Interview with Tom Connell, NewsDay
24 October 2022
TOM CONNELL: Joining me now is Shadow Finance Minister Jane Hume for more on this. Thanks very much for your time. What do you make of some of the forecasts? I mean, in particular, on growth, it's downgraded next year to one and a half percent. It seems basically because of inflation and rising interest rates that's happening. Is it fair to say that's not Labor's fault they've inherited this?
JANE HUME: Tom, what we want to see in the Budget tomorrow is the government building on the Coalition's good track record. When we left government we left it in a very positive position and the economy was chugging along. Unemployment had a three in front of it and was on it's on its way down. There was improvements to the budget bottom line, we still had that triple A credit rating. So we want to make sure that the budget builds upon that. We also want to see it address inflation, which is the most insidious economic feature of any economy. And most importantly, we also want to see a focus on productivity and productive investments so that we can improve that economic growth outlook for the future because unless you get economic growth and inflation, working in the right trajectory, well, then you're going to have a consistently deteriorating budget bottom line and a consistently deteriorating economy.
TOM CONNELL: You've called in the past couple of weeks, including here on NewsDay for a responsible approach, you know, let's not throw too much spending at the issue. And it seems like he's going to do that. No, they're fulfilling their commitments in the election, as you'd expect on some spending there. And they're finding savings. What do you make of the approach they've taken there?
JANE HUME: Well, you have to tailor your budget to suit the times that you're in and when they went to the election, they promised an additional $18 billion in spending on top of anything that Coalition had committed to. Now I would have thought that if there was this genuine deterioration that they are concerned about, if the economic forecasts are so gloomy, if inflation really is as high as they are saying that it is, well then you would tailor those expectations about what it is that they would spend because that really means that the your fiscal policy isn't necessarily working in line with your monetary policy. And of course, if they don't get this right, well, then Philip Lowe's job next Tuesday is going to be made that much harder.
TOM CONNELL: Haven't they done that through finding the savings essentially?
JANE HUME: Well, how much of these savings are going to be permanent? How much of them are actually you know, addressing that constant budget bottom line? Reorganisation or realignment towards Labor's priorities?
TOM CONNELL: Sure but the argument around inflation the issue is right now it's not what we'll talk about structural deficit in a moment. But what they're doing is whatever spendings coming in actually finding some offset. This is what you wanted to happen.
JANE HUME: I think that's actually fundamentally important. And one of the things that we want to understand is has the expenditure decisions that have been made by this government, have they found budget offsets for those decisions and what's the process that's something that will be we will be fleshing out.
TOM CONNELL: What about though, when you say, tailor your budget to changing economic circumstances what what promises would it have been acceptable for Labor to scrap from the election campaign compared to now?
JANE HUME: Well, I'm not privy to the same level of information from Treasury that I used to be when I, when we were in government, obviously, when we were in government, and the big issue that we faced was COVID. And we had to adjust our budgetary expectations to suit those circumstances. But everything that we did them was, you know, targeted and temporary, it was proportionate, and it was scalable, and it was delivered. In a time effective and efficient way through textbook transfer rails. But we did that so that when we came when COVID was over, that we would see an improvement in the budget bottom line and a reduction in debt and we did see that. But now the pressures that are facing this Labor government are different to the ones that faced use.
TOM CONNELL: Sure. Let's just go through some of their promises. Cheaper medicines, you wouldn't. If they scrapped that pledge, you would have said, Labor's making the cost of living harder, you wouldn't have given them a pass on that.
JANE HUME: Well, that's right. We want to say cost of living measures, right. We want to see them in a sensible Budget.
TOM CONNELL: There’s childcare, that doesn’t start until middle of next year. So that won't overheat things. Now, again, if they scrapped that you would have said, well, you've broken your promise.
JANE HUME: Each decision has an effect on the budget in some way, shape or another. It might be a push up inflationary expectations, it might push up economic growth or it might not have been as effective as possible. For instance, there are a number of measures that you want to see the modeling on whether they're improving participation, as well as productivity, not just equity and childcare is one of them. Now, I'm all for a fair and reasonable childcare system that allows both accessibility and affordability for all Australian families. But you want to make sure that you structure that commitment just right to ensure that it's creating productive capacity of the economy, and not in fact-
TOM CONNELL: I guess the point is what you're saying essentially is, times have got harder so Labor should break some election promises. I mean, if they've done that you would have been pretty vigorous in saying they've broken promises.
JANE HUME: That entirely depends on what promises in fact, if Labor came to us and said that we are going to make some spending cuts in particular areas, well, we would look at that in a very open minded way because daily budget repair is a priority.
TOM CONNELL: Okay? Do any of them particularly stand out? You wish they weren't? It's up to them. They're keeping all their commitments.
JANE HUME: It’s up to them to make the decision as to what it is that they're going to prioritise and what it is that they aren't going to prioritise. When we were in government we knew what our priorities were. They need to make their priorities clear now,
TOM CONNELL: Well they have, they’re keeping their election promises.
JANE HUME: And if that's the case, and they decide to sacrifice the budget bottom line to do so well, then there's implications for that.
TOM CONNELL: There’s some waste out there. Isn't I mean, what about commuter car parks? They weren't merit based. Getting rid of some of those projects is fair enough, isn’t it, for priorities?
JANE HUME: Actually, I think that that's a really, you know, that's an easy sledge. In fact-
TOM CONNELL: Is it wrong?
JANE HUME: In fact that there were, you know, there are plenty of infrastructure programs out there, whether they be in the regions or whether they be in the suburbs that did improve productivity. That did make people's lives easier. Now if Labor have decided to scrap some of those, that's fine, but then how can you but then they have to be able to justify it on the basis of efficiencies. And quite frankly, if you've got a commitment to a $2.2 billion Suburban Rail loop that hasn't gone through Infrastructure Australia, even though that's the body that Anthony Albanese himself set up to judge whether there was economic benefit in infrastructure projects, hasn't
TOM CONNELL: That's a fair enough criticism. We're trying to put that to the Minister.
JANE HUME: It's a very important one to put to the Minister.
TOM CONNELL: Sure but I’m talking about the stuff they are cutting. Would you really defend community car parks and hand on heart say it was a merit based scheme?
JANE HUME: Look, it depends on the individual program.
TOM CONNELL: So some are ok and some are not?
JANE HUME: I don’t think you can talk about it as it is, as an overall scheme without understanding what the individual project is. And there were lots of projects in that field, but
TOM CONNELL: And some not so much. Do you accept that-
JANE HUME: The most important thing is, some of the infrastructure is being reprioritised and reappropriated elsewhere. And some of it is going back to the budget bottom line. Now that is fine. That's terrific. But I wanted to be able to see the modeling that demonstrates that there is a productive capacity that is being invested as opposed to just a politically not exploiting a political lens rather than economic.
TOM CONNELL: You’re not expressly defending commuter car parks though, as an entirely merit based program that should not have any cuts from it.
JANE HUME: We're not talking about one car park Tom, we're talking about lots of different projects that were part of the urban congestion, fun and quite frankly, getting people home safer and quicker, getting them to work easy, more easily and more cost effectively. There's merit in that to the not easy switch. It’s a very easy sledge.
TOM CONNELL: An excel spreadsheet with 20, the top 20 marginal seats and saying anyone got some projects for approval.
JANE HUME: I don't know whether that's how that project worked Tom. And, again, I think that might be a little bit politically easy.
TOM CONNELL: Well that's what the Audit Office suggested. What about structural deficit? Is this the thing we need to fix and is that essentially a longer term project for you is Shadow finance. I mean, is the NDIS sustainable right now?
JANE HUME: I don't think anyone would say that the NDIS is sustainable. Certainly that's not what Bill Shorten is saying and that's why he has ordered a review. I think that that is a welcomed commitment coming from this government. There is no reason though, to say that more spending is out of control. Nothing we can do shrug your shoulders and say ‘Oh well, we might have to raise taxes’. The last thing that the economy needs right now is increased taxes because we have to build that productive capacity in the future.
TOM CONNELL: NDIS not sustainable. Any other obvious areas where you just think the direction we're headed in the budget is no longer tenable?
JANE HUME: We know that the Labor government have pointed out five areas where they say that spending has increased and it is has increased structurally, if you like. Now, the job of a government though, is to look at those spending increases and say, ‘Well, what can we do about it? How can we improve it?’ Now they've spoken about NDIS. And as I said, we've welcomed that, but there is more to your spending priorities than just NDIS and we would hope that they would put the ruler over all of their spending priorities to make sure that they are in fact, improving the budget bottom line rather than just letting it blow out and saying now we have to raise taxes.
TOM CONNELL: But as a longer term project for you over this term in opposition. Isn't that a project for you as well? You can run the roll over these programs to the same extent that's
JANE HUME: Well that’s exactly what we'll be doing. During the budget lock up.
TOM CONNELL: But post that, you'll have your own blueprint for. Everyone agrees, structural deficit needs fixing, and you can come up, you don't need to wait for Labor on this. You can come up with your own ideas, saying here's where we should be saving money.
JANE HUME: I'm absolutely certain that when we go to the election, you'll see exactly what ideas, our ideas are. But at the moment, our job is to make sure that Labor just does exactly what it needs to do. Build on the good record of the previous government control inflation, control spending and ideally, give cost of living relief to Australians because that's the most important issue right now.
TOM CONNELL: Jane Hume thanks for your time.