TRANSCRIPT - Sky News Newsday with Kieran Gilbert

PAUL FLETCHER MP

Shadow Minister for Science and the Arts

Shadow Minister for Government Services and the Digital Economy

Manager of Opposition Business in the House

TRANSCRIPT

SKY NEWS NEWSDAY

7 August 2024

Kieran Gilbert: Joining me is the Manager of Opposition Business, Paul Fletcher. We heard the critique there from Sussan Ley about the Queensland plan for state owned petrol stations but ahead of an election, won't it be a popular idea, for the State to take control of some of those to help drive down prices and boost competition, Paul Fletcher?

Paul Fletcher: Well, Kieran, I think it's an exceptionally poor idea and it's the kind of idea that gets jumped up by a pretty desperate political party that suspects it may be, the last few weeks of government. Certainly, let's hope so. 

It's a poor idea because governments have no expertise in retailing and they won't do it as efficiently and capably as private sector businesses. It's a poor idea because it involves spending taxpayers’ money which will inevitably get wasted. 

And, it's a poor idea because it's pretending that government can solve every problem. The best way to make sure that retail prices are as low as possible, you want to make sure that the margin of retail prices above the globally set wholesale prices as low as possible.

The way to do that is to maximise vigorous private sector competition, it's not to introduce a government retailer. I mean, this is the kind of thing that was a feature, frankly, of, you know, the old soviet bloc and we know what the retailing experience there was for customers. This is not going to solve anything. It's a very, very bad idea.

Kieran Gilbert: A lot of your criticism, very similar criticisms have been levelled at the Coalition plan to have state owned nuclear power stations?

Paul Fletcher: Look, I fundamentally disagree with that comparison, Kieran, with the greatest of respect. With nuclear power, what we're talking about is a very capital-intensive business, billions of dollars, and it's also a vertically integrated business. 

The whole thing about petrol retailing is that it's one small part of the value chain and it's not the part of the value chain where fundamentally, prices are set.

Fundamentally prices are set through global supply and demand movements, but there is plenty of logic and plenty of precedent for having highly capital intensive facilities owned by government. For example, when we're in government and we were setting up Western Sydney airport, we took the decision that that would be government owned. Why? Because it's very capital intensive and there are risks that government is best placed to take, and so I have to say with respect, I just reject that comparison entirely.

Kieran Gilbert: The Reserve Bank, its blunt message this week, no rate cuts before the end of the year. The hard slog for many will continue. Do you believe, do you see this as a window where the Coalition might actually electorally be able to get close to forming government if these pressures remain for as long as the RBA is suggesting?

Paul Fletcher: Well, what we're focused on is what delivers the best outcome for Australians. For Australians who are working hard to get ahead to make a good life for themselves and their families, and it's been very tough over the last couple of years.

We know that standard of living is down about 8%.We know that if you've got a typical mortgage, you add that together with other cost increases, you're paying about $35,000 a year more than you were two years ago.

And what we also know, and the Reserve Bank has confirmed this in the statement made by the Governor, Michelle Bullock, yesterday, that a major factor in the continuing level of persistent inflation we have, staying persistently at around 4%, is government spending.

The Reserve Bank Governor specifically called out high levels of government spending, and this is the very point the Coalition's been making. We made this point about the Budget that was brought down in May this year, that this is the wrong time to be turning up the dial on government spending.

And what it means is that Mister Chalmers’ policies are going in the opposite direction of the Reserve Bank's policies. The Reserve Bank is working hard to get inflation under control, and once that happens, you can start to bring interest rates down again but at the moment, inflation is very sticky.

And as the Reserve Bank Governor said yesterday, their expectation is it won't now be until the end of 2026 that we see inflation down in the middle of that target band of 2% -3%. So, this is a very serious challenge, and the Treasurer, Jim Chalmers, seems remarkably lacking in seriousness, in the way he's engaging on this issue.

Kieran Gilbert: But there does need to be efforts by governments to listen as well, to show empathy to people who are struggling. You can't on the one hand say, yes, you’ve got to rein in spending, but surely you would accept the political requirement for governments to also try and help people, whether it be through energy rebates or other measures?

Paul Fletcher: But let's not pretend that the energy rebates in any material way address the inflation problem. They don't. It's an accounting trick. The RBA sees right through it as they assess the level they need to put interest rates to, to get inflation under control. 

The Governor said yesterday that they came very close to actually increasing interest rates by 25 basis points. In the end, they decided not to. But they are clearly very concerned. 

So yes, it's important to display empathy, of course, but it's also important to make the necessary political decisions rather than spending without restraint, as we're seeing from this government $315 billion of additional spending since they came to government.

And in this last Budget, for example, an extra $24 billion over the next four years on 36,000 public servants. Well, we've been very clear that's money we would not be spending. Labor likes having more public servants because they're unionised. It means more power for the union bosses. But we think it's a terrible idea and it's an idea that is contributing to the continuing upward pressure on inflation, which the Reserve Bank Governor has again called out.

Kieran Gilbert: Manager of Opposition Business, Paul Fletcher. Thanks, appreciate it.

Paul Fletcher: Thanks Kieran.