Sally Sara:
Daniel Mulino is the federal Assistant Treasurer and Minister for Financial Services and joins me in the studio. Minister, welcome back to Breakfast.
Daniel Mulino:
Thanks very much for having me on, Sally.
Sara:
Why is the government unable to get inflation down?
Mulino:
So what we saw in the figures released earlier this week is that the conflict in Iran is lasting longer and is more severe than had been forecast. And that means that global energy prices are higher than had been expected a few months ago. We’re seeing higher inflation than expected right across the advanced economy world, so Australia’s not immune from that. You look at automotive fuel prices having gone up over 9 per cent in the last quarter and over 23 per cent over the last year. So that’s the primary driver.
If you go back to the RBA’s most recent monetary policy statement, they talked about energy prices and also some technology prices being higher than expected because of the AI roll‑out, again globally. So there are some global factors at play here which obviously Australia has to navigate. The government’s going to continue its very responsible fiscal management – as we have over the last 4 Budgets– and that will play an important role in putting downward pressure.
Sara:
When we’re looking at other OECD nations and comparable nations, they’re dealing with some of those global factors as well, but they’re having more success bringing inflation down. Why are we not with them?
Mulino:
So there’s a range of outcomes across the advanced economy world. I think if you look at other countries, it’s important to compare holistically. A lot of other economies have not been anywhere near as successful as Australia in terms of their labour market outcomes. We’ve managed to navigate this global economic inflationary impulse with very strong employment growth – around 1.3 million jobs created during the course of the government. We have unemployment higher than we would like, but it’s low in comparison to a lot of other economies.
Sara:
Do interest rates need to go up to the extent that unemployment rises to cool the economy a bit further?
Mulino:
Well, so what we’re doing as a government is to continue to find savings. We’re found something in the order of $180 billion in savings over the last 4 Budgets, 2 surpluses. Plus in the last Budget, really, really significant savings, over $60 billion in savings and reprioritisations. So that’s really important. We’re also leaning in when it comes to the productivity challenge. That is also key here. We need to lift the speed rate of the economy, and –
Sara:
We haven’t seen a significant jump in productivity, have we?
Mulino:
No. And so when you look at productivity, we’ve got a number of major initiatives we’ve already delivered – including passing the EPBC Act, including freezing the National Construction Code, a bunch of measures in my portfolio, but also – as identified in the Budget – something in the order of $13 billion a year added to economic growth through a range of national markets and competition measures.
Sara:
We’re not seeing the productivity shift in a favourable direction.
Mulino:
Generally, productivity improvements do take a bit of a lag to come through, and we saw this, for example, in the Hawke–Keating years. For example, you pass the EPBC Act, it takes a bit of time to implement, and then the improved decision‑making does take time to flow through. But the Treasury analysis in the Budget points to improved economic outcomes.
Sara:
Should Australians brace for another interest‑rate hike next week? Do you think it’s likely?
Mulino:
So I’m not going to try and second‑guess what the RBA’s going to do in future meetings. But what I can look to is the fact that the inflation result that we saw in the last few days is primarily a result of international factors, that the government will continue to undertake responsible fiscal management while at the same time having targeted cost‑of‑living support. We’ve managed to balance those 2 objectives over the last 4 Budgets and 8 economic statements in total.
Sara:
When we’re looking at some of the factors that are at play at the moment, you can’t control the war in the Middle East, but you can control spending. Why not pull harder if you can pull back spending?
Mulino:
I think what has been achieved has been very significant, and as I touched on, if you look at the last 4 years, there’s been an accumulated saving of $180 billion. The fiscal position is significantly better than the trajectory that we inherited; debt is around $198 billion less, which means around $70 billion less in interest payments over the medium term, over the coming decade.
So the accumulated impact of what we’ve been doing budget after budget has been significant. The last Budget in particular had very significant savings. They weren’t easy decisions; they were necessary. And in fact, what we find in the current political discourse is that we have an Opposition who points to the need for more savings. But then when savings actually come into the parliament, they opportunistically and cynically oppose them.
Sara:
The Treasurer’s flagged savings in the upcoming mid‑year budget update. What’s on the table?
Mulino:
Well, obviously it’s too early to talk about specifics. But what I can point to is our strong track record and the fact that in all of the Budgets, in all of the budget updates, we have found savings, and we will find more savings in this MYEFO. I can’t talk about specifics, but responsible fiscal management will be at the heart of it.
Sara:
You’re listening to Radio National Breakfast. My guest is the Assistant Treasurer, Daniel Mulino. Labor MP. Former Minister, Ed Husic, says having price interventions or price caps on basic groceries are measures he believes should be considered to help address cost‑of‑living pressures. Is that something the government would look at; do you see that as a possible option?
Mulino:
What I can point to is really strong measures that Assistant Minister Leigh and the Treasurer have championed when it comes to mandating the Grocery Code of Conduct. So there’s a lot of measures that have been taken to strengthen oversight of the grocery sector going right up the supply chain. The ACCC has stronger powers for oversight of a number of key sectors including groceries. But also, importantly, the penalties for market manipulation and price gouging have gone up tenfold under this government. So there’s a whole range of measures that we’ve taken, and that’s an approach that I think is very much to the advantage of consumers.
Sara:
Commissioner of Taxation, Rob Heffernan, told Senate Estimates last night that the tax office could have consulted small businesses better before announcing its controversial ban on credit‑card payments. How disappointed is the government by the way in which the ATO has handled the credit‑card surcharge issue?
Mulino:
Well, I thought the Commissioner gave very thoughtful and forthright evidence last night. I think the situation was a complex one. The reforms that were being undertaken at that time that have come into effect in relation to surcharging were really important for consumers. It’s critically important that people pay the price that’s advertised. We were an outlier when it came to surcharging and it’s a good thing that we’ve moved away from that situation.
When it came to the ATO, they were negotiating with credit‑card companies, trying to get a better deal so that they could figure out what options were possible. It was a complicated environment. And as the Commissioner has said, in hindsight, in parallel with those discussions with the credit‑card companies, in parallel with thinking about how long the transition period should have been, they could have beneficially engaged with small business more.
I think that what we’ve seen, though, now is that there is an extended transition period. The government saw that that needed to be extended and we’ve done so, and that means that we’ve now got a longer period for small business to deal with the new situation. And we’ll work – the ATO has been asked to think about arrangements going beyond the 30 June deadline next year.
Sara:
Just finally, Labor MP, Josh Burns, says the government needs to do everything it can to bring down inflation. Is there a sense amongst your Caucus colleagues that blaming the Middle East conflict is not enough and the government needs to get on with some drastic measures to get the economy back on track?
Mulino:
So we’re not blaming foreign situations and leaving it at that. I think it’s important context to acknowledge that there are inflationary impulses coming internationally. But as I pointed to, we need to continue to strengthen our fiscal position. We’ve done that across a number of budgets, and we’ll continue to. And we need to continue with productivity reforms. So it is taking actions on those 2 fronts that is important when it comes to dealing with inflation.
Sara:
Daniel Mulino, thank you for joining me this morning.
Mulino:
Thank you, Sally.