PAUL CULLIVER:
First, though, of course, another big change that comes with July 1 is tax cuts. If you are a taxpayer, then a tax cut is coming your way. That is, of course, the major, the major approach to cost‑of‑living relief the federal government has introduced in their latest Budget. So, is it the exact right timing for your household budget, or is it the exact wrong time when our inflation rate is still failing to budge? Of course, the latest data running inflation at 4 per cent, a smidge higher than the previous numbers. Are we at a risk of causing too much demand, too much heat in the economy? Stephen Jones is the federal Assistant Treasurer and has given you a call this afternoon. Stephen Jones, good afternoon to you.
STEPHEN JONES:
Good afternoon. Good to be with you.
CULLIVER:
Is this the worst possible time for tax cuts to be hitting the economy?
JONES:
Look, absolutely not. We know that households are struggling. We know that small businesses are struggling at the moment, just meeting basic cost‑of‑living demand. So, the good news for them is that as of today, wages are going to be up, superannuation contributions are up and taxes are down. As far as the tax cuts go, it’s $20 billion over the course of a full year. But in any one week, it’s a fraction of that. And I know most of the households I talk to will be using this to pay down bills that they already have on the kitchen table. So, it’s not like people are going to be rushing out there with a big spending spree. It’ll just help them keep their head above water.
CULLIVER:
Can you talk through what the government’s approach is here? I’d imagine a tightrope walk is perhaps a fairly apt analogy. We want an economy that continues to grow, but we also want that inflation rate to come down. And clearly nobody wants to say interest rates go up again, a decision, of course, of the RBA. How is the federal government attempting to manage that?
JONES:
Look exactly right, Paul, and what we’ve got to do is get the balance right so some targeted cost‑of‑living relief that won’t blow inflation numbers up. And we think we’ve achieved that with energy bill relief, $300 off your energy bill that actually suppresses inflation and doesn’t increase it, and our medicines policy. And I don’t think any of your listeners would deny, mostly pensioners, but others as well, a bit of hip pocket relief when they’ve got to fill those scripts that their doctor has told them is necessary. So, when you put it all together, a modest wage increase, tax cuts, energy bill relief and medicine relief, we don’t pretend that this is going to solve every problem in the world, but it’ll provide some meaningful assistance to households that are doing it tough without, as you say, generating an inflation flame, which would be counterproductive.
CULLIVER:
Obviously, anyone that is a taxpayer does get a tax cut. Of course, the size of that depends on their wage. When it comes to how households spend that, would you hope and prefer that people are paying down debt rather than, say, running out and spending it?
JONES:
Well, I’m not going to pretend to tell households how they’re going to use whatever money they get. They’ll have their own needs and priorities. But mostly, you’re coming to me from Newcastle, I represent an electorate in Wollongong. I reckon my households are pretty much the same as yours. And most of the people there are looking at how they can buy a new pair of school shoes for their kids, make sure that they’ve got fees paid for kids swimming lessons or all the other things they’ve got to do, meet electricity and other payments. So, it’s pretty basic stuff. It’s not like anyone’s going out there buying Lamborghinis with this stuff. They’re meeting basic cost‑of‑living pressures.
CULLIVER:
Obviously last week we saw that result from the ABS the year to date inflation rate at 4 per cent. It’s ticked up month-on-month. How concerning is that? Does that show that we are indeed overheating the economy too much?
JONES:
I’m not going to get too reactive about one month’s figures, and particularly when you understand the way that those figures, those year-on-year figures are measured. Inflation actually came down in the month. It just didn’t come down as much as it did in the corresponding month of 2023, which is why it looks like it’s ticked up. It actually came down over the month. Let’s look at the quarterly figures. But I think the question you’re probably wanting me to respond to is, is the government happy with where inflation numbers are at the moment? And the answer to that is no. We want to see it coming down faster than it is and we want to see it back within that Reserve bank comfort range of 2 to 3 per cent.
CULLIVER:
Do you think that this number, though, could be a sign that the RBA will put up interest rates?
JONES:
Look, we’re still confident that we’re on track with our program of getting interest rates down. I’m not going to speculate on what the independent Reserve Bank will do. We’ve got to do our bit with fiscal policy and other tools that we have available to us. The independent Reserve Bank will assess all of these things, including employment, by the way, and can I just make the point that one of the extraordinary features of the last 2 and a bit years has been unemployment and the fact that it is at record lows and we’ve created over 800 and nearly, sorry, 800,000 jobs. And the good news about that? More Australians in work. And nothing helps you meet the cost‑of‑living pressures more than having a job and a decent pay. So, the Reserve Bank, in some of their comments over the last week, has highlighted the importance of balancing both those inflationary and employment figures as well, and ensuring that what we do to manage inflation doesn’t smash the great gains we’ve made in unemployment. So, they’ll play their game, we play ours. But we’ve also got our eye on those employment numbers and wages numbers, as well as the things that we are directly impacting through the Budget.
CULLIVER:
The federal Assistant Treasurer, Stephen Jones, is your guest this afternoon here on ABC Newcastle. Assistant Treasurer, I let listeners know that you’re going to be on the program this afternoon and asked if there was any particular topics on their mind that they’d like to hear from you on. John from Meriwether says with 10 million plus getting a tax cut with the help of cost of living. What a self-funded retirees getting other than that $300 electricity rebate?
JONES:
Well, not many groups within the economy, or not many demographics within the economy have actually benefited from a period of high, higher than average interest rates. But if you’re a person whose income is derived from cash, like investments in fixed term deposits or the like, you’re actually one of the groups within the economy that has done better out of a higher interest rate environment than people with mortgages, and that’s more likely to be a self-funded retiree than not. And the benefits that self-funded retirees get is the great tax concessions they get through our superannuation system over a working lifetime, which means they’ve been able to set themselves up, put together with their own hard work, to fund a better retirement than they would otherwise have. Don’t begrudge a cent of it. I think it’s great. We want all Australians to be able to aspire to that. But, you know, it’s not like there hasn’t been some benefit for that group over the last couple of years.
CULLIVER:
So, self-funded retirees are doing fine, is that what you’re saying?
JONES:
No, I’m not going to, I don’t want to put it like that because it sounds like I’m blasé to their actual needs and I’m not. I’m just saying that as a group, self-funded retirees, if they don’t, are not carrying a mortgage or a debt, are probably in a better position than somebody who’s carrying a mortgage or a small business debt and have got to face the increasing interest rate rises. If you’re deriving income from an interest bearing product and interest rates go up, you’re probably in a better position than somebody whose expenditure is linked to having to pay off a mortgage or a loan.
CULLIVER:
Question here from Jen that perhaps speaks to the methodology that the RBA uses to set interest rates, saying, I’ve always wondered why inflation is pegged to us, mere mortals spending more on essentials. Surely if something is a necessity, it shouldn’t be considered excess spending and a driver of inflation. That’s from Jen in Maitland. What do you think of that? Stephen Jones, Assistant Treasurer.
JONES:
Look, when the RBA is looking at this, as the government does, we’re looking at the overall level of aggregate demand and whether there are particular pressure points within the economy which are driving inflation. And the RBA will look through, or have historically, looked through seasonal figures or one-off things like there’s a severe cyclone or weather event in north Queensland which sends the price of bananas or apricots, or – apricots don’t grow in north Queensland, but you get my point. That sends the price of fruit through the roof, which has an impact on measured inflation for food. They’ll look through that and go, that’s a one-off effect. We’re not going to take that into account and they’ll do that in other areas as well. When we look at the inflation figures, we’re going, where are the pinch points in the economy that the government can help on the supply side. So, if there is a shortage of skills, for example, if there is a shortage of housing, for example, what can the government reasonably do on the supply side to boost supply into those markets. So, with skills, we look at training, we might look at immigration or skilled migration, we might look at housing, we look at how can government help to get more houses built more quickly. So, we’ve each got our job to do and that’s the way we look at those aggregate figures of demand and where the pinches are in the economy.
CULLIVER:
I do want to ask you about WA Senator Fatima Payman. Just to remind people, of course, last week there was a Greens motion in the Senate to recognise the state of Palestine. Of course, it is a Labor caucus rule that you have to vote with the caucus. It was the caucus position to not support that motion. However, Labor Senator Fatima Payman crossed the floor, the first person to do so since the eighties. Today she’s released a statement saying, ‘yesterday the Prime Minister suspended me indefinitely from Australian Labor Party caucus. Since then, I’ve lost all contact with my caucus colleagues. I’ve been removed from caucus meetings, committees, internal group chats and whips bulletins. I’ve been told to avoid all chamber duties that require a vote, including divisions, motions and matters of public interest. I have been exiled’ and today as well, in the last half an hour, the SMH is reporting that the Prime Minister has told the Senator she should consider quitting the Senate and handing back her seat to Labor. Do you think Senator Payman should be quitting?
JONES:
Look, I like Fatima. I spent a bit of time trying to get to know her when she entered the Senate. She was the last person elected off the Labor ticket in Western Australia in 2022. I like her. I think she’s a good person at heart. I disagree with what she decided to do. Fundamentally. There were 2 motions available for her and other senators to vote for. One was the one that Labor put forward and the other one was the ones that the Greens put forward. The one that Labor put forward was the one that reflects our party policy position, the one that we all got elected on. The one the Greens put forward, did not. And Senator – Fatima can explain for herself why she voted for one over the other. What I can say is that amongst the colleagues that I speak for on a human level, nobody is seeking to isolate her. But we all get elected to follow the rules and we all know what they are when we come into parliament and there might be many who are saying, well, you know, she actually got a softer landing than other people in a similar position over the last 30 years.
I say all of this as somebody who said, I like Fatima a lot, okay. I don’t want to see her go through any personal anguish or heartache over this, but we’ve got big things that we’ve got to deal with as a government. Yes, our position on Palestine is one of them, but so are all the economic things that I’ve just been talking to you and your listeners about and all the other things that we’re expected to deal with over the course of this important time. And I don’t want to see a distraction from them. I want to see a free state of Palestine living safely, peacefully alongside a free state in Israel. I want to see democratically elected governments in both of them. And I want the people of both countries to be able to live in peace and harmony. I strongly suspect a motion from the Australian Senate is not going to be the catalyst which tips the Middle East over into peace talks. We will work alongside our partners who are working towards peace in the Middle East and we will put all of our efforts into humanitarian aid between now and then. But frankly, I think the majority of Australians elect Australian senators to focus on the things that are immediately before us. Yes, we care about those issues. Yes, we will do what we can as a member of a community of nations and we are working for peace in the Middle East and a two-state solution. A senate motion is not going to accelerate that process.
CULLIVER:
Understood. Is it, is it perhaps going to be a strange thing to explain to voters, though, where yourself, Stephen Jones, you’ve just stated that you support a state of Palestine, a two-state solution that many in the, in the Labor Caucus support this, and yet Fatima Payman, Senator Fatima Payman is being effectively, well, she’s been, as she says, cut off from the Labor Party caucus over this, disciplined effectively over this. Is that, is that a strange sort of inconsistency there to explain to voters?
JONES:
Look, as I said a moment ago, there were 2 motions that are available for senators to vote on. One was one which reflected Labor party policy and the other one, which was put forward by the Greens, which did not. And I’m sad that Fatima didn’t vote for the Labor party one. There are – every one of us who signs up to be a Labor candidate at an election does so on the understanding that we are bound by the rules and the policy of our great party.
CULLIVER:
Would you agree with her characterisation that she says she has been exiled?
JONES:
No, I would not.
CULLIVER:
Okay. Do you think, just to go back to my original question, do you think it is now something that she should consider quitting her senate seat and indeed quitting the Labor party.
JONES:
I don’t think I should add to – I can add to anything that I’ve already said on this. I’ve already made it quite clear. I’m very fond of Fatima, and if she decides that she can be a member of the Labor caucus who will follow the same rules that every other member of the Labor caucus abides by, then I, for one, I’d say it’d be great to have her back inside the show. But frankly, that’s a matter for her to decide on the basis of, you know, her conscience and reflecting upon how she came into this – in the Senate in the first place.
CULLIVER:
Assistant Treasurer, really appreciate your time today. Thank you.
JONES:
Good to be with you.