LAURA JAYES: Joining me live now is the Shadow Finance Minister Jane Hume. Jane, thanks so much for your time. Yesterday, I think we saw our central bank be world leaders essentially in reducing the rate in which rates have been going up. What does this say about Australia's place in the world and our economy at the moment?
JANE HUME: Laura, Australia was left in a very sound position when the Coalition left government. Obviously, when you get the economic settings right, there are fiscal dividends. We saw that in that $50 billion dollar addition to the budget bottom line in the Final Budget Outcome last week. We know that the economy was improving, that the budget position was also improving. We maintained a triple A credit rating, and unemployment had a three in front of it, which was one of the reasons why that Final Budget Outcome was so good. Tax receipts were up, welfare payments had been lowered. But now the crisis that is facing this government, the circumstances that are facing this Labor Government is a cost of living crisis, rapidly rising inflation. Now we know that Australia has been a remarkably resilient economy. We are doing better than the UK and the US certainly but those international economic headwinds do spell a dire warnings. The most important thing that a Labor government can do right now is make sure that it has a sensible approach to the upcoming October budget. And that it makes sure that its fiscal policy is in line with monetary policy. If you don't get your fiscal policy right, settings right, those economic settings right, well, then the RBA is left to do all of the heavy lifting by increasing interest rates. And of course, that disproportionately affects particularly those Australians who are mortgage holders. So we would like to see in the upcoming October budget, a sensible approach particularly to that high spending agenda that Labor took to the election, you know, it said that this is going to be a bread and butter budget. The problem is we know that Labor's bread and butter is higher taxes and higher spending. That's not what we want to see, we would like to see that this government is concentrating on reducing those cost of living pressures and reducing, and making sure that this is a sensible budget, to make sure that the RBA doesn't have to do all the work to address rising inflation.
LAURA JAYES: But which is it because we saw Liz Truss cut income tax rates dramatically? And that sent the pound plummeting. And that was seem to have working, been working against monetary policy. So what are you expecting in this budget?
JANE HUME: Well, I did see all over the newspapers today that there is dissent in the ranks of the Labor government about what it should do about the stage three tax cuts. We would urge the Labor government to keep its promise to all Australians that it made during the election campaign to continue with those stage three tax cuts. In fact, we would think during a cost of living crisis, that increasing taxes is exactly the wrong policy. Now, the UK experience is being used as analogous. And I think that that is a grave mistake. First of all, in the UK. Well, in Australia, the test actually tax cuts have maintained that top tax rate of 45%. It is still a highly progressive system that we've maintained here. That's very different to what the UK were considering. Most importantly, the stage three tax cuts in Australia mean that 40 to 95% of Australians will have paid tax no greater than 30 cents in the dollar. It is an efficient and effective and fair way of implementing lower and simpler taxes. And finally, they're already budgeted for, they have been since 2019. So these tax cuts are already there. And then we'd have to actually repeal legislation in order to not go ahead with it. Now I think that it would be a very brave Labor government indeed, that would walk away from a commitment that it has made to the Australian people just a few months ago to give them lower, simpler and fairer taxes.
LAURA JAYES: They’re legislated but they're not budgeted for though are they?
JANE HUME: They've been budgeted, they've been baked into the budget numbers since 2019 Laura. That's the sort of, you know, the baseline from which additional promises are made.
LAURA JAYES: But would you call that, is that a funded tax cut though, when your budget is in deficit?
JANE HUME: So Philip Lowe said that there are three ways that you can deal with inflationary pressures from a fiscal perspective, you can increase taxes, you can decrease your payments or you can grow the economy. And we would urge the Labor Government to make sure that it's, that the spending promises that it has made, are prioritised appropriately, to make sure that whatever spending commitments it has, do not add to inflationary pressures, in fact, decrease inflationary pressures. There were $45 billion worth of off budget promises that were made $18 billion more on budget promises that were made at this election. I think that those promises should be reconsidered in the light of the circumstances that the Labor government is facing right now.
LAURA JAYES: Like what do you have in mind?
JANE HUME: Well, that's up to a Labor government. That's not up to, to an opposition. We would like to see what they are going to do…
LAURA JAYES: But where we would like to see cuts in funding, is it the NDIS, health, what would it be?
JANE HUME: Well, that's up to a Labor Government to assess its priorities in the face of this crisis. But what is most important here is that rising inflation is a pernicious and insidious problem. It eats away at the purchasing power of ordinary Australians. It erodes wealth, and it is anti-aspirational. We want to see the economy grow and grow in a sustainable way. And that's exactly what tax cuts will do. The most important thing though, for this Labor government is to make sure that this budget coming up is a seriously considered budget that it is, that is a sensible budget, and that it doesn't simply put it all out on the table, every election promise that it's made.
LAURA JAYES: Look, I think more people having more of their own money is a good principle to start from. But when we talk about inflation, I know these tax cuts don't come into effect for another two years. And it might be very different circumstances in two years, which is a good thing. But giving more money and putting more money in people's pockets, therefore more disposable income, wouldn't that be inflationary in and of itself?
JANE HUME: Well, as you said, they don't come in for another two years. And in fact, at that stage, we would hope if the forecasts are right, that are coming from the RBA that are coming from Treasury that we would be at the end of that interest rate cycle and the economy has slowed. Perhaps that is, in fact, the very best time to make sure that there is more money in people's pockets, that we are encouraging economic growth. That it is, that there are aspirational policies out there, rather than ones that are anti-aspirational. So that's a very good reason alone for the stage three tax cuts to remain. Now it's up to the Labor government, which is clearly in disarray over this very issue just a couple of weeks out from the budget. I mean, the ink is going to be drying on these papers, just a couple of weeks. There is dissent in the ranks now. It's actually quite concerning.
LAURA JAYES: Just one final question, because this debate always seems to get away from us, you know, you can shape the facts to suit you whatever narrative you want it to be. But no one ever talks about the amount of tax that people pay at the higher end. And we're talking about income tax here, isn't there, doesn't there need to be a look essentially, at, you know, company tax and income tax and how, you know, clever accounting can help those at a higher income, not necessarily in that band you're talking about up to $200,000?
JANE HUME: I don't think that you would find any opposition from the Opposition in discussions about genuine tax reform, but the issue that's facing the Labor government today is the cost of living. That is the most important issue that is facing Australians right now. And that's one of the reasons why in the Senate last week, I moved a motion to establish a committee on the cost of living because we would like to help the government, we would like to work constructively with the government to find ways to actually understand where the real pressure points are for Australians and find ways to address the cost of living in a way that isn't inflationary. That should be the priority of the government now.
LAURA JAYES: Okay, Jane Hume, good to talk to you.