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Labor’s big cash splash · The Front

• 0:04
  Speaker 1: From The Australian. Here's what's on the front. I'm Christinamiot.
• 0:07
  Speaker 1: It's Thursday, December nineteenth. Alan Jones will plead not guilty
• 0:14
  Speaker 1: to thirty four indecent assault charges relating to incidents that
• 0:18
  Speaker 1: are alleged to have taken place over nearly two decades.
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  Speaker 1: I will not be engaging in a running commentary in
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  Speaker 1: the media, but.
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  Speaker 2: I want you to understand this. These allegations are all
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  Speaker 2: either baseless or they distort the truth.
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  Speaker 1: The veteran broadcaster was swamped by media and protesters outside
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  Speaker 1: Sydney's Downing Center Local Court on Wednesday, but he won't
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  Speaker 1: return for future proceedings after New South Wales Chief Magistrate
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  Speaker 1: Michael Allen excused him from appearing in person. That exclusive
• 0:53
  Speaker 1: story is live right now at the Australian dot com
• 0:56
  Speaker 1: dot au. The government was spend almost sixty billion dollars
• 1:02
  Speaker 1: this financial year and it could drag out the central
• 1:05
  Speaker 1: banks fight against inflation. The Treasurer says the cash splash
• 1:09
  Speaker 1: is unavoidable. But what does that actually mean. That's today's episode.
• 1:22
  Speaker 3: Well, we're rolling out very substantial cost of living help,
• 1:24
  Speaker 3: you know, because people are doing it tough.
• 1:27
  Speaker 1: On Wednesday, Jim Chalmers made it rain.
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  Speaker 3: That's the motivation for the tax cuts, the energy bill relief,
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  Speaker 3: the cheaper medicines, cheaper earlier childhood education, the student debt relief,
• 1:39
  Speaker 3: the rent assistance, and getting wages moving again. We've been
• 1:42
  Speaker 3: able to find room in our budgets for cost of
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  Speaker 3: living relief.
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  Speaker 1: In his mid year Economic and Fiscal Outlook Update, also
• 1:51
  Speaker 1: known as my IFO, the Treasurer announced government spending will
• 1:55
  Speaker 1: surge by just over fifty eight billion dollars in this
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  Speaker 1: financial year.
• 2:00
  Speaker 4: This is a bit of a truth tonic. It tells
• 2:02
  Speaker 4: us where our economy is heading, and particularly it gives
• 2:08
  Speaker 4: us a really strong profile of the sea of red
• 2:12
  Speaker 4: that awaits any government over the next ten years.
• 2:17
  Speaker 1: Tom Ducivic is The Australian's Policy editor, so this is.
• 2:21
  Speaker 4: A pretty bracing set of numbers for anybody to look at.
• 2:26
  Speaker 4: Our revenue miracle of the past few years is over,
• 2:31
  Speaker 4: and now some of the forever spending pressures are coming home.
• 2:37
  Speaker 1: These new numbers will bump the government's share of GDP
• 2:40
  Speaker 1: that's gross domestic product, up to a level we haven't
• 2:43
  Speaker 1: seen since the recession of the early nineteen eighties and
• 2:47
  Speaker 1: the coronavirus pandemic, and it means we're staring down the
• 2:51
  Speaker 1: barrel of a decade of record budget deficits totally more
• 2:55
  Speaker 1: than one hundred and forty billion dollars. But this uptick
• 2:59
  Speaker 1: in spending does doesn't include Labour's Future Made in Australia
• 3:02
  Speaker 1: Net zero investment scheme, or it's sixteen billion dollar plan
• 3:07
  Speaker 1: to slash student debt. So what is the government splashing
• 3:11
  Speaker 1: all that cash on. One of the most expensive items
• 3:15
  Speaker 1: on the list is reforms to the National Disability Insurance Scheme,
• 3:18
  Speaker 1: which the Treasurer says is unavoidable. There's also funding for
• 3:23
  Speaker 1: welfare payments and pensions, plus an unexpected jump in demand
• 3:27
  Speaker 1: for government services like medicare.
• 3:30
  Speaker 3: One of the big drivers of the extra spending in
• 3:34
  Speaker 3: the budget update today, as you know, and which is uncontested,
• 3:38
  Speaker 3: is indexation of things like the age pension, working age
• 3:41
  Speaker 3: payments and the like.
• 3:44
  Speaker 1: And there's a sneaky five point five billion dollar election
• 3:48
  Speaker 1: war chest which will be used for cost of living
• 3:50
  Speaker 1: relief measures likely to be announced in the run up
• 3:53
  Speaker 1: to the next federal election. Jim Charmers deployed another of
• 4:01
  Speaker 1: his trusty catchphrases to explain the government's fifty eight billion
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  Speaker 1: dollar blowout.
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  Speaker 3: Even if you look at the net policy decisions, you know,
• 4:09
  Speaker 3: seventeen and a half billion dollars in net policy decisions.
• 4:13
  Speaker 3: We think something like ninety four percent of that is
• 4:16
  Speaker 3: a combination of genuinely unavoidable already provisioned cost of living
• 4:21
  Speaker 3: or supported in a bipartisan way.
• 4:24
  Speaker 1: But what does that actually mean.
• 4:27
  Speaker 4: It's unavoidable in the sense that governments make choices, and
• 4:32
  Speaker 4: once they make those choices, they decide on certain forever
• 4:37
  Speaker 4: programs basically payments on social welfare for programs, and some
• 4:43
  Speaker 4: of those are linked to inflations, so it means that
• 4:46
  Speaker 4: you have to do indexation. Sometimes you win on indexation
• 4:51
  Speaker 4: in the sense that you've got to return a certain
• 4:55
  Speaker 4: amount to the people receiving those payers, but at the
• 4:59
  Speaker 4: other end, it punishes every wage urner through what we
• 5:04
  Speaker 4: call bracket creep or fiscal drag, where wage inflation just
• 5:09
  Speaker 4: basically pushes our average tax rates up, and so the
• 5:13
  Speaker 4: governments tend to be winners from that, and they get
• 5:17
  Speaker 4: a really big boost from revenue, so the two things
• 5:21
  Speaker 4: net each other out. But in this case, Charmers is
• 5:24
  Speaker 4: just using a big excuse to try and point to
• 5:29
  Speaker 4: those factors outside of his control as driving it. But
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  Speaker 4: that's not the full picture. The full picture is that
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  Speaker 4: in the main the government's own decisions on spending is
• 5:41
  Speaker 4: what is driving this blowout in the budget.
• 5:46
  Speaker 1: Of course, labor is still waging a war against stubborn
• 5:49
  Speaker 1: inflation and desperately hoping the Reserve Bank will cut interest
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  Speaker 1: rates before the next election in a bid to win
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  Speaker 1: back the trust of voters struggling under a cost of
• 5:59
  Speaker 1: living crisis. It says pumping an additional fifty eight billion
• 6:03
  Speaker 1: dollars into the economy won't exacerbate the problem or prolong
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  Speaker 1: the agony.
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  Speaker 3: The Reserve Bank governor has herself said that public demand
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  Speaker 3: is not the main game when it comes to inflation
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  Speaker 3: and interest rates. And what we've been able to do
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  Speaker 3: with the very responsible way we've been managing the budget
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  Speaker 3: is we've seen inflation come off substantially. When we came
• 6:23
  Speaker 3: to office, it was money.
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  Speaker 1: But history tells us that the more money you put
• 6:27
  Speaker 1: into people's pockets by way of bill relief and subsidized services,
• 6:31
  Speaker 1: the more they'll spend on necessities like food and rent.
• 6:35
  Speaker 1: But the more we pump into the economy, the harder
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  Speaker 1: it is to bring inflation down.
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  Speaker 2: So what gives the government here is been coy and
• 6:47
  Speaker 2: not quite telling the full truth on this because it's
• 6:50
  Speaker 2: own spending in this year, after you account for inflation
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  Speaker 2: is going to go up by five point seven percent.
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  Speaker 2: That's the kind of thing you do when you're in
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  Speaker 2: a recession or facing a crisis.
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  Speaker 4: But we're not there. Our unemployment rate is low, the
• 7:08
  Speaker 4: economy is still growing. We've got new people coming into
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  Speaker 4: the country and making the size of the economy larger.
• 7:17
  Speaker 4: But what you've also got is state and territory governments,
• 7:21
  Speaker 4: some of them who've faced elections, have been spending like
• 7:25
  Speaker 4: crazy on all sorts of things like public transport concessions,
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  Speaker 4: energy bill relief. Those sorts of things just pumps more
• 7:34
  Speaker 4: money into an economy. So as the Great Chris Richardson says,
• 7:40
  Speaker 4: that's more dollars chasing the same amount of goods in
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  Speaker 4: an economy, and prices rise, and that pushes up inflation,
• 7:48
  Speaker 4: and that keeps interest rates high.
• 7:53
  Speaker 1: Coming up the treasurer is chickens come home to roost.
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  Speaker 1: Since winning government in twenty twenty two, Jim Chalmers has
• 8:13
  Speaker 1: been quick to take credit for Australia's economic wins.
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  Speaker 3: For the first time in almost two decades, our Labor
• 8:20
  Speaker 3: has delivered back to back budget surpluses. This is a
• 8:24
  Speaker 3: really important demonstration of them.
• 8:26
  Speaker 1: And he hasn't hesitated to blame the opposition for leaving
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  Speaker 1: the government's books in what he says is a bad
• 8:32
  Speaker 1: way the Labor government.
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  Speaker 3: When we came to office, these were two big liberal
• 8:37
  Speaker 3: deficits and we've managed to turn them into two big
• 8:40
  Speaker 3: labor surpluses.
• 8:43
  Speaker 1: But deficits projected to plague the budget over the next
• 8:46
  Speaker 1: several financial years means it's getting harder for Jim Chalmers
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  Speaker 1: to shirk responsibility.
• 8:52
  Speaker 5: After three budgets and potentially a fourth if Labor do
• 8:57
  Speaker 5: hand down a budget on March twenty five next year,
• 9:00
  Speaker 5: Charmers can no longer blame the coalition.
• 9:04
  Speaker 1: Jeff Chambers is the Australian's chief political correspondent.
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  Speaker 5: I think for voters and business owners and others doing
• 9:11
  Speaker 5: it tough out there, this is now Labour's cost of
• 9:15
  Speaker 5: living crisis and housing affordability crisis to own, and it's
• 9:19
  Speaker 5: going to be one of his great political challenges is
• 9:23
  Speaker 5: to respond to that. So there's all types of high
• 9:26
  Speaker 5: level players going on, but people should be expecting from
• 9:29
  Speaker 5: both sides some really big promises, and the pressure for
• 9:32
  Speaker 5: the coalition is to, instead of sitting in that rhetorical space,
• 9:36
  Speaker 5: to actually put some meat on the bones and talk
• 9:39
  Speaker 5: about where they will find savings. And Angus Taylor today,
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  Speaker 5: again concerned about the political blowback, says it's not about austerity,
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  Speaker 5: it's about restraint.
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  Speaker 1: Ahead of Wednesday's MAIFO announcement, the treasure that characterized Labour's
• 9:53
  Speaker 1: almost sixty billion dollar blowout as slippage.
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  Speaker 5: If this is Jim Chalmers's final budget announcement before a
• 10:02
  Speaker 5: federal election, he'll be going to an election without being
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  Speaker 5: able to champion those surpluses, but rather defending a decade
• 10:11
  Speaker 5: of deficits and higher spending under labor. So they're saying
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  Speaker 5: that they need to spend on unavoidable automatic spending. Some
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  Speaker 5: of that is highly questionable given the links to labor policy,
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  Speaker 5: but it comes down to a matter of whether or
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  Speaker 5: not the government has the courage politically to rain in
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  Speaker 5: some of that structural spending. It seems like they don't
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  Speaker 5: have that appetite and that's where the pressure goes towards
• 10:41
  Speaker 5: the coalition to see what their plan is. But ultimately
• 10:44
  Speaker 5: today's my AFA was a really difficult one for Jim
• 10:48
  Speaker 5: Charmers to shine some positive light on.
• 11:01
  Speaker 1: Jeff Chambers is The Australian's chief political correspondent and Tom
• 11:04
  Speaker 1: Ducivic is our policy editor. You can read all our
• 11:07
  Speaker 1: reporting and analysis of the government's media budget update right
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  Speaker 1: now at the Australian dot com dot au