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Tuesday, 10 February 2015
Page: 265

Cost of Living


Senator CANAVAN ( Queensland ) ( 14:07 ): My question is to the Minister for Finance and the Minister representing the Treasurer, Senator Cormann. Minister, could you please tell us how the cost of living is improving for Australian households?


Senator CORMANN (Western AustraliaMinister for Finance) (14:07): I thank Senator Canavan for that question. The Australian government, of course, is working to strengthen the economy, to create more jobs and to help families. Helping families does involve taking cost-of-living pressures off families moving forward. The most significant thing we did in 2014 was to scrap the Labor-Green carbon tax, which has left your average family with about $550 of additional money in their hip pocket. Of course, Labor and the Greens are desperate that we stop talking about the carbon tax. And do you know? It is a past achievement of this government. The reason we have to keep talking about it is because Labor and the Greens would bring it back. Labor and the Greens would push up the cost of living again and would push up the cost of electricity because Labor and the Greens have not learnt the lessons from the election in 2013. What we also know is that the Reserve Bank for the first time in 18 months has cut interest rates because inflation remains low. We, through our budget repair effort, have given the Reserve Bank room to move. The Reserve Bank for the first time in 18 months has been able to cut interest rates, which will put an extra $750 a year into the pockets of a typical Australian family. Petrol prices are lower now on the back of lower oil prices—petroleum prices—around the world. That, of course, is working its way through the system.

The government is very conscious that there is much more work to do. We are focused on doing more work. We will be releasing soon our families package with an emphasis on access to more affordable child care. There will be more to be said about this but, generally, we are now heading in the right direction: strengthening the economy, creating more jobs and helping families. (Time expired)


Senator CANAVAN (Queensland) (14:09): Mr President, I ask a supplementary question. Can the minister advise the Senate how repairing the budget keeps the pressure off interest rates?


Senator CORMANN (Western AustraliaMinister for Finance) (14:09): When the government borrows, it increases the demand for money and therefore increases the price of money. It is pretty simple, really. It is a supply-demand equation. Increasing the demand for money puts upward pressure on interest rates. So, when we reduce the deficit, when we reduce the amount we borrow from our children and grandchildren, what we are doing—contrary to what Labor did—is giving the Reserve Bank room to move. Under Labor, because Labor spent too much and because they spent excessively in the context of the GFC, Australia continued to have one of the highest official cash rates in the Western world. While in the United States it was hovering at zero quantitative easing and going into negative territory now in parts of Europe, here in Australia, even though it was at low levels for Australian standards, the official cash rate was actually still high. (Time expired)


Senator CANAVAN (Queensland) (14:10): Mr President, I ask a further supplementary question. Can the minister advise the Senate whether the government has encountered any opposition to the reforms which would improve the outlook for the economy.


Senator CORMANN ( Western Australia Minister for Finance ) ( 14:11 ): At every turn when this government has been working hard, mostly with the support of a constructive crossbench, to strengthen the economy and create more jobs, Labor and the Greens have been opposed. When we moved to scrap the carbon tax, to boost economic activity, to help families, Labor was opposed. And of course Labor would bring the carbon tax back. When we worked to get rid of the mining tax, Labor and the Greens were opposed. And of course Labor would bring it back. Labor cannot even support their own savings. Right now we are having a debate in the Senate in relation to a budget savings measure initiated and banked by the Labor Party in their last budget which is designed to target research and development tax incentives to small- and medium-sized businesses. What is Labor doing under the weak leadership of Bill Shorten? Opposing.