Melissa Clarke:
For the government’s view, let’s bring in Assistant Productivity Minister Andrew Leigh. Thank you for joining me from Canberra, Andrew.
Andrew Leigh:
Pleasure Melissa, great to be with you.
Clarke:
So, before we get to the budget figures – can I just ask you about the PM addressing the UK Labour Party conference during his visit to the UK? Was that an appropriate thing for him to do?
Leigh:
It certainly was, and it was a great speech. I mean, it followed very much in the history of Clement Attlee and Ben Chifley’s relationship – the strong relationship between Tony Blair and Bob Hawke and Paul Keating. Those links are well known and long‑standing and help buttress the strong links we have with the UK. The Prime Minister spoke about the importance of defending democracy at a time in which populism is on the rise, about the strength of the relationship between our 2 countries, and about the important initiatives such as AUKUS that are being pursued. It was absolutely a national interest speech, and one that strengthened even further the ties between Australia and the UK.
Clarke:
Given that a fair chunk of his speech was talking about some of the extremism we’re seeing in politics, does a Prime Minister in office addressing a partisan party conference risk adding to that partisanship?
Leigh:
We really need to be bolstering a sensible centre at a time in which there are extremist movements seeking to fuel discord and zero‑sum thinking on the fringes of politics. That’s something that Anthony Albanese has sought to do throughout his career. It’s no surprise that he aims to strengthen the centre when he’s overseas as well. Of course, he met with Kemi Badenoch and her Shadow Cabinet and he had a meeting with the King. There was a meeting of progressive leaders – the leaders of Canada, the UK and Iceland got together with our Prime Minister, as well as a bilateral meeting with the Spanish Head of State. All of these meetings are in the national interest and reflect the value that the Prime Minister has gotten out of this relatively short trip overseas, and all that he’s managed to pack into his US, UK and UAE time.
Clarke:
So can I be clear, is this a matter of principle or is it because the content of what he was saying was, in your view, worthwhile and in the national interest and therefore it was worth doing?
Leigh:
I think it’s both. I mean, I think he acquitted himself admirably in that speech which had important resonance of history. He’s obviously speaking to a party conference of a party of government, a party which has won a resounding majority in the UK, and strengthening those ties is in our national interests.
Clarke:
So, a future Sussan Ley Prime Minister would be well within her rights to address the Republican National Congress in the future?
Leigh:
Look, I think the reverse would be appropriate in this instance. I think the Prime Minister gave a very measured, non‑partisan speech, one which was focused on building democracy, one which recognised the value of the deep ties. Of course, our institutions owe their strength to the UK and I think of that lovely Noel Pearson metaphor of Australia having 3 streams: the Indigenous stream, the British stream and the multicultural stream. And so, anything we can do to strengthen our ties with the UK is healthy and in the national interest.
Clarke:
So, if the Reform Party in the UK invited the Prime Minister along, should he address their party conference?
Leigh:
Well, this is a party of government, and I think that is important to recognise here that it’s the party that has the vast majority of the seats in the House of Commons. That’s of course the context in which the Prime Minister is going there, and Australia has sought to build strong ties with that government, but while he was over there he was also meeting with the main Opposition party. That’s as it should be. This has been a really successful trip for the Prime Minister.
Clarke:
All right. Let’s turn to the Final Budget Outcome for the 24–25 financial year. What’s behind the deficit being smaller than expected?
Leigh:
Well, the economy’s stronger and the budget’s stronger as a result. We’ve got wages growing, we’ve got more than a million jobs created, and we’re paying down Liberal debt. We’ve turned those 2 big Liberal deficits into 2 Labor surpluses, and this deficit is now a fifth of what was projected it would be when we came to office. All of that is a credit to the Australian people and the way in which the economy has grown, but also to the careful decisions of Jim, Katy and the Expenditure Review Committee. We’ve returned some 70 per cent of additional tax receipts to the budget bottom line compared to 40 per cent under our predecessors, and as a share of GDP the deficit now is running about a fifth of what it was between the Global Financial Crisis and the pandemic.
Clarke:
The budget position that we’ve seen, the upright is largely due to greater income taxes – also corporate taxes, but largely income taxes. That’s not really a decision of government that’s led to that improved position is it?
Leigh:
It’s the strength of the economy, and Australians are doing better and the budget is doing better as a result, and that’s a great thing. We’ve seen in Australia getting inflation now back inside the Reserve Bank’s target band without smashing jobs. That is rare around the world and unique in Australian history. That’s not the way we got inflation down in the 1970s, the 1980s or the 1990s. In all of those instances, getting inflation under control involved a whole lot of people losing their jobs. That hasn’t happened this time, and that’s reflected in the stronger income tax receipts as well as of course, low unemployment figures.
Clarke:
It seems there’s still some level of concern about inflation going up. The market certainly expects the Reserve Bank will keep interest rates on hold when it meets tomorrow. Does that suggest the government could be doing more and keeping not just 70 per cent of the unexpected revenue, but keeping more of it and putting it towards the budget bottom line to take out more stimulus from the economy to make sure that inflation doesn’t return?
Leigh:
I think we’ve always got to focus on the quality of spending, and that’s what we’ve been doing with the reforms in aged care and the National Disability Insurance Scheme – ensuring that we’re spending taxpayers’ money wisely, getting away from the sports rorts, the carpark rorts and all the other rorts that were rampant when we came to office in 2022.
Clarke:
Sure, but the quantum of money is important too. That’s why you were just telling us that you think your government’s done a good job saving, you know, 70 per cent of the revenue uprights compared to 40 per cent. The quantum does matter. So, the question is, could you have saved 100 per cent of this revenue upgrade and put the government or put the economy in a better position to ward off any sticky inflation?
Leigh:
Melissa, I think we’ve got the balance right. We’ve of course increased the income support payments since we came to office, a 40 per cent increase in Commonwealth Rent Assistance, which is a very targeted measure. We’ve made targeted investments in the clean energy transition. All of that’s important to the future. But as was highlighted so effectively out of the Economic Reform Roundtable last month, we do need to be focused on productivity‑boosting reforms, and that’s why so much of the government’s energy is going in to things like getting national competition policy going again, and merger reforms last year which will be taking effect and the work with the states and territories in order to get strong growth and power in the economy and boosting living standards.
Clarke:
Now, the Reserve Bank is expected to keep rates on hold tomorrow. I know you’re not going to engage in speculation about it, but what’s your message for households, particularly those with mortgages? How should they be looking at the economy when they’re still doing it tough, but are facing the prospect of still facing high interest rates?
Leigh:
Yeah look, many households, particularly with recent mortgages are doing it tough. We’re aware that people are under pressure there, and it’s those challenges that are leading us to be very careful with the government budget. As you know, the Liberal Party talked about surpluses. They printed the mugs, but they never actually delivered any. We’ve managed to deliver consecutive budget surpluses and we’ve actually had the biggest budget turnaround of any parliamentary term in Australian history. There’s been some hard decisions involved in that, but the result is that the government is working in tandem with the Reserve Bank in order to now have brought inflation into the Reserve Bank’s target band.
Clarke:
Look, I just wanted to ask you finally about the Tomago smelter because there’s certainly a lot of discussion about what role the state and federal governments might have in supporting it. Under what conditions would the federal government be willing to bail out the Tomago smelter? What are the principles the economic team is taking when assessing this?
Leigh:
Yeah look, that will be ultimately a decision that will be made by the Industry Minister. I know that the focus on a Future Made in Australia is an important one, and green metals are having a part to play in that. So, we’ll be thinking about the national interest and how Australians can benefit from a clean energy transition and from maintaining that strong manufacturing base, and that’s what the Future Made in Australia agenda is all about.
Clarke:
That sounds to me like the federal government’s pretty invested in ongoing operations at Tomago.
Leigh:
It will be a decision for the Industry Minister, but certainly our commitment to manufacturing is strong, and reflected not just in cute little videos on social media, but actually in real policies.
Clarke:
All right Andrew Leigh, we’ve gone through a few topics. Appreciate your time this afternoon.
Leigh:
Thanks Melissa.