PATRICIA KARVELAS: As we've heard, the government argues it was the Coalition that created a lot of the economic hardship the country's now in. Jane Hume is the Shadow Finance Minister and she joins me now. Jane Hume, welcome to the programme.
JANE HUME: Good morning PK.
PATRICIA KARVELAS: Katy Gallagher says the government hasn't changed its policy on the stage three tax cuts, but it clearly is signalling that it's all under consideration. So no formal change but clearly it is in discussion. All but confirmed really. Is the government justified in making modifications given the situation when you legislated and promised for those tax cuts is vastly different now and in fact they would be delivered on borrowed money.
JANE HUME: I'll be very interested to see how Labor could possibly walk away from an election commitment to provide already legislated lower, simpler and more effective taxes for 95% of Australians. Now the cost of living crisis, we know, is absolutely the wrong time to increase taxes or to change policy. The stage three tax cuts are already fully baked into those budget forecasts. They have been for many years, in fact since 2019. They're fully legislated. The Coalition Government legislated them and went to the election with a policy to see them through. It's now a matter for Labor as to whether they break that election promise to go to the Australian people that they made and that they reiterated only months ago that they are still reiterating today they've already walked away from their promise to reduce energy bills by $275. So it's really a matter for them whether they break another promise. But I think it's really important PK to address this issue of whether tax cuts are good for the economy or bad for the economy. Tax cuts boost productivity. They encourage sustainable growth. They are, in fact, good economic policy and shouldn't be considered only a political promise.
PATRICIA KARVELAS: That's an interesting point you make. Do you think that tax cuts should be funded from borrowed money?
JANE HUME: Well, they're already into they're already baked into the budget. They're already within the legislation.
PATRICIA KARVELAS: That's not the question you can unlegislate to, you know that, you can repeal, you can change legislation. Do you think, though, that you can actually fund tax cuts when you're in deficit?
JANE HUME: I would not want to see tax cuts that have been promised by not just one party, but both parties of government and opposition that are already in legislation. And that will be good for the economy and good for 95% of Australians who will see no more than 30 cents of the dollar tax paid that we would not want to see them, the Labor Party, the Labor Government crab walking away from that commitment. There are other things that they can do to bring down the inflation rate and to address this issue of the cost of living crisis that we're facing in Australia today. Now Jim Chalmers has said that this will be a bread and butter budget, we know that. But you know, Labor's bread and butter budget is their bread and butter is higher taxes and higher spending. What we want to see is an economic plan that results in the RBA not having to do all the heavy lifting to slow down inflation. And because that means that Australians are going to keep seeing their mortgage payments increase as the RBA continues to pull on the levers. So what we want to see from Labor in the October budget is a plan to reduce the skyrocketing cost of living and to address inflation.
PATRICIA KARVELAS: We saw the UK Chancellor do quite the policy backflip this week on tax cuts. Many are now saying it's the writing on the wall for Liz Truss, this brand of government we're seeing how unpalatable tax cuts for the mega rich are in the UK. Why are both major parties continuing to support it here? Why do you think it's okay? Do you see it as a cautionary tale, what's going on in the UK?
JANE HUME: Actually, I think the comparison to the UK high income tax cuts is quite disingenuous. The tax policy debate going on in the UK is not at all analogous to stage three tax cuts. First of all, the stage three tax cuts here have been in legislation for a number of years. They're not a new addition to our fiscal and economic policy like the UK’s tax policy was. Second, stage three tax cuts will be implemented in 2024-25 and when that happens, 94% of taxpayers will face a marginal tax rate of no more than 30 cents in the dollar. So these tax cuts benefit the overwhelming majority of Australian taxpayers and that means that you know that we can reward those Australians that are picking up an extra shift or go for a promotion. We want to encourage that hard work. But most importantly, they have already been budgeted for, they've been baked in and reflected in our budgets for a number of years. That's a very, very different experience to the UK. I would suggest that while we can look to the UK, as you know for a cautionary tale on a number of things. This is not, this is not where we should be. It's not analogous. We shouldn't be comparing one country's tax policy to another country's tax policy.
PATRICIA KARVELAS: But if the economic advice is that going forward with a plan that was set in incredibly different economic circumstances, isn't it right that governments respond to the advice they're getting to the current economic conditions?
JANE HUME: We don't know what advice they're getting to the current economic conditions. That's what Treasury will be, that's something the Treasury will be advising. Treasury is advising the government’s decision.
PATRICIA KARVELAS: Yeah, okay, so if Treasury's advising that it's not the right time to go ahead, isn't it right that a responsible government reconsider?
JANE HUME: Well, that's not what we're hearing what we're hearing is, you know, economists, quite you know, respectable and prominent economists like Peter Downes and Cheryl Murphy have been actually quite vocal not on reducing the tax tax rates, but instead, asking the government to make sure that its fiscal policy is working in line with the RBA is monetary policies because otherwise without that economic plan, the RBA is the one that has to do all the heavy lifting to slow inflation. Tax rates are only one of the levers you can pull. There are other decisions that governments can make to make sure that both fiscal policy and monetary policy are working together in tandem. Certainly that's what the Coalition Government did during the COVID crisis. We'd now like to see the same sort of settings come out of the Labor Government.
PATRICIA KARVELAS: You're calling on the government to address the cost of living crisis. How do you do that without pushing up inflation?
JANE HUME: Well, we know that the cost of living is the number one issue facing Australians right now. Budgets are all about priorities. The Treasurer's priority at the moment seems to be talking down the economy and offering to tax Australians more. We would support any policy that addresses the cost of living pressures being faced right now that doesn't add to inflation. And that's why last week I moved a motion in the Senate to establish a cost of living committee and that will allow the parliament to carefully examine the real cost of living issues that are facing Australians right now, because we wanted to have a constructive inquiry into those cost of living issues to find practical policy solutions with members of the government participating. We really do want the government to succeed with coming up with a plan to tackle the cost of living because without a plan, obviously you plan to fail and the cost of failure is really great for Australia. So I’m excited at the prospect of working constructively with the government with this committee with the crossbench to determine what the best approach is to tackle cost of living pressures without putting more pressure on inflation.
PATRICIA KARVELAS: Just before I let you go. Do you ever regret saying we don't have any policies to David's Speers?
JANE HUME: Okay, honestly, that was a slip of the tongue that was, you know, amplified by Twitter and the flying monkeys on social media, which of course, I regret, because that's not at all the case. In fact, the Coalition, even in opposition, announced a policy within a month of the election with the pension work bonus that would have seen pensioners be able to top up their income without reducing their pension and would have helped with filling skills gaps for small businesses. So it was a policy that we really would have hoped Labor would have adopted
PATRICIA KARVELAS: Often you do hear though, you say it was a slip of the tongue, but you do often hear the new opposition say we're not in government. We're not in government and we know you're not because you lost the May election. But do you think you should be leading in policy rather than answering consistently that it's someone else's problem?
JANE HUME: Well, the most important thing that an opposition can do is hold a government to account make sure that their legislation is appropriately scrutinised and that their policies are sound, as I said, the most important thing that that we can do is make sure that that any new measures that this government brings in reduce inflation don't add to cost of living pressures that are facing Australians and economically sound because the cost of not having a plan. The price of failure is way too high. That's the role of an opposition.
PATRICIA KARVELAS: Thanks for joining us this morning.