Fanning the inflation flames

bad government decisions - such as increased spending over the next five years and new taxes - are contributing to inflationary pressures and exacerbating the cost of living crisis, says peter dutton as he identifies the economy, energy, industrial relations and housing as areas in need of policy reform.

Australians want a good faith opposition which doesn’t oppose just for the sake of it.

An opposition which supports government’s good policies and it stands against bad policies.

The opposition I’m leading is acting in that constructive spirit.

Consider the following:

In the budget in October, we supported several measures:

Extending access to childcare, lowering the costs of medicines, initiatives to combat domestic violence, and flood recovery – to name a few.

In Labor’s most recent budget, we supported several measures:

Increasing bulk-billing incentives, expanding the parenting payment, and the additional investment in women’s safety – to again name just a few.

As an opposition we’ve sought to work constructively with the government on the Petroleum Resource Rent Tax.

We're concerned about the negative effects of such a tax on foreign investment.

But this tax could be far worse if Labor negotiates with the Greens for an outcome.

In exchange for our support, I want to ask the government to remove red tape to condense gas project approval timeframes.

It would address sovereign risk issues created by the government and shore-up domestic supply and help firm-up renewables in the system.

In terms of Labor’s legislative amendments to strengthen the social safety net, here too we've found much common ground and sought to compromise.

We support expanding eligibility for assistance for single parents, and we support seeing more elderly Australians entitled to a higher rate of JobSeeker.

We questioned an increase in the base of the JobSeeker rate at a time when we have 438,000 job vacancies and 840,000 people on unemployment benefits.

Instead, we proposed that those on unemployment benefits are able to earn more through part-time work before their JobSeeker allowance is affected, increasing participation - particularly in a tight labour market.

We should always incentivise the support that we wrap around people to move off welfare into work.

When it comes to foreign affairs and national security, we’ve also found much common ground with the government.

We’ve commended the government for its work in the Pacific, and we’ve provided bipartisan support to the government in carrying forward the AUKUS security deal and the defence agenda established under the Coalition in government.

In fact, there’s one figure that I want to draw to your attention today, and it’s the fact that we’ve supported 70 pieces of legislation in this Parliament already.

We want to be an opposition which seeks to contribute and negotiate to find agreement where we can.

One which is not afraid to say ‘no’ when we need to in the best interests of our country.

Since becoming leader of the federal Coalition, the one issue that Australians raise with me now more than ever, is the cost-of-living.

Australians are genuinely hurting.

I’ve seen people at breaking point.

Many of you will have had that same experience in dealing with your customer base or with people in family or social settings.

Their demoralisation is palpable, and our nation’s inflation is like an untreated infection making Australians sicker.

Australia's inflation rate lifted to 6.8 per cent in April – up from 6.3 per cent in March.

And the core inflation is higher than any G7 nation, except for the United Kingdom.

Imagine, for a moment, a family which does their weekly trip to the supermarket.

They budget $200 per week for their standard 30 items.

We know today, they’re paying $220 for those same items – perhaps even more.

Now, $20 extra might not seem much to many of us in this audience, we’re in a fortunate position.

But over the year, it’s more than $1,000 for that family.

And they’ve only got bad decisions to make from there:

Should they reduce the items in their trolley and go without to keep to their budget at $200?

Should they spend more than what they budgeted and try to find the savings elsewhere?

Should they try and turn off the heater?

Or put off a decision to provide support to their kids?

These are the choices many Australians are making today.

Inflation is squeezing Australians on multiple financial fronts:

From the petrol bowser to insurance premiums.

From power bills to mortgage repayments.

A typical family, we know, with a mortgage of $750,000 is now paying an additional $22,000 a year in after tax payments.

So the ability to find savings becomes even more difficult as inflation pinches harder on all fronts.

Inflation is hurting everyone – individuals, couples, families, businesses and of course industries.

ASIC data comparing like-months across the current and previous financial years show that the number of businesses which have gone into insolvency is up in every case.

The point I want to press home is that our inflation woes, in good part, are coming from Canberra.

As I said, Australia’s core inflation rate is higher than the United States, higher than Canada, higher than Japan and higher than the Euro Area.

That speaks volumes about domestic factors influencing inflation.

Instead of the government lowering inflation, it’s fuelling the fire of inflation by making bad decisions and avoiding others.

Let me give you a couple of examples:

According to the government’s own budget papers, they’ll spend an additional $185 billion of taxpayer money over the next five years.

That adds to inflationary pressure.

The government’s already imposing - or set to impose - new taxes.

The taxes won’t be absorbed in many of the cases.

The taxes on farmers, or on the trucking industry, is going to be passed on to consumers in the supermarket.

Rather than wearing that cost, and we recognise this in many supply chains that we understand – particularly in food manufacturing – Australians will have to pay the cost.

On energy policy, we need to have a sensible and sober conversation.

The onus is on leaders in this room, and further afield, to contribute to this debate.

We do, of course, as a country want to achieve the three goals of clean, cost-effective and consistent power.

But the government’s current energy agenda with its rush to renewables elevates the goal of clean energy to the detriment of the other two.

Labor is switching off the old system before the new one’s ready.

The government’s intervention in the gas market has restricted supply and already caused power bills to rise further.

The ACCC has warned of gas shortages this winter.

AEMO’s CEO, Daniel Westerman, has also raised the alarm about reliability gaps emerging in the east coast grid from 2025 and the need for investment in firming generation over coming years.

Both gas shortages and the government’s price fixing pose serious risks to sovereign investment.

Orica is a multinational which supports mining ventures.

Its Chief Executive, Sanjeev Gandhi, has said ‘the risk is absolutely real that capital will flow out of this country.’

The former Japanese Ambassador also candidly expressed his unease about supply issues given that Australia supplies under half of Japan’s LNG imports.

The CEO of Inpex has also spoken about the deteriorating investment environment in our country.

And it comes all at exactly the wrong time.

Many of these decisions have led to an increase in power bills for Australian families.

The same families I’ve just spoken about are under increasing pressure.

From the 1st of July power prices increase by up to 29 per cent on top of significant increases already.

The government’s plan to roll-out 28,000 kilometres of transmission lines by 2050, means that $100 billion of sunk costs will have to be passed on to consumers and small businesses.

Energy Australia’s managing director, Mark Collette, noted that ‘Transmission is expensive with the potential for overruns.’

He went on to say:

‘… doing things as efficiently as possible to keep these costs down, that is the main game to play for at the moment to minimise the damage.’

Now, it’s a scientific reality that whatever percentage of renewables are in the system, and it’s a great thing - we want to see an increased number of renewables in the system - but they still need to be firmed up.

Nuclear energy – in the form of small modular zero emission energy – is the only feasible firming option if we want clean, consistent and cost-effective power.

Without it, the government is not going to meet its emission reduction targets.

That’s why the Coalition’s been pushing for a reasonable and balanced discussion on the role that safe, zero-emission, next generation small modular and micro nuclear technologies can play in the energy mix.

These new technologies can be plugged into existing distribution grids.

They won't require the investment of $100 billion worth of new poles and wires.

Dr Paterson, the former ANSTO CEO, has pointed out the risks and vulnerabilities of renewables because they’re intermittent and they’ve got large footprints in the form of solar and wind farms.

He also made the point that nuclear power will be essential for energy ‘reliability, for robustness and for resilience.’

Tellingly, the Canadian government is investing close to a billion dollars to develop a grid-scale SMR.

Whilst the Biden administration has passed legislation which provides tax incentives to develop advanced nuclear reactors.

We don’t even want the conversation in this country.

The British Leader of the Opposition, Sir Keir Starmer, recently said ‘Nuclear is a critical part of the UK’s energy mix’.

The UK’s made it very clear that they cannot meet their international obligations to reduce emissions without the use of nuclear to firm up that energy source.

Sir Keir has promised that a future Labour government under his leadership would ‘push forward’ with nuclear to ‘lower household energy bills, create jobs and ensure Britain’s energy security’.

So we want a mature, adult conversation in our country.

We want the Albanese government to look to the examples of Canada, of the United States, of the United Kingdom, and elsewhere across the world.

Thirty two countries have taken up the use of nuclear power, 50 countries are investigating the new technology and of course the government has committed to acquire nuclear propelled submarines – the same technology.

There's a lot more that's going to happen over the course of the next 12 months that I think we should be really mindful of.

There is a huge debate to come in the ‘same job, same pay’ legislation and the industrial relations environment more generally.

It will come at a time of downturn in the economy where there's already pressure on businesses to turn a profit.

Labor's IR laws will undermine the flexibility, the choice, and the competitiveness required for a functioning 21st century economy.

It will cause further injury to national productivity.

As was reported last week, the 4.6 per cent drop in the labour productivity in the year to March is the largest decline since records began in 1979.

As I said in my budget in reply, we are already amidst a housing and rental crisis, and we need to make sure that we can do more to support local and state governments in planning.

Yet in the budget, the government's announced the plan to bring another 1.5 million people to our country over the course of the next five years – bigger than the population of Adelaide – without planning.

Now all of us support a strong migration program.

It's important for an underpinning of our social compact and our economic imperative.

But Labor at the same time has taken a decision to axe the Coalition's $120 billion infrastructure pipeline.

Projects intended to bust congestion and lift productivity will now be cut.

And the implications will be more congestion, lower productivity and much more besides.

So we want to work on those issues over the course of the next 12 months to find resolutions.

We need a significant plan to establish where people will live – particularly where social housing can be readily accessible.

We want to make sure that we can help families get through the cost of living crisis.

This is an edited extract of remarks delivered at the Committee for Economic Development Australia (CEDA) State of the Nation Conference 2023 by Leader of the Opposition Peter Dutton.