MICHAEL ROWLAND:
Okay, we're going to turn to our next story now. The impact of latest interest rate rise, the 13th since the rate hike cycle began last year. And bring in the Assistant Minister for Treasury, Andrew Leigh. Minister, thank you so much for joining us.
ANDREW LEIGH:
Pleasure.
ROWLAND:
We’ll on to rate rises in a moment. But what, if anything, does the government know about what's going on with Optus this morning?
LEIGH:
Nothing at this stage that I've heard, Michael. Certainly it's up to Optus to quickly rectify this with its customers. It's clearly causing chaos across not only Melbourne's train network, but also for many people who rely on their mobile phones, it's just a reminder of how reliant we are on this instant connectivity. And like so many other Australians, I'm hoping the systems are back up quickly.
ROWLAND:
Given the way the slow way Optus responded to the data hack last year, are you hoping for a better response this time around from this company?
LEIGH:
Certainly am.
ROWLAND:
Yes.
LEIGH:
It'll be a matter of Optus doing the right thing by their customers and speedily.
ROWLAND:
Okay, let's turn to the rate rise announced with no great surprise, sadly for a lot of Australians, by the RBA board yesterday, this is going to hurt so many borrowers.
LEIGH:
It'll be a big squeeze on many Australian households who are feeling the pinch on the mortgage. We know that when inflation is too high for too long, that has an adverse impact on the economy. Inflation is bad for savings, it's bad for business decisions. The Reserve Bank even says it'll worsen inequality. But the medicine is also going to be tough for many Australian households. We, as the Federal Government, are doing what we can to put in place responsible cost‑of‑living relief. That works with the Reserve Bank to put downward pressure on inflation.
ROWLAND:
Given one of the key jobs of the Reserve Bank, if not the key job, is to fight inflation. Is this the right decision?
LEIGH:
The Reserve Bank can answer for their own decisions. What we need to do as a Federal Government is ensure we're working with them. So, the recent budget took about half a per centage point off inflation. The Australian Bureau of Statistics numbers say that in the most recent quarter, childcare costs would have gone up 13% were it not for the government's measures. Instead they went down 6 per . They also said that in areas of rents and energy, government decisions were putting significant downward pressure on prices.
ROWLAND:
But still, Michelle Bullock the Governor, is leaving open the option of another rate hike, possibly by the end of this year, if not into early next year. What does that say about inflation and what the government's doing?
LEIGH:
Central bank independence is a cornerstone of our economic system and it's critical that politicians understand the clear differentiation between monetary and fiscal policy. I'll leave Michelle Bullock to answer for the Reserve Bank. What I'll do as part of the economic team is to answer for the decisions we're making. Think about areas like our Competition Task Force, the crack team within Treasury, who are looking to get more competition in the economy, which is not just good for wages and innovation, but also puts downward pressure on prices.
ROWLAND:
The RBA is independent and it's been a cornerstone of our economic system for a long time, as you say. But politically, and really, this is pretty awkward, if not painful for the government.
LEIGH:
I don't deny that this is tough for Australian households, but it's also critical that we understand that our system works at its very best, Michael, when people stick to their knitting. Our knitting is working on issues such as getting more randomised trials and good evaluations, ensuring we're doing multinational tax reform, making sure that we're putting in place that cost‑of‑living relief that's flowing through in the area of health. So, we just had the biggest increase in bulk billing expenditure in the 40 year history of Medicare. That's really important for Australians, as is the 60 day prescribing that's kicking in.
ROWLAND:
That's what's happening so far, given the pressures so many households are facing. Increasingly facing now, after yesterday, will the government look at more cost‑of‑living relief either in the mid‑year economic statement before Christmas or in next May's budget? We're already seeing cost‑of‑living relief flowing out, but I'm talking about extra help.
LEIGH:
Well, the energy bill relief is flowing out through November. We've just seen that bulk billing relief coming into place in the areas of energy, health care, childcare. We've got measures in place that are putting downward pressure...
ROWLAND:
Yes, I appreciate all of that. These measures have been announced and there's a lag effect with them. But I'm talking about measures not announced already. Can Australians expect more help from the government?
LEIGH:
We're always looking at ways in which we can assist Australian households. We're always aware of the challenge of doing so in an appropriately responsible fiscal way. By bringing down the first surplus in 15 years, effectively, the Federal Government is taking the approach of a householder who says now's the time to pay down a bit more of the mortgage.
ROWLAND:
Yeah, indeed. You're an economist by training before coming into Parliament. Inflation, according to both the government and the RBA, is going to persist for longer, going into next year, well into 2025. In the middle of next year, in the first year, we have $20 billion worth of stage three tax cuts coming in. Inflationary tax cuts by any measure. Will the government have another look at the stage three tax cuts?
LEIGH:
Well, those tax cuts have been legislated. They're in place. We don't have any plans to change them. Our focus is on multinational tax reform, on implementing that OECD Two Pillar agreement. We've got measures on tax transparency for multinationals. All of that's really important, Michael, not just in adding to the revenue base, but also in creating a fair system between Aussie companies and multinationals.
ROWLAND:
Stage three tax cuts are here to stay.
LEIGH:
We don't have any intention to change them.
ROWLAND:
So, you say intentions, and that's a bit of a, excuse the expression, weasel word. They're either here to stay or they're not. Is the government seriously looking at either axing them or perhaps winding them back?
LEIGH:
No, we're not.
ROWLAND:
Okay. Andrew Leigh, appreciate your honesty. Thank you so much.
LEIGH:
Thanks, Michael.