of the Prime Minister, the Treasurer and the whole economic team right now.
JOURNALIST:
Just on that, you said about the US goods going into services, that hasn’t happened here – is there a possibility that would happen here?
LEIGH:
It’s certainly a possibility, we’re very alive to the potential of inflation to become entrenched and that’s why we’re so focused on working in with the independent Reserve Bank and dealing with the supply chain issues which are driving inflation. A lot of the inflation that is being driven is coming through issues such as food prices and gas prices and so the work that Minister Bowen is doing with his State and Territory counterparts in ensuring that we have the right outcomes in the gas market is really critical to bringing inflation down.
JOURNALIST:
On the Energy Ministers meeting, obviously we heard that yesterday they agreed that something needs to be done urgently but we haven’t heard any solutions or what’s actually happening, when are we going to get some answers as to what will be done to bring down power prices?
LEIGH:
Well Minister Bowen has said very clearly everything is on the table here, and that we’ve seen a doubling of gas prices. That’s a significant challenge for the manufacturing sector in particular but also for many Australian households. Minister Bowen is working methodically with his State and Territory counterparts, Minister King is engaged with the gas producers. Everything is on the table right now. We’re not going to simply sit by and allow these significant price rises to hurt Australian households.
JOURNALIST:
But do you think businesses could fold because of the power price pressure, before any of those levers are even pulled?
LEIGH:
We need to move swiftly on this, but we also need to make sure that we get all of the interventions absolutely right. It’s an area where there is significant state and territory overlap, and it’s important to think about our international relationships as we do so as well. It’s a complicated area, but certainly one which Minister Bowen and others are heavily engaged on, and focused on getting the very best for Australian households.
Any other questions? Other topics? Thanks everyone.