Topics:  Labor's housing tax, Labor’s homegrown inflation 

 

E&OE   

 

STEVE CANNANE:  

As another month comes to an end, there's another set of inflation figures and another collective sigh that interest rates haven't gone up, but not much happiness around that they haven't gone down. Figures out yesterday show that the annual rate of headline inflation fell to 2.7% in August, partly because of state and federal cost of living relief measures. Treasurer Jim Chalmers was quick to claim that the numbers proved the government's policies were working.  

 

[AUDIO of Treasurer]  

 

But the opposition says it doesn't get Australians any closer to an interest rate cut. Shadow Treasurer Angus Taylor joins me now. Welcome to Radio National Breakfast.  

 

ANGUS TAYLOR: 

G'day, Steve, good to be with you.  

 

STEVE CANNANE: 

Inflation for August has fallen to an annual rate of 2.7% with the underlying rate at 3.4. That's not too far from the RBA target band of 2 to 3% to drop the rates. Do you welcome that news?  

 

ANGUS TAYLOR: 

Well, sadly, we've still got a long way to go, and Australia is at the back of the pack on this, Steve. We're seeing interest rates coming down in the UK, in the US, in Canada, in Europe, in New Zealand, but not in Australia. And the Reserve Bank Governor herself, just a couple of days ago, made the point that we've got to see sustained reductions in inflation. It's no good it being temporary. We're going to see a 48% increase in electricity prices over the next 12 months or so according to Westpac, so those temporary reductions just don't cut it. They don't get there. And the Reserve Bank Governor couldn't have been clearer about this the other day. Our fight against inflation has taken too long. We are still a long way from where we need to be. It's these final miles that are the hardest, and it is clear that the government is not getting us to where we need to be. And the result is we are at the back of the pack, and we're not seeing the interest rate cuts that others are seeing around the world.  

 

STEVE CANNANE: 

Okay, well, you've said that Labor is at the back of the pack compared to the rest of the world. But two of those countries you mentioned, the UK has a 5% rate, higher than Australia's, New Zealand has 5.25%, higher than Australia's. And the Governor the other day pointed to the fact that those international comparisons are difficult to make because the RBA took a different policy. They took a different approach to keeping interest rates a bit lower than those comparable countries.  

 

ANGUS TAYLOR: 

Yeah, but sadly Steve, we are seeing cuts there. But worse than that, our core inflation is higher than almost every other one of those countries. And so the truth is that the Reserve Bank has still got a long way to go. And they made this point, they said in their statement just a couple of days ago that labour productivity in this country is back where it was in 2016 and this is disastrous. They pointed out that our immigration rate...  

 

STEVE CANNANE: 

When the Coalition was in government?  

 

ANGUS TAYLOR: 

Well, you know, you expect labour productivity... 

 

STEVE CANNANE: 

So it was pretty low then? 

 

ANGUS TAYLOR: 

Steve, let's be clear. If labour productivity isn't going forward each year, then you have a problem. It's very hard to deliver prosperity that way, and you've seen a collapse. Here are the numbers, 6.3% collapse since Labor came to power. This is completely unprecedented. The Reserve Bank know it's a problem, but they also highlighted the rapid rate of population growth we've had in this country, particularly immigration and it's clear that Labor has lost control of immigration. They're not going to meet their targets, nothing like it. And the Reserve Bank is highlighting that this has an impact on getting the balance right between supply and demand.  

 

STEVE CANNANE: 

Okay, labour productivity is low. The last time I looked at it, for the 12 months to March 2024 it was just over 0% but that was above what the 2015 to 2019 average levels were, when the Coalition was in government?  

 

ANGUS TAYLOR: 

Steve, let's be clear, it's collapsed by 6.3% in two years. No one, no one can argue that that's even close to being right. We see Philip Lowe, former Reserve Bank Governor, out in the papers today saying we have a serious problem here. And there's no credible economist that will argue that a 6.3% in labour productivity, which should go forward each year, I mean, over the long term we've always seen labour productivity rising year after year after year. 6.3% collapse in two years, no wonder we've got a problem in this country. No wonder real disposable incomes have collapsed by 9%. Again, unprecedented.  

 

STEVE CANNANE: 

Well, let's talk about housing inflation... 

 

ANGUS TAYLOR: 

But this is incredibly important. No other major country, advanced country in the world, has seen a collapse in real disposable incomes like that. It is just diabolical, and the Treasurer wants to pat himself on the back. Well, it's not good enough.  

 

STEVE CANNANE:  

Let's talk about housing inflation, because that remains a problem. Rents are at 6.8%, new dwellings costs are up by 5.1%. The key, as we know, to tackling that is supply, and in the short term, there is no flood of dwellings coming on the market. Would it help if the Coalition passed Labor's legislation aimed at increasing supply? 

 

ANGUS TAYLOR: 

Well, let's be clear about what Labor's vision for housing is in this country, and this has become more apparent in the last 24 hours, where it's clear there's a secret plan that's been worked on by Labor. Their vision is that big investment funds and big corporates should own the housing that Australians rent. Our vision has always been different. It's that we have mum and dad investors, a plumber, a chippy, a nurse, a teacher, who owns a house that they rent out to other Australians. And this is a big choice. It's an important one. It was a choice that we had at the 2019 election, and it's clear that Labor is working up an alternative here. So we believe in the mum and dad investor. We don't want to replace the mum and dad investor with the big corporate, big investment fund who's the landlord of the house that Australians rent. But it's clear that Labor want to go in that direction.  

 

STEVE CANNANE: 

I'm not sure it is clear. I think they've asked Treasury officials to reportedly look at the impact of scaling back negative gearing and capital gains tax concessions that, I mean, you put it as a secret plan, but they may just be asking some bureaucrats to look at the modelling. If a certain model proved beneficial to housing supply, would you consider adopting that as policy?  

 

ANGUS TAYLOR: 

I don't know how taxing mum and dad investors more is going to increase supply. I mean, the way to increase supply and to get the balance right is to focus on the fundamentals. The CFMEU is making the cost of building everything in this country higher, and Labor refuses to deregister them and continues to take donations from them, Steve. I mean, we see immigration, as I said, the balance there is just not right. Now, we're a great immigrant nation, and we should be, but these numbers are just mind boggling. I mean, we have almost hit in three quarters, Labor's target for the entire year. I mean, they're going to overshoot their targets by an enormous number, well over 100,000. These are completely unsustainable situations, and Labor's answer is to start a fight again with mum and dad investors in the home. Now, if you're right, if this is not a secret plan, well, the Treasurer should front up...  

 

STEVE CANNANE: 

Well I don't know... 

 

ANGUS TAYLOR: 

...in an interview on your program, and explain that to Australia, Steve, but my understanding is he's not doing that.  

 

STEVE CANNANE: 

Okay, well, we are talking to Shadow Treasurer Angus Taylor, it is a quarter to eight on Radio National Breakfast. Now, you've talked about the government being addicted to spending and that being a problem with inflation as well. And yesterday, on RN Breakfast, your colleague Jane Hume cited 36,000 new public servants being employed in the last two years of the Labor government as an example of this. This led to a former public servant, Anne, emailing me and say the expenditure on these jobs was way under what the Coalition was paying for consultants, instead of having people in the public service do those jobs. Who has been more extravagant with public spending here, Labor with its new public servant jobs, or the Coalition with its consultants and other outsourced workers in the previous period of Government? 

 

ANGUS TAYLOR: 

Well, you just have to look at the overall spending. I mean, we're seeing spending going up at a rapid rate, 16% in two years.  

 

STEVE CANNANE: 

I'm not talking about overall spending, I'm talking about those particular public service jobs that Jane Hume cited as an example of government largesse.  

 

ANGUS TAYLOR: 

But at the end of the day, it's the total spend that matters for Australians. But can we come back to the 36,000. I mean, I think now is not the time to be adding 36,000 Canberra based public servants.  

 

STEVE CANNANE: 

What if that saves money? 

 

ANGUS TAYLOR: 

Now is the time for government to be managing every taxpayer dollar incredibly carefully. And I'll tell you why, Steve, because every Australian household right now is struggling to make ends meet. When real disposable incomes, our standard of living, has collapsed by close to 10% in the two and a bit years since Labor has been in power, it is incumbent on government to manage its spending very carefully.  

 

STEVE CANNANE: 

I think everyone agrees with that, about the importance of managing taxpayers' money. I think everyone agrees with that... 

 

ANGUS TAYLOR: 

I was about to get to the public servants. Adding 36,000 public servants is simply not the right way to do that.  

 

STEVE CANNANE: 

Okay. Well, I need to press you on this point, because the Australian Public Service audit of employment found that the APS workforce under the coalition in 2021 - 22 increased by 37% with over 50,000 full time equivalent workers thanks to consultants, contractors and outsourced workers being employed, and that that policy cost $21 billion a year. So who's being more extravagant here with the public spending?  

 

ANGUS TAYLOR: 

Well, you haven't actually revealed how much Labor is spending on consultants now, and I can assure you they're continuing to spend money on consultants, but they haven't actually revealed those numbers... 

 

STEVE CANNANE: 

Okay, but their argument, and it hasn't, their argument hasn't been tested yet. They say... 

 

ANGUS TAYLOR: 

You're not comparing apples with apples.  

 

STEVE CANNANE: 

Yeah okay, but their argument hasn't been tested yet. But they have announced that they expect to save $4 billion from slashing labour contracts over coming years. Now, that will be audited, and we'll be able to get to the answer eventually.  

 

ANGUS TAYLOR: 

When Labor says one thing, they generally do another. You know, they say there's going to be no extra taxes on superannuation. They say they're not going to play around with income taxes. They say they're not going to play with negative gearing Steve, they do something completely different. So I put no store in that commitment. The truth is that the public service is substantially larger than it was when Labor came to power, that's the reality. We are on our way, according to reports in the in the last two days, to the highest level of spending across this country by government we've ever seen by a long way. 28% of GDP. Look the facts on this are clear, and now is the time to be managing every single taxpayer dollar incredibly carefully, and we think the Labor Party is not doing that.  

 

STEVE CANNANE: 

Angus Taylor, good to chat this morning. Thanks for your time. 

 

ANGUS TAYLOR: 

Good on you, Steve. 

 

ENDS.