SUBJECTS: IMF recommendations to reduce inflation; Government policies to respond to cost-of-living crisis; RBA decision on interest rates.
EMMA REBELLATO (HOST): Well, the International Monetary Fund has urged Australia's Reserve Bank to increase the official cash rate further citing the need to reduce inflation to the target rate of two to three per cent as soon as possible. Assistant Minister for Competition, Charities and Treasury Andrew Leigh joins us now from Parliament House in Canberra.
Good morning to you.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION, AND TREASURY ANDREW LEIGH: Morning, Emma. Great to be with you.
REBELLATO: So, are the alarm bells ringing within the government now?
LEIGH: We've been very concerned about the global inflation crisis and the effect that it's having on Australians. In the last budget, we brought down a range of cost-of-living measures designed to work in tandem with the Reserve Bank in order to bring inflation back into the target band. So, for example, just in the last quarter, you saw the Australian Bureau of Statistics reporting that if it hadn't been for our measures, then childcare costs wouldn't have gone up seven per cent. Instead they went down 13 per cent. And similarly, in the case of rents, they reported that our changes to Commonwealth Rent Assistance had put downward pressure on inflation. Likewise for energy prices with our energy bill relief package.
REBELLATO: The IMF, when it comes to inflation, is saying that mortgage holders shouldn't bear the burden of this, that governments, both state and national, really need to look at their infrastructure spending. Is that what the Government will do? Will you look at reining in spending or making it more moderate?
LEIGH: We put in place a strategic review of infrastructure when we came to office. Catherine King was keen to work with her state and territory counterparts on the problem that the previous government was very keen on announcing projects, but hadn't staged the delivery in a sufficiently careful fashion. We need to make sure that projects aren't tumbling over themselves and driving up costs. That strategic review of infrastructure is about ensuring the nation gets the infrastructure it needs and that the projects are properly sequenced in an appropriate timeline.
REBELLATO: Well, how do you balance that, given the population's growing? Infrastructure is desperately needed in a lot of areas and the IMF is saying if you spend too much, then inflation is going to keep staying high.
LEIGH: You make strategic decisions, you focus on the most important projects first and you ensure that you're sequencing the work plan. You bring in migrants where they're filling shortages and where they're able to allow those projects to go ahead. We understand the importance of getting this right. Frankly, as an economist, I've read an awful lot of IMF reports over the years. This is one of the most glowing I've seen. It is a clear endorsement of the government's fiscal strategy, recognising the fact that we just brought down the first Australian surplus in 15 years.
REBELLATO: Well, it's also saying a lot more needs to be done, though, in terms of reining in spending. So, you mentioned the Catherine King’s review into major projects, will we see the mid-year budget review, which is coming out soon, will we see any projects being cut or delayed or scrapped altogether?
LEIGH: Well, we'll work through a range of those project issues, but certainly what you'll see for the mid-year budget update is a set of responsible fiscal decisions. We'll be ensuring that we're moving to deliver strong budget outcomes as we've done in the past. In my areas of multinational tax, competition and good policy evaluation, we're working to make sure we've got more rigour in what we assess, that we're applying good randomised trials and cost-benefit analysis to government decisions. We need to get competition policy working again after a couple of decades in which we've seen market concentration rise and markups increase. That's a key to productivity, but it's also a key to putting downward pressure on costs for Australian households.
REBELLATO: Speaking of Australian households, we know a lot will be looking to Tuesday's RBA decision and it looks like interest rates will go up. Are you concerned, speaking of the RBA, that the RBA's experts that analyse the housing market hasn't met for an entire year? We've got rents going up, mortgages going up and interest rates going up.
LEIGH: Look, the Reserve Bank can speak for themselves on those issues, but I did notice their comments this morning that they frequently consider house prices, that housing is one of the main issues that their research program focuses on. I'm confident that the Reserve Bank is well across the challenges in the housing market. As is the government, which is why we've just passed the Housing Australia Future Fund, why we're working on setting up the Help to Buy initiative, why we're investing more in public housing. We understand that there is a housing challenge in Australia and it's the responsibility of a government to step up and invest in housing supply.
REBELLATO: Andrew Leigh, thank you very much for joining us this morning.
LEIGH: Always a pleasure. Thank you.