Topics: Interest rates, cost of living, The Voice

E&OE

MARK LEVY: Yeah, Mark Levy in the chair for Ben, who will be back with you at 5.30 on Monday. Now it's the decision we were all hoping for, The Reserve Bank has decided to hit pause on an interest rate rise this month, the cash rate will remain at 4.1% for now. It's a small mercy for households battling with skyrocketing mortgage repayments. But we're being warned that more rate rises could be coming. The RBA Governor, Phil Lowe says inflation is still too high and will remain so for some time yet. The Board's priority is to return inflation to target within a reasonable timeframe. Most economists forecast one or two more rises this year alone, that could be disastrous. According to the Financial Review, 1.4 million borrowers are already at risk of repayment stress. That's almost 30% of all mortgage holders. Angus Taylor is the Shadow Treasurer and I'm pleased to say he's on the line. Angus, good morning to you.

ANGUS TAYLOR: G’day Mark. Thanks for having me.

MARK LEVY: Well, mate this is welcome news, but let's not get ahead of ourselves. The decision to hold rates won't last long and we've got millions of families on the brink.

ANGUS TAYLOR: Yeah, welcome relief, no question about that but the battle against inflation is far from over, Mark, we've got more pain coming through the pipeline, regardless of what happened yesterday. We've got almost half a million Australians moving from fixed rate mortgages to floating rates in the second half of this year and we've got a Reserve Bank that has made the point that further increases may be necessary. So, there's a long way to go here and in that context, we need the government stepping up, you can't leave all the heavy lifting to the Reserve Bank. We know from historical experience, that when you have these surges of inflation, if you leave the whole job to the Reserve Bank to central banks, it's a tough, tough series of outcomes, you see, you see a lot of pain for those with a mortgage. We need a government that treats this as its absolute priority and pulls every lever at its disposal to bring down inflation and bring down interest rates as well in the process.

MARK LEVY: Angus, I've heard you use that term in the past, you know, the government needs to pull every lever, can I ask you what levers you would like them to pull and if you were in their position, what you would be doing? Because I mean, the Coalition was in power for nine years. Yes, we're now under a Labor government, what levers do they need to pull?

ANGUS TAYLOR: Well, we didn't see this sort of inflation in our time in government, but they need to pull every lever. So, I'll start with perhaps the biggest one that most economists would point to, is you've got to manage government spending. Now, let me put this into perspective, Mark. Labor has added $185 billion of spending since they came into government in twelve months. That's over $7,000 of extra spending for every Australian. Yep, they're spending a huge windfall we've got particularly from our very strong exports of coal and gas, industries they don't support of course, particularly strongly, but that increase in spending is throwing fuel on the fire. Meanwhile, industrial relations policy is going in the wrong direction to make sure that we put downward pressure on inflation and interest rates, the Reserve Bank Governor has made this point and energy policy, just deliver the promises they made before the election. And of course, we see energy prices going in exactly the wrong direction. Meanwhile, productivity is in freefall. We've seen a four and a half percent reduction in labour productivity in the last 12 months. Now that's disastrous for getting inflation down. All of those levers are at the government's disposal, but we're seeing indifference from the government at best and incompetence at worst.

MARK LEVY: 800,000 Aussies are coming off fixed rates to more expensive variable rates in the coming months. Are you concerned the RBA is pushing too hard? And could they end up pushing us into a recession?

ANGUS TAYLOR: Well, the Reserve Bank does what it must, but the point is it does it within the context of broader government policy. And the problem central banks always have and the Reserve Bank has is that it only has one lever. It's got a single lever, which is interest rates. And it's a very blunt instrument, Mark. And that's why we need to have all these other levers being pulled. And you know, if you go back to that last surge of inflation we had in this country, it went through the 70s and 80s and into the early 90s. Ultimately, it was beaten because government played a significant role in taking pressure off inflation and interest rates. And it wasn't beaten until that occurred, it was in fact the Labor government who did much of the early work, it was the Hawke Government, but we're not seeing that from this Labor government. I can tell you Anthony Albanese is no Bob Hawke and Jim Chalmer who’s a doctor of spin, not a Doctor of Economics is certainly no Paul Keating.

MARK LEVY: All right, well on Dr. Chalmers, the Treasurer, he'll make a decision on the RBA Governor’s future this month, Philip Lowe hasn't had a good run. He told us interest rates wouldn't go up until 2024. But we've had, what 13 rises in 14 meetings or something along those lines, if you were in his shoes, would you be renewing Philip Lowe's contract?

ANGUS TAYLOR: Well, there's no question the Reserve Bank made some egregious errors, and people paid a high price for that, and you'll have listeners who paid a high price for it by locking in mortgages on the expectation that they weren't going to go up. And they have gone up a lot.

MARK LEVY: Simple question, simple question, though. Would you extend this contract?

ANGUS TAYLOR: You know, at the end of the day, this in many ways, I think is the wrong, the critical question here is what can the government do to take pressure off?

MARK LEVY: Yeah, but is it yes, or no? Is it yes, or no? Would you renew his contract or appointment?

ANGUS TAYLOR: It's not our appointment?

MARK LEVY: That's not the question, though. I'm asking you if you were in the position, is it worthy of Philip Lowe continuing on as the Governor of the Reserve Bank?

ANGUS TAYLOR: If I was in the position, I would follow the process to appoint the Reserve Bank Governor that they laid out, that was laid out in the Reserve Bank review. A proper process, which means they don't appoint a union hack, made of the Labor Party, that they appoint the best qualified person they go through that process that’s been laid out very, very clearly. Their first two appointments to the Reserve Bank Board they didn't follow that process, they should follow that process with the Reserve Bank Governor.

MARK LEVY: All right. Can I ask you about The Voice? The Indigenous Affairs Minister, Linda Burney is fronting up at the National Press Club today, she's going to provide some details believe it or not on The Voice. Linda Burney will say The Voice will be asked to focus on health, employment, housing and education. Is this too little too late?

ANGUS TAYLOR: Well, it's just confusing the situation? I mean, is she saying now that The Voice will take instructions from the government? I just don't know how this thing's going to work, Mark and this is the whole problem with it. It’s so shrouded in uncertainty, I mean, we don't know who's going to be on The Voice. How many people are going to be on it? Who's going to vote for it? Does the government instruct it? Does it decide what it wants to do itself? We do know that the wording in the Constitution means that it will be able to roam wherever it wants to go, but how does this all fit together? I think Linda Burney’s comments that I've seen so far only confuse the situation, they don't clarify.

MARK LEVY: All right.

ANGUS TAYLOR: I should say by the way, these are all issues that she's talking about that we want addressed. Of course, we do, but I just don't know how The Voice is going to do that.

MARK LEVY: Well, I don't think it's getting a lot a lot of support in the community given the latest polling numbers and everything else, which I'm sure you're across, but I've run out of time, Angus, it's always wonderful to catch up with you. Thankfully, some good news yesterday for mortgage holders, but like you say there might be a few more to come, these rises. Anyway, appreciate you joining us.

ANGUS TAYLOR: Good on you. Thanks Mark.

ENDS.