Albanese says cash handouts would ‘feed straight into inflation’
Paul Karp
The prime minister, Anthony Albanese, told ABC News Breakfast the government had opted not to give cash handouts that would “feed straight into inflation” and therefore “not help people with cost of living”.
He said:
So what we had to do was target investment into ways that didn’t add to inflation. So cheaper childcare, more paid parental leave, more affordable housing. Increase in wages that you will see over the medium term kicking in … As well as providing immediate relief through measures like cheaper medicines.
Asked if Australia could avoid following the rest of the world into recession, Albanese replied:
I think that is right. The budget papers show that’s the case because we have been responsible. In areas like the increased upgrades in revenue – 99% of those over the next two years were banked to pay off debt, put downward pressure on inflation.
That is a bold prediction. With a huge structural deficit even while Australia is at near full employment, there’s not a lot of room in the budget for pumping up demand if the economy does tank.
Asked about the Greens’ criticism that the private sector built 1m homes in the last five years anyway, Albanese rejected criticism of the housing accord as smoke and mirrors.
He said:
Gee they’re negative, they always are. They never have any solutions. We have a real solution worked out with super funds, state governments.
Key events
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Jim Chalmers will also give the address at the national press club today.
It’s budget-palooza!
From past years, the success or failure of a budget tends to rest on how long people talk about it. People spoke about the 2014 budget for weeks. But the more boring the budget, the less it’s discourse shelf life.
Over on Sky News, the questions were all about the next budget:
Host: Joining us live now in Canberra is the Prime Minister, Anthony Albanese. Prime Minister, good morning to you. So, a safe Budget to pay for your election commitments. Are tax increases and spending cuts next?
Anthony Albanese:
Hang on, Pete. We’ve just said the Budget last night. You’re now talking about future budgets. Let’s talk about what we did last night. What we did last night was to fulfil our election commitments, provide cost of living relief with cheaper child care, cheaper medicines, more Paid Parental Leave, more support for affordable housing. And we want to get wages moving again. We did all that without putting pressure on inflation by targeting our investments in things like infrastructure, improving the National Broadband Network, making sure that there’s that growth in the economy without putting pressure on inflation. That was our focus last night. And we managed to achieve it.
Host: You’ve still got a mountain of debt to pay down, it’s only going north, Prime Minister. So, are tax increases and spending cuts going to come next?
Albanese:
Look, we inherited a trillion dollars of debt, Peter, as you know. We inherited a trillion dollars of debt with not much to show for it. What we did last night was to make $22 billion of savings. We took the revenue gains that have come through, 99 per cent of those revenue increases from the higher costs of fuel and energy, we put them straight to the Budget bottom line, 99 per cent of them. So, it was a responsible Budget that saw a significant drop in the deficit to $37 billion from what was anticipated. That is a responsible thing to do. Because we want to make sure that we fight inflation because that is necessary if we’re going to get real wages moving in the way that we want them to.
The post-budget interview game is very strong today
There are so many interviews to be done that Anthony Albanese and Jim Chalmers just walk from camera to camera, microphone to microphone and host to host and answer different versions of the same questions.
Peter Dutton and the opposition are doing their best to get their lines in where they can too.
All of this before a day of parliament where the same things will be discussed.
Peter Hannam
Inflation figures to be released this morning
If the flood of numbers in last night’s budget weren’t enough, we get September quarter consumer price index numbers from the ABS at 11.30am today (AEDT).
The spectre of inflation dominated Labor’s first budget since 2013 with very little extra spending to assist cost of living because that would only stoke price pressures. The independent Reserve Bank would then have to hike interest rates higher for longer, nullifying any benefits.
The market consensus is for the headline CPI to come in at 7%, quickening from the annual pace of 6.1% in the June quarter (the predicted quarter-on-quarter increase is about 1.6%)
Underlying inflation will be what the RBA is most interested in, while the rest of us will be watching what will be happening to non-discretionary items (essentials).
Economists such as CBA’s Gareth Aird, who correctly picked the RBA’s latest 25 basis point rise in the cash rate, reckon the central bank was assured the budget wouldn’t be expansionary. Not extending the fuel excise “holiday” was a clue.
The budget assumes the RBA’s cash rate will peak at 3.35% but investors are still betting on a much higher “terminal rate”.
As the #Budget2022-23 (2.0) was being released, investors were tipping the RBA would lift its cash rate 25bp on Nov 1st, on the way to peaking at ~4.2% in a year’s time. Budget bases its peak rate at 3.35% (using a consensus of market economists). Spending restraint will help. pic.twitter.com/Xavopx7APK
— Peter Hannam (@p_hannam) October 25, 2022
Households arguably hold up half the sky for the budget predictions (and China the other half) so it would be better for the economy if the budget and not investors were right on interest rates. We explore these dynamics more in this piece:
Dutton says people on fixed incomes ‘copping it’ in Labor’s ‘grim budget’
Paul Karp
The Liberal leader, Peter Dutton, is out attacking the government’s pre-election modelling that said the average electricity bill would fall by $275 with increased renewable investment.
Dutton told ABC News Breakfast:
The government said only six months ago that families would see a $275 reduction – now they are told [it is] a 56% increase. People on fixed incomes, pensioners, they are really really copping it in this budget and it is a grim budget.
And I worry for those families who are already struggling with an increased mortgage payment, in increased prices of the browser, and now they’ve been told by the government the complete opposite of what they were told before the election so you can understand the anger out there.
Dutton claims the market is “factoring in” increased costs from investment in renewables and batteries. The Ukraine war had already broken out when Labor used the $275 figure, so they can’t blame skyrocketing gas prices, according to Dutton.
Dutton also attacked Labor for blowouts in the NDIS, arguing that the Coalition hadn’t been able to make changes to the scheme because they wouldn’t get through the Senate.
Meanwhile, Bill Shorten “has been running around telling people they could have more rather than less” under the disability insurance scheme, Dutton said.
And just like that…
Albanese says election promise of cheaper energy was ‘consistent with the modelling’ at the time
Here is where we get a bit closer to the nitty gritty.
Anthony Albanese is on ABC radio RN Breakfast and he is asked about lower energy prices.
Is your election promise of cheaper energy bill dead?
“our election promise was consistent with the modelling we took there, which was about the fact that the cheapest form of new energy is clean energy”
– @AlboMP, PM
— RN Breakfast (@RNBreakfast) October 25, 2022
The game has changed since then. Labor’s promise was by 2025, but this is the closest the PM has come to admitting it may not be possible to meet that election commitment.
Albanese says cash handouts would ‘feed straight into inflation’
Paul Karp
The prime minister, Anthony Albanese, told ABC News Breakfast the government had opted not to give cash handouts that would “feed straight into inflation” and therefore “not help people with cost of living”.
He said:
So what we had to do was target investment into ways that didn’t add to inflation. So cheaper childcare, more paid parental leave, more affordable housing. Increase in wages that you will see over the medium term kicking in … As well as providing immediate relief through measures like cheaper medicines.
Asked if Australia could avoid following the rest of the world into recession, Albanese replied:
I think that is right. The budget papers show that’s the case because we have been responsible. In areas like the increased upgrades in revenue – 99% of those over the next two years were banked to pay off debt, put downward pressure on inflation.
That is a bold prediction. With a huge structural deficit even while Australia is at near full employment, there’s not a lot of room in the budget for pumping up demand if the economy does tank.
Asked about the Greens’ criticism that the private sector built 1m homes in the last five years anyway, Albanese rejected criticism of the housing accord as smoke and mirrors.
He said:
Gee they’re negative, they always are. They never have any solutions. We have a real solution worked out with super funds, state governments.
Paul Karp
Albanese on taxes: ‘We have no plans beyond what we announced last night’
On Channel Nine’s Today, Anthony Albanese was asked about Labor’s plan for the economy, allowing him to rattle off the highlights reel from the budget:
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National reconstruction fund, to help create new industries
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Faster broadband
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A billion dollar plan for skills and training
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Cheaper childcare policy to lift women’s workforce participation
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Paid parental leave to help working families
Albanese was then challenged on whether the government will increase taxes. He said:
We have no plans beyond what we announced last night … We’ve fulfilled the commitments we’ve given. If it was in our agenda you would’ve seen it last night.
It’s a bit silly to ask about future budgets the day after we hand out a budget. All our plans are in the budget last night.
Albanese said the tax agenda in the budget is cracking down on multinational tax avoidance, which are the “ones we went to the election on” as the government was “fulfilling promises we put to the Australian people, that they voted for in May”.
Albanese and Chalmers spruik budget and blame Coalition for energy price woes
Paul Karp
The prime minister, Anthony Albanese, and treasurer, Jim Chalmers, are out selling the budget with the three Rs featuring heavily (responsible, responsible, responsible).
Chalmers told ABC News Breakfast the budget provided “targeted cost-of-living relief that doesn’t put upward pressure on inflation”. Pressed on why the government didn’t do more for households, Chalmers said there was $7.5bn for measures including cheaper childcare and medicines. The treasurer said the government couldn’t offer “excessive” cost-of-living relief, which would make inflation worse.
On Sky News, Albanese said the budget was responsible because it applied 99% of the projected improvement since the March budget towards the bottom line, resulting in a “significant drop in the deficit”.
Albanese was pressed on electricity prices, and continued to warn the government would consider further regulatory reform.
Albanese blamed the Coalition, arguing “if we’d had a decade of investment we’d be less reliant on global prices” and noting prices were scheduled to increase by 20% before the election, but voters weren’t told.
Albanese said the budget contained the biggest spending in renewables since the Chifley government’s spending on the Snowy Hydro scheme.
He said:
We need to increase (gas) supply further. We would be prepared to look at measures beyond what governments have normally considered because of the extraordinary circumstances.
Chalmers told Channel 7’s Sunrise that Australians understand the war in Ukraine is pushing prices up, and renewables will help bring them down.
Good morning – it’s budget Boxing Day
It’s budget Boxing Day and this is where stuff gets real.
A budget lives or dies in the first 48 hours – the reactions, how the government defends it and how the opposition attempts to frame it all matter.
But what matters the most is what you think, Australia. And how you react.
This budget puts budget repair front and centre. Which means that, yes, it’s a bread and butter budget. There is no, as someone said last night, meat and potatoes. There is barely a spread of jam.
The cost-of-living relief comes in the form of the measures announced before the budget. Childcare. Paid parental leave. Infrastructure projects such as the “aspirational target” of 1m social and affordable homes (with the states and the private sector helping).
But looking through the budget, inflation looms large. So Jim Chalmers has worked to put a lot of money back into the budget. Almost all of the extra $150bn found in revenue went back on the budget’s bottom line.
Which means there is not a lot of individual cost-of-living relief.
Chalmers calls it “restraint”. He has a very keen and worried eye on inflation. And doesn’t want to act in opposition to the Reserve Bank, especially after what happened in the UK.
So it’s bread and butter all round. Which will be cold comfort for anyone already struggling to make ends meet.
The opposition has seized on the lack of relief for energy prices and that looks like where Peter Dutton will be focusing most of his own energy today.
The Coalition spent question time yesterday trying to pin the increases on Labor and that looks set to continue today. It’s an ambitious task given the Coalition was in power for almost a decade up until May and also knew energy prices were going to increase, and deferred that information until after the election.
But no one cares about that when they are opening crippling energy bills. And if the opposition can attach that angst to the government then they’ve managed someway to flip the narrative.
It’s going to get messy.
You’ve got Katharine Murphy, Mike Bowers, Sarah Martin, Paul Karp, Daniel Hurst and Josh Butler sorting through that mess for you, and Amy Remeikis on the blog for most of the day.
Ready?
There’s not enough coffee in the world today.
But let’s get into it.
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