The cash rate this week hit its highest point since 2011. It was the Reserve Bank’s fourth interest rate increase of the year.
The government has blamed the ongoing Middle East conflict for fuelling inflation and higher rates, while the Opposition is putting primary blame on government spending.
To discuss Australia’s economic woes and what the Opposition says should be done better, as well as other issues including AI and migration, we were joined on the podcast by the shadow treasurer, Tim Wilson.
On the impact of the US-Iran war on interest rates, Wilson says inflation was rising before the war:
We had an interest rate rise on the third of February this year, which was before the first bomb was even dropped on Tehran. We had three interest rate rises this year till yesterday, where we got our fourth. And we haven’t seen the equivalent behaviour in other developed economies throughout the year on increasing interest rate rises until now.
(The podcast was recorded shortly before the release of figures showing inflation at 4% in the year to August.)
Wilson said the Coalition wants to cut spending and taxes. But when it comes to setting budget caps on these as proportions of GDP, he declines to be specific:
In principle […] I believe in these things.
But he said the Opposition will announce its formal policy at a later point:
We will announce our policy at the appropriate time once we understand the budget position that we will inherit based on, obviously, the two federal budgets yet to come. But I can tell you with absolute certainty that there are some people in public life who always want to get their hands on the Treasury benches so they can go off and be profligate so they can spend willy-nilly. I can assure you, I am not one of those people.
Wilson warns about the risk of Australia being a “client state” to AI companies:
Currently the federal government is in negotiations with AI companies about whether we’re going to train frontier models in our country. And if we do, we’ll at least have some influence over the direction they set, otherwise we risk being a client state of essentially these AI companies and their operations overseas.
AI works in Australia’s national interest as part of not just our economic interest, [but also] our security interest, and of course, building out the broad strength of our country for the future.
On AI guardrails, Wilson says the Coalition supports “measured approaches towards navigating” the new technology.
But the specifics of what that looks like is still something that everyone in the world is navigating and it’s something that we need to do, acknowledging that we needed the technology to work for Australians.
Having recently toured regional areas of the country, Wilson says migration is needed, especially for small businesses. But he says the Liberals want to restore a sense of control over the system.
People are saying we need workers, we need them to make areas sure that we can grow our business. If we didn’t have them, we wouldn’t have the people we need to pull beers at our pubs, work in our aged care or pick fruit on farms.
Australians understand that migration fills a role in our economy and our society. What they want people to do is to contribute to our nation, not just take from our country. And the more we get that alignment, rather than it being a free for all, the more likely Australians will have a sense that the feel of migration programmes have a sense of control.
Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
