Topic: Labor & Greens lovers tiff over housing policy; Labor Budget; RBA; Minister for Trade visit to China;
09:20AM AEST
Thursday, 11 May 2023
Laura Jayes: Well The Greens are continuing to block Labor’s $10 billion housing fund, so things are getting a bit personal in the Senate and they did this morning. Labor’s Penny Wong taking aim at the Greens housing spokesperson in a stand-off.
[EXCERPT]
Penny Wong: This man’s ego matters more than women fleeing domestic violence. What sort of party are you?
Nick McKim: She’s not only wrong, she is very clearly showing that Mr. Chandler-Mather is right under the skin of the government.
Simon Birmingham: Well, it’s always unfortunate to see lovers having a fight, isn’t it? Particularly when it plays out publicly. A lovers tiff between the parties of the current government.
[END OF EXCERPT]
Laura Jayes: Simon Birmingham joins us now, probably explains why you’re a little late this morning, Simon because you do often- you’re very punctual. You’re often on time, but you seem to enjoying yourself a little bit too much seeing that lovers tiff.
Simon Birmingham: Morning, LJ. Well, look, we often see the Labour Party and the Greens stitch up secret deals and those deals then see guillotines applied through the Senate to ram through legislation. And the government is trying to ram through this legislation with next to no time for debate in the Senate. But on this occasion they’re having this fight with the Greens. It appears to have gotten very personal. But what’s lost in all of this is, of course, the hapless potential management of public money from the Labor Party. They promised to $10 billion fund would be set up, that would be off the budget books and that they would only be investing the earnings from that. But since then they’ve made promises to the crossbench that there will be minimum numbers of houses built from the fund. They appear to be making promises to the Greens. There will be a minimum amount of money spent from the fund. Well all of that is going to ensure that this fund, where they haven’t been clear on the investment mandate or any of the other details equally, won’t be an off budget fund. It’s going to be one that hits the budget bottom line and simply adds to costs directly for taxpayers, all while many question whether it’s going to have any meaningful effect in terms of the housing market.
Laura Jayes: Well, meaningful effect is one thing. It probably won’t even touch the sides, but it’s a start and people are desperate and it’s only going to get worse. So, this stand-off helps no one.
Simon Birmingham: Well, this is not the type of policy that is going to address the concerns that are there. And in fact, the types of things the government’s been doing that are driving up costs in the construction sector, their industrial relations reforms last year, their abolition of the ABCC, those sorts of things are only going to add to the problem further. Along with their failure to have any plan in the budget to be able to control inflation and its those inflation pressures that are going to keep adding costs in terms of generating of new housing supply and ultimately undermine anything that this type of ill thought-out fund can do.
Laura Jayes: Okay. Well, let’s get to the budget more generally then. Obviously, politics is politics. So your side has been very critical of the Budget. But what have what would you have done?
Simon Birmingham: Well, LJ, I would like to think that we would have been able to show greater spending restraint and outline a clear plan to tackle inflation, and that would have required productivity measures. It would have meant not doing some of the things I just mentioned that damage productivity in the construction sector, but actually pursue areas where you can make the economy more efficient, alleviate pressure in terms of supply chains. But also not be adding tens of billions of dollars extra in terms of government spending, which economist after economist are now lining up to say will be inflationary and does increase the risk of a further 1 or 2 interest rate rises from the Reserve Bank. Which means that Australians are going to pay higher prices and that the vast majority of Australians, particularly working Australian families, are going to miss out and be worse off as a result of this Budget.
Laura Jayes: Well some on your side are saying, well, there’s no money for the middle class. The middle class should have got a bit of a handout here and a hand up from the Federal Government. But on the same side they’re saying, well, you know, these measures are inflationary. How does that work? How could you have given more support to the middle class and that have not been inflationary?
Simon Birmingham: Well, that’s certainly not what I’m saying. What I’m saying is-.
Laura Jayes: Some on your side have.
Simon Birmingham: -a plan about. Well, I think the messaging that I’ve heard from the shadow treasurer, the shadow finance minister, our key spokespeople, is pretty clear that there should have been a clear plan to bring inflation down to ease the pressure on all Australians. Rather than simply trying to pick a handful of winners as the Government’s done and divide Australians. They should have had a clear plan that would bring inflation pressures down to make sure that fiscal policy, government budget policy is actually working in sync with monetary policy Reserve Bank decisions. Whereas what we’re hearing from Chris Richardson, from UBS, from Goldman Sachs, from indeed Standard and Poor’s, they’re all kind of lining up now to say this Budget does have extra spending, that spending will be inflationary, and it does put extra pressure on the Reserve Bank for further interest rate increases. So, the first rule should be do no harm and the Government has failed that test and they’ve instead created a budget with inflationary pressures that breaks the do no harm rule and instead will mean more Australians pay more regardless of whether they’re middle income or lower income. Everyone will face those pressures.
Laura Jayes: It hasn’t failed the test yet. We haven’t seen the RBA board make any decision. So, if the RBA holds off next month on an interest rate rise, will you eat your words?
Simon Birmingham: Well, it’s not just a test for next month. Of course, we have to see what the RBA board does over a period of time. And what some of the economists have been saying is that this budget will result in interest rates being higher for longer. So, there’s the risk that some are identifying that interest rates will go up even higher. There’s the risk others are identifying that they will at least stay higher, whether that’s another increase or at the current levels for longer. And even on that score, that will, of course mean that the government is creating a circumstance where people are feeling that mortgage pressure and those costs that businesses are facing in terms of their borrowings which get passed on to consumers and will continue to feed through the economy and add to pressures on many Australian households.
Laura Jayes: Okay. One final question here. Don Farrell, he’s the Trade Minister, is about to land in Beijing. He’s optimistic that all sanctions on our goods from China will be dropped by the end of the year. You’ve got to give it to him if he achieves that right?
Simon Birmingham: Well, that would be very welcome. And China should do that because they should be backing down on the type of economic coercion they tried to apply. Australia has shown great resilience in the face of that coercion and that’s very welcome. The Government, though, has now had many, many meetings from the Prime Minister, the Foreign Minister, the Deputy Prime Minister and the Trade Minister with their Chinese counterparts. It’s time to start seeing some outcomes from those meetings and outcomes in particular to see the tariffs on barley, the tariffs on wine removed so that those unfair, unjustified punitive sanctions on Australian industry no longer apply.
Laura Jayes: Simon Birmingham. It’s fine that you’re late now we know why. Good to have you on the program. We’ll see you soon.
Simon Birmingham: Thanks, LJ Great to be with you.
Laura Jayes: So quite fiery in the Senate today. Not between Labor and the Opposition, but it seems Labor and the Greens at the moment, so keep an eye on that one.
[ENDS]