I inform the Senate that the President has received the following letter, dated 6 March, from Senator McKim:
Pursuant to standing order 75, I give notice that today the Australian Greens propose to move "That, in the opinion of the Senate, the following is a matter of urgency:
Given the RBA's admission that between half and three-quarters of the increase in inflation is a result of supply shocks and that monetary policy can do very little to offset supply shocks, the RBA should not raise interest rates and the government must act to address inflation and the cost of living crisis, including by introducing a national freeze on rents".
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
I understand that informal arrangements have been made to allocate specific times to each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
We are witnessing something extraordinary and devastating unfolding in this country: the lives of the poorest Australians, those who can least afford to be made worse off, are being degraded in the relentless and dogmatic pursuit of a self-defeating economic goal. Renters and mortgage holders are being smashed by a Reserve Bank stuck in the past and in denial of reality. Tomorrow will just be the latest chapter of this unfolding ruination of the poorest Australians when the RBA does what it shouldn't do and lifts interest rates for the 10th consecutive time. Meanwhile, the government is more interested in ashen-faced commentary rather than doing what it was elected to do, which is to actually help people. We find ourselves today, and we will find ourselves tomorrow, at the dead end of neoliberal economics. And at that dead end lies the inherent flaw in one of the hallmarks of this corrupt ideology: so-called independent central banking.
Independent central banking is fundamentally undemocratic. The justification for one of the most important economic tools not being in the hands of elected government is that monetary policy is too important to be left to politics. We are told that interest rate decisions are best left to those who really understand the economy, and that inflation is always and everywhere a function of excessive demand that the RBA alone should be left to get under control. It's on this reductive logic that the RBA's nine consecutive rate rises have been based and have gone unchallenged by the government. And it's on this reductive logic that tomorrow's 10th interest rate rise will again be based. But the logic is flawed. How do we know it's flawed? Well, because the RBA have told us so.
Last month, the RBA said that between half and three-quarters of the increase in inflation is a result of supply shocks. And the chair of the board of the RBA, Mr Lowe, said, 'There is very little that monetary policy can do to offset supply shocks.' He said, 'Our models are not well suited for supply shocks.' So, there it is: our glorious, technocratic, wise-above-all-others, independent central bank, responding to a problem it can't understand with a solution that doesn't suit. That's the great travesty happening before our eyes.
We know that interest rates are not the right tool to deal with the current inflation spike, but we are stuck in this bizarre Pavlovian state where the RBA raises interest rates to squash a non-existent price-wage spiral and the government goes through its 'nothing we can do about it' routine, and the poorest Australians—the renters and the mortgage holders of this country, who did nothing to create the problem of spiking inflation—are paying the price. And we're supposed to believe that this is the best we can do, while the wealthiest in this country continue to make off like bandits. Well, it's not good enough.
I say to Labor: people's lives are being destroyed, so wake up and do something about it. Tax corporate super profits, tax the wealthy, freeze rents, make child care free, put dental and mental health into Medicare, and raise income supports. These are meaningful actions that Labor could do if they would just take their heads out of their centrist fundaments and look to the light on the hill. Please, do something. Don't just sit there and pretend you can't.
nator RENNICK () (): It must be a blue moon tonight, because it's not often that I agree with Senator McKim. I agree on most of his motion; I'm not too keen on the national freeze on rents, even though I accept that there's a genuine problem in regard to rents. But much, much more needs to be done than just allowing an unelected, unaccountable RBA to run riot and destroy the economy through this blunt instrument known as qualitative easing. For too long, Western governments have relied on these central bankers, who are unaccountable and who all report to the Bank for International Settlements. We had that confirmed by Michele Bullock during the last set of estimates, where she admitted that she wouldn't release the minutes of those meetings with the Bank for International Settlements because they wouldn't be allowed back at the table. That's not what I call accountability. But I will address that issue another day, because I want to go back to the crux of this, which of course is the cost of living and the crisis that is going to be caused by the RBA's reckless behaviour.
The problem with the RBA is that they are all lifers. The last four RBA governors all started work at the RBA. They've all had careers in the RBA and have no idea of what goes on in the real world. They base everything on theory and very, very little on practice. I think we need to look—and I know Senator McKim is touching on this; I didn't quite pick up all of it, but I think I'm on the same path as him—at the fact that they deal only with the demand side. I've asked the RBA this myself. They deal only with the demand side. What we've got here in Australia at the moment is that we've had supply shocks. People often think inflation is caused only by too much demand, but that's not the case. If trying to make ends meet is too much demand, well, I'm sorry, but that's not too much demand; that's a lack of productivity in our own economy because we don't build enough nation-building infrastructure to provide essential services at affordable rates. What we really need to do in this country is stop being afraid of building infrastructure—in particular, what I call the sovereign seven, which are dams, rail, road, power stations, telecommunications, airports and ports. We need to supply more of these things, through quantitative easing. It took me 30 years to unbrainwash myself, because I had this rubbish forced down my throat at university, but there is nothing wrong with doing this. There is nothing wrong—companies do it all the time. They issue shares. They issue equity. They issue new equity to build a new mine.
As a country we can issue new equity to build infrastructure. It's debit, asset; credit, equity. You can create an infrastructure bank here at the federal government level. They can lend to the state governments, and the state governments pay interest back to the national infrastructure bank. The national infrastructure bank can pay dividends back through to the federal government, which will basically be a form of raising revenue, adding more infrastructure and more supply to the economy. This will push down the prices of essential services. That's not just good for the cost of living; it will make it more competitive—for our businesses to compete with other businesses in the world. Look at China, for example. They didn't go out and buy trillions of US dollars. They did all that infrastructure building in China, on the back of their own central bank.
We have a history here in Australia of doing the same thing. One of Australia's first governors, and he was the first governor to issue our own currency, was Lachlan Macquarie. He built the Sydney hospital, the Sydney barracks, with our own currency, the holey dollar. That was Australia's first currency. Unfortunately, today that holey dollar is used as a logo for Macquarie Bank, who happened to act on—because of superannuation. This is what people don't want to admit about superannuation, the fact that this facilitated privatisation of our infrastructure assets. So now they're in the hands of unelected superannuation board members.
There are other things we can do to ease demand on inflation. We should look at lowering the immigration rate. Two-thirds of our immigration rate is driven by foreign students. Universities don't have to pay tax on income derived from foreign students. So if you want to talk about a super profits tax, let's make universities pay tax on the profits they derive from foreign students. That will reduce the demand caused by over immigration.
or WALSH () (): I too rise to speak on the urgency motion moved by Senator McKim. The Albanese government is talking to Australians every day, and we know that Australians are facing cost-of-living challenges. We know that families are doing it tough. We hear it every day. After a decade of waste and rorts and stagnant low wages, a pandemic and a war in Ukraine inflation is quite appropriately the top issue on our agenda.
The Reserve Bank makes its decisions independently in its response to addressing inflation, and it should stay independent. Today's debate shows exactly how important it is that the RBA sets rates, not the politicians in this chamber. Our role as the government is to deliver a responsible economic plan and to deliver relief to those who need it most. It is a responsible plan that will help drive down inflation. Because of a decade of the former coalition government's wasted opportunities and questionable priorities, we have a lot of work to do. We're dealing with a trillion dollars of debt with absolutely nothing to show for it.
Our response to inflation is a three-point plan, which is about relief, repair and, importantly, restraint. We're providing cost-of-living relief that doesn't add to inflation. This year, we've successfully argued for a minimum wage increase, and we're proud of that increase. We've delivered cheaper medicines, which has seen Australians save more than $36 million in the past two months. We know energy bills are a stress point for households, so we're working with the states and territories to provide energy bill relief. This will be a key policy in the May budget.
Last December we introduced emergency caps on gas prices. It's been confirmed in Senate estimates that this will push down future prices significantly. According to Dr Kennedy, over the year to June 2024 our price caps will continue to reduce inflation by half a per cent. This is also a point acknowledged by Mr Lowe, who cited in estimates our energy policy as having a key downward force on inflation.
We know people need relief, right now, from the rising cost of living today as well. So we're delivering cheaper child care; we're delivering free TAFE; we're expanding paid parental leave; we're building more homes. At the same time, we're repairing our economy. Senator McKim does raise an important point: it is supply shocks that have contributed to inflation. The coalition did nothing in government to strengthen our supply chains. That has only made things worse for Australian families.
We have plans to repair our broken supply chains. We're doing that by investing in the long run of our economy. Our $15 billion National Reconstruction Fund will diversify our economy. It will bring manufacturing back to our shores. It will create secure, well-paid jobs. We're investing in the renewables that will bring down energy prices and help us reach our emission targets too.
So what is important right now is that, as a government, we make quality investments that strengthen and diversify our economy, secure our energy and our supply chains and create new jobs across the economy. Notably, our plans don't add to inflation, and that's because we're being responsible and restraining our spending. We're returning 99 per cent of revenue upgrades to the budget over the next two years. The average of the last government was just 40 per cent. The last thing that we want to be doing is contributing to inflation pressures. The plan is working, and we need to stick to it. We know that Australians are doing it tough, and we're taking responsibility for addressing inflation. It is the defining challenge that we face right now this year. But we're prepared to face it with sensible plans. We're working every day to make Australians' lives better, by delivering secure jobs, cheaper child care and cheaper medicines and investing in the long run of our nation, with more housing and cleaner energy, and bringing back manufacturing. This is what we were elected to do, and we're getting on with the job.
Long debate text truncated.
Date and time: 4:36 PM on 2023-03-06
Senator Pocock's vote: Abstained
Total number of "aye" votes: 10
Total number of "no" votes: 25
Total number of abstentions: 41
Adapted from information made available by theyvoteforyou.org.au