Topics: National Accounts 

 

E&OE   

 

GREG JENNETT: 

Well, we said we'd come back to the national accounts and the rather anemic growth rates that they reported when they went public earlier today, we're going to do that now, getting the opposition's perspective on all of this. The Shadow Treasurer Angus Taylor joins us in the studio now. Welcome back to the program, Angus. So yes, your prescription throughout budget season has been spend less in fiscal policy. Had that been applied through January, February and March, these figures would be significantly the poorer, wouldn't they? 

 

ANGUS TAYLOR: 

Well, I don't think that's right. The government right now is facing a deadly combination of two different things, Greg. Number one is an economy that's going backwards in GDP per capita terms, five quarters now, where we've seen the economy is, in a household recession. And at the same time, we've got core inflation that's going up, not down. You've got both of them. Now, if the government spends. it's going to push up inflation, and that is exactly what's going on at the moment. We've seen inflation, core inflation, going up, not down. The right answer in these circumstances is what I've always said, which is to get back to basics, you've got to get productivity moving, you've got to make sure the supply side of the economy is right. And in fact, what we saw in the numbers today is productivity has collapsed, labour productivity has collapsed under this government, over 5% reduction since they came to power, it's flatlining at the moment. And for the Reserve Bank, this is this is calamitous, it is incredibly difficult for them to get interest rates down and to beat inflation in that environment and get to a strong low inflation economy that's growing, when you've got productivity that isn't moving. 

 

GREG JENNETT: 

Well, that's only one input, isn't it, as Michelle Bullock told senate estimates today, they are poised to go in any direction that the data might take them. Productivity is kind of a longer term measure of economic health, but in the near term, she may well cut, the board may well cut if the sluggish growth continues, that would be a benefit to households. 

 

ANGUS TAYLOR: 

Well, labour productivity is actually in freefall, it's not long term, it's absolutely been in freefall under this government. And that means if you try to stimulate the economy, you drive up prices. It's a pretty straightforward dynamic, Greg, and that's what the Reserve Bank is faced with. They were forecasting a productivity, labour productivity outcome for the year well above 1%, it's showing absolutely no sign of getting near that. So they've got a massive problem, because you remember, they've got to solve two problems here. One is to get inflation down. The second is to get the economy growing. If you throw stimulus at that, you will fail, you will not meet the dual objective. And that is exactly where this budget has taken us. It's the wrong budget for the times, Greg.  

 

GREG JENNETT: 

You mentioned per capita recession. And that trips off the tongue, but it's not an established measure is it of the health of the economy. That is GDP, as published today. And it remains positive, sure it's a narrow path between where we are and where we probably don't want to get to, which is negative growth. But there it remains, you'd have to acknowledge that the path is still being walked here. 

 

ANGUS TAYLOR: 

Well, you're gilding the lily there, I think. It's a household recession. From a household perspective, GDP per person is going backwards. In fact, the only thing that's making the economy go forwards, and this is the wrong answer for growth, of course, is a very, very high rate of immigration. So we've seen over 1.2 million increase in the population of Australia in just two years, Greg, that's the only thing growing. GDP per person is going backwards. And that means you've got a household recession. And of course, it's no surprise then, that households, many watching today, will have found in the last two years, they've gone backwards. They've got poorer since Labour came to power. 

 

GREG JENNETT: 

Again, to site Michelle Bullock, who in her testimony today said we look beyond per capita recession as a term, they don't find it particularly helpful in their policy setting. Why should a government?  

 

ANGUS TAYLOR:  

Well because that's what households find helpful in their policy discussions. That's what the household feels. And at the end of the day, that's what we've got to focus on. You can focus on whatever you like out there. But the thing that ultimately matters is are households better off or worse off, Greg, and since Labor's come to power, yes there is an almost 8% slashing of their standard of living, their real disposable incomes, which is a diabolical situation. And of course, it's no surprise in those circumstances GDP per person is going in the wrong direction. 

 

GREG JENNETT: 

No surprise, so there's no real surprise in today's figures are they? They are in line with the budget. You wouldn't be calling for an immediate review, a mini budget, to reset everything in light of these sort of rear vision mirror statistics? 

 

ANGUS TAYLOR: 

Well you've had three failed budgets now. So perhaps the Treasurer could have another budget tomorrow and try and fix the three failed ones. But at the end of the day, he's brought down the wrong budgets. What you need is a focus on a strong, low inflation economy. That means you got to get the basics right. What does that mean in practice? You can't spend money that you don't need to. There's over $13 billion of corporate welfare in this budget. You've got to make sure you're getting rid of red tape, you've got to make sure you're getting approvals through. I mean, this is how you get the economy going. The Labor government thinks the way to get the economy going is throw money at their mates, let union officials around the workplaces. This is not the way to do it.  

 

GREG JENNETT: 

Can I take you to some other questions that were put to officials, notably the Treasury Secretary Stephen Kennedy yesterday on tax reform, or more specifically, corporate tax. Your colleague Jane Hume asked Dr. Kennedy about this, he doesn't see it as a pressing priority, nor does he see the fundamental tax mix in Australia has kind of fundamentally flawed at present. That sounds like a sound argument against moving down this path. Is the coalition considering it? 

 

ANGUS TAYLOR: 

Well, we announced an important corporate tax initiative in the budget in reply, which is to reestablish accelerated depreciation for small businesses to encourage them to invest.  

 

GREG JENNETT: 

Yep but specifically the corporate tax, 30 to 25%. 

 

ANGUS TAYLOR: 

That is the corporate tax rate, I mean, the practical corporate tax rate you face is after you account for depreciation. And so what this is doing and why it's so important is it's encouraging small businesses in this country to invest. That means they create jobs, they take risks, they grow the economy on the supply side, which is not inflationary, and importantly, gets the economy going again. So it's an important measure, which we have seen work incredibly well, not just in Australia, but around the world. That's why we announced it in the budget in reply.  

 

GREG JENNETT: 

Is that the end of it? Is there a path still to be journeyed here by the Coalition in corporate tax reform at the headline rate 30 down to 25 for big business? 

 

ANGUS TAYLOR: 

Well, that's what we've announced. We've already announced the accelerated depreciation going back to the pre COVID era having it on an ongoing basis, which would never have been in place before. And I think that's a very important step forward in making sure you've got that strong, low inflation economy we all want to see.  

 

GREG JENNETT: 

Alright, a bit to digest today in the figures. Angus Taylor, we appreciate you coming around once again. Thanks for joining us.  

 

ANGUS TAYLOR: 

Thanks Greg.   

 

ENDS.