Federal election 2022 live updates: Chalmers attacks Frydenberg for ‘flurry of self-congratulation’ amid cost-of-living crisis

Jim Chalmers:

How much, Josh, do the real wage cuts in your budget cost the average Australian worker this financial year?

Josh Frydenberg:

Well, firstly, we’re saying that wages will continue to rise and there’s about a $900 difference for somebody who’s on average full-time earnings between what the wages would be and what tin nation rate would be. But as you know, they get $1,500 in tax relief from 1 July, so that makes up for that difference between the WPI and the difference between the wages price index and the inflation rate.

(Treasury’s forecasts on wage growth have been wrong 53 out of 55 times)

Josh Frydenberg:

My question to Jim – he says we revisit the last election but it actually goes to the heart of the believability of the Labor Party. They are trying to sneak into Government and say that they will hold – handing a budget after the election but not tell the people before the election what would be in that budget. Now, Jim, you said you were proud and pleased of $387 billion of higher taxes, higher taxes on super, higher taxes on income, higher taxes on housing, higher taxes on retirees, higher taxes on family businesses, indeed there were media reports even less than a year ago about new revisiting the housing tax. Family business tax. What impact would have $387 billion of higher taxes that you took to the last election have had on an economy that has just encountered the biggest economic shock since the Great Depression with COVID?

Jim Chalmers:

Josh, this might come as a big surprise to you, but it’s 2022 now. The 2019 election has been run and won. And I think it speaks volumes, frankly, and with respect of your approach to this job and to this economy and to the future of this country that when you’re given an opportunity to ask one question of your opponent, you ask a question about the 2019 election. I think that speaks volumes about what you’re offering the Australian people.

Australians had their chance to cast their judgement in 2019, they cast that judgement and we respect the judgement that they made. We have been working around-the-clock since then to earn their trust and part of that has been acknowledging where we put forward a policy that wasn’t right and where we have found a better way to deal with some of these issues. Now, contest this election on the policies we’re putting forward, not on the policies we’re not putting forward. Contest this policy on a plan for a better future, that’s what we’re trying to do. You should try it too.

Laura Tingle invites the men to ask a question of each other.

Josh Frydenberg jumps in:

My question to Jim – he says that we’re…

Jim Chalmers:

After you, Josh!

Frydenberg:

I’m sorry. You did speak first.

Jim Chalmers on that same question:

This is a long-term challenge, as you know, and it needs long-term policy and long-term planning and shouldn’t make your policy based on kind of near-term spikes in prices. We all recognise at least the major parties recognise, that there will be a mix of energy sources and that that mix will change over time.

And it’s not just the Labor Party saying that energy costs will come down if we introduce a cleaner and cheaper energy into the system.

The investment community has been saying that for some time to their credit.

The peak business organisations have been saying that to their great credit. The contribution they have made to this conversation.

Now, getting cleaner and cheaper energy into the system is Australia’s biggest opportunity over the next decade or two and I think Australians are angry that we have been stuffing around with this for a decade now. All of this uncertainty created by a Government where some of the members say that net zero is rubbish and other members say that net zero is locked in, depending on where they are in the country, whether they’re in Kooyong or Capricornia, OK.

There’s a cost to that. There’s a cost to that to our economy and one of the reasons why we need a Labor Government and a key part of a better future for this country is to finally get on with the job of grabbing this incredible opportunity that we have, probably the most important opportunity that we have as a country and as an economy is to grab this thing, because if we get that cleaner and cheaper energy, we will unlock tens of billions of dollars in investment.

We will create hundreds of thousands of jobs and we’ll make energy cheaper, all the way from pensioners to working families to businesses as well. If we miss this opportunity, we should hang our heads in shame, but that’s what’s been happening. This opportunity has been going begging and it’s not good enough, it needs to change and it will change if there’s a Labor Government.

Q: Both of you claim to be able to control power prices. The Government says you’re responsible for bringing the prices down, the Labor Party says you can bring them down further. Wholesale power prices are on the march and they’re on the march because the Brice of coal is on the march. Can you both explain why that will not be the case in the future that that will continue to set the price of power in the marketplace and as wholesale power prices go up, so will retail power prices?

Josh Frydenberg:

So commodity prices have gone up and coal is one of these and that’s largely out of what has been happening in the Ukraine and it’s the expectation of treasury that those prices would start to normalise over time and that would play through to the energy system.

I do point out that electricity prices for households are down by about 8% in the last two years under the Coalition and for small businesses down about 10% and they doubled under the Labor Party.

The key here is to get the transition right and that is particularly important as we move to net zero emissions.

I used to be the energy and the environment minister and I’ve got the scars to show it. You got to get right is that transition to more intermittent sources of energy. I saw when Hazelwood was closed.

It was a dirty coal-fired brown coal source. Victoria went overnight from being a net energy exporter to being a net energy importer at times of peak demand. But they saw a spike in the wholesale price of about 80% at the time.

And I remember getting calls into our office and indeed other offices from pensioners who couldn’t afford the heating and they would have to sleep in bed with extra layers of clothes and extra blankets and the same pensioners were sweltering in the summer and couldn’t afford their cooling.

So the point here is that unless you get that transition right, the cost to both households, particularly the most disadvantaged members of our community who spend a higher proportion of their income, their disposal income, on electricity, and businesses which are hugely price-sensitive to energy input costs, like glass, like manufacturers of paper, steel, and other manufacturing goods, are all hypersensitive to getting electricity prices down.

So our focus is about a proper transition, ensuring dispatchable power like gas, bringing in more renewables into the system, having back-up storage like pumped hydro and Snowy 2.0, all of which hopefully will smooth that transition because inevitable we’re moving to a smaller carbon footprint.

That’s a good thing for the environment but also over time a good thing for the economy.

Q: A question to you both – can you tell us what you expect the annual cost of Medicare, aged care and the NDIS to be in 10 years’ time? And how you each believe the growing demand for these services should be paid for? And either of you prepared to have an honest conversation with the Australian people about this looming challenge for the country?

Josh Frydenberg:

Well, we have set out the forward costs in the IGR and in the case of all of those areas, they’re going to continue to grow up because we have got an ageing population and we’re also spending heavily in another key area which is disability support.

So the expectation is that while the NDIS today is about 1.2% of GDP, that’s going to go up to about 1.5% in the coming years as set out by the IGR.

We’re going to have to pay for all those services including hospitals, disability support, increased mental health support, and education. And the way to do that is to grow our economy and that is why I do defend the spending in productivity enhancing areas.

I do defend our record where we have created more jobs so that nearly 2 million more people are in work today than at the start of the – of when we came to Government. The way we’re seeing an improvement in the budget bottom line is actually moving people from welfare to work.

That’s how you improve the bottom line, that’s how you grow the economy, that’s how you pay for those increased expenditures and social services.

(IGR is the intergenerational report)

Jim Chalmers:

Every dollar that gets wasted or rorted in the budget is a dollar that can’t go to some of those fast-growing areas of important public spending.

Medicare is one, NDIS, as Josh said, is another, aged care is another, the defence – defence spending will need to go up as well and we have acknowledged that, too.

And so what we need to be able to do is to flick the switch in the budget not to austerity, but to quality so we can fund the things that we care the most about, including those four things I mentioned a moment ago.

If you take aged care, for a moment, we have got a $2.5 billion commitment in aged care which recognises that people are not getting the care that they need and deserve, they’re not getting the food they need and deserve.

The workers aren’t getting the support that they need and deserve and that’s a meaningful important commitment, a modest commitment, which will make a meaningful difference to people’s lives.

And so as we reorientate the budget away from the rorts and the waste that we have seen for much of the last 10 years towards more meaningful, more productive spending, then, of course, we need to factor in that some of the things we care most about are the things that cost more and more as time goes on.

If you look at the intergenerational report, I think one of the great tragedies, as an economics nerd, one of the great tragedies of the release of the intergenerational report is that it didn’t get the attention that it deserved.

What the IGR said release bid Josh and his department is that unless we change the way we go about things, we’re up for 40 years where the economy is smaller than it’s been for the last 40, we got 40 years of deficits, we got an extraordinary amount of debt with not enough to show for it and that’s why we need to start thinking differently about the budget and we have nominated areas where we can begin that task but the task should be there for whoever wins office in every budget until we can meaningfully pay for these commitments that we make to the Australian people.

Josh Frydenberg on that:

Well, the focus of our spending is creating more jobs and driving up productivity and I think both Jim and I would agree that we need to lift our productivity here in Australia and it’s a global challenge right now.

So the digital transformation – the 10-year $120 billion infrastructure pipeline, you know, Melbourne to Brisbane inland rail, getting food from the paddock to the plate that much faster, a second airport for Western Sydney, Snowy 2.0, a major energy project, they’re all nation-building projects that have begun on our watch and they’re all about driving higher productivity.

So we have also made significant changes to child care including $1.7 billion in last year’s budget which was designed to make it easier for 250,000 families who will save more than $2,000 a year.

So I would defend our spending, we have turned off the emergency support and with respect to taxes, our record is very clear – we are – people are paying lower taxes under us than the Labor Party, and if Jim had his way and introduced $387 billion of taxes at the liar taxes at the last election, the tax-to-GDP raise show would have gone to a record high of 25.9%.

Jim Chalmers:

Josh is fighting the last election again. Look, the point that I would make about this is the quantity of spending in the budget obviously matters a great deal. We pay interest on the debt that the Government has racked up and so it matters.

So you need to get maximum bang for buck. But what matters just as much, if not more, is the quality of that spending.

And if you stack up the record of the Government against the commitments that we have made in this – well, before this election campaign, over the course of the last three years, let me give you a couple of charges. The Government spent at least $5.5 billion of submarines that will never be built.

We think we should invest a little less than that, but around that in child care. But people can work more and earn more if they choose to.

I can go through lots of examples of this. Our spending is responsible, it’s carefully calibrated to deliver an economic dividend, whether it’s productivity, whether it’s participation, whether it’s other forms of economic dividend because the big challenge in the budget, which gets missed in the kind of conversation around the headline figures, is that we’re just not getting value for all of this debt.

And we want to get some value for it and we measure that by the economic dividend. There’s been a lot of waste, there’s been a lot of rorting of the budget over the best part of the last 10 years and by need to do much better than that.

Laura Tingle brings them both back to the question:

Well, neither of you have actually completely answered John’s question. Which was about spending and tax and also reflected what I was saying – we’re now in a different economic environment of rising inflation to one we had certainly in the last 20 years. So the question I’d like both of you to answer is – can you nominate actual discretionary spending cuts in terms of proportion of GDP that you’d be aiming for in the next three years? And with respect, Jim Chalmers, $3 billion is big – you know, a big deal in a trillion dollar… 3 trillion [Chalmers: It’s $3bn more than they have offered]… . And Treasurer you haven’t answered the question the fact that you really haven’t engaged in any serious discretionary spending cuts either. What is the task that we have to face and the taxpayers have a right to know about in the next three years?

‘Enough of this rubbish about tax’

Q: We have an inflation issue in this country now that’s been misjudged by the Treasury, the Reserve Bank, the budget forecast inflation at just 4.25% peacekeeping. The RBA says it’s now going to peak at 6%. So my question is to both of you, the budget tipped an extra $39 billion of discretionary spending into the economy at the time we already got inflationary pressures already. More commitments being made during the election. Labor is also pretty much matched most of the Government’s commitments and has some of its own spending priorities too. Are either of you prepared to make discretionary spending cuts or tax rises to help take pressure off the RBA on inflation and lifting interest rates? Or is this just a job for the RBA to keep lifting interest rates as high as they need without help from fiscal policy?

Josh Frydenberg:

Our plans have been set out in the budget and have been announced subsequent to the budget. Treasury was asked at budget estimates whether the announcements we made to ease the cost of living would have a material impact on inflation and they said, “No.”

And then if you look at the statement which no doubt you would have looked at the statement from the Reserve Bank yesterday, they were very clear – in their words, these are not mine, the main driver of inflation has been international factors.

And you had Moody’s come out yesterday and criticise the Labor Party for trying to politicise the cash rate increase. You see, Jim, can’t have it both ways.

He was criticising the Coalition when interest rates fell and yesterday he was criticising the Coalition when interest rates rose. And Moody’s called him out just yesterday in a statement which is very unusual.

And so the point here is it’s been the COVID pandemic and it’s been the war in Ukraine which have been the main drivers of the inflation. Now, importantly you raised the notion of higher taxes. Other countries in the world, like the UK and the US, have lifted taxes through the pandemic. We have not. We have cut taxes by $40 billion for households alone. And we increase that tax relief in the budget. It is a very different approach between us and the Labor Party and the Australian people need to know it. We are prepared of the discipline of a tax-to-GDP cap at 23.9%.

They are not. They took to the last election $387 billion of higher taxes, something that Jim said at the time he was proud and pleased of, yet now they’re trying to hide and not reveal what their true intentions are until they have a budget if successful after the election. That’s not good enough. We know the Labor Party will always tax more, they’ll always spend more, whereas our plans are set out very clearly in the budget.

(The government defended its net zero by 2050 plan, which was released with less than 13 pages, after criticisms it had released a ‘pamphlet’)