Interview with Tom Connell, Sky News

TOM CONNELL: All right. But we will, of course, have time for Hume and McAllister. Each week, Shadow Finance Minister Jane Hume and Assistant Climate Change and Energy Minister Jenny McAllister face off and fire up on the big news and political developments. There was a little thing called the Federal Budget this week. We had the Labor Party go first this week, so we'll switch it up and let you, Jane, get something off your chest. What have you been focussed on this week?

JANE HUME: Well, Tom, how quickly things can change. There was a fair bit of crowing on Tuesday night about Labor's economic credentials, but that quickly unravelled when you look past the glossies. It ended up to be a traditional big tax, big spend Labor Budget. There was $185 billion worth of additional spending since the election alone and explicit removal from the fiscal strategy to reduce inflation. And economists have been lining up from the left, from the right and from the centre to say that this Budget not only doesn't do anything to reduce inflation, but it could potentially make the situation worse. If inflation stays higher for longer, your interest rates stay higher for longer and your standard of living goes down. Now, the Coalition knows that you cannot tax your way to reduce inflation. You cannot spend your way out of a cost-of-living crisis. But you don't need to listen to us, just listen to the economists, because they've noticed that Labor has waived the white flag on reducing inflation.

TOM CONNELL: Jenny, your hot take before we get into the Budget debate.

JENNY MCALLISTER: Thanks, Tom. Well, I've obviously got quite a different perspective than Jane. I mean, this week the Albanese Government delivered a Budget that lays the foundations for Australia's future. The Treasurer laid out a plan that makes investments to help Australians through hard times in the short term, but also the investments that are necessary to set us up for the long term. The important investments, of course, include the biggest ever investment in bulk billing, decreases in the cost of medicine and, of course, energy price relief. All of it, while we are cleaning up the mess left to us by the Coalition, a Budget that was boobytrapped with terminating measures and unfunded promises. So, we are, of course, cleaning up the mess. But what did we hear from Peter Dutton last night? More of the same. No responsibility, no vision, no policy, and worst of all, no real new ideas. I think Australians expect more than that.


JENNY MCALLISTER: They expect a government that is compassionate, that understands how to deliver a responsible and measured Budget and will make the investments that are necessary for both the short term and the long term.

TOM CONNELL: Jumping in there because it's Budget week, so I want to keep the show not too far in deficit. We're a little bit truncated today. Let's show you what the week has been. It was about the razor-thin surplus, the first in 15 years. It was a tripling of bulk billing incentives, increased welfare payments, and the Coalition's response that they thought middle Australians in particular were left worse off. Here's been the reaction through the week.

[Footage excerpts]

TOM CONNELL: All right, I want to start with you, Jane, on the response from Peter Dutton, because he's expressed disappointment at the lack of help for middle Australians and that the lower middle-income tax offset was scrapped. So, just to clarify, if you were still in government, would you be keeping this tax offset?

JANE HUME: Well actually, we calculated that the average Australian family is probably about $25,000 a year worse off under this government, just in the last year alone. Now, that includes lower and middle income tax offset, but it also includes the effect of rising mortgages, rising grocery prices and, of course, rising energy bills as well that's an enormous amount of money the average family has to bite -

TOM CONNELL: That's assuming under the Coalition, there wouldn't have been a single rate rise under the Coalition. Is that the claim there?

JANE HUME: Well, we know that there was one during the election campaign, but reducing inflation would have been front and centre of our strategy, because we know that the only way you can provide cost of living relief to all Australians is to reduce inflation. And the only way you can reduce inflation is to rein in your spending. And there was so much spending in this Budget. It was, in fact, an expansionary Budget. It wasn't contractionary at all. And we've heard very mixed messages from Labor Ministers. It started off saying, this is going to reduce inflation, then it wasn't going to do any harm. And now we're hearing that, of course, it actually may well add to inflation, making the situation worse.

TOM CONNELL: Okay, but I see what you do. What about LAMITO? What are you actually saying? That you would have kept it to help middle Australians, is that what you're saying?

JANE HUME: Well, the LAMITO was always an ending measure. It was a COVID measure that was coming to an end. But of course, it does impact people's hip pockets, there's no doubt about that. And, of course, as taxes continue to rise because of bracket creep, people are finding that more and more of their income is being eaten up by taxes. So there's more coming out of their pockets and less going in.

TOM CONNELL: I'm just trying to clarify - as a result are you saying you would have kept it?

JANE HUME: Well, there wasn't an announcement last night to keep the LAMITO, I couldn't assure you of that. It was always supposed to be a temporary and targeted measure for COVID. But that said, what we did want to hear last night, what we did want to hear, was a commitment for those stage three tax cuts which would put money back into people's pockets, people that are now seeing their wages eaten up by higher taxes because of bracket creek.

TOM CONNELL: So, saying it's bad, it's gone, but you would have also scrapped it, is what it sounds like to me. The Coalition complaint Jenny on so called middle Australia. So, let's take two average income earners of about $80,000. It's probably a bit higher than that now, but you're talking about a family income of $160,000. They, unless they have children in childcare, get nothing out of this budget. That is accurate, isn't it?

JENNY MCALLISTER: No, that's not at all accurate, Tom. I'll take you to just one measure. The tripling of the bulk billing incentive, of course, significantly increases the incentive for bulk billing for children under 16. So, a family trip to the doctor is far more likely to be bulk billed for many Australians. And we know that there's about 11 million Australians who may well be supported by just this one measure. We are really aware that this is a tough time for Australian families-

TOM CONNELL: Anything else? So, but anything else? Is that it?

JENNY MCALLISTER: There are a range of measures that are important. The expansion of eligibility for some of the home programs, of course, the broad focus on increasing the supply of housing. All of these things matter to middle Australia. But we are actually -

TOM CONNELL: But if you're a family there, if you're a family there on those two incomes and you're paying off a mortgage, you're already in your house, there's nothing else, is there? I mean, this is a lower income focus. That middle-income bracket has basically been left out.

JENNY MCALLISTER: I'll take you to another measure, Tom. The decision to intervene in the energy market has made a real and material difference to the prices that Australians would have expected to pay this year as a consequence of the global energy crisis. That was an incredibly important intervention -

TOM CONNELL: But that's not in the Budget. And the energy rebate doesn't go to those households.

JANE HUME: The prices are continuing to go up.

JENNY MCALLISTER: The cost of those interventions are, in fact in the Budget. Of course they're reflected in the Budget. These are important interventions that, again provide benefits across the Australian economy. Making medicines cheaper, that matters as well. People going to the pharmacy once every two months rather than once every one month. There are measures right across the board and we wanted a Budget that will deliver for all Australians, but we don't apologise for focusing our efforts in some regards and targeting our efforts at the Australians that need it most. And you did see that in the Budget as well.

TOM CONNELL: Jane, just on the spending, then, because this is something the Coalition has raised some concern about. Spending before GFC, this is the best measure when you talked about an expansionary Budget you alluded to. There is spending as a percentage of GDP, so the spending now is 26.5 per cent. You have reaffirmed your commitment to keep tax to GDP at 23.9 per cent. What are you doing then? Are you going to run some massive deficits, because that's a huge gap, or are there going to have to be some big spending cuts under the Coalition and when we will learn about them?

JANE HUME: Well, Tom, you'll find out what the Coalition's election policies are closer to the election and let's face it, the first Budget that we'll deliver will be in May in two years' time. We would hope that the economic conditions by that stage had changed significantly, but hopefully without too much pain, hopefully without the RBA having to do all the heavy lifting and having to continue to raise rates to slow down the economy. Because, let's face it, at the moment, what you've got is one foot on the accelerator with your fiscal policy, one foot on the brake, and that's how you wreck the engine. So, we would hope in two years' time that the situation is improved, but we can't see any indications that that will be the case.

TOM CONNELL: Right, but that is the decision, isn't it, that you either have to go, we've got some big deficits or some serious spending cuts because of your own speed limit on tax of GDP? Because tax of GDP under Labor is at 25 per cent, so there has to be a huge cut in that. But then you'd have to do the same cut in terms of spending. That's the situation you're facing.

JANE HUME: Tom, you're only looking at one side of the ratio. The GDP is just as important. And let's face it, there really wasn't anything in this Budget that would help grow the economy. In fact, productivity projections are going down and yet at the same time, we've got population going through the roof, 1.5 million net in migration just in these five years alone, with cuts and delays to infrastructure at the same time to support that net migration. Migration is important, don't get me wrong, we're a great migrant country and it's been part of our growth story for decades. But unless it's a well-managed program, it can actually make the situation worse. So, we would hope in two years' time, when we deliver our next Budget, that the situation is under control. But quite frankly, that's when we put in those special guardrails, whether it be tax to GDP, expenditure to hit GDP, caps on the growth of public servants, these are the sorts of things that simply have disappeared from this Budget and that's why it's blown out of control on the spending side.

TOM CONNELL: What do you make of that, Jenny, on migration? Because obviously the total size of Australia's population is still forecast to be lower than it would have been, but for COVID. But this is a huge intake in a short period of time. This is a record rate of migration. Are we really ready for it? Do you think voters think that's a good idea right now?

JENNY MCALLISTER: Well, one of the things that is something of a misconception and the Treasurer pointed to this in his speech to the Press Club earlier in the week, is that the government sets the net migration figure. We actually forecast it. We do set a cap on permanent migration. But the net migration figure is the consequence of a range of demand-driven processes. Australians coming and going, students coming, tourists coming. And you're quite right that the truth is that even with these significant increases that are projected as a consequence of those demand-driven processes, we're still not actually back to where we would have been during the pandemic. We do actually need to have a real focus -

TOM CONNELL: Nonetheless, it's a very rapid flow, isn't it?

JENNY MCALLISTER: Yeah. And you'll see the government bringing a real focus to housing. Jane and I have spent, of course, this week in the Senate with the government trying to bring on debate about the Housing Australia Future Fund. And Jane and her colleagues teaming up with the Greens political party, not just to oppose the fund, but to block even the possibility of debate in the Senate. Now, that is baffling to me. I don't think it's credible to come on this program and talk about the challenges facing Australians in relation to housing, when that's actually been your behaviour in the set of choices you've made this week in the Senate.

TOM CONNELL: All right. What about a response to that Jane?

JANE HUME: That was a political ploy going on in the Senate, that you guys wanted to bring it on, you knew you were going to lose it. But no, we want to discuss this, we want to talk about it. We're going to wait until after Senate Estimates so that we get some time to do exactly that, because it's critically important. But, of course, you're absolutely right. This is about social housing. It's the pimple on a pumpkin here. These new migrants, this net migrant intake isn't going to want to live in social housing. We need to open up supply. And let's be honest, if Anthony Albanese was the real leader of the Federal Parliament, with a whole bunch of Labor Premiers, he would be out there banging their heads together, saying, "open up supply." New supply is the only way that we're going to solve the housing crisis, not just for the Australians that are here now, but also for the new migrants and to make sure that we have the infrastructure there to support them. That is the only way. Your housing fund isn't going to deliver that.

JENNY MCALLISTER: Jane, if you actually read about ten pages into the Budget paper -

TOM CONNELL: Very briefly, one last response.

JENNY MCALLISTER: Thanks, Tom. Look, Jane, if you just get into about page ten of Budget Paper One or thereabouts, you'll see the agreement established with the states and territories to work through the questions of housing supply. Because you're quite right, that is an outstanding issue -

JANE HUME: What's the answer, though?

JENNY MCALLISTER: - that was not tackled by your government in more than ten years, and it is one of many things the Australian community expects us to tidy up.

JANE HUME: You've got Labor Premiers wall to wall. Knock yourself out, Jenny. You should do it now.

JENNY MCALLISTER: We'll get on with the job of doing it.

TOM CONNELL: All right. Maybe we'll do some more housing. I sense it's something you both want to talk about more. But we'll have to do it next time.


TOM CONNELL: Jenny, Jane. Thank you. Plenty to dissect out of the Budget. I'm sure it'll still be floating around.