JANE HUME: Good afternoon, everyone. It's gonna be a very difficult afternoon for a lot of Australians today and particularly, Australian holders. It's clearly going to be a tough Christmas for many Australian families and that's because they have been abandoned by this Labor government. They've been abandoned by a government that's been distracted, that's taken its eye off the ball away from what is the most important issue right now and that's getting inflation down so that we can keep interest rates lower.
Today, the Reserve Bank sent a very, very clear message to the government and that was that they must do more to bring inflation down. The news that the rates have increased now, another 25 basis points up to 4.35% cash rate will be very tough for many Australians to swallow and that's particularly for mortgage holders. The average family with a $750,000 mortgage will now be paying an additional $24,000 a year in mortgage repayments. Now that's not the sort of money you find down the back of the couch.
The RBA has had to hike interest rates 13 times now but 12 workers have been under this Labor government and that's because inflation is out of control. It's still well outside the RBA's target band of two to three per cent. And not only that, but today we are going to have said that they expect the risk of inflation being higher for longer has increased, not decreased, increased. Now the RBA is trying to cool the economy, it's doing its very best, but at the same time, Labor has added $188 billion more fueling expenses and that's further fueling inflation. The RBA has its foot firmly pumping the breaks, but at the same time, Labor has its foot on the accelerator.
The government is continuing to point the finger at everybody else other than themselves, but in fact, the Treasurer wants to blame international events. Now, it wasn't that long ago that the Treasurer said that he couldn't 'give a stuff' that 'Australians couldn't give us stuff' as to what global factors had on the cost of living crisis. But in fact, Jim can't keep blaming everybody else. As Chris Richardson told the Australian newspaper today, he said "inflation has ticked up and it's not just petrol. It's not just the Middle East. It's popping up in new areas of the Australian economy" and Michele Bullock confirmed that in Estimates last week. Inflation is coming from Canberra. It's set in, it's baked in and that's because the government took its eye off the ball and it hasn't got a plan to bring inflation down.
Labor promised that Australians would be better off under their government. They promised that they would bring down the cost of living, that they would bring down energy prices, that they would bring down mortgages and they have failed on every front. Instead, the government has spent the last 17 months focused on the wrong priorities and the cost of living has only got worse.
We know from last week's ABS data that these interest rate rises are having a significant effect, particularly on working households and the cost of living for ordinary Australian families is getting worse and we're hearing that on the ground, as well. In the Cost of Living Committee, we've heard from charities that are seeing more and more people lined up outside their doors, particularly from those food charities who are saying that they're seeing people with double incomes lining up for assistance to put food on the table for the first time. People with mortgages lined up for the first time. Energy companies have told us that there was a direct correlation between interest rate rises and a number of people seeking assistance through their financial hardship programs.
Australians are having to make some really tough decisions right now. Tough decisions about whether they turn on the heating or whether they eat tonight. Tough decisions about whether they pay the rent or whether they pay their bills. And unfortunately, the government hasn't done the same. It's failed to make the tough decisions that it needs to make with its budget. Tackling inflation needs to be priority number one, priority number two, and priority number three for this government. Australians are crying out for help and Labor's lack of a plan to bring down inflation means that hardworking Australians are going to pay more. Interest rates will be higher for longer if inflation stays higher for longer. Labor's lack of a plan is gambling with hardworking Australians money and with our economy. I'm happy to take questions if you've them.
JOURNALIST: One of the tough decisions the government says it's making is on infrastructure projects, where costs have blown out by $33 billion. Cutting some of those projects or pushing them off with reduced demand in the building and construction sector. Do you think that's a good idea?
JANE HUME: Well, let's check the big litmus test on infrastructure projects shall we. I mean if you're going to cut infrastructure projects, but keep the Suburban Rail Loop in Victoria, a project that already costs look astronomical, over $130 billion, $30 billion just for the first section alone. This is a project that hasn't gone through Infrastructure Australia that the Victorian Auditor General already said the business case doesn't stack up. And yet this is an infrastructure project that the Albanese government won't back away from. I don't know how seriously you can take them when they say that they want to cut infrastructure projects for the sake of inflation.
JOURNALIST: So where would you like to see the government funding entertainment?
JANE HUME: Well, I'll tell you what we wouldn't do. First of all, we wouldn't be taxing farmers, we wouldn't be taxing truckies, because of course those costs instantly get passed on to grocery prices. We wouldn't be interfering in the energy markets in such a way that you're actually detracting new investors turning them away, particularly in gas markets. Because we know that increasing supply is the only way that you're going to sustainably bring down energy costs in the future. We wouldn't be spending an additional $188 billion, particularly that $45 billion of off balance sheet funds which the IMF specifically said, have an inflationary impact. There is so much that this government can do and instead it's got the wrong priorities. It's looking the other way. It hasn't got a plan to tackle inflation.
JOURNALIST: So would you cut the ballooning infrastructure?
JANE HUME: Well, you cannot take them seriously on the infrastructure spend if they are still planning to fund the Suburban Rail Loop in Victoria, which is Dan Andrews boondoggle-
JOURNALIST: So what would you cut?
JANE HUME: It's a Dan Andrews boondoggle. It should be the first thing to go. The first thing to go. If they're not cutting the Suburban Rail Loop, quite frankly, they're not taking infrastructure cuts seriously. They're simply trying to blame somebody else for rising inflation. Once again, they've blamed Vladimir Putin first and foremost. Then they've blamed the middle east, they've blamed Israel, and now they're blaming the States. Jim Chalmers can't take responsibility for this and yet so much of the inflation balloon is in his control. He could be doing so much more.
JOURNALIST: Senator Hume, just on that $188 billion of additional spending, a lot of that is just indexation of government payments. Are you proposing cuts there?
JANE HUME: Well that's $188 billion more than the Coalition said that they were going to spend just 18 months ago. Fiscal responsibility is so fundamentally important, particularly in a time of high inflation. We know that this Labor government came into office with a wishlist of projects and policies that they wanted to implement, and some of those will actually have the opposite effect on inflation, for the ones that we need to get inflation back down. Here's a good example, Industrial Relations reforms. They're actually going to cost the economy in productivity and yet Philip Lowe said that the only way you can have sustainable wage rises is increased productivity. This government is doing the exact opposite.
JOURNALIST: So would you not increase the Commonwealth Rent Assistance and welfare payments? I know you've been hearing a lot in your cost of living inquiry about the pressures on people at the lower end of the specturm. What would you want them to do?
JANE HUME: Those policies weren't policies that we took to the election. If inflation was under control, there wouldn't be a need to have those extra increases in rent increases or whether it be welfare increases. The most important thing you can do to help people with the cost of living is to bring inflation back down. Inflation is driving this cost of living crisis and it's most important to deal with not just the symptoms, but the causes of inflation. At the moment the government is talking about the cost of living crisis as if you can deal with it with bandaids. But that's just putting a bandaid on a bullet hole and dealing with the symptoms and not the causes.
JOURNALIST: I know this has come up a few times now. But do you think the government should be looking at fuel excise again and cutting that?
JANE HUME: Well, I know that the former Coalition government did cut fuel excise and there's a good reason for that because at that stage, inflation hadn't taken hold. In fact, inflation was being driven by really only one thing and that was Russia's invasion of the Ukraine. That pushed up the prices back then, which was why it was so important to nip it in the bud. But now inflation has taken hold and you don't have to look too far to see that. Core inflation is still much too high and the Reserve Bank is acutely aware of that. It's not just fuel prices that are driving inflation, domestic factors are as well. And that's why our core inflation is now higher than almost any other developed country. It's higher than the US, it's higher than Germany, Italy, Canada, Japan and that's a real concern. Tackling fuel excise whether it be temporary or permanent isn't the way to tackle core inflation.
JOURNALIST: Is cutting fuel excise a bandaid solution?
JANE HUME: Potentially it has the effect of bringing down the CPI temporarily. But once you bring the excise back on it's going to bring the CPI back up again. More importantly, because of the fluctuations in the fuel price you could actually see a cut in the fuel excise eaten up in one fell swoop. There is more that can be done to tackle the root causes of inflation to bring down that core inflation. Those domestic factors that are driving inflation right now, they're the ones that Michele Bullock, the Governor of the Reserve Bank pointed to last week. That rise in services inflation is something that this government clearly doesn't want to talk about.
JOURNALIST: Is cutting fuel excise a bandaid solution? Can I just pick up on something you said before about Russia and the Middle East, so are you accusing the treasurer of putting too much blame on the Middle East and Russia in terms of inflation?
JANE HUME: Well certainly the Treasurer is not particularly good at looking at the domestic factors that are causing inflation but you can't look past those core inflation figures. Yes, of course, international factors have had a had an effect in the past but there's more to it than that. Now, because this government has taken its eye off the ball, those international factors are no longer the most important factors of inflation. In fact, if you look at the ABS data from last week that showed tradeables versus non-tradables inflation, in fact, it is the domestic factors that are keeping inflation higher for longer and that's what the RBA governor is concerned about. That's why she's saying that we're now not expecting inflation to come back to that two to three per cent band till the end of 2025. That's another two years. That's gonna be hard news to swallow for Australian mortgage holders that are already doing it really tough right now, because until inflation comes back down, we can't expect interest rates to come back down.
JOURNALIST: Senator Hume, just in the last paragraph of the RBA's statement, it seems they've lifted the hurdle for another rate rise. They've added the word 'whether' in front of 'further monetary tightening may be required'. Is that good news that maybe you know, there's some respite down the track for, you know, homeowners now that they won't see another rate rise, that it's looking less likely?
JANE HUME: Actually, I read it the other way they say that the risk of higher inflation actually increased not decreased. That would be a great concern, I think, to the RBA, you know, they've left the door open to more rate rises. Michele Bullock has made it very clear that she has a low tolerance for a slower than projected return to that two to three per cent band, that two three per cent target. and she said that she won't hesitate to do what needs to be done in order to bring the person under control. And yet at the same time today, they're saying now the rest of higher inflation, inflation will be higher for longer has increased not decreased.
JOURNALIST: Senator Hume, can you share I guess how do you think this will impact Australians going into Christmas with some economists expecting that we might see another rate rise?
JANE HUME: Yeah, well, we've been hearing those stories in the Cost of Living Committee in particular. I mentioned those queues out the door that we've seen at Foodbank. Foodbank have told us they're seeing people come to ask for their services for the first time ever. People with two incomes, families with two incomes, families with mortgages. We've heard from St. Vincent De Paul and from the Salvation Army that they're now seeing demands on their services that they've never seen before. And charities themselves are struggling with cost of living places like op shops are struggling to pay rent or keep the lights on. They're struggling to find volunteers because volunteers have gone back to work to solve their own cost of living crisis. The cost of living is a really important issue. Getting inflation down is probably number one, two and three, and yet this government has taken its eye off the ball. It's been distracted, whether it be by overseas trips, whether it be by expensive Voices to Parliament, that clearly Australians didn't want. Australians to be crying out to their government saying this is our most important issue. The cost of living is our most important issue. Only now is the government actually saying that 'Yes, it's our most important issue too'. Now that's despite the fact that Anthony Albanese last New Year's, said that his New Year's resolution was to bring down the cost of living. Well we're in November, he has resoundingly filed in that New Years resolution. What is the government's plan to bring down inflation? They cannot seem to say. I think we'll leave it there, thanks.