Interview with Danica De Giorgio Sky News, AM Agenda
6th July 2022
DANICA DE GIORGIO
Returning now to our earlier story the cash rate is up to 1.35% after the Reserve Bank lifted interest rates by 50 basis points in July. It's the third consecutive month in which the central bank has raised rates, which now sits at the highest level in three years. The major banks are expected to pass on the increases shortly. Live to discuss is the Shadow Finance Minister Jane Hume. Jane, appreciate your time this morning. How high do you believe the cash rate will go up this year?
JANE HUME
Well, it's not up to me as to what I think the cash rate will go up to, that's up to forecasters like Philip Lowe at the Reserve Bank. He has flagged that interest rates will continue to rise in order to combat inflation and to keep prices under control. The coalition government left the economy in good shape, we had unemployment at record low levels, high levels of participation, very low levels of welfare dependency and a fiscal buffer in household balance sheets. But with those economic headwinds that have come largely from overseas, Australian households and individuals are right to be nervous about what lies ahead when it comes to interest rates and inflation under Labor. Inflation in particular is a very simple concept. It's too much money chasing too few goods. But it does require a very sophisticated and nuanced response, both monetary policy and fiscal policy has to work together to combat it. We know that Philip Lowe and the Reserve Bank are using monetary policy to the best of their abilities. That's what we've seen with those interest rate rises, we know that they also were expected but that doesn't ease the pain for those households that are feeling the pinch on their mortgages. But there is more that can be done from a fiscal level too. We want to make sure that those interest rate rises are also counted with fiscal measures and responsibility. That means that the country is far less likely to fall into recession, as we're seeing in the US now.
GIORGIO
Okay, we're just on that. As you said, part of the uncertainty is certainly stemming from overseas. So what is going to give Australia confidence over the next six months or so to protect us from a possible recession?
HUME
Well, some of the inflationary pressures are definitely caused by temporary factors, whether it be fuel prices or hangovers from the supply chain issues of COVID. They will be temporary. However, there also may be some structural factors in those inflation figures too, as we return to inflation normal if you like. It's up to the Reserve Bank and also the government to determine which of those structural of those structural changes need to be addressed and which of those temporary changes need to be addressed and how, for instance, it's important to make sure that we don't lose business confidence at this time. Even though interest rates are going up, which makes businesses less likely to invest, we want to make sure that there are incentives there for businesses to put money back into their businesses. For instance, through the technology investment boost that was announced by the coalition in the last budget that increases productive capacity in people's businesses. We want to make sure that we can reduce red tape to reduce the cost of doing business as well so that those higher prices aren't passed on, in the form of higher prices for goods and services. So there's lots of different ways that you can approach the inflationary problem. It's up to the government of the day to do so in a sophisticated and nuanced way. As the saying goes for a man with a hammer every problem is a nail, which is not the approach we want here. We want to make sure that there is a much more nuanced approach. And also language is particularly important because of course, one of the great drivers of inflation is inflationary expectations, it becomes a self-fulfilling prophecy. So we have to be very careful about the way we speak about inflation publicly, particularly from the treasurer Jim Chalmers. He must make sure that he tempers his language in a way that doesn't worsen the situation.
GIORGIO
I want to ask you about financial assistance for flood victims, we are standing by still to take you live to the Prime Minister speaking about the floods. Yesterday, the federal government announced some assistance. Now this morning, the Prime Minister has announced $1,000 in disaster recovery payments for adults. When Labor was in opposition, it was critical of the former government's failure to roll out that payment quick enough, has Labor handled it better?
HUME
Well, in fact, it was the coalition government that set up the mechanisms for those payments to roll out quickly and get into people's hands as soon as possible. Those same mechanisms will be used this time around. So I think that you know, the criticisms last time were unjustified and that's why you won't be seeing criticisms from the coalition to the Labor Government this time around. It's exactly the same mechanism that's being used.
GIORGIO
What more can be done to support these communities financially? This for some of them is the third or fourth time they've been impacted by floods in the last 18 months alone, what more can be done do you think?
HUME
Well, that's a very good question and one for the government to answer. That's not an opposition's responsibility to come up with those solutions. However, what we can do is support those communities through this very difficult time, some of those households and businesses are still reeling from the same event occurring just earlier in the year, they hadn't even quite recovered from that. I do know that speaking to some of my colleagues that have flooding in their local communities that they're doing everything they possibly can to help businesses and households through this very difficult time the cleanup is going to be significant, it is going to have an effect on the budget and on the bottom line. So that's a question that Labor will have to answer.
GIORGIO
I want to move on now to another topic. Liberal Senator Linda Reynolds has called for a short-term gender quota in the Liberal Party to increase the number of women in parliament, do you support that?
HUME
Well, I've never been a supporter of quotas for a number of reasons. Mainly, because the Liberal Party is very much a grassroots organisation, rather than a top-down authoritarian organisation. It makes its decisions from the bottom up, and directives don't sit well with a liberal philosophy. More importantly than that, I think that there is appropriate ways of improving gender ratios within the Liberal Party that don't necessarily require quotas. There are lots of ways of skinning this cat. We don't want directives, we do want a direction. I think that it does need to come from leadership as to what those expectations are. We need consistency across the states too in the programmes that they run to improve gender ratios within the Liberal Party. It's very interesting that there is call for quotas now because quite frankly, this is a function of the electoral outcome. Had we maintained all our seats in the election, we would have actually had far greater gender ratios. Now had we had won the seats that we were targeting, we would have had even better gender ratios. But an election loss changes the dynamic and the makeup of the parliament. But that's something that the Liberal Party has to face and has to address. As part of the review process that I am undertaking now with Brian Loughnane into the election result, I'm sure that there'll be comments that are made to that effect. Are quotas the answer? We know quotas work to change the numbers. The most important thing, though, I think, in the Liberal Party, is to change the culture. A lot of that responsibility falls to female leaders like Sussan Ley, like myself, like the women in Shadow Cabinet, to make sure that we can demonstrate to our grassroots the importance of having more women in parliament because better decisions gets made because we're more reflective of the community that we represent. But also because there's an electoral imperative to do so.
GIORGIO
Just on that, as a senior female within the Liberal Party yourself, have you personally tried to address some of the cultural issues?
HUME
In fact, as a member of the Liberal Party for a very long time now, this is something that I've been working on for years. In fact, before I was ever elected, as part of the Liberal Women's Council, I was part of putting together a mentoring programme for young women in the Victorian division of the party. Finding young political aspirants and connecting them to older and retired members of parliament, to give them help and guidance as they navigate their way through the Liberal Party and political system in order to get themselves pre-selected. Now, it was a terrific programme, it worked very well, but it became unsustainable once I moved on. The programme itself fell by the wayside. So we need those sustainable programmes and that is where that direction from leadership is so important. The decisions still need to be made by party members, but they have to make those decisions based on having a quality pool of talented women that want to run for the party and want to represent them and their values in Parliament.
GIORGIO
Shadow Finance Minister Jane Hume will have to leave it there. Thank you very much for joining us this morning.
HUME
Great to be with you.