Interview with Matt Doran, Afternoon Briefing
25 October 2022
MATTHEW DORAN: The Shadow Minister for Finance, Liberal Senator Jane Hume, joined me earlier. Jane Hume, welcome to the program. It is a very interesting day, because this is the first time we're going to see some of the details of how Labor wants to run the economy, as opposed to the coalition. A lot being made about the cost-of-living crisis hitting Australian households hard at the moment. Do you concede that there's only so much a government can do in these circumstances, with inflation surging and a lot of it down to external forces from overseas?
JANE HUME: Well, certainly, Matt, today, the budget is going to be a real test for Labor. It's going to be a test in the short term to see whether they can consolidate on the good position, the good economic position and the good budget position that the coalition left them with. Their inheritance has been low unemployment, triple A credit rating, improved budget bottom line, and reductions to debt. So we want to make sure that they can consolidate on that. But we also want to see a plan - a plan to reduce inflation down to that 2% to 3% band that the RBA work within. That's so that the RBA doesn't have to do all of the heavy lifting. We don't want the government to be walking in one direction and the RBA to be walking in another - foot on the pedal on one side and foot on the brake on the other. We also want to see the government introduce a plan to help with the cost-of-living crisis right now. Not in two years - right now.
Because we know that Australians are doing it tough - at the bowser, at the grocery checkout, and particularly when they're paying their mortgage. They're looking to their government for help. Then in the medium term, what we want to see is a plan for growth. A plan for productive capacity and for participation. Because unless your growth is outstripping your spending, then you're in a consistently deteriorating economy. My concern is that what we've seen already in the budget papers is a plan to fail. You know, Labor has raised the white flag already. They've said that inflation will continue to rise for another two years. That growth is going to continue to fall. That real wages are going to continue to fall. So, what we want to see from Labor is a plan to address these issues rather than just saying, "It's inevitable." And the only way to deal with that is to raise taxes. That would be the worst possible thing that you could do right now because Australians are crying out for help and relief.
MATTHEW DORAN: Alright. That's a good opening gambit you've made there, setting out your position. Let's touch on that issue of a plan for cost of living now. What areas do you think need to be looked at to try to address the cost-of-living crisis that's hitting so many Australian households?
JANE HUME: Well, the most important thing is a plan to reduce inflation. What is it that this budget can do to maintain pressure, downward pressure on inflation? The only way to do that is to contain your spending. To ensure that the RBA doesn't have to do all the heavy lifting using interest rates to control inflation.
MATTHEW DORAN: Isn't that why we're hearing from the government that they're not going to be giving cash handouts in this budget? They're not going to be spending big on new projects - rather, they're going to be putting money into areas like the NDIS and the aged care sector, which have been crying out for extra funds?
JANE HUME: In fact, Labor went to the election with $18 billion worth of additional spending onto the budget bottom line - larger deficits. That was their plan, to have larger deficits. Indeed, we're seeing that play out in their projections in the future. We want to see spending contained so that the RBA doesn't have to do all the heavy lifting. Certainly, we'll see this play out next Tuesday when the RBA decides on interest rates.
MATTHEW DORAN: What sort of time frame do you think is reasonable to expect inflation to get back from the lofty heights it's currently at into that band that the RBA generally wants it in when it's making its decisions around things like interest rates?
JANE HUME: We'd like to see inflation come down as soon as possible. Certainly, the inflationary pressures in Australia are less than those that we're seeing in the US and the UK. That's because this government was left in a far more enviable position when we left office back in May. But right now, what we want to see is, within the next 10, 12,18 months, the inflationary pressures come down and cost of living addressed for ordinary Australians who are really doing it tough right now. Not just those who are in flood-affected areas, but all Australians right around the country. Particularly by Christmas when those interest rates really start to bite, they're going to be feeling it in their hip pockets.
MATTHEW DORAN: So it is going to take a while. We're sitting at 7.75%. Chances are when the budget's released tonight, it could tip over with an "8" in front of it. It is going to take a while to bring it back to the 3% mark, isn't it?
JANE HUME: Inflation projections look like it will come down over the next two years. That is a good thing. We want to see that maintained and in fact hastened. That's when those tax cuts are going to start kicking in. That's really important. It's going to be a tough couple of years for Australians. We know that Jim Chalmers is making some pretty dire predictions about wage growth and inflation. Chances are, in three years' time, when we go back to the polls, Australians will be poorer than they were at the last election.
MATTHEW DORAN: Let's talk about interest rates. 'Cause, you've hinted at what the RBA has to make a decision this time next week. When we're talking about interest rates, and we're talking about that great Australian dream of home ownership, it is getting further and further out of reach for so many younger Australians, in particular, wanting to buy their first home. What sort of policies do you think need to be put in place in that housing sector to try to free up stock or put more supply into the system and help people get into the market?
JANE HUME: We know that Labor is coming out with a housing policy tonight. We'll need to wait to see the details of thaw how that manifests. I'm not entirely sure what it will look like having superannuation funds involved in building houses. I think that people would rather own their own homes rather than have superannuation funds own their homes. We also want to see how that's going to play out - how much will the taxpayer subsidise versus how much will your retirement subsidise new housing stock? The most important thing with new housing stock is that the states and local governments get on board to release new land, to release the supply side. It's not a demand-side problem with housing. It's a supply-side problem.
MATTHEW DORAN: You mentioned there people would rather own their house outright. I think that is, of course, the case. But given the circumstances, given how much the housing market has changed, isn't there scope to look outside the box, I guess?
JANE HUME: Well, the most important thing - when it comes to owning your own home - is that you have a job and that you can repay the mortgage. That interest rates come down, and that unemployment remains low. That's what we would like to see in this budget - that everybody has a chance to own their own home because they know that they've got a job in the future and that they know that their real wages are rising and not falling.
MATTHEW DORAN: Jane Hume, you've got a busy night of reading ahead of you. Thanks for joining us today.
JANE HUME: Thanks, Matt.