Patricia Karvelas:
I’m joined now by the Assistant Treasurer, Daniel Mulino. Welcome to the program.
Daniel Mulino:
Thanks very much for having me on, PK.
Karvelas:
The Treasurer says that you take as a government your part of the responsibility for the inflation problem we have. MYEFO is coming up, that’s the mid‑year budget process. He’s said, telegraphed that there will be savings in MYEFO. Don’t they need to be net savings to have an impact on inflation?
Mulino:
Well, I think what the Treasurer has stressed is that we’ve now delivered 4 Budgets, and on top of that a range of budget updates, and we’ve delivered savings in all of those. We’ve seen 2 Budget surpluses. We’ve seen in total a budget position around $230 billion better off, 180 billion in saves, and a significant reduction in net debt.
So they’re all significant contributions over 4 years. So we’ll be approaching MYEFO with the same spirit that we’re going to be delivering a very responsible budget update, and that’s something very much in line with what we’ve delivered now 4 years in a row.
Karvelas:
Well, I have to be impolite and say if you approach it the same way, we might get the same outcome, which is stubborn domestic inflation as well as the overseas headwinds. So you need to maybe not do the same thing.
Mulino:
No, but we’ve been contributing downward pressure on inflation in a range of ways over the last 4 years. When we came to power inflation was over 6 per cent and rising fast and it’s now higher than we’d like, but it’s much lower than that, it’s much lower.
And as I said, when you look at the accumulative effect of all the different Budgets we’ve delivered, including 2 surpluses, and last Budget importantly – and Jenny Wilkinson, the Treasury Secretary talked about this today – had over $60 billion in saves and contributed to an improvement in the fiscal position that was putting downward pressure on inflation.
Karvelas:
Sure. But you are going to be looking at savings, cuts, whatever people want to call them, I’m not going to get into that debate, but you know, spending less, the Treasurer’s made that clear. So there’s no contest about that that’s going to happen. Will they be net savings though; can you guarantee that they’ll be net savings?
Mulino:
Well, I can guarantee that it will be a responsible economic document. I just don’t want to get into the particulars of the different parameters, but we will have savings in there and we will do it in a way that is responsible.
We’ve had targeted supports for people who are doing it really tough, we know that there’s a number of people doing it tough. So again, all the way along we’ve been delivering supports for people who need it in the healthcare system, higher rates of Medicare, cheaper medicine and we’ve been delivering tax cuts for all taxpayers across the last few years.
Karvelas:
So if you’re looking for savings though, and the Treasurer conceding that that’s going to happen, it demonstrates that you realise that they have to be made to have an impact on inflation. How substantial do they need to be for you to actually be doing some of the heavy lifting on reducing inflation?
Mulino:
Well, we’ll deliver a responsible document, it’s –
Karvelas:
But do they have to be substantial? Like I’m trying to sort of drill down, I know you can’t go through every item, and it’s being deliberated through the, you know, ERC process where you deliberate these things. But it has to be big, doesn’t it, for it to actually have an impact on the economy?
Mulino:
But what I can point to is the fact that when you look at our track record, we have delivered accumulated savings that are very, very significant, $180 billion, and –
Karvelas:
Does this one need to be bigger?
Mulino:
Now’s not the time for me to talk about specific numbers, but as I said, it will definitely be a responsible economic document, as have all of our Budgets and budget updates.
Karvelas:
And a noticeable impact on the flow through to inflation?
Mulino:
Well, we are managing this document in light of the challenge that we have in the economy, and we have said that a key priority of our economic management is to fight inflation; we’ve said that throughout the last 4 years.
Karvelas:
The Opposition outlined their budget changes, and Tim Wilson said, you know, not much criticism of the changes. There are some specific ones that I want to ask you a question about. When they are taken together, I think it’s about $9.4 billion is going to be saved on things like ditching the new vehicle efficiency standard, the electric‑vehicle discount and also the home‑battery subsidies.
Some of these things, particularly the home‑battery and the electric‑vehicle subsidy, they go to high‑income earners. Also EVs where people are buying them, they’re making – they’re actually voting with their feet. Is that an area that you think that there might be some bipartisan support for?
Mulino:
So what I’d say is, firstly, looking at some of those individual measures, we’ve already targeted the EV discount, and we made a significant save in the last Budget on that front. So that is going to be targeted in the future, more towards –
Karvelas:
Could it go further?
Mulino:
– vehicles of under $75,000, there’s much more in that space. But the broader point I would make here is that both the Opposition and One Nation are making big claims about saving money in that clean‑energy transition space. That is a false saving.
We know from the macroeconomic modelling, from Treasury, from international agencies, from macro economists that if you slow down or imperil the economic transition, that is going to cost us far more, it will cost households more. If you have a disorderly transition rather than an orderly transition it leads to lower wages growth, higher inflation, higher costs.
And what I might say is now we have a situation that’s quite remarkable where both the Opposition and One Nation are ditching even having the commitment to net zero.
So, look, I think there’s a number of policies being put forward which are politically cynical at times, and frankly, in the medium and long run are not going to serve our economy or our community well.
Karvelas:
If you look at the inflation data today, as I have, and clearly you have too because it’s pretty important stuff and it’s going to have an impact on, of course, what the Reserve Bank decides, the AI boom is a bit of a problem, isn’t it? Like it’s sort of touted as good for us, but it’s clearly fuelling some of our inflation problem.
Mulino:
Again, this is a global phenomenon, and when you go back to the Reserve Bank’s last statement of monetary policy, they identified higher than forecast energy prices, but also higher than forecast technology and IT costs.
Look, there’s a real opportunity here, and I think the way that the Prime Minister and the government are approaching it is that we need to embrace that opportunity. But we also need to do it in a way where we have the roll‑out in a coordinated way. We need to see PM&C lean in to coordinate across portfolios, but also National Cabinet.
We do need to embrace all of the opportunities here but do it in a responsible and coordinated way.
Karvelas:
Just on a sort of ordinary person level, and I don’t mean to be disrespectful to you, and myself –
Mulino:
I’m always glad when that’s the precursor for a question.
Karvelas:
Well, you know, it feels like in this building where people, and we’re coming out of Parliament House, people are on largish incomes, obviously not everyone’s on the same incomes, but largish incomes, apart from the people who are serving us food or helping us. There’s a sort of disconnect between just how much this is punishing people every day, this cost‑of‑living crisis, that it just won’t stop. How bleak are things going to get, minister, next year because the trajectory is going to get worse? You have to level with people, don’t you? It’s about to get even worse than people are experiencing.
Mulino:
Well, look, can I just say I’m very conscious of the way people are doing it tough in the community. And when I go out into my community, whether it be on the shopping strip near my electorate office or a small business event – and I was at one a couple of Friday nights ago – look, I hear people’s experience directly. But that’s why things like the Urgent Care Clinic in Sunshine near my EO, cheaper medicines, higher rates of bulk billing, these make a real difference. That’s why things like $2,800 accumulatively off the tax bill for someone on the average wage, like this makes a difference. And you can look at that through the Stage 3 tax cuts being reworked, 2 different tax cuts at the lowest rate, and then the instant deduction and the WATO.
So, look, we are doing things that are targeted, that are responsible –
Karvelas:
Do you accept that, you know, there’s a list of things, but if you’re an ordinary person, you mentioned Sunshine, the place I was born, like that’s not – it doesn’t cut it, it’s too hard to live in this country.
Mulino:
No, so I get that people are still feeling like it is tough, I totally get that. But you know, the Urgent Care Clinic is an example in Sunshine is very busy, and it’s helping people, and again, I talk to people who have used it and rave about it. So that’s – it doesn’t solve all the world’s problems, but it has made a noticeable difference, and that roll‑out of Urgent Care Clinics around the country has been really positive. Cheaper medicines make a difference.
What we’re trying to do is to have a range of different interventions, each of which touches different parts of the community, some of which touch many people, for example, the tax cuts. The accumulated effect for most people, and those doing it tough is material.
Karvelas:
It is. And people feel – I mean I speak to people all the time in the government, off the record, they’re saying they know this is kind of smashing you, isn’t it, with respect? Like people are really upset, they’re upset because it’s gone on for so long too, and there doesn’t seem to be a light at the end.
Mulino:
And this is a global problem. So we’re seeing this inflation surge that we saw reflected in an uptick in inflation today in Australia, it’s a global phenomenon, all major economies are seeing this inflation, essentially coming from a war that it would be in all of our interests if it ended. It is lasting longer than had been forecast some months ago, so –
Karvelas:
But it’s also – some of its home grown, that’s the issue, that’s the only bit you can control. You can’t control the war in the Middle East, but you can control your own contribution.
Mulino:
So on the home grown front, if you look at our last Budget, $60 billion plus in saves, and as the Treasury Secretary pointed to, that is putting downward pressure on inflation. And if you look at aggregate demand, if you look at the increase in aggregate demand over the last financial year, 4 out of 5 dollars is coming from the private sector.
So the government is really leaning in here, it is making savings, and it’s making savings in each and every economic statement, in each budget, in each budget update. We need to keep doing that. But as you say, people are doing it tough.
Karvelas:
Is your message though – they are, absolutely.
Mulino:
So we need to keep leaning in and helping them in a responsible way.
Karvelas:
And is your message to our viewers, people who are watching, that the government’s not only going to lean in but going to lean in harder than it ever has, that this is now make or break time, like this is too enduring?
Mulino:
We’re going to continue to be responsible, and that’s important. So we’ve had savings in every budget, in every budget update, and we will have savings in the next one.
But as I said, we also need to continue to provide targeted support to people for exactly the reasons you identified, PK, there are people who are doing it tough.
Karvelas:
There certainly are. Thank you so much for coming in.