Topics: Monthly CPI 

 

E&OE   

 

ANGUS TAYLOR: 

Well, monthly inflation data's just come out in the last hour or so. And they are a shocking set of numbers. A shocking set of numbers. Most shocking of all for hardworking Australians who are trying to make ends meet who are continuing to see price rises, inflation well above expectations. We've seen core inflation in these numbers up by 4.1%, over 4%. And remember that the RBA's target range is down at 2-3%, 2.5% midpoint target. So well above target.  

 

But the point here is the pain that every Australian household is feeling. They are continuing to pay more for their groceries, they're continuing to pay more for their housing, whether they own it with a mortgage, or they're renting. They continue to pay more for their insurance. They continue to pay more at the petrol pump. It doesn't matter where you look, Australians are continuing to struggle to make ends meet. We're seeing enormous sacrifices being made across the board now, not only are many Australian families having to take on extra hours and make sacrifices with their kids and loved ones as a result, they're digging deep into their savings, and they're clearly cutting back now on anything that's discretionary. And many, many types of expenditure that traditionally wouldn't have been considered to be discretionary. We're seeing organised sport numbers going down as families decide that they just don't have the time and the money anymore, to be able to look after their kids in the way they might have in the past. These are really heart wrenching sacrifices. I see, as I get around the country, I go to food banks, I see people going to those food banks that have never been there before. And it's a tough time for those people, a very tough on for those people.  

 

Now, we've just seen a budget handed down, the third for this government, where there was an opportunity for the government to get it right. We said there were three clear tests for this budget. To beat this inflation dragon once and for all. To make sure we've got a pathway to longer term growth at a time when we've seen four quarters, four quarters where there's been no growth, with negative growth for three quarters, of GDP per person. That's a household recession, if there ever was one, and Australian households are feeling that keenly. But we also said that it needed to be a budget with fiscal discipline. Sadly, we didn't see this budget meet any of those three tests. And within hours, we heard economist after economist say this was not the right budget for the times. This was not the right budget for the times.  

 

This was not a budget that's going to slay inflation once and for all. The most persistent inflation in the advanced world, according to The Economist. It's not a budget that's going to set us off on the pathway to that longer term growth that we need with low inflation. It's not a budget that showed any fiscal discipline. Indeed, we saw $4 of spending for every extra dollar of savings. And in fact, over the next two years, we're going to see a 16% increase in spending in just two years. That is not the way you beat inflation.  

 

This was not a budget that is going to beat inflation. And it's because we've got a government that is weak, that is ineffective. A Treasurer that doesn't understand the basic economics of how you beat inflation. And he's making the wrong calls and has the wrong priorities at a time when Australians need the right decisions being made, the right priorities, and the right focus. Happy to take questions. 

 

JOURNALIST: 

Angus that monthly figure was coming down towards the back end of last year, it hit 3.4% in November, it's basically stuck around that point since then. Does that tell you the Reserve Bank may need to raise rates in order to get inflation down back into the target range? 

 

ANGUS TAYLOR: 

Can I say what it tells you more than anything else is we need fiscal policy to be playing a role in beating inflation. If you rely on the Reserve Bank, it means interest rates stay higher for longer, and that is exactly what's happening. That is exactly what's happening. We've learned this time and time again, history is so clear on this. If you leave it to the Reserve Bank, if you leave it to the Reserve Bank, we continue to have extended high interest rates and every single Australian pays a price. This is homegrown inflation now. The Reserve Bank Governor has said it, the Reserve Bank Governor has made that point. We see domestic inflation, non tradable inflation, at five times the tradable inflation, the imported inflation. It's very clear. And that means the government has to do its bit. But this was not a budget that did that. And you only have to look at what economists had to say, to see that. Economist after economist of all political colours by the way, of all political colours, saying that this was not the right budget for the times.  

 

JOURNALIST: 

Housing and rents were among the biggest drivers of inflation. With this in mind, would you support a rental freeze or a cap on rental increases to tame those drivers? 

 

ANGUS TAYLOR: 

You know, the best way to get prices to a point where they're affordable for anything, is to get supply and demand in balance. To get a balance in the market. And that's why we've set that the record levels of immigration that we've seen in this country in recent years is completely unsustainable. And we've proposed an alternative pathway to get that balance right. Now, there do need to be supply side measures as well. And this is an important role for state and local governments to play, to get the market back into balance. When you get the market back into balance prices come down. The attempt to use price caps, which have been tried in countries across the world, and in many times in the past, have failed. They've always failed. You've got to get the basics, right. And this is why we say, and our budget in reply was all about getting back to basics, getting back on track, by making sure you get the fundamentals right. Every Australian household right now is having to get back to basics and get the fundamentals right. It's time for this government, which has failed to date to get the basics right, to get focused on the right things and get the right priorities. 

 

JOURNALIST: 

Where do those spending cuts need to come from then?   

 

ANGUS TAYLOR: 

Well, we've laid out many areas where the government hasn't needed to spend money. I mean, a $450 million failed referendum would have been a good start, of course. But as we look forward, we've seen over $13 billion in corporate welfare that we think is inappropriate. We've opposed $45 billion of spending in the budget. We've said that you don't need to give extra money to environmental activists to shut down the most important projects in Australia. We don't, we shouldn't be giving money, grants to the CFMEU. There are many, many areas where we're seeing waste from this government. I mean, this Treasurer has set up his own departmental spin unit. Departmental spin unit. More money coming to it in the budget. I mean, if he thinks that the answer to the problems right now is spin, again, he's got his priorities wrong, but he does get priorities wrong.  

 

JOURNALIST: 

The Treasurer's forecast inflation coming to target by Christmas, relying on their power rebates and tax cuts. Do you think that modeling is still accurate? Or is he living on a prayer there.  

 

ANGUS TAYLOR: 

The Treasurer loves to forecast. The only thing that matters to Australians' back pockets is the outcome. And the outcomes have been all wrong. This is another inflation outcome that was above expectation, that was worse than the Treasurer told us it was going to be. We continue to see everything heading in the wrong direction under this Treasurer because at the end of the day, this is a Treasurer that doesn't understand the economics of what's going on at the moment. Not understanding that, being out of touch with what's happening in middle Australia, he's getting these calls wrong. Thank you very much. 

 

ENDS.