MADELEINE MORRIS: $19 billion. That's a lot of money.
JANE HUME: It is a lot of money and it's a lot of money that's come through two things really high commodity prices that we've seen over the last year and that won't be a surprise to anybody. And also because we've had this high inflation and low unemployment. It's meant that more and more people are paying tax and more and more people are moving from one tax bracket to the other tax bracket. That's bracket creep. And of course that means that there's more money coming in on the revenue side of the ledger, that's a good thing, but it also means that people are paying much more tax.
MADELEINE MORRIS: It's not going to hang around though. Those commodity prices certainly won't be hanging around forever. So it's a bit of a boost. What should we be spending that money on?
JANE HUME: Well, I don't think we should be spending that money at all. You know, we already know that. You know, there was a budget surplus of 4.2 billion that was announced in the budget in May. And then since that time, so that's only a couple of weeks ago, the government's already announced an additional $2 billion for social housing to the states. They pull that money out of thin air but now that we have that additional funds, really that should be booked to the bottom line and we want to make sure that we do that to reduce debt to reduce interest repayments in future years. And that hopefully will reduce the deficits that are forecast for coming years because it's not just about banking a surplus, one off because of those high commodity prices because of those rising taxes. We want to make sure that we can have very prudent fiscal management in the years to come and not just for the sake of it because that's also an indicator to the Reserve Bank that the government's doing its part to bring down inflation.
MADELEINE MORRIS: Anthony Albanese has indicated though that he wants to help people with this and as we're talking we are facing the very real possibility of yet another interest rate hike tomorrow. For people who are in the lower income and many, many in middle incomes as well. They are seeing their mortgages go up by $1,000- $1,500 a month. And at the same time they're having to deal with increased energy bills 25%, 30% to 40% in Victoria. Anthony Albanese says part of the job of government is to make sure that they're looking after families. They're looking after individuals that people aren't doing it tough. In this case of extreme need, where we are with so many people's really struggling, why shouldn't it go to a little bit more relief for people?
JANE HUME: Well, it should, because the only way to persistently bring down the cost of living for all Australians is to bring down inflation. So what we want to see from the government is a plan from the government specifically to bring down inflation. Now, the argument is, if the government comes out and spends more, well, that's actually a signal to the Reserve Bank to push inflation to push interest rates up higher to deal with inflation. If you've got the government not doing its bit on reducing inflation, that it turns all the responsibility to the RBA. It's like having one foot on the brake and one foot on the accelerator and that's a great way to bust the engine.
MADELEINE MORRIS: Okay. Well, I'll give you the example of the power price relief, which the Liberals, the Opposition did not want brought in. The government says that that has actually reduced inflation by three quarters of a percentage point. I mean that is a very, very significant reduction.
JANE HUME: It's only temporary though and of course the moment that relief comes off, inflation goes back up and the RBA has to keep pedaling that bit harder to bring down inflation overall. It would be far better to bring down energy prices by bringing more supply into the system, by encouraging investment and the reason why the coalition objected to the changes that the government were making was because it was actually detracting new investors and detracting new supply and that won’t bring down energy prices.
MADELEINE MORRIS: I mean, that was sustainable into the future. That was the energy companies argument but we haven't seen any evidence of that yet, have we?
JANE HUME: Well we have actually, we saw a number of companies actually withdraw from their investments in new supply opportunities, particularly in gas.
MADELEINE MORRIS: Let's go to Steven who is in Port Melbourne, Steven, you're speaking with Senator Jane Hume.
CALLER: Hello Jane. Look apart from what you say is absolutely correct about the inflationary pressures of spending. With respect to the surplus, why not allocate it to defence, where you actually purchase weapons, maybe allocate half of 10 million for the AUKUS deal and bank that effectively into a fund and the other 10 million actually most weapons supplier that we have allows us to supply more weapons to Ukraine, which is the excuse given the Army's, sorry not that Army the defence force. There is not releasing any weaponry that Ukraine because they can't afford to replace it. So would you support a strategy of allocating it to defence I suppose is the question.
JANE HUME: David, that's a really good question. And in fact, in the last government, we made sure that defence spending as a proportion of GDP was up around that 2% mark. It had been depleted somewhat in the previous government. We brought it back up and the obviously the introduction of the AUKUS agreement, which is such an important, strategic, international strategic position to have taken, will push that up even further. That said, you know, we don't want all of that money to go to one area, we want to make sure that it's effectively used for not just the safety of the citizenry, but also the prosperity of the citizenry and the best thing you could do is to bring down inflation, so that there is economic opportunity as well as protection of the citizenry that said, Look we have said that we want to see the commitments that were made by this government to the Ukraine when they were first elected. We want those commitments met and I think that there's an international obligation and also a domestic expectation that that will happen.
MADELEINE MORRIS: Thanks, Steven. Angus Taylor is going to be outlining a new liberal economic pitch this evening. Senator Hume, what's that, what's he going to be talking about there?
JANE HUME: Well, I think that Angus is reiterating a lot of what we've already said that also, what we're talking about today, that slaying that inflation dragon is fundamentally important if we're going to maintain the cost of living crisis if we're going to get the cost of living crisis under control. But more importantly, I think he's going to expand on some things that Philip Lowe, the Governor of the Reserve Bank said about productivity, because productivity growth is critical for the Australian economy. It's a really easy word to throw around. But it is one of the great drivers of growth as population, participation in the workforce and productivity. But productivity growth is probably the hardest one to achieve. And in the budget, it's actually forecast to go backwards, which is really disappointing. Philip Lowe said that the wages growth is achievable, but only when there is underlying productivity that accompanies it. Otherwise, wages growth is inflationary. So the Coalition is very committed to increasing productive output because that increases living standards. So doing things like bringing down the cost of energy, rolling back, inflexible and damaging industrial relations, laws, cutting red tape, improving competition, all of these things, drive productivity. And that allows for an economy that's growing, as well as allowing wages to grow but it doesn't add inflationary pressures.
MADELEINE MORRIS: Are we gonna be hearing anything new? I mean, those sound like themes that you've already spoken about multiple times from the Coalition's point of view.
JANE HUME: I'm not going to preempt Angus' speech tonight, he'd never forgive me and of course, they are common themes because this is how you grow an economy in a sustainable and an effective way. You know, we know that under the Coalition Government. The last Coalition Government, there are a number of activities that are undertaken things like changes to insolvency laws, cutting taxes, things like the instant asset write off, the $120 billion infrastructure pipeline, all of those things they fuel productivity growth, they fuel economic growth. We don't want to see those things roll backwards, we wouldn't see more effort specific plans to tackle productivity so that you can have that sustained economic growth into the future.
MADELEINE MORRIS: That also means tax reform, doesn't it?
JANE HUME: Well, we certainly want to see the stage three tax cuts go through and quite frankly-
MADELEINE MORRIS: Those stage three tax cuts though. Sorry to interrupt you there. Those stage three tax cuts put more money in the hands of the most wealthy. How does that not then add to inflation? Because the people who are have the most money already, if they get more money, that's just they're just going to spend that and how does that actually slay the inflation dragon? Does that not just add to it more?
JANE HUME: We would hope that the inflation dragon was well slayed by the time that those tax cuts kick in, which is in about a year's time and-
MADELEINE MORRIS: Well it wont be according to projections from you know, it will still be well above 4% according to Reserve Bank.
JANE HUME: Well, certainly according to the budget they should be. I mean, budget itself has said that inflation should be under control. Now, economists might not agree with that. But also understand that stationary tax cuts affect people at quite low income levels, even around sort of $60,000 or so. If you earn that amount of money, you'll be getting more, keeping more of your own money as part of the stage three tax cuts. But most importantly, I know we spoke about in the beginning of the show Madeleine is that bracket creep caused by inflation means that people who are getting those wage rises, whose wages are just simply keeping up with inflation are moving into higher and higher tax brackets and paying more and more of their money in taxes. So that actually means if you don't have tax reform, you have less money on your pockets, not more.
MADELEINE MORRIS: Susanna has got a question for you in Altona. Hi, Susanna.
CALLER: Yeah, hi, how you going? Sorry. I'll just, I'll just mute.
MADELEINE MORRIS: Oh, don't mute yourself. Mute the radio but don't mute yourself Susanna. Have we got you there? No, I don't think we have. Any luck with Susanna? No. We'll try and get you back. Dee is in Taylor's Hill, hi Dee.
CALLER: Hi, I have a question for the Senator. Like, is the Liberal party proposing any laws relating to reducing some burden on planning laws to bring the house prices down? Seeing that they have a $19 billion surplus? Probably there is scope to work around that area as well.
JANE HUME: Yeah, thank you Dee. Look, housing is one of the most difficult problems to deal with at the moment, particularly from a federal level. You know, the federal government has the ability to control a lot of the demand levers on on housing, but demand isn't a problem. The real problem at the moment is supply. Now what frustrates me more than anything else is the opportunity that the government has right now, because it is a Labor Government federally, there's a Labor government in every state water wall on the mainland. Surely this is the opportunity for Anthony Albanese to bang their heads together these premiers and say 'Come on, what is it that you're doing? What's your state doing to open up supply?' Because it's really hard from a federal level to open up supply. Now that said it can be done. You know, in the last Coalition Government for instance, we introduced a policy whereby older Australians can downsize their home from the big family home to a smaller home. And rather than losing the tax incentive for doing that they could put that money into superannuation and not break their cap. So that you know, increase the churn of housing supply out there, but there's still more that can be done. It just has to be done in a very coordinated way between the federal government and state government. We're not seeing that right now.
MADELEINE MORRIS: Do you accept that actually with homebuilder, which is a key plank of the COVID government's that actually, you turbocharged demand and that has added to the supply challenges that we now see.
JANE HUME: Well it was a very different time and Lenny, remember home builder was a was a policy that we undertook during COVID at a time when, let's face it, the economy just came to a halt. And it was time of great uncertainty too. In fact, it was one of the reasons why Australia didn't fall into recession. The problem that we're facing now though, is a little different. Yes, about a year ago, there were problems still with the supply chain. But now we're actually seeing a problem with confidence in the market particularly now that we're seeing organisations like Henley and ProBuild and Porter Davis collapsing.
MADELEINE MORRIS: But do you accept that added to the inflationary issue of house prices and indeed supply which is now something that is really driving and has been driving on patient for longer?
JANE HUME: Certainly there was demand for labour and there was difficulty in the supply chain of getting building supplies. That should no longer be the issue. The issue now is demand for new homes, new homes. And of course with a migration program that's going to see an additional 1.5 million people come to our shores, we want to make sure that we have that supply to be able to house them. We know we need the labor, but we've got to make sure that we have supply of housing as well and that's really up to the states to loosen the reins to make sure that they've got planning laws that allow for new supply. That there isn't anything to discourage the opening up of new housing supply.
MADELEINE MORRIS: If you want to put a question to Jane Hume 1300 222 774 or text 043774774 Let's check the road roads briefly with Caroline Ferguson.
MADELEINE MORRIS: Senator Jane Hume is with you. Liberal Senator for Victoria and of course Shadow Finance Minister. The Albanese Government suddenly has $19 billion in a surplus now, where would you spend it? You've been talking about that today. One place that we could put it is in childcare. Now there is a new system of childcare rolling out next week where there'll be much greater subsidies for people but when we spoke a little bit earlier to a Canadian economist, Gordon Cleveland, he's an expert in childcare. They've only got a new system in Canada for how to fund their childcare. He was a little perplexed, actually about how we do it. This is how they are doing it over in Canada.
GORDON CLEVELAND: You find on the demand side you give the money the subsidy money to parents and let them go out and buy childcare and what we're doing is funding it to the service. In other words, we're we're bringing the price down to $10 a day by funding the service funding a lot a lot of the costs of the service to bring it down so that the price to parents is $10 a day.
MADELEINE MORRIS: Jane Hume, would that be one way that the government could spend this unexpected service, surplus rather?
JANE HUME: There's lots of ways that you can slice and dice childcare and let's be honest, childcare is already an enormous proportion of budget expenditure. It's up already around $11 billion, I think perhaps more with the new changes that have come in this week. And even with that enormous expenditure of more than $11 billion a year. We're still facing increasing childcare costs through things like increased wages, increased energy prices, increase rents for childcare centers, and of course that worker shortage as well. The problem of course, is when you make childcare more affordable, but you don't have the workers to work in the centers. Well, of course, the prices are going to go up and think there's a lot of families that would be very disappointed that the changes in childcare subsidies have already been eaten up before they've got a chance to take over from that. More importantly-
MADELEINE MORRIS: It's not certainly the case that the changes in childcare subsidies have been eaten up by inflation.
JANE HUME: You'd think you'd see that if childcare costs have gone up dramatically in the last 12 months, and that's before the new subsidy kicks in.
MADELEINE MORRIS: Well, that's not necessarily the case for every family, just to be clear.
JANE HUME: No, not every family, but in fact, there are many families that can't get into childcare at all. There's about 9 million Australians that live in areas that are essentially like a childcare desert. You can't get childcare and a lot of regional and certainly not remote communities.
MADELEINE MORRIS: So funding the service making it $10 a day, not something that you think would be a good idea in Australia?
JANE HUME: Well I think I've got to admit I have had a look at different funding models of childcare in my previous role, and it is very complicated. But the most important thing is that we provide families with choice and that they have accessibility of services, you know, they need to be able to access services and I think it's really disappointing that so much of the funding for childcare that we've seen the Albanese government hasn't gone to those regional communities that, which is you know, they're just as important as the urban ones.
MADELEINE MORRIS: The National Anti-Corruption Commission gets underway today, already 44 referrals. Have you made any?
JANE HUME: No, not personally, I haven't made any but of course, we welcome the introduction of the National Anti-Corruption Commission. And you know, we hope it does an excellent job-
MADELEINE MORRIS: How many are about Stuart Robert, do you think?
JANE HUME: You know, corruption is wrong and it undermines in trust and integrity of public life and we should all have confidence in the institutions that govern us and you know, that are part of our daily lives. The public should know that people that break the law should face the consequences and standards of public health should be higher. So of course, we'd supported the passage of the National Anti-Corruption Commission legislation and we look forward to seeing it operate. I was very pleased to see that the Commissioner said that's intended to be fearless and intend to be fair and he intended for the Commission to be impartial. I think that's a very important, very important characteristic, and also not to allow the Commission to become weaponised. We don't want it to become a political tool. You know, he's going to dismiss referrals that are nuisance or inappropriate, and only except the ones that are systemic, which they're the ones that really make a difference.
MADELEINE MORRIS: Okay, so in that case, do you think referrals about Stuart Robert and his conduct would be appropriate referrals to the NACC?
JANE HUME: I'm not going to go into individual cases and I would hope that no one should do that. I think what we've seen if anything in the last few months, Madeleine is that when politicians and the media start commenting on things that potentially have implications in the justice system, it can have very negative consequences. So I would hope that neither of us will get into that one.
MADELEINE MORRIS: Katrina is in Blackrock, she's calling to speak to the Shadow Finance Minister. Hi, Katrina.
CALLER: Oh, hi, Madeleine. Yes, thanks for taking my call. Jane. I'm very interested to know why you think that we should believe that, you know, the liberals are the only one who can manage money and the best to deal with finances when you're when you were in government and particularly leading up to the last election, you recommend that you wanted people to dip into their superannuation to buy their home and currently we have a situation where people are struggling to pay their mortgages, they're in properties with negative equity. So we'd have ended up with a situation where people would be losing their retirement funds plus having to sell their properties. Do you see the problem with that or do you still think that people should be dipping into their superannuation for their first homes?
JANE HUME: Katrina, that's an excellent question. Look, obviously one of the biggest indicators of economic security in retirement is owning your own home and the Liberal Party fundamentally believe that home ownership should be an aspiration that we know we can work towards.
CALLER: But there is no security if you've dipped into your retirement funds, and then you've lost your home because you couldn't afford to pay your mortgage. Do you see the problem with that?
JANE HUME: Katrina, that problem doesn't exist right now because the policy doesn't exist.
CALLER: It would if the Liberals had got into power and done that.
JANE HUME: Look, Katrina the policy was that you were allowed to take up to $50,000 from your superannuation to help with the deposit on your first home. When you sell that first home. You put that money up to $50,000 back into your superannuation plus the earnings that you have made from the increased value of that first home. So your retirement savings haven't been robbed, and you have a home to live in. I actually think that that's a win-win situation. And it's a policy that we're particularly proud of. Not only are we proud of it for first home buyers, but in fact we expanded that policy and that was an announcement by Peter Dutton in his first budget and reply speech to older women who might find themselves suddenly single for the first time later in life and other ones that are most at risk of homelessness.
MADELEINE MORRIS: Okay, Katrina. We'll have to leave it there as we head up to the news, Jane Hume. Before I let you go, we're talking about horrible holidays that have gone wrong. Has anything absolutely terrible ever happened to you on holiday?
JANE HUME: I have to admit, a fair while ago now when my kids were quite little and I have three. I took them away for a winter holiday down to the Mornington Peninsula and my best friend was going back to work. And so I offered to take her three the same age as well and I put them all into a tennis camp. I thought that'll take care of the daytime. Well, of course it rained, it rained and it rained. And that tennis camp got canceled every single day. And I had six children, two muddy dogs and they were all starving all the time. All I did was cook and clean mud and cook and clean mud for a week. And I was doing the right thing by a friend but by God, it was an awful holiday.
MADELEINE MORRIS: Wow, that sounds like an absolutely terrible holiday. All right, Senator Jane Hume. Thanks very much for coming in.
JANE HUME: Great to be with you.
MADELEINE MORRIS: That's Senator Jane Hume, who is of course, the Shadow Finance Minister.