WEBVTT - Labor’s big cash splash

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<v Speaker 1>From The Australian. Here's what's on the front. I'm Christinamiot.

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<v Speaker 1>It's Thursday, December nineteenth. Alan Jones will plead not guilty

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<v Speaker 1>to thirty four indecent assault charges relating to incidents that

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<v Speaker 1>are alleged to have taken place over nearly two decades.

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<v Speaker 1>I will not be engaging in a running commentary in

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<v Speaker 1>the media, but.

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<v Speaker 2>I want you to understand this. These allegations are all

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<v Speaker 2>either baseless or they distort the truth.

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<v Speaker 1>The veteran broadcaster was swamped by media and protesters outside

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<v Speaker 1>Sydney's Downing Center Local Court on Wednesday, but he won't

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<v Speaker 1>return for future proceedings after New South Wales Chief Magistrate

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<v Speaker 1>Michael Allen excused him from appearing in person. That exclusive

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<v Speaker 1>story is live right now at the Australian dot com

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<v Speaker 1>dot au. The government was spend almost sixty billion dollars

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<v Speaker 1>this financial year and it could drag out the central

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<v Speaker 1>banks fight against inflation. The Treasurer says the cash splash

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<v Speaker 1>is unavoidable. But what does that actually mean. That's today's episode.

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<v Speaker 3>Well, we're rolling out very substantial cost of living help,

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<v Speaker 3>you know, because people are doing it tough.

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<v Speaker 1>On Wednesday, Jim Chalmers made it rain.

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<v Speaker 3>That's the motivation for the tax cuts, the energy bill relief,

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<v Speaker 3>the cheaper medicines, cheaper earlier childhood education, the student debt relief,

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<v Speaker 3>the rent assistance, and getting wages moving again. We've been

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<v Speaker 3>able to find room in our budgets for cost of

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<v Speaker 3>living relief.

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<v Speaker 1>In his mid year Economic and Fiscal Outlook Update, also

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<v Speaker 1>known as my IFO, the Treasurer announced government spending will

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<v Speaker 1>surge by just over fifty eight billion dollars in this

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<v Speaker 1>financial year.

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<v Speaker 4>This is a bit of a truth tonic. It tells

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<v Speaker 4>us where our economy is heading, and particularly it gives

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<v Speaker 4>us a really strong profile of the sea of red

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<v Speaker 4>that awaits any government over the next ten years.

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<v Speaker 1>Tom Ducivic is The Australian's Policy editor, so this is.

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<v Speaker 4>A pretty bracing set of numbers for anybody to look at.

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<v Speaker 4>Our revenue miracle of the past few years is over,

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<v Speaker 4>and now some of the forever spending pressures are coming home.

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<v Speaker 1>These new numbers will bump the government's share of GDP

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<v Speaker 1>that's gross domestic product, up to a level we haven't

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<v Speaker 1>seen since the recession of the early nineteen eighties and

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<v Speaker 1>the coronavirus pandemic, and it means we're staring down the

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<v Speaker 1>barrel of a decade of record budget deficits totally more

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<v Speaker 1>than one hundred and forty billion dollars. But this uptick

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<v Speaker 1>in spending does doesn't include Labour's Future Made in Australia

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<v Speaker 1>Net zero investment scheme, or it's sixteen billion dollar plan

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<v Speaker 1>to slash student debt. So what is the government splashing

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<v Speaker 1>all that cash on. One of the most expensive items

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<v Speaker 1>on the list is reforms to the National Disability Insurance Scheme,

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<v Speaker 1>which the Treasurer says is unavoidable. There's also funding for

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<v Speaker 1>welfare payments and pensions, plus an unexpected jump in demand

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<v Speaker 1>for government services like medicare.

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<v Speaker 3>One of the big drivers of the extra spending in

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<v Speaker 3>the budget update today, as you know, and which is uncontested,

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<v Speaker 3>is indexation of things like the age pension, working age

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<v Speaker 3>payments and the like.

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<v Speaker 1>And there's a sneaky five point five billion dollar election

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<v Speaker 1>war chest which will be used for cost of living

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<v Speaker 1>relief measures likely to be announced in the run up

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<v Speaker 1>to the next federal election. Jim Charmers deployed another of

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<v Speaker 1>his trusty catchphrases to explain the government's fifty eight billion

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<v Speaker 1>dollar blowout.

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<v Speaker 3>Even if you look at the net policy decisions, you know,

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<v Speaker 3>seventeen and a half billion dollars in net policy decisions.

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<v Speaker 3>We think something like ninety four percent of that is

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<v Speaker 3>a combination of genuinely unavoidable already provisioned cost of living

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<v Speaker 3>or supported in a bipartisan way.

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<v Speaker 1>But what does that actually mean.

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<v Speaker 4>It's unavoidable in the sense that governments make choices, and

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<v Speaker 4>once they make those choices, they decide on certain forever

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<v Speaker 4>programs basically payments on social welfare for programs, and some

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<v Speaker 4>of those are linked to inflations, so it means that

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<v Speaker 4>you have to do indexation. Sometimes you win on indexation

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<v Speaker 4>in the sense that you've got to return a certain

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<v Speaker 4>amount to the people receiving those payers, but at the

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<v Speaker 4>other end, it punishes every wage urner through what we

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<v Speaker 4>call bracket creep or fiscal drag, where wage inflation just

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<v Speaker 4>basically pushes our average tax rates up, and so the

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<v Speaker 4>governments tend to be winners from that, and they get

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<v Speaker 4>a really big boost from revenue, so the two things

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<v Speaker 4>net each other out. But in this case, Charmers is

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<v Speaker 4>just using a big excuse to try and point to

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<v Speaker 4>those factors outside of his control as driving it. But

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<v Speaker 4>that's not the full picture. The full picture is that

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<v Speaker 4>in the main the government's own decisions on spending is

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<v Speaker 4>what is driving this blowout in the budget.

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<v Speaker 1>Of course, labor is still waging a war against stubborn

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<v Speaker 1>inflation and desperately hoping the Reserve Bank will cut interest

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<v Speaker 1>rates before the next election in a bid to win

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<v Speaker 1>back the trust of voters struggling under a cost of

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<v Speaker 1>living crisis. It says pumping an additional fifty eight billion

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<v Speaker 1>dollars into the economy won't exacerbate the problem or prolong

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<v Speaker 1>the agony.

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<v Speaker 3>The Reserve Bank governor has herself said that public demand

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<v Speaker 3>is not the main game when it comes to inflation

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<v Speaker 3>and interest rates. And what we've been able to do

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<v Speaker 3>with the very responsible way we've been managing the budget

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<v Speaker 3>is we've seen inflation come off substantially. When we came

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<v Speaker 3>to office, it was money.

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<v Speaker 1>But history tells us that the more money you put

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<v Speaker 1>into people's pockets by way of bill relief and subsidized services,

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<v Speaker 1>the more they'll spend on necessities like food and rent.

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<v Speaker 1>But the more we pump into the economy, the harder

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<v Speaker 1>it is to bring inflation down.

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<v Speaker 2>So what gives the government here is been coy and

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<v Speaker 2>not quite telling the full truth on this because it's

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<v Speaker 2>own spending in this year, after you account for inflation

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<v Speaker 2>is going to go up by five point seven percent.

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<v Speaker 2>That's the kind of thing you do when you're in

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<v Speaker 2>a recession or facing a crisis.

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<v Speaker 4>But we're not there. Our unemployment rate is low, the

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<v Speaker 4>economy is still growing. We've got new people coming into

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<v Speaker 4>the country and making the size of the economy larger.

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<v Speaker 4>But what you've also got is state and territory governments,

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<v Speaker 4>some of them who've faced elections, have been spending like

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<v Speaker 4>crazy on all sorts of things like public transport concessions,

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<v Speaker 4>energy bill relief. Those sorts of things just pumps more

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<v Speaker 4>money into an economy. So as the Great Chris Richardson says,

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<v Speaker 4>that's more dollars chasing the same amount of goods in

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<v Speaker 4>an economy, and prices rise, and that pushes up inflation,

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<v Speaker 4>and that keeps interest rates high.

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<v Speaker 1>Coming up the treasurer is chickens come home to roost.

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<v Speaker 1>Since winning government in twenty twenty two, Jim Chalmers has

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<v Speaker 1>been quick to take credit for Australia's economic wins.

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<v Speaker 3>For the first time in almost two decades, our Labor

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<v Speaker 3>has delivered back to back budget surpluses. This is a

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<v Speaker 3>really important demonstration of them.

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<v Speaker 1>And he hasn't hesitated to blame the opposition for leaving

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<v Speaker 1>the government's books in what he says is a bad

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<v Speaker 1>way the Labor government.

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<v Speaker 3>When we came to office, these were two big liberal

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<v Speaker 3>deficits and we've managed to turn them into two big

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<v Speaker 3>labor surpluses.

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<v Speaker 1>But deficits projected to plague the budget over the next

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<v Speaker 1>several financial years means it's getting harder for Jim Chalmers

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<v Speaker 1>to shirk responsibility.

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<v Speaker 5>After three budgets and potentially a fourth if Labor do

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<v Speaker 5>hand down a budget on March twenty five next year,

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<v Speaker 5>Charmers can no longer blame the coalition.

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<v Speaker 1>Jeff Chambers is the Australian's chief political correspondent.

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<v Speaker 5>I think for voters and business owners and others doing

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<v Speaker 5>it tough out there, this is now Labour's cost of

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<v Speaker 5>living crisis and housing affordability crisis to own, and it's

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<v Speaker 5>going to be one of his great political challenges is

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<v Speaker 5>to respond to that. So there's all types of high

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<v Speaker 5>level players going on, but people should be expecting from

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<v Speaker 5>both sides some really big promises, and the pressure for

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<v Speaker 5>the coalition is to, instead of sitting in that rhetorical space,

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<v Speaker 5>to actually put some meat on the bones and talk

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<v Speaker 5>about where they will find savings. And Angus Taylor today,

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<v Speaker 5>again concerned about the political blowback, says it's not about austerity,

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<v Speaker 5>it's about restraint.

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<v Speaker 1>Ahead of Wednesday's MAIFO announcement, the treasure that characterized Labour's

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<v Speaker 1>almost sixty billion dollar blowout as slippage.

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<v Speaker 5>If this is Jim Chalmers's final budget announcement before a

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<v Speaker 5>federal election, he'll be going to an election without being

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<v Speaker 5>able to champion those surpluses, but rather defending a decade

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<v Speaker 5>of deficits and higher spending under labor. So they're saying

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<v Speaker 5>that they need to spend on unavoidable automatic spending. Some

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<v Speaker 5>of that is highly questionable given the links to labor policy,

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<v Speaker 5>but it comes down to a matter of whether or

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<v Speaker 5>not the government has the courage politically to rain in

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<v Speaker 5>some of that structural spending. It seems like they don't

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<v Speaker 5>have that appetite and that's where the pressure goes towards

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<v Speaker 5>the coalition to see what their plan is. But ultimately

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<v Speaker 5>today's my AFA was a really difficult one for Jim

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<v Speaker 5>Charmers to shine some positive light on.

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<v Speaker 1>Jeff Chambers is The Australian's chief political correspondent and Tom

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<v Speaker 1>Ducivic is our policy editor. You can read all our

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<v Speaker 1>reporting and analysis of the government's media budget update right

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<v Speaker 1>now at the Australian dot com dot au