MATTERS OF URGENCY – Interest Rates

Well, clearly the country has a surplus of money at the moment. That’s why we have inflation at levels we haven’t seen for a generation. But it’s been pretty clear from listening to the Senate for a couple of hours this afternoon that we also have a great surplus of wishful thinking in this place. I
was in here earlier when Senator Bilyk was saying, ‘Oh, we just need to pay people more money.’ Senator McKimis now saying, ‘All we need to do is lower interest rates and everything will be fine.’ But there is in no way any logical or reasonable discussion of what would happen if we did what Senator McKim suggests. What would happen if we just said, ‘Yep, let’s intervene and drop the interest rate by’—I don’t know: 25, 50 or 100 basis points? What is likely to happen? We already have inflation well above three per cent, the highest in the developed world. If we were to just go and cut interest rates, take the easy solution that Senator McKim suggests, that would certainly—it
has to, by definition—put more money into the money supply to lower interest rates. That’s how the Reserve Bank does it. They buy up bonds. They either print money or go into their vaults, take more money and chuck it into the economy. That will increase inflation, and no-one will be better off at the end of it. In fact, almost certainly we’ll be worse off over time because inflation will get out of control, we may end up with a wage price spiral and we will be back to where we were in the 1970s. It will take years and decades and a lot of economic pain to fix up. So it’s a very childish approach to these issues. I think Australians are desperate for some leadership from this place. They’re sick and tired of this juvenile pointscoring from the likes of Senator McKim. They all know in their real lives that things are tough. They all know there’s no easy answer when you’re struggling to pay the bank or when you’re worried about whether your credit card says ‘insufficient funds’ at the check-out. At least there’s noone there to see you these days. You’ve got no check-out person there to witness your embarrassment. But people are worried about that. They know there’s no easy answer; they have to make tough choices in their own lives—to decide not to get a new car, not to go on a holiday or to cut back on other expenses. They make those decisions. Yet they look at this
place and they look at their leaders, who are not willing to make any tough decisions at all. They’re telling them these sweet nothings: ‘You can have it all. We can cut interest rates and we can just get rid of price gouging, and everything will be fine.’ Life is not like that, Senator McKim. These are very tough times for Australians, and to get out of tough times you have to make tough decisions. You have to make tough decisions about working out what the appropriate interest rate is. The really tough decision we have to make is about how we reform our economy to help business get going. The real result of inflation and the cost-of-living crisis we have right now is our terrible productivity growth. Senator Gallagher is back here. She was a bit embarrassed before to state the productivity figure under this government, which has fallen, as I said earlier, by 6.3 per cent in two years—an average decline on a compound annual growth rate of 2.9 per cent. Senator Gallagher was trying to claim to the Senate earlier that the growth under the coalition was much worse. Actually, I went and had a look at the figures, and growth was 1.3 per cent in GDP per hour worked on a compound annual growth basis during the coalition’s term in office. So it’s terrible. That’s 1.3 per cent compared to -2.9 per cent. That is the reason people are struggling right now: our productivity has fallen through the floor. Nowhere in this motion—I only caught just over half of Senator McKim’s speech—did I hear him mention the word ‘productivity’. That’s the key way to get out of this crisis. It’s hard. It’s not an easy answer for people to say. It means we probably have to work harder, work smarter and make tough choices about what we do about our energy situation and our housing situation. But that’s the only answer to get out of this crisis. Senator McKim just completely ignores it. It is a juvenile response to this issue. The government at least says some things about it, but it’s not willing to change course at all. Its answer—I asked this to Senator Gallagher earlier —to my question about getting productivity growing was, ‘We need to invest more in solar and wind,’ like these things are working. They’ve been complete and utter failures. Productivity in our energy sector has fallen by seven per cent under this government. That’s a seven per cent fall in the productivity of our energy systems because of this mad rush to invest in types of energy that don’t work. When the cost of energy goes up, the cost of doing everything goes up. So it’s about time we had a hard look in the mirror as a country and realised that a lot of what we’re doing right now is wasting our taxpayer resources that people worked so hard for. We just dole it out on a handout basis like candy. We’re also making silly decisions on things like net zero emissions, thinking it won’t come at a cost. It is, and everybody is facing that cost right now.