Interview with Patricia Karvelas, RN Breakfast
8 May 2023
PATRICIA KARVELAS: Well, there are still, of course, big questions over whether the government will be able to get the balance right between tackling inflation, debt and providing crucial cost of living relief. Jane Hume is the shadow finance minister and joins us this morning. Jane Hume, welcome.
JANE HUME: Good morning, Patricia.
PATRICIA KARVELAS: Yesterday, the shadow treasurer, Angus Taylor, said a drover's dog could achieve a budget surplus this year. So if a drover's dog could do it, why didn't the Liberals while you were in power?
JANE HUME: Well, in the last 12 months, we've seen an extraordinary amount come through increased commodity prices and also through increased tax revenue. And one of the reasons why we've seen that increase in tax revenue is because of bracket creep High inflation is actually pushing people into new tax brackets, and that's creating a windfall surplus for this government, a windfall surplus that they're now saying that they're going to spend more than 40% of which is, I think, a far cry from the comments in October that more than 90% of any revenue upgrades would go towards budget repair Now they're saying that from those record commodity prices and record bracket creep, they're actually going to continue to spend. That's our major concern. Australian families are making some really difficult decisions right now, trying to manage their own budgets. The Labor Government has to do the same and the only way that this budget is a genuine cost of living budget is if Labor reins in its spending and delivers a plan to tackle inflation because getting inflation down is the only policy that will provide cost of living relief to all Australians. The longer that inflation stays high, well the longer then living standards of Australians are impacted. So there needs to be a very specific policy in this Budget about tackling inflation.
PATRICIA KARVELAS: $14.6 billion is a pretty significant support package. Will you support it?
JANE HUME: Well, again, we wait to see what the details are, but this isn't delivering long term sustainable cost of living relief, because the only way you can do that is to bring inflation down. Otherwise, you're simply spending money that's going to get eroded away.
PATRICIA KARVELAS: The Treasurer, inflation and Treasurer tells us the advice they have is that it won't be inflationary. They've been-
JANE HUME: That's not the same as bringing inflation down. I think you're falling for the weasel words of a Labor government. What they've said is that their spending won't add to inflation. Well that is yet to be seen, but it certainly isn't bringing inflation down. So what that is, essentially raising a white flag. It's saying inflation isn't our responsibility. We can't do anything about it. We're going to turn all of that over to the RBA and that's why rates will continue to have to rise. How would you decrease inflation in the budget?
PATRICIA KARVELAS: What would be the one policy measure you would take if you were delivering tomorrow night's budget?
JANE HUME: Well, the most important thing we would do is rein in expenditure, make sure what sort of things would those well, would rein in expenditure. And I'm not saying that we would make cuts. I think that is, you know, a far too sort of simplistic term. What we've you're spending less, something gets cut. For instance, we probably wouldn't put on an additional 8000 public servants, which is what we've seen from this government just in the last 12 months alone, an additional 8000 public servants. We would make sure that the guard rails were on the budget so that we had a tax to GDP ratio, that not only did we have offsets, for new expenditure, which is of course what this Government's talking about when it says savings, we would have genuine savings and bank those savings to make sure that you don't just deliver a surplus in one year, but you deliver it sustainably in future years and that will be the real test of this government. Whether it can restrain itself from its innate from those instincts to spend more, to tax more and instead bring the budget back into balance for the long term.
PATRICIA KARVELAS: Jane Hume, you mentioned the extra public servants, but the former coalition government you were a part of spent close to $21 billion on external labor hires in the public service, according to an audit. So that's essentially it was 37% larger than originally thought, the public service because of those externals. So you're actually spending money just in a different way, weren't you?
JANE HUME: Well, to be honest, I think this is a partisan attack and it isn't grounded in fact. Well, it's an audit of departmental costs. Department rental costs as a proportion of total government spending fell throughout the coalition's term in government, even during the COVID period. And it's nonsense to say that consultants aren't needed to assist with public service responsibilities. All governments need external and expert support and advice, and often it's a more efficient means of having access to that expertise. And just to give you an example, I mean, I know that the Victorian Labor Government has increased its spending on consultancies by 200% and that's a government that's grown the number of public servants. In contrast, the Coalition had a cap on the number of public servants and reduced departmental costs as a proportion of government spending that has disappeared under this Labor government.
PATRICIA KARVELAS: All right, let me jus, two things I want to find out from you. The PRRT. I mean, it's been criticised even by Chris Richardson the way that they formulated this, to say they could have gone higher in terms of the tax they were getting. Will you support it so the government doesn't have to do a deal with the Greens, which would inevitably you would, think mean a higher tax take?
JANE HUME: Well, we'll see what's in the budget and examine the details there to understand exactly its impacts. But we've consistently said that you can't tax your way to prosperity. Budget repair can't simply be higher taxes, but the cost of living.
PATRICIA KARVELAS: You've already begun this process in government, right.
JANE HUME: Yes. We had begun, we had looked at the Callaghan review. We actually initiated the Callaghan review that had recommended some changes to the PRRT. But let's face it, Patricia, that was before there was a price cap put on gas. That was before there was a safeguard mechanism that was also impacting the profitability of these organisations. And to be honest, we heard at the Cost of Living Committee that I chair that the key to getting energy prices down in the long term in a sustainable way is not through a government supplement, but it's to ensure and not through a tax, but to ensure that there's more supply in the market. And I'm really concerned about what the increase might do for that investment in supply. It does seem that every policy that this government is putting forward is deterring new investment rather than attractive new investment. So any subsidies that you throw at energy prices, any cost of living relief that is temporary is just a band-aid until you can improve supply and lower inflation.
PATRICIA KARVELAS: Very brief answer, if we can on this, just on single mums, do you think they deserve an extra $100 a week, which clearly the government's looking at for this budget when there and that should only be reduced when their youngest child turns 14?
JANE HUME: Well, we always want to make sure that the most vulnerable are well looked after, but to be honest, the only cost of living relief that is sustainable is going to be reducing inflation, because otherwise that extra $100 a week or however much it will be, will simply be eroded away by high inflation. We've seen inflation with a seven in front of it-
PATRICIA KARVELAS: Single mums can't even buy food for their kids-
JANE HUME: and it will just get worse as long as inflation is high. That's why this needs to be the number one priority of this government.
PATRICIA KARVELAS: Thank you so much for joining us this morning.
JANE HUME: Thanks, PK.
PATRICIA KARVELAS: Shadow Finance Minister Jane Hume and you're listening to Breakfast.