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Thursday, 24 November 2022
Page: 3523

Mr HAMILTON (Groom) (16:38): We have had time now to digest the Albanese government's first budget and, like many Australians and many small businesses in my community, I am still left with many questions. Just before the election, the Prime Minister promised Australians that they would be better off under a Labor government, but the reality is, as Christmas approaches, the typical family will be at least $2,000 worse off. They are facing increased mortgage payments, higher grocery bills, higher electricity prices and sky-high fuel costs. All the things that households were worried about are still going to happen.

Labor said they had a plan to bring down the cost of living but, six months on from the election, all Australians have is a list of broken promises and a budget which ignores that pain. This budget was absolutely a missed opportunity to help households through this tough time. It also failed to outline a plan to contain the ballooning interest rates and inflation that are currently crippling the nation. Labor instead fell back on its old routine of high taxes and even higher spending. There was no short-term plan to reach or even approach budget balance and no long-term plan to reassert the roles of productivity and lower taxes in driving growth and real wages. The budget left the heavy lifting of addressing inflation to the Reserve Bank, and, as we all know, the only hammer that they have to hit with is higher interest rates.

At his recent public hearing in front of the Economics Committee, the Reserve Bank governor, Philip Lowe, could not have been clearer on the need for monetary and fiscal policy to work together during this tough time and that, if they didn't, it would prolong the pain being felt by Australian households. It's not just the RBA governor; this is something that central bankers around the world have been calling for.

Unfortunately, clearly their warnings were not heeded by the Treasurer, who's waved the white flag on using fiscal policy to address the pressures on inflation. Instead of a comprehensive plan to consolidate the strong economic and budget positions, we have a growing deficit and no medium-term fiscal strategy for balanced budgets. Instead of delivering economic growth that's stronger than spending growth, we've got $142 billion of extra taxes and likely more to come. Instead of a productivity agenda, we have union red tape, more big government and cuts to employment, innovation and small-business programs.

This failure has been acknowledged in the media, with economist Warren Hogan quoted in the AFR on 14 November as saying:

… our federal fiscal policy has failed to join the fight against inflation, preferring to sit on the sidelines and cheer on the "independent" Reserve Bank as it takes up the task.

The budget itself does a very good job of admiring the problems created by this failure. The budget shows that the cheaper mortgages that Labor promised before the election will not happen. The budget shows that the $275 reduction in energy prices that Labor promised before the election will not happen, and the budget shows that the real wage growth that Labor promised before the election will not happen.

Professor Stephen Hamilton from the ANU's Tax and Transfer Policy Institute has said the budget delivers:

… the weakest economic and fiscal strategy of any government since the Charter of Budget Honesty was established, and the exact opposite of the approach of a responsible economic manager.

Hamilton—no relation—also notes:

… the government is actively driving the budget deeper into structural deficit.

It would appear that the Treasurer is leaving the heavy lifting of addressing inflation to the RBA.

The budget does not make the Reserve Bank's job of containing the rising inflation any easier. Already, a family with a $750,000 mortgage is paying more than $1,200 extra every month on their repayments compared to May this year, and this is while Goldman Sachs expects the cash rate to increase five more times in the next six months. No wonder we've seen the Reserve Bank, the ANZ and the Commonwealth Bank of Australia, among others, now forecast end of year inflation to be higher than what was contained in the budget. They've seen the budget; they've assessed it, and they're now acting on their belief that the government is making a bad situation worse.

But why, despite multiple promises from both the Prime Minister and the Treasurer that franking credits wouldn't be touched, does this budget make changes to franking credits with a $550 million tax? On 4 March 2022, the Prime Minister promised Perth radio listeners that, when it came to franking credits, Labor 'are not touching them'. Just weeks later, he told the ABC, 'We won't be having any changes to that franking credits regime.' The Treasurer, Jim Chalmers, told Queenslanders that, when it came to tax: 'We won't be doing franking credits. I couldn't be clearer than that.' But, in the budget, there is a new tax on franking credits. Budget Paper No. 2 contains an unannounced $550 million grab on retirees and Australian investors, and Treasury officials have confirmed to the Senate that this change alters the franking credits regime as it has functioned for decades.

The Australian people deserve answers to some of these questions. They simply can't wait another seven months for Labor's second budget to see if Labor can come up with a workable solution for households and important tax relief.