: Yesterday’s better than expected inflation numbers are welcome news for Australians and the Federal Government. But can we be sure the worst is over? Earlier this week, vacuuming retailer Godfreys went into voluntary administration, triggering fears a wave of retail bankruptcies could precede the expected rise in unemployment. Many will be watching with some hope that the lower than expected rate of quarterly inflation might make the Reserve Bank more inclined to lower interest rates sooner. It’s all very welcome for the Government as they try and sell the changes to the stage three tax cuts. This morning, I’m joined by the Prime Minister, Anthony Albanese. Prime Minister, welcome back to Breakfast.
ANTHONY ALBANSE PRIME MINISTER: Good morning, Patricia.
KARVELAS: Inflation has plunged to a two year low of 4.1 per cent. That is obviously welcome news. When will cost of living return to normal?
PRIME MINISTER: Well, this was certainly good news yesterday. An inflation figure, seeing it moderated to 4.1 per cent in the year to the December quarter. Now, when we were elected, just the month of the quarter before, the March 2022 quarter, the quarterly rate was 2.1 per cent and that was where it peaked. Since then, since we came to office, we’ve been working really hard to deliver cost of living relief, but without adding to inflation. So, monthly inflation now has a three in front of it for the first time since December 2021. And so this is welcome and encouraging progress in the challenge of dealing with inflation. But that work continues because we know that people are still under pressure and we need to not be complacent about it. We need to continue to work as we have with our three-point plan. Having the surplus, making sure we deal with cost of living pressures without putting pressure on inflation, and dealing with issues like supply chain issues as well.
KARVELAS: Prime Minister, AMP Capital Chief Economist Shane Oliver says he expects three interest rate cuts this year, starting in June. But he’s warned there is a risk the rewrite of the stage three tax cuts would delay interest rate reductions until August. So, could your changes to tax delay interest rate relief?
PRIME MINISTER: No. And that is precisely what Treasury have said, why we released the Treasury documents, eight pages of analysis, as well as a number of pages, including graphs and the assessment. That’s why we very much focused on making sure it was revenue neutral, the changes that we had. That’s why we also consulted the RBA Governor, both the Treasurer and the Treasury Secretary. And this will not have an inflationary impact because, although people on low and middle income of course, are more likely to spend, because that’s one of the reasons why we’re doing it, they don’t have the luxury of putting it into savings that’s balanced out by the increased labour supply that will occur as a result of particularly that decrease in that first rate from 19 cents to 16 cents, so that every Australian taxpayer gets a tax cut. And overnight as well, we’ve seen these figures of extra bulk billing. What that has done, as well as making a difference in terms of people seeing a doctor, is that it has led to Australians saving $15 million in gap fees just in November and December alone. I’ll be on the Central Coast today. It’s the 40th anniversary of Medicare, by the way Patricia, and we’ve seen a five per cent increase on the Central Coast of New South Wales. We’ve seen higher than that, six per cent in Tasmania. This is all making a difference, with some 360,000 additional trips to the GP being bulk billed. These are the sort of initiatives that we have undertaken that have driven down inflation.
KARVELAS: Let me take you to interest rates, though. Do you expect the RBA to start cutting rates?
PRIME MINISTER: Patricia, as you know, the RBA are an independent body.
KARVELAS: So let me ask the question differently –
PRIME MINISTER: They will make their own decisions.
KARVELAS: Because you have commented before. Do you think households need to see cuts to their interest rates in coming months, given the cost of living pressures you talk about and the other results we’re seeing in the economy?
PRIME MINISTER: I, of course, would like to see cuts to interest rates. I’d like to see any measure that takes pressure off low and middle income earners. Particularly people in middle Australia, have had to deal with inflation, have had to deal with the interest rate increases. And we have targeted, it’s easier to target cost of living relief for people who are on payments, for example, and we made those increases last year. But how do you target people in middle Australia for relief. There’s two ways, essentially, the things government can do. It can encourage an increase in their wages. We’ve done that. We have real wages increasing for two quarters in a row. The second is taxation, and that is why this plan is targeted squarely at middle Australia.
KARVELAS. So, what do you make of the business proposal a couple of days ago now that Fair Work Commission shouldn’t consider the same level of a pay rise for minimum wage earners on the basis of the tax cut they’re going to get?
PRIME MINISTER: Well, people who are on minimum wages are doing it tough. That’s the truth. And one of the things that strikes me has occurred over recent days is that for some of the commentary, whether it be the Coalition which has been all over the shop, or indeed some of the commentary from some in the business community, is that during the pandemic, these were the heroes. The cleaners, the people who are aged care workers, our child care workers, our truck drivers, our retail workers. These are the heroes of the pandemic that kept the country going. And now that they’re under pressure, we make no apologies for targeting our support at low and middle income earners.
KARVELAS: Now, Prime Minister, how will you deal with demands from the Greens? Adam Bandt says that they’ll consider your tax package with an increase to JobSeeker. Is that something you’d do?
PRIME MINISTER: We’re not going to trade, if you’d like, across a whole range of issues. This is something that we consider in every Budget, I’ve said that. We had a significant increase in the last Budget on JobSeeker of Youth Allowance, of Parenting Payment. Of course, we made the very significant difference on Single Parent Payments. We had increases in Austudy and Youth Disability Support Pension by $40 a fortnight. This benefited over a million Australians. We’ll always do what we can to provide support.
KARVELAS. So, just to be clear, you will not consider the other demands for other changes, like, for instance, in housing or in JobSeeker?
PRIME MINISTER: Well, it gets you to talk about them and that’s fair enough. That’s politics, that now you’ve spoken about their position, I expect that to occur. But our proposal stands on its merits and at the end of the day, the minor parties as well as the Coalition are going to have to decide, is our package better than the package which was previously there. And the truth is that there has been no criticism of any substance of our package by either the Coalition who’ve engaged in personal abuse, or the crossbenchers.
KARVELAS: Well, they’re arguing that you’ve broken a promise and you have, haven’t you?
PRIME MINISTER: This is the party led by Peter Dutton, who today, as we celebrate the 40th anniversary of Medicare and we commend and applaud the increase in bulk billing, wanted to introduce and tried to introduce a GP tax on every visit to the doctor.
KARVELAS: But you say wanted to, they didn’t.
PRIME MINISTER: Well, they did introduce it. They got knocked off in the Senate and by Opposition they put it in their Budget, a GP tax that they tried to introduce as well as, of course, an increase in the top rate that they didn’t speak about before they came to office. They had the so-called deficit levy on high income Australians, so that that actually increased the top marginal tax rate. They talk about aspiration, they did nothing about the top rate.
KARVELAS: What you’re saying is that you don’t care about what they’re saying about broken promises because they’ve done it the same. So, all politicians the same? Is that what we should get out of that?
PRIME MINISTER: What I’m saying is when economic circumstances change, as they have, with a commitment that they put in five years in advance. I said at the time it was a triumph of hope over experience to know what the economy would look like in five years time. Low and middle income earners are under pressure. What you can’t do is say, ‘Oh, there’s all this cost of living pressure’, acknowledge and identify a problem, but not come up with a solution. We have come up with a practical solution. It’s not the easy decision. We knew it would be contentious, but it’s the right decision taken for the right reasons. It will benefit low and middle income earners, but it will also benefit our national economy as well.
KARVELAS: Okay, Prime Minister, your Treasurer has ruled out looking at other reforms like negative gearing. Is a policy like changes to negative gearing something you need to go to an election with to get a mandate for?
PRIME MINISTER: Well, what we’ve done when it comes to housing is have a range of policies in place, whether it’s support for social housing, the Social Housing Accelerator and the other increased through the Housing Australia Future Fund.
KARVELAS: I know what you’ve done, but on that question, do you think that you need to get a mandate for something like that?
PRIME MINISTER: Well, one of the things that we’ve seen here is that we have a very big policy on the table and the Coalition want to talk about anything else but. Because originally they said that they would oppose it before they knew what it was, then they said they’d reverse it, which would mean an increase in tax for 12 million Australians, and now they’ve stopped talking about it and can’t even make a decision in their shadow cabinet. We’ll continue to argue for the tax change that we have advocated for.
KARVELAS: But on broader taxation reform, what is your view? I’m asking for a sort of deeper answer, really, if I can put it that way, about the way that you frame these changes. Because, there is a sensitivity about big change. And others, like, for instance, Allegra Spender, were saying we need big tax reform. So, do you need to take that kind of reform to an election, or is it something you do from Government? How do you see it?
PRIME MINISTER: Well, I have a lot of time for Allegra Spender, but of the changes that we’ve put forward, she’s yet to support one. The PRRT changes that we’ve advanced, the changes to superannuation, these ones, she’s yet to come out and say that she supports it. What we’re focused on is what we will take to the Parliament in coming weeks. The legislation will be introduced next week. And people will have to make a decision of whether they want every Australian to get a tax cut, all 13.6 million of them, not just some.
KARVELAS: Okay. Prime Minister, do you see the Dunkley by-election as a referendum on your changes to tax?
PRIME MINISTER: No.
KARVELAS: Why not?
PRIME MINISTER: Because it’s not –
KARVELAS: But it’s the first time –
PRIME MINISTER: Because it’s not. Simple as that.
KARVELAS: I think it was Michelle Grattan who described it that way and I’ll explain why I think she was thinking. This is the first time voters, albeit it’s not the whole country, but voters will make a judgement on those tax cuts. So, do you see it as a sort of a big survey, isn’t it, on how voters are feeling about it?
PRIME MINISTER: They’ll make a judgement on a whole range of issues. And the idea that you sitting in the studio there or me sitting in my office.
KARVELAS: Standing.
PRIME MINISTER: Can work out exactly why people will vote is very bold. I’ll put it that way –
KARVELAS: Okay. Let’s move on.
PRIME MINISTER: What Dunkley is, is an opportunity is for people to elect Jodie Belyea, who will carry on the legacy of Peta Murphy. She was an amazing local member, tragically lost her life to cancer at the age of just 50. She recruited Jodie to the Party. Jodie will be outstanding. She’s such a strong advocate, a local, a local mum who’s really in touch with her community.
KARVELAS: I want to just talk about Gaza before I let you go, Prime Minister. The US Secretary of State has asked the State Department to present policy options for US and international recognition of a Palestinian state after the war in Gaza. Have you asked DFAT to look at that too?
PRIME MINISTER: I’ve certainly had discussions with Secretary Blinken as well as with President Biden about the issues of the Middle East. And what’s very clear is that we need a political solution. And it has been my long-term view that I hold that Israel has a right to exist within secure borders and that Palestinian people need justice and need their own state as well. The two-state solution is something that the international community must play a constructive and positive role in.
KARVELAS. So, you’re open to that? To establishing, recognising a Palestinian state in that time frame?
PRIME MINISTER: My position has always been to support a two-state solution in the Middle East, where both Israelis and Palestinians can enjoy the prosperity that will come with peace in the region. This conflict has gone on for a long period of time and it’s also been my position consistently, including throughout this conflict, that every life matters, every innocent life, whether it be Israeli or Palestinian.
KARVELAS. So, you are in talks, just to confirm, about recognising Palestine after the war.
PRIME MINISTER: We’re not in talks. It has been my Government’s position and been my personal position for a long period of time, that I support a two-state solution. And the United States, President Biden has spoken about this on a number of occasions publicly, and Secretary Blinken, I think, as well, has been clear about his position. We need, and the Government has voted for a humanitarian ceasefire. We want to see the hostages released. We are completely opposed to the terrorist organization, Hamas has no role to play. And indeed, if you look back, Patricia, the reports today are very consistent with the joint position that was put out by Australia, Canada and New Zealand some months ago now.
KARVELAS: Prime Minister, Australian officials have met the UN Secretary General and officials from UNRWA to discuss lifting the suspension in funding. Are you going to do that?
PRIME MINISTER: Well, I’m not preempting those meetings. We know that UNRWA plays an important role. Our closest partners all fund UNRWA, including the United States, the United Kingdom and Canada. And we know that as well, we take the allegations of breaches of UNRWA’s neutrality very seriously. But UNRWA is the only United Nations body with the mandate to provide relief and services to Palestinians in the region. It is providing essential services in Gaza directly to those who need it. And this issue needs to be resolved. We cannot have a circumstance where the UNRWA staff, the allegations are that there have been some, a small number, but still it’s deeply concerning that some were involved in the October 7 terror attacks.
KARVELAS. So, has the UN been able to satisfy Australian concerns around the involvement of staff in the October 7 attacks so that you can resume funding?
PRIME MINISTER: Well, we consider these issues after consultation rather than, with respect, Patricia, on RN, as important as this program is. We’ll take this seriously. We’ll take considered advice. We want to make ensure that every dollar that Australia contributes, as would the other contributors like the US and Canada, goes to helping people on the ground who really need it.
KARVELAS: Just on something entirely different. Before I say goodbye to you, first time I’ve spoken to you in 2024.
PRIME MINISTER: This’ll be good.
KARVELAS: Yes, something entirely different.
PRIME MINISTER: Anything could happen here.
KARVELAS: Anything is about to happen. No. There’s been some speculation around when the Governor General, David Hurley, will be replaced. Do you believe he should be replaced by First Nations Governor General?
PRIME MINISTER: I think he should be replaced by a great Australian. And I believe in our institutions. I think Governor General David Hurley has done a fine job and has continued the service that he provided to the Australian Defence Force and then as Governor of New South Wales. And the protocols demand that those discussions take place between the Government, myself, in recommendation to King Charles, and that’s precisely how it will occur.
KARVELAS: So, you’re going to give me nothing?
PRIME MINISTER: Well, the protocols require –
KARVELAS: Protocols, protocols, protocols, Prime Minister.
PRIME MINISTER: Well, they matter. Our institutions matter.
KARVELAS: I know the institutions matter. I’m just wondering if you think it would be nice to see an Indigenous person in that role, given this country’s legacy.
PRIME MINISTER: The so-called conservative party. Although it’s not called that, of course. It’s certainly not a Liberal party and it’s not a conservative party either. It trashes our institutions. I respect our institutions. And I’ll be doing just that prior to making an announcement in the first half of this year that I think the announcement will be made by the Palace, not by myself.
PRIME MINISTER: Okay, Prime Minister, really appreciate your time.
KARVELAS: Thanks very much, Patricia.
