Topics: National Accounts 

 

E&OE   

 

ANGUS TAYLOR: 

Well National Accounts data just out a few minutes ago. And these numbers are truly a wake up call for the government. These numbers are a wake up call for the government. But they're not news to Australians who are suffering after two years of collapsing disposable incomes. What we see in these numbers is the pain that I'm seeing every single day on the ground when I go to food banks, when I go into the mortgaged areas, when I talk to renters, when I talk to Australians right across this great country, we see the enormous pain they are feeling as they struggle to make ends meet. And they take extraordinary measures to be able to feed their families, to be able to pay their energy bills, and to be able to get by every day. But as I said, they're a truly shocking set of numbers. And I think it's important to just dwell on what we're seeing in these National Accounts, as I say, which are reflected in what we're seeing in households and businesses right across Australia.  

 

This is the weakest annual growth in the economy since 1991. There's a whole generation of Australians who've never seen anything like this before. And what we see here is five consecutive quarters of negative GDP per person growth. This is a household recession. It's a household recession that is ongoing and at this point, showing no sign of ending, as Australian households see that they're going desperately backwards at this difficult time. And we see it in their household disposable incomes, we see this in the numbers, they're down by 7.8% on a per capita basis, since Labor came to power. An absolute collapse in their disposable incomes.  

 

And that's why they're digging very, very deep into their savings. Saving has almost stopped as a result of this collapse in disposable incomes since the election, down by 9.9 percentage points as Australians do whatever they have to do to get by, which has included working extra hours. We also see absolutely disastrous productivity numbers. Now this government loves to tell everybody that productivity is as it used to be. It's not we've seen an absolute collapse in labour productivity, since Labor came to power, 5.2% and that's continued to be reflected in these numbers. Price increases now, we've reached almost 10% since Labor came to power and core inflation has been going up, not down, since December. Going up.  

 

We are one of, we are the only country indeed of our peers that's seeing that core inflation going up since December. And meanwhile, the Treasurer says this is all okay and it's progressing well. Well it's not. And we haven't seen these kind of stagflationary pressures where you've got the combination, a deadly combination now, of accelerating inflation, collapsed growth per person, household disposable incomes in freefall, and a government saying everything is heading in the right direction. Well it clearly, clearly isn't. Now at the heart of this is a government that's had the wrong priorities and the wrong policies. The wrong priorities and the wrong policies.  

 

We've seen them spending much of the first year and beyond in government focusing on their Voice, we've seen the economy taking second priority for them versus all of the other Prime Minister's focuses. But most importantly, we've seen them fail to take responsibility for what is homegrown inflation. The Reserve Bank Governor has said it again today. She said it again today, this is a homegrown situation we're facing right now. We've seen a third failed budget now, $315 billion of extra spending. $30,000 for every household and I tell you, not many households are feeling any benefit from all of that. They're wrapping business in red tape. They're putting the union officials in charge not just in the workplaces, but in so many other areas of policy that they're pursuing, and their one clear answer on all of this is an immigration rate the likes of which we haven't seen before, we see in these numbers, is over 1.2 million population growth in Australia since Labor came to power.  

 

That is not the way you grow the economy. We're a great, proud, immigrant nation. But when that number is so far ahead of housing supply, and we see in these numbers, housing construction has gone backwards, is going backwards. And the government is not going to get anywhere near its targets.  

 

There is a better way, it is about going back to basics. It is about getting back on track by focusing on the fundamentals. That means re-establishing the fiscal disciplines that were there until this Treasurer got into the role and started focusing on spin rather than substance. It does mean making sure that we've got real productivity focus, making sure we're getting rid of red tape, we're approving projects, we're getting rid of unnecessary wasting, we see examples of that even just in recent days. The Minister for the NDIS with a $600,000 speech writer. This is not the time, this is not the time to be spending that kind of money. Australians are paying a very high price for a government that's had the wrong policies and the wrong priorities. Happy to take questions.  

 

JOURNALIST: 

Angus, treasury estimates has heard over the past few days a lot of questions about corporate tax cuts. Is the Coalition considering taking a corporate tax cut to the next election?  

 

ANGUS TAYLOR: 

Well, we've already proposed an important one, which is accelerated depreciation for small business being ongoing and raised to $30,000. I note that the Assistant Treasurer put out legislation today for accelerated depreciation for small business, but it goes nowhere near far enough. It's not enough. I mean, this is how you encourage investment, as you know, investment in these National Accounts has gone backwards. It's going in the wrong direction. We need to see that investment and accelerated depreciation encourages it. That's why in the budget in reply speech, Peter Dutton announced that we would take it back to those pre COVID levels, at higher levels than Labor is proposing and most importantly, make it ongoing so that businesses have the certainty they need to be able to make investment, knowing that they won't be bound in red tape and knowing that they'll be able to get rewarded for making those investments.  

 

JOURNALIST: 

Mr. Taylor, the Coalition still hasn't supported last year's budget measure on accelerated depreciation.  

 

ANGUS TAYLOR: 

That's not correct. 

 

JOURNALIST: 

Well, as I understand it, there's now last year's and this year's, yet to get through the parliament. 

 

ANGUS TAYLOR: 

Can I clarify that. This is more spin from a Treasurer who never does the real job. It's always spin. It's always spin. We have always supported any measure for accelerated depreciation. We were successful in the Senate, in pushing an amendment to get it back to the levels it was pre COVID. Labor didn't like that amendment and so they sent it back to the House and blocked it. Now, that's a choice for them. But I can assure you we have never, we have never opposed a measure for accelerated depreciation coming from this government in the parliament.  

 

JOURNALIST: 

Given the flatlining economy though, isn't there an argument to support the measures as they are and then argue for a better deal for business, rather than holding it up? 

 

ANGUS TAYLOR: 

We did both. We did both. And this Assistant Treasurer, as he always does, it gets into his in tray, stays there forever. And it's convenient, because I don't think he's interested in small businesses, he's interested in union officials. That's where he takes his instructions from and they're not concerned about our business. So he leaves it in his in tray and does nothing with it.  

 

JOURNALIST: 

But what does it do... 

 

ANGUS TAYLOR:  

We have sent a very strong signal to Australians, and to the business community, that we believe in encouraging small businesses to be able to make investments with accelerated depreciation. We think it's an important measure.  

 

JOURNALIST:  

Just given the weakness of growth, are you, if you're worried about recession, are you willing to revisit the migration cut you're planning? Or is that locked in regardless of what the economy looks like?  

 

ANGUS TAYLOR:  

You know David, the pain that households are feeling that I've described, and I see every single day, the pain that means they're digging deep into their savings, they're working extra hours, they're cutting back on what would traditionally have been considered to be essential spending. We see that when we look at what they're buying in the supermarkets. I see it every single day. You ultimately need to beat inflation first and then you can grow the economy. But this government has failed to do that. Has failed to do that. I said there were three tests for this budget. First test was to slay the inflation dragon once and for all. Well, there was nothing in this budget that gives us any confidence they'll do that other than tricky manipulation of data, that was about the best they had in the budget. The second test was to actually set us up for longer term growth. Their answer to that is corporate welfare. Well, that's not how you do it. It's not government it's got to be led by, it's got to be led by business. And the third was to reestablish the fiscal disciplines, and they didn't do any of that. 

 

JOURNALIST: 

But on migration is your [inaudible] regardless of what the economy looks like? 

 

ANGUS TAYLOR: 

In terms of migration, what matters to households is GDP per capita. That's what the government has to focus on. And it's failed to do that. I mean, we've got a household recession, households are facing stagflation. That's not a word we've been using for decades. There's a whole generation who don't know what it means. But that's what they're facing. 

 

JOURNALIST: 

So you'd still cut migration by 25% even if it means recession? 

 

ANGUS TAYLOR:  

Well you know David, the truth is, if you get GDP per capita going forward, you don't have a recession. It's that simple. It's really simple. That's what you have to focus on. The truth is, what you're accepting here is that the Treasurer has failed. Now, the Treasurer stood up and gave a press conference a moment ago, where he told everybody how everything was progressing nicely. Well, it's not. He's failed. He's had three budgets to get this situation to where it needed to go. And he's absolutely failed on it. If he intended to be in this situation, he needs to fess up on that. But this is disastrous for Australian households. And raising the rate of immigration is not the answer. I think Australians understand that.  

 

JOURNALIST: 

You talked about stagflation, so did Jane Hume. Michelle Bullock was very clear that she did not see the current... 

 

ANGUS TAYLOR: 

I said household stagflation.  

 

JOURNALIST: 

You're saying household stagflation as opposed to economy wide... 

 

ANGUS TAYLOR: 

At the end of the day, what matters to Australians is what they feel and see in their household...  

 

JOURNALIST: 

But households have jobs. I mean, the employment numbers have held up quite well, and wages have held up well. And that's a key part of stagflation, whether you would be talking about it at an economic level or a household level, the fact that people have jobs is something that the Reserve Bank Governor has continually pointed to as a positive factor of the economic circumstances. 

 

ANGUS TAYLOR:  

If the Treasurer thinks it's okay, if the Treasurer thinks it's okay to have a 7.8%, almost 8% cut in household disposable incomes in two years, that that's okay, he should be clear on that. It's not okay. It's absolutely disastrous for Australian households. We haven't seen anything like this before in our generation, I mean, this is extraordinary. And it is stagflationary at the household level. Why? Because the economy is going backwards as far as I'm concerned, GDP per capita is going backwards for any household and inflation is going up from what is already the highest level, core inflation is going up, the highest level of our peer countries. There's no other peer country where core inflation has gone up like it has here, since December. None! So you know, this is diabolical. And the Treasurer needs to actually recognise that it's diabolical. Right now, it seems to me that this is the outcome he intended. Well, if it's the outcome he intended, he needs to fess up on that.  

 

JOURNALIST:  

Should the budget have cut spending? 

 

ANGUS TAYLOR: 

We've been very clear on this David, I don't know how many times I've had this conversation with you. But 315...it's actually not cutting at all. What it's doing is adding 16% in nominal growth in spending... 

 

JOURNALIST: 

So should we cut spending?  

 

ANGUS TAYLOR: 

So spending is growing at double the rate of the economy. That's why the Treasurer has driven the budget in the next, little over 12 months, down to a $43 billion deficit. If you grow spending at that rate, then that's what happens. Now, there's a whole row of economists out there all saying that that's expansionary. And if you saw the Senate estimates yesterday, where the Secretary of Treasury took enormous pains to avoid admitting that in fact, this was an expansionary budget. But it's 16% growth. That's extraordinary. Now, basic fiscal disciplines need to be in place. And we've already highlighted a number of places where we think there is waste. There is significant waste. $45 billion we've opposed through the parliament. Over $13 billion of corporate welfare in this budget that we think is unnecessary. We see, even just in estimates in the last 24 hours, all sorts of questions to be answered about this investment that the government is making in the Silicon Valley based company. I've got to tell you, that this is not the time to be spending money in that way, David, and we've been clear about it. 

 

JOURNALIST: 

You've talked about the big increases in migration that we've had and the impact that has when it comes to per capita GDP. Is that part of the rationale for the politician wanting to cut migration levels to mechanically bring GDP per capita back into a positive? 

 

ANGUS TAYLOR: 

You get GDP per capita up by getting your basic settings right, by getting your basic settings right. You've actually got to have positive labour productivity, not negative. I mean, you know, minus five... 

 

JOURNALIST: 

But mechanical... 

 

ANGUS TAYLOR:  

Hang on... 

 

JOURNALIST: 

More people coming into the country, it's a denominator in a calculation of a per capita, so... 

 

ANGUS TAYLOR: 

Just, I will answer the question because it's important. You can't have labour productivity going back by 5%. You simply can't have rising disposable incomes, real disposable incomes, and rising GDP per capita, without that. Now in terms of immigration, if households are going backwards, you don't solve the problem by having a higher immigration rate. That is only the sort of spin that someone who doesn't understand basic economics would accept and it seems to me that the Treasurer has gone down that path. The key issue with this level of immigration is our housing supply hasn't been able to keep up with it. And it can't. The numbers are just way too high for that to be remotely feasible, let alone the fact that this government set a target of 1.2 million homes, it's not even going to get close to it. Its own adviser on this has said there's no way it's ever going to get close to those numbers. So the government's got its priorities wrong, got its policies wrong. Australians are paying a high price and there is a better way. 

 

ENDS.