Topics: National Accounts data; Labor destroys Australians’ standard of living; reckless government spending; collapsing productivity; APRA; government subsidies; fiscal guardrails; Reserve Bank; core inflation; nuclear energy costings; Reserve Bank board appointments

 

E&OE   

 

ANGUS TAYLOR:

Well National Accounts just came out, and these numbers are a nightmare reflecting the nightmare faced by Australian households and businesses under this Labor Government. Make no mistake about it, these numbers are a scorecard for the Albanese Labor Government and they get a fail This is a complete and utter failure. It's clear this government has been taking this country in the wrong direction, and we see this in the numbers here today. GDP per capita going backwards for the seventh consecutive quarter. We have now been in a household recession for seven quarters. It was a record up to six quarters. It's still a record, and of course, that means more pain for Australians, more pain for Australian businesses, more pain for Australian households. Productivity … labour productivity is in freefall. Labour productivity is in freefall. This outcome reflects the complete and utter failure of Labor's big Australia, big government policies. We have seen our population increase by almost 1.6 million since Labor came to power. A much faster rate than we had previously seen. We see a person arriving to live in this country every 44 seconds. Every 44 seconds, and of course, that population rate growth is outpacing substantially the growth in the economy. That's why we've got GDP per person going backwards. That's why we have a household recession. But we also see in these numbers is this government's big government focus. Spending more is what they do. They think the answer to every problem is to throw money at it but the result of that is persistent inflation, an absolute collapse in Australians’ standard of living, an unprecedented collapse in our standard living, which I'll come back to. The numbers are quite extraordinary. In the last quarter alone, Australian governments have borrowed $40 billion. That's $4,000 for every Australian household and it goes on. This is a government that has lost control of its spending, and the result of that is there is no comfort in these numbers for the Reserve Bank. At the end of the day, the Reserve Bank looks at the balance between supply and demand and with a collapse in productivity supply is going in exactly the wrong direction. They need to see the Reserve Bank needs to see strong productivity if it's going to be easier to bring down inflation and interest rates and we've seen, of course, core inflation rising in the data that came out only a few days ago.

 

Now, I mentioned standard of living. At the end of the day this is what matters most of all to Australians. Our standard of living has seen the biggest fall of any of our peer countries since Labor came to power. The biggest fall in the OECD. It's now down since Labor came to power by 8.7%. That's also the biggest reduction since records have been kept back in the 50s. We haven't seen this during the Whitlam Government, during the Keating Government, during the Rudd Government. We never saw anything like this and it continues on and the dials continue to move in the wrong direction. Now we’ve seen prices for a typical working family up almost 19% since Labor came to power. We've seen interest rates triple what they were. A typical family with a mortgage in an electorate like mine, right across Australia has paid an extra $50,000 in their mortgage payments. That's money they won't get back. That's money that's paid out of after-tax income and of course, personal income taxes are up 22% since Labor came to power.

 

Now, I've said consistently, there is a better way. It's certainly not a big government, big Australia approach. We've been very clear that you've got to get productivity back on track. You've got to re-establish the fiscal guardrails that were in place until this government came into place. You've got to make sure that the economy grows faster than your spending and that means having productivity moving in the right direction, getting red tape out of the way for small businesses in Australia to invest, to grow, to employ and most of all to make sure that we don't have continued pressure on interest rates and inflation. We will continue to describe that better way forward whether it's in the energy sector, whether it's in the housing sector where we have announced policies to get 500,000 new houses built on the supply side. Getting the supply side moving. Whether it's in financial services where we've announced policies to roll back some of the worst red tape that's preventing Australians getting access to insurance, to lending, to finance more generally, to advice, indeed. That will be our focus in the coming days and weeks and I look forward to talking to you more about that as we have those discussions.

 

JOURNALIST:

Shadow Treasurer, you've mentioned the big government, big Australia approach. Without government spending and probably without immigration as well, the GDP would definitely have been in the negative this quarter and likely have been negative for previous quarters. Doesn't that show that government spending has done a role in keeping in … in bolstering Australia's growth and living standards?

 

ANGUS TAYLOR:

Let me make a couple of points about this. What matters at the end of day for Australian households is what happens at the household level, and that's going backwards. If your population is growing faster than your economy, then individuals go backwards. It's a pretty simple formula and if Jim Chalmers thinks the answer to Australia's problems is to open the floodgates then he needs to be honest with that with Australians. He hasn't been. He's got to explain why he thinks that's the right answer to the challenges we're facing now. Now we're a proud immigrant nation, make no mistake about it, but these numbers are way above what we’ve seen before. One person arriving in Australia every 44 seconds. This is not what we've seen in the past, and we can see our economy is not coping with it. That's a desperate situation for Australians to see a household recession continue on seven quarters in a row. I mean, look, this government has had three budgets to try and fix this situation. There is no pathway to restore the collapse in Australians’ standard of living that we’ve seen since Labor came to power. No pathway to see that anytime soon and of course, these numbers confirm that in fact the pathway to restore our standard of living is further away than it ever was.

 

JOURNALIST:

Mr Taylor, Andrew Bragg's committee has said, reduce the buffer on first home loan mortgages under APRA and also controversially suggested that APRA’s charter be changed. You have criticised Jim Chalmers for saying the Future Fund’s charter focus should be on residential housing. The credential regulator under what the Bragg committee has recommended would be changed to first home buyers. Where do you stand on that? Is it a Coalition policy to make changes to APRA’s mandate?

 

ANGUS TAYLOR:

Well, Shane, I wouldn't be drawing a comparison between the Future Fund and APRA. APRA is a regulator. The Future Fund is a custodian of Australians’ money. They are fundamentally different things and yep, I'll remain critical of a Treasurer who sees the Future Fund as money for him to invest in his pet projects. I think it's absolutely at odds with the respect that has been shown to the Future Fund across both sides of politics until today, until we got a Treasurer in place who sees every bit of money he can get his hands on as his money for his pet projects. This reflects a guy who's spent six months in the private sector that he describes as the worst six months of his career. I mean this is not someone you give money to for investment allocation … so coming back to the APRA position. I mean, I think there is no question that our financial services sector is wrapped in red tape, and we should be looking at every bit of red tape with the takeaway that gives Australians more access to affordable finance than they otherwise would have had. We're seeing right now a situation where Australians are underinsured, under advised on financial services and increasingly under banked and to the extent that that's a result of red tape from excessive regulation, we think it's appropriate to have discussions about rolling back that red tape and we've been strong on advice reforms, for instance, of getting our advice sector back on speed and moving again.

 

JOURNALIST:  

Isn’t there a danger in saying to APRA, you must take into account first home buyers when their job is to make sure the financial system doesn't collapse?

 

ANGUS TAYLOR:

Well, I think there's danger in APRA making it more difficult and more expensive to lend to Australians and we'll always be looking to get that balance right, Shane, and I think this is absolutely essential. And it’s why we've already announced important policies, some of which the government has followed us on, like the regulatory grid, to take some of the most egregious red tape away from the financial services sector so they can get out and help Australians to realise their dreams. That's what we want to see from our financial services sector.

 

JOURNALIST:

Do you think state and federal government subsidies are helping or harming households?

 

ANGUS TAYLOR:

What is very clear is that we see heavy-handed government spending in this economy crowding out the private sector. A dollar spent in the public sector is a dollar that would be spent on the private sector, and we've got a private sector that's clearly in recession right now. That's very clear. The most sustainable growth always is growth driven by the private sector because it doesn't require taxpayers’ money. It doesn't require taxpayers’ money and so we want to see a strong private sector. It's clear that that's not what this government wants to see. It wants to see more government. It wants to see more taxpayer money spent. Look, government spending is now, as you know, Michael, at record levels. 27.9%. That's higher … 27.9% of GDP. That's higher than it was during the pandemic crisis. But the only crisis we have right now is Labor governments. They're the crisis we're facing. To get to 27.9% under these circumstances, crowding out the private sector, making or resulting in productivity going backwards. I mean, productivity is in the hole and you know, if you're if you're a central banker sitting there trying to get interest rates and inflation down and labour productivity is going backwards, your task has been made impossibly difficult.

 

JOURNALIST:

You talk about the need to restore fiscal guardrails. Would that include a spending cap? Like a spending to GDP cap?

 

ANGUS TAYLOR:

Yeah we've been very clear time and time again, Phil, that we want to see the economy growing faster than spending. That's the key. We saw that …

 

JOURNALIST:

Have you got a number in mind?

 

ANGUS TAYLOR:

… leading up to the pandemic, and that is, we've already announced that will be central to our guardrails. That's not what we're seeing right now. Nothing like it. We saw in the last budget a 16% increase in spending in just two years and if you look at the numbers that have just come out, it's a faster rate than that.

 

JOURNALIST:

Sorry to just interrupt. Would you be prepared to nominate a number before the election?

 

ANGUS TAYLOR:

Well, you know, I've said very clearly that we want spending to grow at a slower rate than the economy.

 

JOURNALIST:

It's pretty slow.

 

ANGUS TAYLOR:

We want the economy growing at those sorts of levels that we've seen historically, which is 3% or more. That requires a good productivity outcome of course. You understand how these things work. With a sensible level of immigration growth, not over 2%. Not over 2% which is what we've seen. So I think the numbers are pretty clear.

 

JOURNALIST:

Mr Taylor, do you still intend to release your nuclear energy policy costing before the end of the year and can you tell us what level of detail …

 

ANGUS TAYLOR:

We will release it in good time, and …

 

JOURNALIST:

Is it before the end of the year though?

 

ANGUS TAYLOR:

Can I finish? As we've released our policies on where the generators will be located, you know, Labor was carrying on talking to all of you guys and hassling and saying, you've got to get them to release where they're going to be. We did. We did. Actually it turns out that’s pretty sensible.

 

JOURNALIST:

That was six months ago.

 

ANGUS TAYLOR:

Hang on, I’ll finish off. That’s putting it in places where we already have transmission lines and the beauty of that is you don't need to build new transmission lines, which is a huge cost that Labor is treating in many cases as a sunk cost, which is absolutely ridiculous. It’s why they've completely understated the costings. We know the cost of their renewables-only strategy will be well north of $600 billion. We will release our costings. But one thing I can assure you of, the one thing that I can assure you of, is that it will be less than Labor’s cost.

 

JOURNALIST:

So it won’t be before the end of the year?

 

ANGUS TAYLOR:

I'm not going to give you the date. I’ll leave that to Ted.

 

JOURNALIST:

Obviously, the costings were sort of flagged in the budget reply speech that was back in May. Can Australians actually expect costings or are you just going to say we'll do a feasibility, we'll do an analysis or are you actually going to have costings?

 

ANGUS TAYLOR:

You will see. You will see. I mean, look, can I say up front here? It would be just great if Labor could give us an honest set of costings to what their renewables-only strategy is going to cost.

 

JOURNALIST:

No fair enough. We’ll ask them about that. But …

 

ANGUS TAYLOR:

Let me … we've filled that vacuum because it is a vacuum. They haven't been honest, and they've treated a lot of spending as necessary on the electricity grid as so-called sunk costs. I mean, taxpayers have to pay it so they left that out. A very clear omission. Chris Bown hasn't been up front with people in the costing. Well, we know what those costs are now. We'll put ours out, and they will be substantially less than Labor’s and that, I can absolutely assure you.

 

JOURNALIST:

Mr Taylor, can you just specify which areas of spending you'd cut back and specifically with the electricity rebates as well, would you end those?

 

ANGUS TAYLOR:

Well, we know right now that Labor's plan is to end it in July, which is soon after the election. So that's the current plan. I'm looking forward to whether there's a change in that plan. That means we're going to see a surge in inflation when they come off and Jim Chalmers’ manipulation of the numbers and pretending that the number that matters is headline inflation when it's core inflation, which is going up. You know, he'll be outed on that because he has been very dishonest about this, but just coming back to your question. We'll wait and see what Labor has to say on these things. What we know is they have absolutely failed in delivering their $275 reduction and this is the key for Australia. They’ve failed on their $275 reduction. So what do they do? They go and grab some money from taxpayers to pay and say we’ll give it back to you here. That's a failure. That is an absolute and utter failure because they've had their strategy wrong, they haven't looked at every possible option to get energy into the marketplace, get the supply side right. This is the key, whether it's housing or energy or financial services, we've got to see the supply side opening up. That investment in the supply side has got to happen if you're going to get prices down and Labor’s never understood this. They think the answer to everything is to throw some government money at it. Well, we know, we know from history, this simply doesn't work and the result is you end up with what we've got right now, which is an economy which is only growing because of government spending, and that's unsustainable. That's a completely unsustainable situation and we've got core inflation that's going up, not down, whilst productivity is in free fall. I mean, if Jim Chalmers cannot see that this is a disastrous situation for the Australian economy, a disastrous situation for Australian households, a disastrous situation for Australian small businesses and large businesses then he simply doesn't understand basic economics and I fear that is the case.

 

JOURNALIST:

Just on the Reserve Bank. You’ve mentioned the fact that the bank is focused on core inflation. The charter of the bank does not mention core inflation. The statement between the Treasurer and the Reserve Bank clearly does not mention underlying inflation. It says it is inflation which is the headline inflation, that has been part of it since Peter Costello …

 

ANGUS TAYLOR:

I think the government has been pretty clear on this.

 

JOURNALIST:

I know that, but I’m just asking have you turned your mind to whether, if the bank actually needs … it needs to be clearer that headline inflation is where the people live, core inflation is where the bank’s living right now. Does that need to be clearer?

 

ANGUS TAYLOR:

I tell you where people live. They’re living in a situation where they want sustained lower inflation and sustained lower interest rates. That's where they live. And the way to get to that, we know, and the Reserve Bank Governor has said this on many occasions is lower core inflation. There's no secret about that.

 

JOURNALIST:

I’m just wondering if you think [inaudible] that needs to be clarified?

 

ANGUS TAYLOR:

What’s clear is the Treasurer doesn’t understand it. So it might need to be clarified in his mind. I accept that point. It does need to be clarified in his mind. I don't think it needs to be clarified in the mind of the Reserve Bank Governor. 

 

JOURNALIST:

Shadow Treasurer, the Treasurer said last week that he would consult you on Reserve Bank board member appointments. Has he done so yet?

 

ANGUS TAYLOR:

Oh, I look forward to that.

 

JOURNALIST:

Have you had any consultations so far?

 

ANGUS TAYLOR:

No. Not since the decisions have been made about pushing his sack and stack strategy through the Parliament.

 

JOURNALIST:

Shadow Treasurer, just again on the Reserve Bank. You said that the Reserve Bank should pay attention to productivity in your opening statement.

 

ANGUS TAYLOR:

Well, I'm saying they do.

 

JOURNALIST:

Yeah, well, but the other thing is, obviously, as you said, without government spending, we would be in … we’re already in a per capita recession. We'd be in a bigger recession without government spending. Shouldn't the Reserve Bank pay attention to that and would you think that means it's time for them to cut interest rates?

 

ANGUS TAYLOR:

You know, we want to see an economy that is strong and sustainably strong. You don't have a sustainably strong economy when you keep reaching into the pockets of taxpayers to try and prop it up. And that's what's happening. This is ridiculous. I mean, this is a big Australia, big government approach which is completely unsustainable. You can't do it and importantly, we're not seeing supply and demand getting to the position where we know we can see a sustained reduction in inflation and interest rates. Core inflation went up in the last data release. I mean, this is diabolical. And we now know part of the reason why. Because labour productivity is in free fall, and this government has had settings all wrong. It's reckless spending. It's failure to deal with the supply side challenges in industry after industry, whether it's the construction industry where the CFMEU has been in charge, whether it's the energy industry where the Minister thinks that excluding options that the rest of the world is open to – gas and nuclear – he dislikes them both. Blue hydrogen. You name it. I mean, he'll rule them out on ideological grounds. This is a government that has been taking this country in the wrong direction, and the results are in. What we've seen today is what you get when a government gets the economic settings wrong and this government does not know how to manage the economy.

 

JOURNALIST:

Sorry just one more on nuclear if I could. Ted O’Brien said not that long ago that there will be costings before Christmas. Are you saying that's no longer the case?

 

ANGUS TAYLOR:

Well, as I said, you'll see the costing soon enough. Be patient. Be patient. You'll get real costings from us. You got costings from Labor last time before the election, where they told us we were going to get a $275 reduction and I'm still looking for that one. We haven't seen it. Good on you. Thank you very much.

 

ENDS.