LAURA JAYES: Let's get some instant reaction now from the shadow finance minister Jane Hume who is in Melbourne, Jane Hume. Thanks so much for your time. I want to go straight to that wages issue. Is it a problem?
JANE HUME: Well, certainly wage rises are a problem if they're not accompanied by productivity and Philip Lowe has been flagging that he's been signaling that for some period of time. I suppose the disappointment is that there was nothing about productivity in this budget, this recent budget by the Albanese Government. In fact, it forecast productivity to go down over both the short and the medium term. I think that is some cause for concern. Because if you keep having wage rises without accompanying productivity rises, well that's instantly inflationary. So we'll see inflation stay higher for longer and that means that the RBA has to keep doing all the heavy lifting with the one tool that it's got in the shed. Which of course is interest rates. And he said he acknowledged that interest rates disproportionately affect certain parts of the economy, that that's not the best tool but it is the only tool that he has at his disposal.
LAURA JAYES: Indeed, so what is the Opposition's position then on the fair wage decision of last week for minimum wage workers? Was that enough?
JANE HUME: Well, the 5.75%, 5.35% I should say announcement by the Fair Work Commission is an independent decision taken. That's like commenting on an interest rate decision. They're independent bodies and they make decisions based on the information that they have at the time with the objects that they have, as part of their remit. And so they made a decision-
LAURA JAYES: I guess the problem here is, and I’m sorry for interrupting Jane. I guess the problem here is we need a little bit of honesty. From the political class here. Yes, wage rises from what Philip Lowe was saying for the lowest paid workers is fine. But do you agree with him when he's essentially saying, if everyone expects a wage rise, we're going to have a problem? Are you comfortable in telling the Australian public that if you're off the chain, you're not a minimum wage worker, you're on a pretty good wage at the moment don't expect a pay rise. That's not what you going to get. And that's not what the economy needs right now.
JANE HUME: Well, in fact, those on the minimum wage are going to get a pay rise and it's going to be above the rate of inflation. In fact, it was the government that we're pushing for those wage rises to be at least equal to inflation. That's where the risk occurs. That's where the potential for a wage price spiral can begin, particularly if it's not accompanied by productivity increases. We all want to see wages rise in a sustainable way that isn't going to blow the economy, blow out inflation and create that pain and the potential for, for the economy to tank in response to the persistent, persistent inflation that can't be beaten back with that one blunt instrument of interest rates. That was why we were asking the government what it was that they were doing in the budget to help bring down inflation to a single measure that's brought inflation down.
LAURA JAYES: Well Philip Lowe just said that the Budget was neutral. What would you have done in that budget?
JANE HUME: Yeah it’s neutral, it’s a neutral budget, but that's the problem, isn't it? If you've got a contractionary monetary policy, but you've got a neutral budget, a neutral fiscal policy, well, that's you know, one foot is hard on the brake and the other foot still on the accelerator. This was a really big spending budget. It's got deficits as far as the eye can see. It was not contractionary.
LAURA JAYES: Sure it was big spending but it was for that, that direct payment was for the lowest income work, the lowest income the most. Angus Taylor was complaining at the time that it wasn’t for middle Australia. So you can't have it both ways.
JANE HUME: Well you can actually. You can deal with inflation for middle Australia, because the only way you can bring down the cost of living sustainably is to bring inflation under control. You can't simply rely on the RBA to do all the work. It has to be the responsibility of the government as well. Now we want of course to make sure that there's cost of living relief for those that are most disadvantaged, but at the same time, if you're simply making inflation worse, it becomes a vicious cycle. All of that extra money that is going to those on the lowest incomes gets immediately eaten up and the value of that money is eroded by increasing inflation. So inflation is the number one issue for the government right now. And in fact, Jim Chalmers acknowledged it after the October Budget last year. He said that inflation was public enemy number one that it was the dragon we need to slay and yet six months later, the objective of addressing inflation was removed from the Budget’s fiscal objectives completely removed. I don't know why. What changed between October and May that you would actually want to remove that objective from your fiscal strategy. So that's why Philip Lowe has been left to do all the heavy lifting. He said what he wants to see from government, he said he was talking to you just in those last couple of questions about wage rise as public sector wage rises by both state and federal governments, how they are a risk factor and that might make him need to raise right right raise rates even further.
LAURA JAYES: Jane Hume, so good to talk to you. Thanks so much.