RBA commentary on inflation; Fuel prices; Interest rates

Simon Birmingham:  Thanks very much for coming today. I want to acknowledge and welcome the speech by the Governor of the Reserve Bank today that highlights the Reserve Bank of Australia's position, consistent with that of other central banks and leading international organisations around the world. That takes a circumspect approach to some of the inflationary pressures that sees them largely as being temporary at present, and that maintains the Reserve Bank's outlook that sees Australia in an environment where inflation will remain and should remain broadly under control, where interest rates will remain broadly low and where unemployment continue to trend down towards four per cent.  
 
As the Reserve Bank governor himself has said an environment any time in the recent past where inflation moved around with a number starting with two and unemployment with the number starting with a four would have been considered to be an exceptionally good outcome. And that is certainly the work and trajectory our government continues to wish to focus on. Making sure that we keep Australia in the strongest possible position for jobs to grow and for unemployment to keep heading downwards. And that's what we have sought to do throughout our time in government to make sure that we created as many jobs as possible across the Australian economy and then during this COVID-19 pandemic, protecting the jobs of Australians as much as possible. And in doing so, we've created one of the most exceptional economic results in the world when it comes to managing COVID. Minimising business failures, maximising employment retention and keeping our economy and jobs in the strongest possible position for Australians. This hasn't just been an accident, it's been as a result of the sound policies that have been applied over recent years. Policies that stand in stark contrast to our political opponents. 
 
We have delivered policies that have saved more than $300 billion worth of income tax and other tax cuts being legislated and applied across the Australian economy. Our opposition went to the last election, with more than $380 billion of higher tax proposals. We have delivered policies that have seen around 11 consecutive quarters of reductions in electricity prices for Australians based on the CPI. The previous government oversaw more than 20 consecutive quarters of electricity price rises under their term. These are the differences that are making a profound difference to Australian households and small businesses. Creating greater capacity for them, which we can see being realised by higher levels of household savings. By the fact that there'd been an uptick over recent years and first home ownership, and by the fact that businesses have stronger balance sheets than previously been the case. These are all the dividends from strong Liberal National government of lower taxes, more jobs, strong economic management, in contrast to our political opponents and their history of higher taxes, higher costs and weaker economic outcomes.

 

Journalist: Australians who are highly leveraged, perhaps with a mortgage. Why would they believe the coalition could keep interest rates low, in view of the advice, I have that there's a tip that there could be a full percentage rise in interest rates in the next 18 months. How can you trust the coalition on that basis?

 

Simon Birmingham: I'd encourage people to look at the words of the Reserve Bank Governor today. Who has, as I said, outlined a very thoughtful contribution in terms of the way he, the Reserve Bank of Australia and other central banks and other international institutions see the outlook in relation to inflation and pressures, which they largely see has been shorter term and more temporary. The strengths that he sees in the Australian economy and the fact that the Reserve Bank of Australia still believes that low interest rates will be the case for the foreseeable future here in Australia.

 

Journalist: Can the coalition claim that petrol prices and interest rates will rise under Labor? And on what basis would they do that?

 

Simon Birmingham: Well, Australians have seen the history before. They've seen the history of Labor governments where interest rates have been higher, where electricity prices have been higher, where economic outcomes have been weaker. Versus the Coalition, where we have delivered a track record in government of strong economic outcomes, record numbers of people in jobs, putting more cash back into people's pockets through tax cuts. Not the tax hikes of Labor. And through making sure that we have the strongest possible market conditions which have been driving down electricity prices. That's the type of contrast that people can take and look, not just what is said, but what has been done. Under the Liberal and National parties, lower taxes, lower electricity prices. Under the Labor Party, higher taxes, higher electricity prices. That's the lived experience in Australia.

 

Journalist: Is there a need for the coalition to invent a scare campaign against Labor to win the next election?

 

Simon Birmingham: Talking about facts and the lived experiences is something that we will happily stand by. We will happily contrast our track record with that of the Labor Party when it comes to reducing electricity prices versus their increases in electricity prices. Where we've legislated tax cuts, while they introduced new taxes and promised additional taxes. This is simply a statement of facts. The data backs it up.

 

Journalist: What makes them available to any government to keep fuel prices below $2?

 

Simon Birmingham: Well, is the government. What we have done is act in the areas that are within our control and sphere. We don't get control and set global oil prices. What we do get to control are the policies in terms of supporting additional storage for fuel in Australia, the maintenance of processing facilities in Australia in relation to fuel. We've put real dollars on the table to make sure we create more of those storage facilities to ensure that we have a situation where fuel is still refined in Australia and that we keep refineries in Australia. They're the types of measures that we've done within our control whilst ensuring that Australians in an environment of lower interest rates of lower taxes and of lower electricity prices are better able to withstand some of those global pressures that come along.

 

Journalist: One of the criticisms though there isn't that critical mass in the Australian economy to cover the shortfall in terms of what's available, refined locally gets what we had to bring in and an intervening period while you get that critical mass up. What control can you possibly have on retail prices?

 

Simon Birmingham: Well, it's why we've invested in terms of refinery capacity and in terms of ensuring that we keep those refineries in Australia and that we have more storage of fuels in Australia. But the global oil price is set by global factors well outside of Australia. And the important thing we can do for Australians is precisely what we've done on fuel, which is to retain as much refining capacity here for the future by backing in those refiners willing to invest in our country, create more storage capacity in Australia, but also to make sure that Australians have the strongest possible economy, the greatest possible job security to be able to withstand these challenges and as much cash in their pocket from lower taxes and lower electricity prices, and strong job security as possible to be able to withstand any of the global shocks that come along. We've all had to withstand the global shocks of COVID-19. There will always be certain global shocks and pressures. The important thing is ensuring that we create the strongest environment in Australia for people to be able to withstand those shocks. Thank you.

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