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The Morning Edition
A national address, nailing down the budget, and Hastie’s ‘striking’ interview
00:27:57
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- [00:01]
A
My fellow Australians, by nature we're an
- [00:04]
B
optimistic country, but I understand that right now it's hard to be positive.
- [00:10]
A
The war in the Middle East.
- [00:11]
C
Okay, guys, I've got Paul and Shane Wright in the studio with me. I want to hear from them. On a Winston Churchill scale of 1 to 10, how do we rate the Prime Minister's address to the nation on Wednesday night?
- [00:23]
A
Well, it was no, I will fight them on the service station front line. It was a very well short of that tenor.
- [00:31]
C
Yes. And Paul, what did you make of it?
- [00:34]
B
Well, the Prime Minister's not Barack Obama. It wasn't quite the Gettysburg Address, but it served an important purpose. I think for many voters out there. They haven't actually heard a clear message from the government yet. It's felt messy. The government was a little bit late to get its tone right. There is a realisation now that this will dominate the government's agenda for weeks, if not months, probably months. And so I think the government was keen to get its voice into the public, public discourse. For Albanese to be able to say I took it very seriously from the start to condition for what comes next and to, you know, reassure but also warn about what the future might hold. The knock on the speech or the address will be that by actually calling a national address early in the morning and having a day of speculation about what might be in it, it served the opposite effect to actually instill fear. There's some anecdotal reports about queues at service stations which clearly was not the government's intent. So there'll be days of questions and I imagine the Prime Minister have to justify his decision to go forward with such a big set piece that may not have had the desired outcome.
- [01:40]
C
Yeah, I mean, I didn't see it as sort of badly as that. I just sort of thought that he was under a bit of criticism last week for being a bit flat footed in his response to the crisis and that they weren't sort of, you know, grasping the bull by the horns in terms of people's expectations. And there is a bit of public anxiety out there or maybe a lot of public anxiety. So I feel like he was just kind of trying to reassure people, look, keep calm, carry on. We're all over it and there might be some more drastic measures coming down the pike, but we'll tell you when we get there or we'll tell you. Well, before we get there. We're going to talk about that this week. I'm Jacqueline Maley. You're listening to Inside Politics from the Age and the Sydney Morning Herald. And if you haven't already guessed, I'm joined by our chief political correspondent, Paul Sakal, and our special guest star and favourite of the podcast, chief economics correspondent, Shane Reich. Gentlemen, it's good to have you on board.
- [02:33]
A
You had me a special guest star. You didn't have to embellish.
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C
I know, I know, but I couldn't help myself. Such my cup overfloweth. When you're on, you're only.
- [02:42]
A
You're only human.
- [02:43]
C
That's right, that's right. So the pm, as discussed, sort of shifted more to crisis footing this week and he's announced two important measures. Let's just briefly cover off what they were. Paul.
- [02:54]
B
Yeah, the first was the major announcement was a halving in the fuel excise, which is the levy that's paid on every litre of fuel. Is it 52 cents per?
- [03:04]
A
52 cents until it until midnight on April Fools Day?
- [03:09]
B
That's right. And this did actually have a pretty quick, tangible effect on petrol prices. There was a sense that it might take days or weeks to kick in, but there was an immediate reduction at a lot of service stations of about 15 or 20 cents across the country, which is good news. But fuel prices might just continue to increase and so though this might offset slightly the increase, but is not going to bring prices down over the next few weeks as the supply crunch looms. And there's also a question about whether, you know, reducing the price of fuel actually counteracts the price signal, which is telling people not to buy fuel when we need.
- [03:42]
C
And we know that Shane Wright has very strong views on that. I'm going to ask him about that in a sec. The PM also cut the heavy vehicle road user charge. So basically that's helping out truckies who, you know, usually have to pay this charge and are really doing it tough at the moment.
- [03:57]
B
And one other big move just we should get in is a $2 billion fund which is. Which will allow the government to effectively scour the glob with Australian firms trying to bring oil into the country to underwrite purchases of tankers, the spot market is obviously increasing oil prices by 2, 3, 4 times.
- [04:15]
A
Most people don't understand there's a big difference between, say if I tell you that the barrel price at the moment, it's actually fallen a couple of bucks over the last two days, it's about 100 US. But on the spot market you are looking 130, 140. There is a big difference between these, the contracted and the spot prices. And this is what's really driving the announcement that they've made this week.
- [04:38]
C
Yes, because everybody's scrambling to get oil right now. Shane, tell us you think the fuel excise cut is very bad policy. Why do you think that? Please explain.
- [04:47]
A
Well, I know for all those motorists out there who are fuelling up thinking, you beauty, I've saved 26 cents a litre, which is about 19 bucks on 60, 65 litre tank, I get that. But that's the problem. You are saving money at a time of inflation which will get spent somewhere else and this is what the Reserve bank will be having kittens. In fact, I'm reliably informed there's a birthing suite for the kittens in Martin Place at the moment because this is in the wrong direction for them. They want money being taken out of the economy. The big lift in petrol prices is doing that. But you've actually given some of that back and as much as both sides of politics say, well, this will only have a little bit of impact on demand, like the classic supply and demand curve. You reduce a price, the demand for something goes up. Even Jim Chalmers admitted this week it'll probably have an impact, 1 to 2% increase in demand. His argument is that the big increase in prices so far has cut demand by 10%, although that's really at loggerheads with the argument that there's been this huge surge in demand anyway. But we're in stupid times when people are racing out filling watering cans with fuel. So that's my real concern about putting money back in. This is a hit to the budget at the end of the day at a time of high inflation and that's what will have the reserve banks.
- [06:17]
B
I'm enjoying your shift to a full on inflation hawk this week, Shane.
- [06:22]
A
I've always been an inflation hawk, my friend.
- [06:23]
B
I suspect the government would argue privately that the potentially quite marginal effect on inflation that this measure might have is outweighed by the imperative to use one of the few levers the government has to provide cost of living relief. Many other nations around the world are doing similar tax changes and I think the pressure on the government to be seen to be doing something has outweighed the inflation concern.
- [06:46]
A
And that's the difference between politics and economics. Politics. They need to be seen to be
- [06:50]
C
doing something apart from politics and economics. I want to bring in psychology and just sort of see sort of make. I know, I know, I know it's not a science that you might recognise,
- [06:58]
A
shane, but it's Dr. Maley.
- [07:00]
B
I love this switch psychoanalyze me?
- [07:04]
C
Yeah. No, I think that there's probably a strong argument for the psychological effect that it has on a population that's a little. That was already feeling the pinch, already feeling very anxious about rising interest rates and they've got a little bit of relief, so they might be able to relax a little bit. Whether or not we relax so much that we then go out and spend and push up inflation, I don't know if I think that that will be the psychological effect. Anyway, I am interested in the kind of the impact you think all of this is going to have on the budget because we were going to be having a pretty ordinary, or, you know, maybe a bit of a slightly ambitious reform budget that Jim Chalmers had been talking about on May 12th. And now obviously global events have intervened. Chalmers is sort of saying, on the one hand, that's not going to stop us from, you know, making ambitious reform. In fact, it's an even greater reason to go hard on reform. But on the other, on the other hand, Shane, he seemed to say this week that whatever extra money the government or tax revenue that the government might reap from inflation will basically be fed back to people via cost of living measures and that we might see even more government money rolling around in the economy. Can you decipher any of this for us?
- [08:18]
A
Yeah, I can, I'll attempt, but I won't do it in a psychological manner. I'll do the same thing outside my bailiwick. Get one.
- [08:25]
C
Yep.
- [08:26]
A
Look, I think when he talks cost of living, I'd be very wary thinking there's going to be some sort of handout. I think there's real resistance in treasury because as much like Chalmers has been talking about, we're going to be making decisions later in the budget cycle than we normally do. The starting point was always this is the budget we're going to have to make changes on.
- [08:47]
B
So do you mean cuts?
- [08:49]
C
Like are they going to cut back the budget and some of those structural pressures that we've talked about before.
- [08:53]
A
Look, if I like, the NDIS is clearly one area where they're going to. They have to make savings. They know that. And the politics of the situation, the number of seats that Albanese has in the House, the makeup of the Senate has not changed, despite what's going on in the Middle East. So that core piece of politics is still there, which means if you're going to do it, you do it in this budget, which is their first budget since the election. And even on Thursday, Albanese has used his speech to the national press club to really double down on. We are going to be reforming in this, in this budget.
- [09:33]
B
The first time he's used the same language as Chalmers in this big press club speech on Thursday to say to match the Treasurer to say this will be the most ambitious budget yet. It's not the time to pull back, it's the time to go forward.
- [09:44]
A
And I think that's a really, that's really important that we see the Treasurer and the Prime Minister using the same terminology clearly. So that tells you right so we know productivity reforms. There's going to be changes around the tax system particularly say in the corporate tax space. I think you will see some sort of investment system put in place to get businesses to become more productive by investing in plant and kit. That's going to happen. You will see savings. So the NDIS is clearly in the target but I think you'll see a lot of smaller cuts like they try and spread out a bit of the pain and then you get into the tax reform proper. That's where there's going to be cost. Anything you do in that space but say the CGT that we've been talking about for it feels like forever negative gearing that issue hasn't disappeared. There hasn't been a killing off of that by either the Treasurer or the Prime Minister. So I think those things are definitely still on the cards. But it's clear that Chalmers so much is in flux right now. Trying to nail down exactly what the budget will say is it is the most difficult budget to piece together I think since the late 2008 during the depths of the global financial crisis when Wayne Swan actually had to put up put out a separate update to the budget just like eight or ten weeks after a mid year update. It's that difficult.
- [11:15]
C
So it'll actually be exciting when we're in the lock up. Genuinely exciting to see what's. What's unveiled.
- [11:20]
B
Big lockup.
- [11:20]
C
But what, what will we make of the forward estimates though? Like they're just. They're going to be even more fictional than usual, don't you think?
- [11:28]
A
Forward estimates are always. There's always a bit of fiction. There's always but this is it. Like how do you predict. Like they haven't been able to predict the iron ore price for the last 15 years. So how you would predict what's going on with oil prices and LNG prices. Look, I've got a chocolate wheel here. I'll spin it and it may do as good a job as anything else.
- [11:47]
B
And the contradiction on the messaging from the prime minister on Thursday. And Chalmers is that they're on the one hand talking up the cost saving element of the budget, the productivity element. They want to take money out of the economy because the inflation problem has not been fixed. But on the other hand, they're already taking measures that go against it with the fuel excise cut and they're forecasting some more in the cost of living relief space, even though we don't expect handouts. So it's a really tricky balance. And on the tax reform question, the treasurer has been talking about the crisis being a reason to go harder. And f, there are some others in the cabinet who say, well, okay, it might provide impetus to do more around potentially investing in oil reserves or other measures that actually address this crisis, but how does it add to the case for fixing negative gearing or capital gains tax? And I think people around the Treasurer are now thinking about how they sell those tax reform measures with a different framing that addresses the current crisis. And one of the pieces of just one of the thoughts around that is that you could pitch these measures not just as, you know, fiscally sound and beneficial to the housing market, but also as measures that kind of win trust of voters, that push against the rise of populism and that kind of instil this sense that the government is making the society fairer and trying to boost social cohesion. So putting a social cohesion security framing around intergenerational equity.
- [13:17]
C
I don't know. I don't know if any punter has ever kind of accepted a tax reform on the grounds of social cohesion. I think that the fairness argument is so much easier to make in the current environment. And, you know, I think that the coalition, I've said this before on the podcast, I think the coalition is going to be really hard pressed to argue against these tax reforms that we think they'll make. You know, in the current environment, with housing affordability being where it is, and as you say, with the rise of one nation and the sort of, I think the starting point of many people who are switching their votes to one nation, which is the system's kind of rigged against me no matter how hard I work. You know, I pay my taxes, I'm trying to raise my family, and I just can't get ahead and, you know, so burn the whole thing down. I want to, I want to ask you guys about sort of fuel security and energy security, because we have touched on this before, but I just wonder if we're going to be having a national debate sort of into the future about what our fuel security and energy security will look like because. And will it just get everyone to double down on their positions so people who are like look this shows more than ever this whole crisis shows that fossil fuels are an unreliable source of energy. Other people will say all it shows is that we need to be mining and exploiting the fossil fuels including oil reserves that we have here in Australia. Shane, what do you think about where the debate's going to go on that?
- [14:40]
A
Well there's two points. One is the term sovereign capability which is being tossed around. They are the two most frightening words I've been listening to for some time because it can mean all manner of things. Are we going to start building our own refinery? Like if you listen to some people in that space that's where you end up. You've got the drill baby drill types out there. You're going but that oil needs to be refined and we don't have the facilities on there. There are some, if you once you go down this we have to have great supply lines we have to produce stuff domestically which this government has been talking about and their policy, the future made in Australia is that policy. The Nats and the Liberal Party are still are talking the same game but there hasn't been the whole discussion of well this means big economic choices by this country that have to be made. No one's been upfront about the amount of cash that would have to go into the fact that you don't have enough people to do what you want to do. There will be some areas of the economy cut off if you go down
- [15:41]
C
that path as in if you go down the path of exploiting oil resources or trying to more in Australia not
- [15:48]
A
just like the private market is the one that's deciding whether to explore for a of oil or not in this country and for the last ten years they've gone. No, there's no case at the moment. There is however and we've seen some great data in the last like Even the last 24, 48 hours about EVs for instance there have been increases in EV, the car prices, the second hand prices for EVs while prices for petrol driven cars are falling sharply. Consumers have gone there's a great big price signal that's what I'll do. And there are some especially on the right who are saying oh we'll have a culture war about petrol versus EVs. The EVs are winning that culture war because it's an economic war and they just can't win it.
- [16:33]
C
It's a hit pocket war. Paul, what do you think?
- [16:37]
B
This crisis has raised up a debate around the globe about energy security and the way in which green energy and renewables could bolster that. Because obviously a solar and wind farm is not affected by war many thousands of kilometres away. You heard the European leader Ursula von der Leyen make this point in Parliament last week. You had the IEA director make the same point. I suspect the labor government will start leaning into that argument when this crisis starts to subside. It would be seen as political point scoring or perhaps slightly ideological to be leaning too heavily on that argument, given the ire and conservative ranks towards the green energy agenda of this government. But I think they will lean into that in coming months and years to say we are on the right path and that crisis proved we're on the right path. On the other hand, as Shane mentions, the coalition will argue that we need to be doing more here to give ourselves the ability to use our own oil. So one would suspect that it will give more weight to an energy abundance agenda in general.
- [17:41]
C
Yeah, isn't it, I mean, isn't the best argument putting climate change as become an. It's become a culture war. I mean, ridiculous as that is. It just seems like a technology argument to me because fossil fuels are like, they're 18th century kind of technologies. They're old, you know, old school. You have to invest enormous resources pulling them out of the ground. You have to put them on rusty old tankers, ship them all the way across the world. And the technology for wind and solar just seems, I don't know, more contemporary.
- [18:12]
A
And you're an elite, aren't you?
- [18:14]
B
You sound like Malcolm Turnbull. Technology, not taxes.
- [18:17]
C
But I know people would. You sound like Malcolm Turnbull.
- [18:20]
B
People would make not dissimilar arguments about. And people have people, you know, who are, you know, advocates of efficiency in the economy and who are kind of productivity hardheads would have said similar things about our nickel refining capacity, our copper making capacity, aluminium. And you see the labor government now in a really substantial shift to pump billions of dollars into these sectors to keep them alive against the wishes of economic hardheads. Because according to the labor government, and you see this agenda on the right as well through people like Andrew Hastie, if we lose these industries, we lose our ability to fend for ourselves in time of war.
- [18:58]
C
Yeah, that's kind of a national security argument which I suppose you can divorce a little bit from an economic argument. But I mean, you know, the energy resources and you know, the form of energy that we use is Just it seems to me entirely an economic argument, or it should be. I want to talk about the US alliance because Albanese has had to sort of tread such a fine line on this one. We saw the Canadian Prime Minister, Mark Carney, come out with some really quite strong comments against President Trump and the Iran war here in Australia. We're not doing anything new to that. The Prime Minister went on 7:30 this week and sort of talked about. He made his strongest comments to date. So he talked, you know, he said people want to see how this ends. He wanted to see a de. Escalation, a timeframe or a clearer objective. And then also in the next sentence sort of said that the objectives had been achieved, whatever that means. Paul, do you see this as a hardening of rhetoric? And I mean, there are some people out there who might, who might actually want the government to call this for what it is, you know, which is a, you know, a very erratic, non strategic and increasingly sort of terrifying war.
- [20:05]
B
Yeah. Albanese has obviously hardened his rhetoric over the last fortnight. It started in a press conference, I think about two weeks ago, where he made the point of saying that largely the U.S. s objectives in this war have been to varying extents, achieved. And he urged Trump to de. Escalate. And then this week you've seen him also call for greater certainty around the end game. And he also made the point quite firmly that Australia is not obligated to be more heavily involved in this war because we weren't consulted by Trump. So echoing some of the language out of European allies, less sharp language, but similar sentiment. And I think he would be channelling what he believes to be popular sentiment on that.
- [20:53]
C
Yeah. So he's sort of got a, like tread a fine line, doesn't he? Because he wants to be seen in step with, I think, the Australian public, which is kind of horrified by what's happening and what Trump's doing, but at the same time, he can't sort of openly piss off the Trump administration unnecessarily.
- [21:10]
A
Well, that's the price of the Australian American alliance. Like if you wanted an Australian Prime Minister to have a huge crack at the U.S. president, let's go back to Gough Whitlam. And that ended exceptionally well. Yeah, that sort of tension. That is not where like people talked about how Andrew Hastie was up front.
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C
Yes.
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A
Talking for everybody. Go, hold on. He is a shadow, shadow industry spokesman for the opposition, which is nowhere near government. That person can say stuff. A Prime Minister. The government. The government cannot.
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C
And I don't think the Australian public would necessarily want to see the Prime Minister, you know, have an open crack at Trump whatever their views about him. But you mentioned Hastie there. He made those comments on Insiders last Sunday so if any listeners hadn't watched and missed them he basically said this
- [21:59]
A
is a bad shot. I think this was a huge miscalculation. Iran has managed to pretty much hold the whole world economy to ransom and because we're at the end of a very long supply chain we're going to experience pain now we were already and
- [22:13]
C
he said I don't know why we went in there and he said, you know, I'm a close friend of the United States but I think we should be able to ask hard questions. And as you say it's sort of easy for him to say that because he's like a renegade sort of on the fringes of the Liberal Party with very obvious intentions to become its leader. He did say some stuff, stuff about tax policy. So Shane, I'm really interested in what you have to say on that because he said that basically he was open to the Liberals should be open to property tax reform and increasing tax on gas companies. This is like a shot across the bow of, you know, neoliberal economic policy, isn't it?
- [22:48]
A
He's been in this space for some time because the electorate he represents on the outer suburbs of Perth is. Yeah. Interest rates, mortgage paying, central.
- [22:59]
C
Yep.
- [23:00]
A
So he. And remember there aren't that many of those in the Liberal Party left after the disaster of the last election campaign. So he has always been a bit more open in terms of the argument around CGT and negative gearing because that is what he's hearing from his community and he is not nearly as an ideologue around taxation or around the propertied class as some other members of his
- [23:28]
C
opposition like the leader. The leader of the leader.
- [23:32]
A
Yeah, that's right. Like every time you hear from Angus Taylor it's you don't. If you don't, you don't put a tax on something if you want more of it. Except you've got this overwhelming economic argument by people who know far more about the Australian housing market and the taxation system of it saying the interaction of CGT and negative gearing is an issue, it's not the driving issue but it's a factor in the way that we've got higher priced houses in this country and you're into the intergenerational issue. Hastie understands that it's partly because he is younger as well as representing an outer suburban seats. He Has a young family and he sees it up front.
- [24:10]
C
He gets it. Yeah. I just think that's fascinating because it's like he's on the side of the people. And he said that, Paul, he said that very explicitly. He said we need to overhaul the whole system.
- [24:19]
A
We either fix the system or it's torn down by people like Pauline Hanson. No one's going to reward us for a final last stand for neoliberal politics. Ok. There's no medal for that.
- [24:31]
C
What did you make of those comments? Because he's not talking like a classic liberal. He's not talking like Angus Taylor is talking. He's really going against the grain of the entire Liberal Party, isn't he?
- [24:42]
B
Yeah. I think this interview was really striking and will be seen as an important moment in Hastie's trajectory wherever he lands. It exemplified where the new generation of liberals want to take the party. People like Andrew Hastie, Keith Wallahan, backbenchers like Garth Hamilton, Ben Small, some of whom will not be very well known to our listeners. They're kind of frothing at the mouth, wanting the party to talk to different groups in the Australian public. Some of them are much more right wing than traditional liberals in some ways, but they also want to be speaking to the non asset owning class. They also want to question the coalition's attachment, really fervent attachment to Israel and America. They want to open up new debates on national identity. And what Hastie is doing by questioning Trump's agenda in the Middle east is opening up a new nationalistic agenda for the Liberal Party, which in Hastie's vision would be much more Australia focused than us focused at this point, given the destabilising effect Trump is having across the west and given the disregard with which he treats allies. So you saw in that interview a leading voice in this new generation of conservatives who are, you know, channeling what you see in other populist right movements across the world. Giorgia Maloney, others in Europe saying the world is pretty fractious, we need to start fending for ourselves, building up our military, focusing on it, on getting a better lot for the working class, really looking at different coalitions with this Australia first lens.
- [26:24]
C
It's really interesting to me because it's almost like a generational conflict within the Liberal Party, but it's also traditionalists against. Yeah, sort of populist influenced, vibrant of the conservative right. It's fascinating. I don't think Andrew Hastie's going anywhere. It seems like he's only sharpening his claws. So we will keep following this. Shane, thank you so much for coming on. I hope you guys fill up your tanks with ease, your petrol tanks and whatever other tanks you might have with ease this weekend. This Easter long weekend.
- [26:55]
A
Well, that's if we can afford the expensive chocolate because remember, cocoa prices still very, very high from a global shortage.
- [27:03]
C
I know. I feel like that's gone off the agenda. The Easter Bunny is not immune from inflation.
- [27:09]
A
No, you don't want an inflated Easter Bunny.
- [27:13]
C
You do want an inflated Easter bunny egg basket, though.
- [27:17]
A
Absolutely.
- [27:18]
C
Thanks very much, fellas. See you soon.
- [27:20]
B
See you soon.
- [27:20]
A
Cheers, Jackie.
- [27:26]
C
You can read all of our political news on our websites, theage.com au or smh.com Today's episode was produced by Chee Wong with help from Debbie Harrington. Our executive producer is Tammy Mills. And our podcasts are overseen by Lisa Muxworthy and Tom McKendrick. Before you go, follow Inside Politics and leave a review for us on Apple or Spotify. I'm Jacqueline Maley. Thank you for listening.