Today, once again, we heard the government’s lack of focus and lack of answers on the cost-of-living crisis that is facing so many Australian families at the moment. Since this government took office, there have been 11 increases in interest rates, and obviously the Reserve Bank has had to act, given inflationary pressures here—and there have been inflationary pressures all around the world. The issue is the RBA has been left to do all the heavy lifting on its own. There has been no contribution from this government to help bring inflationary pressures down. Their budget was a massive spendathon which just fuelled inflationary fires, and now we are seeing the consequences of that, as Australians, with inflation rates here, in this country, being much, much higher than those of our peers around the world. Let’s be very clear, in particular, about this government’s budget strategies and settings: they are not helping with the fight on inflation.
The government released a budget in May this year, its first full budget since coming to power, and it had a massive $20 billion extra in net spending. It added $20 billion of extra fuel to the Australian economy at a time when inflation was already out of control. To put that figure in context: that was the biggest degree of net spending in any budget going back to Kevin Rudd’s time, except for the COVID years—we’ve got to pull out those COVID years where in one budget I think we spent more than $200 billion in relief for businesses and for people who had been put out of their jobs; they were special times. In normal, non-pandemic times, through all the 2010s and even before Rudd—I’ll get to Rudd—there was nothing like $20 billion of extra spending; that just wasn’t a thing. There might have been $10 billion or $8 billion or $7 billion of net spending. Sometimes there was a net decrease—the Coalition tried to reduce and rein in spending, especially in the early years of the Abbott government—but never was there an increase of this amount. That was the government’s contribution. That’s in raw quantitative figures. Whatever their rhetoric, that’s what they did: they added $20 billion of extra spending, which was the biggest amount since Kevin Rudd’s GFC budget.
In response to the global financial crisis, which most of us would remember, Kevin Rudd did spend more than $20 billion, and there was some rationale for that. We won’t rake over the coals of the criticisms or the details, but at least there was some rationale for that because the world was facing a massive recession. We were all facing the risk of huge recessions, so there was a rationale for the government to help and spend some money to try to avoid the worst outcomes here. That’s not what we are facing now. We are not facing a massive global recession. We’re not facing a global financial crisis. We are facing a global inflation fire bomb, and, in response to that, this government is just adding on more spending to the economy. And that is only making things worse and making the Reserve Bank’s job harder; they’ve got to lift interest rates even further than they have to be because of this government’s fiscal policy settings. As I said, this has played out in the real data. This is not rhetoric, the spending of the government. It’s up to the government to justify: why are you spending so much money? Why? That’s the real data in their own budget; it’s not my figure.
Australia has inflation sitting at six per cent. I often hear the Treasurer saying that this is a great thing; he has fixed it. Inflation has peaked. It’s at six per cent a year! That’s still over double what the target range for inflation is. In the United States, inflation has now dropped to three per cent. In Canada it’s dropped below three per cent to 2.8 per cent. So why have other governments around the world been able to bring in and rein in inflation much quicker than this one? All the while, they are spruiking like it’s mission accomplished, like they don’t have to do any more and they don’t have to make any tough decisions.
The reality is: to get control of something like inflation, to help Australian households, takes tough decisions. There is no easy way out of this crisis, but this government has avoided every tough decision it’s been confronted with since coming to government. It is spending all of the money it’s getting from the mining boom. We might hear them saying they’ve got record surpluses; that’s not the issue. They’re only getting the record surpluses because there are massive amounts of economic activity and wealth coming through our mining sector because of the commodity price boom. They’re taking it. They’re spending, in net terms, more than $20 billion. That is the greatest degree of spending outside the pandemic since Kevin Rudd, and it’s probably going to end in tears just like his spendathon did.
