THOMAS ORITI:
The Assistant Treasurer, Stephen Jones, helped craft Labor’s first budget in almost a decade and he joins us now from our Parliament House studios. Good morning, thanks for your time.
STEPHEN JONES:
Good morning. Good to be to be with you, Tom.
ORITI:
Real wages, they’ll begin to grow next financial year. But, there are a lot of people who are struggling right now. What do you say to those listening who are pretty worried?
JONES:
Look, real wages are growing, not at the pace we’d like them to, but they’re growing at a rate faster than at any time over the last decade. The problem, obviously, is that inflation is growing faster and whilst we know that real wage growth will be persistent, inflation we expect to come back off again by mid next year, and all of the efforts in the budget are about trying to ensure we don’t make a bad situation worse because if we start writing billion dollars cheques it’s just going to pump more money into the economy, push inflation up, and the Reserve Bank will respond by jacking up interest rates. So, it’s sort of trying to walk that fine line between providing household what is they need but not making a bad economic situation even worse.
ORITI:
It’s a balance, though, isn’t it, at an uncertain time? What about if that doesn’t happen with inflation? Not great news for wages then? This is really a forecast that could change.
JONES:
Look, if we’re still talking about persistently high inflation rates in another 18 months’ time, we’ve got a significant issue. Right around the world, central banks are working in a very coordinated fashion; in fact, this has been the fastest and most coordinated consolidation or fiscal tightening anywhere that we’ve seen in post war history. So all of the major central banks around the world are lifting their interest rates. We are doing the same, not at the same rate as many of the others, and we know that that does impose a real cost on businesses and households. But the alternative is much worse and that is inflation getting out of control, and high inflation, Tom, is just a tax on households and a tax on businesses as they can’t afford the basics.
ORITI:
Okay. That’s wages and inflation. I want to talk to you about power prices. Now the Treasury’s forecast a rise of 56 per cent in power prices by mid next year, and I know that there’s been announcement of a broad suite of regulatory interventions. I’ll ask you about that, but do you think a lot of people who perhaps voted Labor went into the election thinking that they were going to be seeing cheaper energy bills?
JONES:
Look, firstly, this budget’s all about being open and transparent with people, whether it’s on the revenue side of things, the spending side of things and the forecasts that we’re getting as a government. And we just want to say, this is what the market regulator is telling us is likely to happen if there is no change in the external circumstances and international circumstances with the price of power. We want to be really transparent with the Australian people about what’s happening and what’s driving that. We didn’t predict the impact of the war in Ukraine. But what we are still confident of is that the rollout of our policy, our rewiring the nation and doubling down on renewable energy, battery storage, investing in hydrogen, but over time, these initiatives as a whole will bring down power prices. Before the election we relied on the absolute best economic modelling available in this space, which is the RepuTex outfit. Everybody agrees they’re the best at the job. We relied on their modelling and the modelling that you’ve just quote there was based on that independent analysis.
ORITI:
So, you could acknowledge, though, that some people might feel let down, though?
JONES:
People –
ORITI:
Some people might feel deceived that they went into the election thinking that there were going to be lower power prices and the opposite has happened.
JONES:
We understand that people are doing it tough with power and we understand that businesses and households are doing it tough, which is why we’re focused on policies that are going to provide relief in the short term and over the long term; but also, frankly, Thomas, just being really honest with people and saying, “You’ve had a decade of climate wars and energy policy inaction and policy changing every year,” and that’s a real part of the problem that we’re facing now. We’ve had four gigawatts of base load power removed from the system and only one gigawatt enter over the last decade and that’s the cause of the problem …
ORITI:
So let’s chat solutions to that.
JONES:
… one of the approximate causes that we have right now.
ORITI:
Sorry, to interrupt, but let’s just chat because there’s a lot I want to get through. Let’s chat through solutions then. Regulatory interventions – that’s what we’re being told – what’s that going to look like?
JONES:
We’ve already started. So, we had a hard conversation with all of the gas exporters and said, “Well as the second largest gas exporter in the world, your number one obligation is to Australians first”. So ensuring that Australian businesses, particularly manufacturers and households have a stable supply of affordable gas over the next few years, absolutely critical. That was a supply intervention to ensure that there was actually goes flowing through the pipes. Without that, it wouldn’t have happened. If necessary, we’ll also work on the price side of things and the discussions are going on in government at the moment about whether more needs to be done to put in place some price control there as well.
ORITI:
What about red tape?
JONES:
That would obviously be a last resort. Hopefully we can get there through agreement and negotiation. That’s gas. We also need to look at what we can do around energy generation, so a conversation with the states and the energy generators some of whom, a lot of whom have been privatised over the last two decades about how we can get more generation into the system, because getting more energy generation into the system is what is going to be bring prices down and that’s the problem that we have at the moment.
ORITI:
Red tape – we had Jane Hume on about an hour or so ago on the program – Shadow Finance Minister. She says the opposition would ease those costs by ensuring baseload supply and she said they’d do that by reducing red tape around new gas supplies and slowing the rate of the closures of coal fired power stations. What do you say to that approach?
JONES:
Look, if any of these things were possible, you could assume that Jane Hume and her colleagues would have done it in any of the last nine years that they were in government. If there was a magic wand to wave, you can assume they would have done it. On the red tape issue, you know, we think that – we’re the biggest or second biggest gas exporter in the world, as we are. The issue isn’t supply. The issue is not that we don’t tonight have enough gas on the east coast of Australia or the west coast of Australia. It’s where that it was is going to. So, I don’t think any of those solutions are going to help us over the next 12 months even if we waved the wand and approved a whole bunch of new coal seam gas wells over the next 18 months. We’re not proposing to do that. You still wouldn’t get gas on into the market for another two to three years.
ORITI:
I’ve just got a few other things to ask if you don’t mind. David Littleproud, federal Nationals leader, joined us about an hour go. He said the budget makes regional people second class citizens. Very much a feeling from David Littleproud, as Nationals leader, they’ve been forgotten. No future, cutting regional infrastructure spending, which has happened – billions of dollars for some projects. What’s your response to that? I note before you answer, that child care was a big issue for him. He said, “Okay, I acknowledge the billions of dollars in child care, but that does not mean that 30 per cent of Australians living regional areas will have access to it.”
JONES:
Child care, aged care, health care in regional communities, the criticisms they’ve had of the National Party in past have been that unless it’s got four legs and stands in a paddock or unless you can pave it over with bitumen, the National Party doesn’t care about it. It’s the services in regional communities that are the lifeblood of those communities, so aged care, health care, child care, education, these are the things that we’ve prioritised in this Budget.
ORITI:
He would agree, he would agree saying they’re not getting the support they need?
JONES:
Can I talk about the infrastructure? Happy to have that conversation. The way infrastructure spending was done in this country over the last 10 years is as simple as this: the National Party has a fit and throws all of their toys out of the pram and the former government wrote cheques for billions of dollars that couldn’t be cashed. We’re not going to do it that way. We’re going to ensure that where we are spending billions of taxpayers money on infrastructure, it’s got to have an economic dividend and it’s got to be in the national interest. So, yes, we are still spending hundreds of millions of dollars on highway upgrades, on rail infrastructure upgrades, on water infrastructure upgrades. My colleague Murray Watt will be distributing from our resilience fund billions of dollars over the course of the next ten years to ensure that we are improving infrastructure to make it more natural disaster resilient, something the National Party couldn’t do in any of their years in power, so over $200 million a year in infrastructure firming alone for natural disaster resilience. So, we are absolutely spending money on infrastructure in regional Australia, it’s just we’re not going to do it in the way that the National Party and the former government did it, which is the National Party has a hissy fit and billions of dollars of taxpayer money goes out of door. That’s not the way to do economic management.
ORITI:
Speaking of big price tags, I just want to ask you about the NDIS. That was to be a pretty big conversation starter last night. Based on the forecasts we’re seeing, it could be about $102 billion in a decade. Well and truly the most expensive social program under the Federal Government. Now, this has bipartisan support no doubt. It was Labor’s scheme. What’s gone wrong here and where you are going to find the money? That, surely, you could argue, is just completely and utterly – no one’s arguing it’s not necessary, but very unaffordable.
JONES:
We don’t want the NDIS to collapse under its own weight, which is why we’ve got to slow the growth in its spending and we’ve got to ensure that every dollar is well spent and targeted at the people who the scheme was designed for. We know that there has been some rorts in the scheme. We know there’s been inefficiencies and mismanagement in the scheme, so the first place to start is looking at those. Bill Shorten’s already got a program of work underway on fraud detection and prevention and clawing that money back, and the second job of work is the review we’ve got to weigh into the way that money is being spent and the way the plans are being approved because everyone’s complaining at the moment, to be frank. Yes, myself and the other members of Expenditure Review Committee complaining about the massive growth in the scheme, but also people on the ground saying, “We’re getting our plans cut every year”, so something isn’t adding up here and we want to get to the bottom of it.
ORITI:
Okay, just finally, housing. A million homes over five years starting in 2024. You know, it sounds impressive. I’m wondering about how it’s all going to work out, though, in terms of a shortage of material, a shortage of labour to also do it, but a lot of cheap land is in flood prone areas. I’m just thinking about the flooding we’ve experienced recently. What’s actually going to be done to properly increase supply without building on them?
JONES:
So, a couple of things. The reason we’re starting in ‘24 is we’ve got labour and building material shortages between now and then, so even if we wanted to get these housing projects away at that scale over the next two years, we don’t think we could do it. So it’s just an acknowledgment of what’s possible. And the reason that we have an Accord between national, state and local government and the funders and the builders of housing is to remove all of those obstacles to ensure we get planning done right and done effectively. We don’t want to be building in flood plains. We’re being asked by the New South Wales Government to fund land buybacks and to fund flood damage replacement in New South Wales at the moment. The last thing we want to do is hand out a cheque to help the New South Wales Government to repair the damage that’s just been done because developments have been put in the wrong area at the same time as we’re looking at down the road another development going on in a flood plain. So, we’ve got all of these areas of Government lined up to ensure planning’s done right, building standards are done right, the finance is flowing from the private sector and we can meet those targets. We think we can do it.
ORITI:
Stephen Jones, I appreciate your time, thanks so much.
JONES:
Good to be with you.