This is the week that the government finally admitted that they’ve had it wrong for months now and have to take some of the blame for the extra mortgage pain we’ve seen unleashed on Australian families by the Reserve Bank this week. I say that because it was this week that Jim Chalmers fronted the media and finally revealed that he might actually have to do something about government spending to help with the fight against inflation. Indeed, the Financial Review reported a few days ago that Treasurer Jim Chalmers concedes the government will have to cut back on some infrastructure projects to help in the fight against inflation. Mr Chalmers was quoted on the ABC’s Insiders program as saying:
I do think we’re going to need to make some difficult decisions about the infrastructure pipeline, which factors in those $33 billion of blowouts from …
Blah, blah, blah—here we have a situation where the government announced a budget six months ago in which they massively boosted government spending, which has fuelled inflation, which has therefore caused the Reserve Bank to have to act this week to increase interest rates. Now, finally, six months later, we’ve got this concession saying, ‘Maybe we should have controlled spending.’ Why didn’t the Treasurer do that six months ago? He had the opportunity to do something to help Australians struggling with inflation when he put his budget plan together. He could have done something to help reduce the heat in the economy. This was an issue a year ago. This was an issue six months ago. It’s now an issue that’s even worse today because the government has been sitting on their hands doing nothing. They’ve done absolutely nothing. In fact, I shouldn’t say that. I’ll take that back. They have been spending your money and adding fuel to the inflation fire.
Six months ago, in their budget, they increased government spending through their own decisions. These were explicit policy decisions that the government made. They increased government spending by $22 billion. That’s in their own budget. There’s a table towards the back of the budget which shows what the impact of government policy decisions were in that budget. In that budget, six months ago, the government increased spending of your money by $22 billion. How does that figure compare to other budgets? In fact, you have to go all the way back to the Kevin Rudd era, if you don’t count the COVID years. Obviously, the COVID years were a little bit different. If you don’t count the COVID years, you have to go all the way back to Kevin Rudd to find a bigger-spending budget than this one six months ago. At least Kevin Rudd had the excuse of the global financial crisis. He had a global recession that was ruling the world at the time. His Treasury secretary told him to go hard and go early or go home, so to speak. Because of that, he unleashed a lot of government spending. We can debate whether that was the right approach, too, but at least he had that excuse. Mr Chalmers used to work for Kevin Rudd. He might be addicted to this approach.
This time, Mr Chalmers had an economy that was overheating. He had an inflation rate that was over seven per cent last year, and he decided to deliver a budget which massively expanded government spending. That is the record. That is what this government did. The consequence of the mistakes the government made in their budget six months ago is that Australians are now paying more on their mortgages. More Australians are in mortgage stress. It’s a record number for over a decade, with 1½ million Australians now paying more than 30 per cent of their income on their mortgage repayments. They’re in a lot of stress. They’re doing it tough. And the government has been sitting back and doing nothing to help.
You can go back and check the record: for the last six months—or the last year, really—I’ve been calling on the government to cut back spending to take the heat out of the economy. I said it in the budget week; I’ve been saying it for the last year. But the government has ignored those calls. Finally—belatedly, it seems—they might be trying to do something about it. But, unfortunately, the train has already left the station. It’s going to be much harder to stop inflation now that the genie’s out of the bottle. That’s because, now, the Reserve Bank is warning that inflation is affecting services. It’s not just Ukraine or the Middle East. These are just excuses from this government that has failed Australians over the past year. We now have a broader inflation problem because the government didn’t have the courage to deal with the situation when it first emerged a year or so ago. Now, hopefully, the government will actually act. As I say, unfortunately, it will mean Australians pay more on their mortgages. They have to lift up. They have to tighten their belts because the government wouldn’t tighten its belt. We’ll see what the Australian people think about that come the next election, but we desperately need a government now which will tackle these issues, stop with the talking points, stop making excuses and do its job as a government.
