Topics: Inflation and federal budget

E&OE

DAVID SPEERS:

Angus Taylor, welcome to the program.

ANGUS TAYLOR:

Good to be with you, David.

DAVID SPEERS:

So let's start with this inflation question. Should this budget increase spending or cut spending?

ANGUS TAYLOR:

Well, the starting point for the budget or the test for the budget, and the most important one is that it's got to bring down Labor's homegrown inflation, David, that's the overwhelming issue here. To do that, they have to re-establish the fiscal guardrails, the fiscal rules that Peter Costello put in place back in the 1990s, to have a structural budget balance, making sure the economy grows faster than spending. But what we've seen from Labor to date is two failed budgets, they haven't delivered this cut in the inflation, the homegrown inflation that we've seen under Labor, described as homegrown inflation by the Reserve Bank Governor, by the way, and the result is that if we have another flop in this budget, Australians are going to pay a very, very high price. So just back to the question, though, should they increase spending or cut spending? Well, they should be restrained in spending, they should make sure...

DAVID SPEERS:

So they should cut?

ANGUS TAYLOR:

They should make sure that the economy grows faster than spending. And that's the exact opposite of what we've seen in the last two years. So to put this in perspective, we've seen $209 billion of additional spending from Labor since they came to power. So that's over $20,000 for every Australian household. I'll bet there's not many Australian households out there listening to this today, who feel as though they've got that benefit. And yet, that's what they've done. There's $2 of spending initiatives for every saving initiative. That's not the answer.

DAVID SPEERS:

I've heard this $209 billion figure that you've used a few times.

ANGUS TAYLOR:

It's in the budget papers, David.

DAVID SPEERS:

It's a pretty big number.

ANGUS TAYLOR:

It is.

DAVID SPEERS:

To be fair though, this does include the automatic increases in the age pension and other payments, all the spending, you supported in last year's budget for JobSeeker and rent assistance. You're not saying they shouldn't have done that.

ANGUS TAYLOR:

Well, we've opposed $45 billion of spending through the budget. We didn't block supply David, that's not something we're proposing to do of course, but we've seen spending growing in real terms much faster than the economy in the last two years. We have seen a government that loves to spend, I mean, it's their natural instinct.

DAVID SPEERS:

Well, they say their spending increase is only 1.4%. Yours was 4.1%. It's, the average over the last 30 years 3.2%. So they're saying...

ANGUS TAYLOR:

Well, they're going back to COVID era of spending to do that.

DAVID SPEERS:

Well, they're going back 30 years.

ANGUS TAYLOR:

Over the last two years what you've seen under this government is spending growing much faster than the economy. And these fiscal rules that were put in place by Peter Costello in the 90s are very, very important. They're part of the Charter of Budget Honesty. And they're essentially rules that ensure that government, when they're putting together their budgets, have a process where they do exercise restraint. That's not what we've been seeing. We're proposing to put those back in. This is a very, very important policy change. Labor took them out when they came into government.

DAVID SPEERS:

So you'd have a spending rule. What would that look like?

ANGUS TAYLOR:

Well, there's a couple of paths to this one is structural budget balance, not windfall surplus. What we've got at the moment is a focus on windfall surplus.

DAVID SPEERS:

You'd have a structural balance in year one?

ANGUS TAYLOR:

You've got to have a shift over time of a structural budget balance. Now, the way to get there, the way to get there is pretty straightforward. You do exactly what Mathias Cormann did from 2013 through to the pandemic, where you made sure that the economy grew faster than spending. That's not what we're seeing under Labor.

DAVID SPEERS:

So you'd have another spending audit like the Tony Shepherd spending audit that...

ANGUS TAYLOR:

Well, I'm not committing to that now. We'll talk more about the processes, but the key thing is to get those fiscal rules back in place. And they have been in place, I should really, it's really important to emphasise this, they have been in place since Peter Costello. It's only the current Labor government that took them out.

DAVID SPEERS:

Well, let's look at spending...

ANGUS TAYLOR:

They did it, because they love to spend at exactly the time when we need restraint. Because if Australian households are struggling with their budgets, and showing restraint in their budgets, it's time for the Australian government to show restraint.

DAVID SPEERS:

Let's talk about restraint then. Yesterday, the government announced more than $11 billion new housing funding. The Coalition criticised it because it had no new money. Does the Coalition want to spend more?

ANGUS TAYLOR:

No, the point here is that the government committed or promised there'd be 1.2 million houses being built. There is nothing in any of what was announced yesterday that tells us we're going to get any closer to that target and their own National Housing Supply Council has said they're going to fall short of a million at best. And many commentators...

DAVID SPEERS:

So should they spend more?

ANGUS TAYLOR:

No, they should just get back to basics. Here's the point. If you want more manufacturing in Australia, which we all want, if you want more housing in Australia, you've got to get back to basics. What are the basics that you've got to get right? You've got to get energy policy right. You've got to make sure there's more supply coming into the market to put downward pressure on prices. You've got to make sure you've got to get your industrial relations right, David, which ensures that we've got productive, competitive workplaces, which are good for both employees and employers. You've got to make sure that government's not getting in the way, you're not over regulating things, you're getting approvals done not blocking approvals. These are the basics. If you don't get the basics, right, you try to veneer over it with loads of government spending, and it fails.

DAVID SPEERS:

On Defence, the Shadow Defence Minister Andrew Hastie says the Coalition will spend more than Labor. Is that right?

ANGUS TAYLOR:

Well, I'll make the historical observation that Coalition governments have always been able to stay within those fiscal rules that I just described, and at the same time, deliver a strong outcome for Defence. And that's something that we need going into the future, there's no question about that. Look, the geopolitics we're facing right now, there's no doubt they're very different from even a few short...

DAVID SPEERS:

So you will spend...

ANGUS TAYLOR:

We'll make sure Defence gets the capability and resources it needs. We're deeply concerned about whether that's going on.

DAVID SPEERS:

That's a little bit short of what Andrew Hastie's saying.

ANGUS TAYLOR:

Well, I'm not going to give you the election budget details now but what I'm going to say is that Coalition governments have always found ways to make sure Defence gets what's it what it needs. And there's no time when that's more important than now. Look, the question for the Australian people is who do you trust to defend Australia in terrible circumstances.

DAVID SPEERS:

Well, we're talking about the budget. What about tax cuts?

ANGUS TAYLOR:

Well you were asking about Defence.

DAVID SPEERS:

Defence spending, which I'm still unclear whether you're going to increase but anyway, let's talk about tax, are you going to offer bigger tax cuts?

ANGUS TAYLOR:

Well, we've already committed to an important tax cut and I think this is a very, it's a crucial indicator of where we're going, which is to restore the accelerated depreciation that was in place for small and medium sized businesses before COVID. Now, we do need, we do need private sector led investment right now. We don't need government to do the investment, we need the private sector to do it. And the key to that we've found historically, and we saw it, in our time in government, was accelerated depreciation for business. So restoring that to back to where it was, hugely important for small businesses who are struggling at the moment, but also hugely important to get the capital investment we need to have that low inflation, strong growing economy that we all want to see.

DAVID SPEERS:

What about personal income tax? Will you offer bigger tax cuts for personal income?

ANGUS TAYLOR:

Well, the really insidious effect we're seeing on personal income taxes right now is inflation. We've seen a 23% increase in personal income taxes being paid. And the best way to get personal income taxes back to where they need to be is to put downward pressure on inflation. So that's the starting point. We'll give you the fuller tax package. Obviously, the accelerated depreciation is an important part of that, that we've already announced. And, obviously, we'll have more to say about the broader...

DAVID SPEERS:

When the government rejigged the stage three tax cuts, you said you would proceed with significant tax reform. And you talked about those at the top end who were going to miss out under the government's changes. Are you now saying you might not?

ANGUS TAYLOR:

We said we'll deliver a tax package before the next election, which is in keeping with the stage three tax cuts. And critical to that, critical to that, is making sure that we don't see the insidious creep of income taxes, which was sent 23% under Labor. But we've also been very clear, we've made very clear, we need to see more private sector investment. And this is a crucial differentiation between us and Labor. They think the way to get the economy going over the medium term, is to get the government to invest. We think it's to get the private sector to invest.

DAVID SPEERS:

Well, let's talk about that. This Future Made in Australia plan. What do you think? Where do you stand on this idea? And admittedly, we haven't seen all the detail, but we've seen some of the investments in solar panels, critical minerals processing and quantum computer. Is this a good idea?

ANGUS TAYLOR:

Well, a couple of points I'd make about this. The first is, we don't really know what it is David, and you made that comment a few minutes ago and you're absolutely right. The second point I'd make is if you want manufacturing to succeed in Australia, you've got to get back to basics. I worked in the sector for many, many years before politics. If you don't get the basics right, no amount of government subsidy and investment is going to make up fruit. You've got to get your energy...

DAVID SPEERS:

Is there any case for subsidies given what's happening around the world with the US, with the Japanese, with the Europeans all getting into this stuff? Does that make an argument for Australia to do the same?

ANGUS TAYLOR:

There's no case for subsidies whilst you're not getting the basics right. You've got to get the basics right. Now we'll look at each measure as they come forward. It seems to be a grab bag of measures but the key is to get those basics right.

DAVID SPEERS:

I appreciate your points there...

ANGUS TAYLOR:

Well, it's fundamentally important. I mean, we're seeing major manufacturers leaving the country right now. Qenos, who for years I worked very closely to make sure that they could stay in the country, that meant important gas policy, which the government has finally realised is relevant to making sure we've got strong manufacturing in this country.

DAVID SPEERS:

What about the subsidies we've seen for solar panel makers - would you strip that away?

ANGUS TAYLOR:

Well, again, we haven't seen any of the details on this and we'll wait and see.

DAVID SPEERS:

Quantum computers?

ANGUS TAYLOR:

Yeah exactly. So we've got a billion dollars between the Federal and Queensland Government, which is given to a company based out of Silicon Valley. But we again, we've seen no details. We've had two Shadow Ministers asking questions about this, we haven't got any of the answers. Is it equity? Is it debt? Is it loans? What are the milestones? What's it going to achieve? How's it structured? We don't have any of these answers.

DAVID SPEERS:

You clearly have concerns about government subsidising the private sector, would you be willing to subsidise nuclear power plants?

ANGUS TAYLOR:

Well, at the end of the day, all generators, if they're going to be successful in delivering affordable, reliable energy and bring down emissions, have got to deliver a return on capital. And that's our approach to energy ...

DAVID SPEERS:

So would you subsidise it?

ANGUS TAYLOR:

Well, it's got to be capable of delivering a commercial return. And that's an important threshold test for any investment. And this is where Labor simply doesn't understand investment. I mean, they think they can do a better job of investment in this country than thousands and thousands of experts and professionals out there who do this as their job every day. But frankly, they haven't got a clue. Jim Chalmers has never been involved...

DAVID SPEERS:

Getting back to nuclear, do you think it would deliver a commercial return?

ANGUS TAYLOR:

Well, as I say, we're obviously going to have more to say about nuclear in time. But yes, I do, of course. I think any energy source that's going to be able to deliver affordable, reliable energy and bring down emissions at the same time, has to be able to deliver a commercial return. And I think it will be able to, sure.

DAVID SPEERS:

Given the government's now, with its gas strategy said, you know, we'll stick with gas for up til 2050 and beyond. Does that weaken the case for nuclear?

ANGUS TAYLOR:

No, I don't think it does. I mean, I think the important point here is that the government's been mugged by reality when it comes to energy policy. And they've finally realised that we've got collapsing supply in Bass Strait, we need to get more gas out of the ground and more gas into our pipelines. Now, I've been saying this for many years and finally, they've realised it now. I'm glad to see that they put out a set of principles the other day, which are supportive of addressing that issue. I'm disappointed that was only a set of principles. They've got to get serious about this. We can reduce emissions...

DAVID SPEERS:

When are we going to see your nuclear policy?

ANGUS TAYLOR:

Well we've already been moving at a rapid pace towards nuclear, which will be one of the most significant changes in energy policy in this country in a long while. There's a sense from some in the commentariat that we're not contrasting with Labor. We're making serious contrast with Labor right now as an Opposition and they're important contrasts. Nuclear is one of them. Gas has been another.

DAVID SPEERS:

And another one's supermarkets. I want to just, quickly on a couple of other things. Where's this at? The Nationals want the power to break up Coles and Woolies. Have you knocked that off or is this now Liberal policy as well?

ANGUS TAYLOR:

Well, Liberal policy for some time has been to have a - the Liberal and National policy - has been to have a mandatory code for supermarkets. We've been pushing Labor on that. Belatedly, they seem to be coming to the party. That's great news. And that's a very, very important step for making sure we've got a competitive sector. We also have been upfront in saying we're considering further penalties for anti competitive behaviour in the supermarket sector. We're working our way through that.

DAVID SPEERS:

What about a breakup power?

ANGUS TAYLOR:

Well, look, you know, we haven't been frightened of divestiture powers in the past. I was the Energy Minister who put a divestiture power in place in the energy sector.

DAVID SPEERS:

The big stick.

ANGUS TAYLOR:

And we did see reductions in retail prices in the couple of years that followed that. So we have seen that work. But as I say, we're working our way through that issue. The mandatory code though, I'm glad to see that Labor's finally seen the light on the importance of doing it.

DAVID SPEERS:

And the RBA, there's still a disagreement between you and the Treasurer on the Reserve Bank, the plan to have two separate boards. You want all of the existing board members to go on to the new monetary policy board. Why is that? What's your concern here?

ANGUS TAYLOR:

Well, we want to see a credible, capable, strong and independent Reserve Bank and the Reserve Bank's enormously important to making sure we get low inflation and low interest rates in this country, and we want to see evolution not revolution. Now, we've worked closely with the government on a whole range of issues where we've come to sensible agreement. But the red line for us, a red line for us, has been that we don't see sacking and stacking the board. It's very clear that the Treasurer wants to be able to sack and stack the board. We've seen reports just in the last week that headhunters are out, spending $100,000s on headhunters, to recruit for the Reserve Bank board before they've even put legislation through to change the board structure. So you know, this tells you how far ahead of themselves the government has gotten. I wrote to the government, I wrote to the Treasurer back in October, on this issue in particular, I'm still to get a reply, David.

DAVID SPEERS:

When you use the word stacking, are you suggesting he wants to put people on the Reserve Bank or the monetary policy board that will lower interest rates before the election?

ANGUS TAYLOR:

Well, what we want to see is an independent reserve bank that is effective at fighting inflation and beating inflation on a sustainable basis. And anything that puts that at risk is something that we're going to oppose.

DAVID SPEERS:

Final one, outside your portfolio, the Liberals have been trying to pin blame on the government, in part, over a violent home invasion in Perth a couple of weeks ago, because one of the alleged offenders was released from immigration detention back in November. Turns out another alleged offender in that incident was released from immigration detention when Peter Dutton was the Home Affairs Minister. Now, Peter Dutton's been demanding the government take responsibility. Will he?

ANGUS TAYLOR:

Well, the first point I'd make about this is I know no more about it than what I've seen in the media. Clearly the Labor Party has been pushing this out. The second point I'd make about it is that this was an illegal arrival under a Labor government that gave this person a protection visa. So there's a bit of hypocrisy going on here. But we'll wait and see what briefings we get from the government on it. I make the point that they've released 153 people and some of those people have been wreaking havoc. And that's something the government has still failed to take responsibility for.

DAVID SPEERS:

If the court documents do confirm, do backup that he was released when Peter Dutton...

ANGUS TAYLOR:

Well, we're speculating on something where I know nothing more than what's in the reports.

DAVID SPEERS:

It'll be a double standard though wouldn't it to say Peter Dutton doesn't need to claim responsibility, but this mob do.

ANGUS TAYLOR:

You know, we could start with 153 people being released and the havoc that's flowed from that being something that this government and these two hapless Ministers are prepared to take responsibility for David.

DAVID SPEERS:

All right. Angus Taylor, thanks for joining us this morning.

ANGUS TAYLOR:

Thanks for having me.

ENDS.