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THE HON ANGUS TAYLOR MP SHADOW TREASURER

SENATOR THE HON JANE HUME SHADOW MINISTER FOR FINANCE

TRANSCRIPT

DOORSTOP, PENRITH, NSW Wednesday, 20 September 2023

Topics: OECD Economic Outlook; cost of living; labour productivity; industrial relation reform; higher taxes under Labor; trade

E&OE

ANGUS TAYLOR: Well, the OECD Economic Outlook that was out today tells us what we already know about the economy that it’s shuddering to a halt, that inflation is stubbornly persistent and that Australians are all paying a very high toll and worst of all, we've got a government that is asleep at the wheel. It's distracted. It's prioritising other things. Now, what these numbers tell us is that Australians, Australia, as an economy is performing worse than most of our peer economies around the world, that our inflation and growth is worse than it was last time the OECD looked at it and that Australians are paying a high price. We've seen an economy where GDP per capita has gone backwards now for two quarters. That's real pain for Australians on the ground and we've just seen that out here in Penrith. It's been great to be here with the Shadow Minister for Finance, Jane Hume. We've been at a temporary accommodation provider. We're hearing about a new working poor emerging in this part of Sydney. We're seeing this right across Australia. Australians who are struggling to make ends meet, struggling to pay the bills, we've seen real wages going backwards alongside an economy that’s shuddered to a halt and that backward movement in real wages means Australians simply can't pay their bills, their electricity bills, their insurance costs, their housing costs, whether it's the mortgage or the rent, all of those costs are going in exactly the wrong direction. For a typical Australian family, a working family prices in the last 12 months up 9.6% and wages up around a third of that. That's a sharp reduction in their standard of living, a sharp reduction in their quality of life and a sharp increase in the working poor we're seeing right across

Australia. Now, there is much the government could do. First of all, prioritise it. Don't get distracted. This is a government that is absolutely focused on its Canberra Voice, on more bureaucracy, what we need is not more bureaucracy, we need a focus on those issues that are going to make a difference for Australians and that means flexible labour markets, not moving them in exactly the wrong direction. Competition so we put downward pressure on prices. Not knocking competitors out of the market like we've seen in airlines and of course, fiscal policy that's going to take the pressure off inflation and of course, the Shadow Minister for Finance will have more to say about that and other issues and I’ll hand to Jane now.

JANE HUME: Thanks Angus. Well, the OECD updated economic outlook certainly sounded the fiscal alarm bells. There are some dire warnings in there for Australian policymakers. The real question is, is Jim Chalmers and Anthony Albanese, are they going to listen? The first warning, of course, was that inflation will stay higher for longer and interest rates will therefore stay higher for longer unless governments can tackle it using their fiscal policy levers rather than just turning it all over to the Reserve Bank with the one tool that they have in the shed, which of course, is interest rates. Unless the government can control its natural urges to spend more and more, we're going to see all the heavy lifting being done by the RBA. The housing crisis that we've seen writ large this morning, is just going to get worse and at the same time, the cost of living will keep getting worse for all Australians. Today, when we were looking at that temporary accommodation, they were telling us that it's not just a housing crisis. They're also facing rising costs of energy, rising costs of fuel, rising costs of food and that's creating Australia's new working poor. The second warning, of course, is that growth is going to remain sluggish unless you can get productivity moving again and of course, the only way you can do that is not using just migration, you have to make sure that you have flexible industrial relations laws, that you improve competition in the market, that you lower taxation, that you lower energy prices - all things that this government seems to be failing to do. So unless you tackle those two elements, control your fiscal urges to spend more and more and get productivity moving again well then we're going to continue on with what is now a per capita recession and could potentially get worse. I think we're happy to take questions if you'd like us to?

JOURNALIST: Thank you both. [Inaudible] what other ideas are there that would get [inaudible]?

ANGUS TAYLOR: Yeah, Charles, if I understand it, right, the question, the question was, what is it going to take to get productivity to where it needs to go and put this in perspective we've seen a 6.6% collapse in labour productivity in the last five quarters, which has coincided with a 6% reduction in real wages for working families. So those two things are correlated and it's having a real impact on Australian families. In terms of dealing with it. We know good industrial relations policy can make a difference. Not putting in place more red tape for Australian businesses will make the situation worse. Competition policy can make a real difference to productivity but we're seeing a government that is taking competitors out of the market. So there's very clear policy changes that the government can make. And I would add to that

what Jane just said, which is good fiscal policy encourages strong outcomes on productivity, but we've got a government that's added $185 billion of spending since they came into government. That's over $7,000 for every Australian in additional spending. If you want to fix productivity that is not the way to do it. Labor is doing all the wrong things and it's because they're distracted. They've got different priorities. The priority should be this because this is where the pain is around Australia right now.

JOURNALIST: You mentioned the 6.6% collapse over the last five quarters. Labor's IR reforms, many aren't in yet and some have only just come in. They can't be blamed for the productivity collapse.

ANGUS TAYLOR: Well, there's more to it than IR reforms. I'm talking about what you need to do to solve the problem, Charles and of course, what you do need to do to solve the problem is make sure you've got the right industrial relations policies where workers and employees can sit down together and work out how to improve a workplace for everybody. For workers with higher real wages and for employees with a better performing business and that's simple, common sense stuff but it's not the simple common sense stuff that's coming from Labor. If you look at the last five quarters, there's a whole combination of factors that have contributed to that, and many are trying to understand it. But I tell you what, when we look forward, when we look forward, we need good industrial relations policy, we need good competition policy, we need the right fiscal policy and we need a government that's not distracted. And right now, the dials are all moving in the wrong direction on each one of those things.

JOURNALIST: When you look at that OECD report, it points to trade as being necessary to increase, to try and stimulate growth, not just Australia … [inaudible] would you support Australia normalising trade with China and is there any other market that you think we should be investing in or [inaudible] instead?

ANGUS TAYLOR: Let me make a quick comment on that and Jane may add to it. Look, we want to see more trade for Australia. We want to see Australia opening up as many markets as possible and of course, when we were in government free trade agreements were a strong focus for us and it gave great benefits to our exporters, our farmers, we saw huge increases in the value of our exports over that time period with very strong benefits that flowed. Of course, we want to see normalisation of trade with China. It's got to be consistent with a line in the sand on our strategic position. But trade I think is consistent with taking a strong strategic position and of course, we will always support and encourage that. I don’t know if you want to add to that Jane?

JANE HUME: Yeah, I would say that trade, of course, is fundamentally important. We are a very successful trading nation but at the same time, it's not just about free trade agreements and who you're trading with, it's about the cost of the produce that you're selling. If you add a truckies tax, if you add a farmers’ tax, if you add complicated industrial relations tools, all of these things are costs to businesses, which push up

the price of Australian goods and services, which make them less competitive in overseas markets. So yes, while more new free trade agreements and better free trade agreements with countries right around the world are important, it's really important that we concentrate on what's going on in our own backyard to make sure that our goods and services are competitive.

JOURNALIST: What do you see in your role in the finance portfolio or in your subcommittee on cost of living, is there anything that you’ve identified that would give hope to Australian consumers that prices are coming down or that things will get easier in the coming years?

JANE HUME: Well, the frustrating thing I think that we've heard as part of the Cost of Living Committee is while headline inflation is coming down that core inflation is still stubbornly high, persistently high and that all the heavy lifting has been turned over to the Reserve Bank of Australia to try and get that down using the one tool that they've got in the shed, which of course, is interest rates, and that means that it's Australian homeowners and then renters as well because there's a flow on effect that will suffer the most. They seem to be that new working poor of Australia. They're affected not just by increasing housing prices, but of course, increasing costs of energy, increasing costs of groceries as well. They're being hit from all angles and it's up to the government now to address the cost of living in a concerted way and yet we've seen no strategy by this government, no policy that actually has an actively deflationary effect, quite the opposite. Instead, it seems intent on reducing competition in industries like the airline industry, or in tying up business, particularly small business in the red tape of complicated industrial relations reform - more radical than anything we've seen in decades. This is not the way to improve productivity. It's not the way to bring down the costs of Australian goods and services. It's not the way to improve trade and it's certainly not the way to tackle the cost of living crisis that Australians are facing now.

JOURNALIST: Final question, the OECD report [inaudible].

ANGUS TAYLOR: Well, it's clear, Charles, that Australia is performing at the wrong end of the numbers that we saw in that economic outlook. Our growth is below average, our inflation, our core inflation is above average, and they're the wrong direction. Those things are absolutely in the wrong direction. What is it costing Australians? Well we've seen for a typical working family, a reduction in their real wages of 6%. That's a huge hit to the standard of living, to the quality of life of hardworking Australians. That’s thousands and thousands of dollars. We know for a family with a mortgage in this area, indeed, from way back when the budget happened earlier in the year. $25,000 a year worse off than they were prior to this government coming into power so things can be better. Things can be better, but to be better you need a government that is absolutely focused on these issues, these cost of living issues, these economic issues and not distracted by other issues.

ENDS.

Hannah Hunter Senior Media Adviser | Office of the Hon Angus Taylor MP Federal Member for Hume Shadow Treasurer

M: 0429 920 254 | E: hannah.hunter@aph.gov.au