Labor IR laws and spending in Coalition sights

Angus Taylor says Labor’s spending was now out of control and only adding to the cost of living crisis. In nominal terms, factoring inflation in, spending is more than double the growth rate of the economy.

Opposition Treasury spokesman Angus Taylor has vowed to put the productivity crisis and government spending at the centre of the Coalition’s economic agenda. Picture: NCA NewsWire / Martin Ollman

The Coalition will accuse Labor of embarking on a spending spree that will outpace the nation’s forecast economic growth rate by more than 100 per cent and further fuel inflation, as it vows to tear up key planks of Labor’s industrial relations laws.

If elected, the Coalition, as part of its IR overhaul, will make a point of returning to the original definition of casual employment. Opposition Treasury spokesman Angus Taylor has vowed to put the productivity crisis and government spending at the centre of the Coalition’s economic agenda ahead of the next election as it draws battlelines around homegrown inflation and economic management. In his budget-in-reply speech to the National Press Club on Wednesday, Mr Taylor will accuse Labor of spending increases of 16 per cent over the next two years.

In nominal terms, factoring in inflation, this is more than double the growth rate of the economy, he will claim. Nominal GDP growth was forecast at 7.6 per cent over the two years from 2023-25. Spending growth was projected to be 15.8 per cent.

In real terms, the ratio was similar, with GDP growth running at a cumulative rate of 3.8 per cent over the two financial years compared to spending growth of 8.3 per cent.

“For the second budget in a row, economists are clear that it is unambiguously expansionary,” Mr Taylor will say.

“Labor has committed to an extra $315bn of spending since the last election – more than $30,000 per household.

“On policy decisions, Labor is spending $4 for every $1 raised.

“Government spending as a percentage of GDP is forecast to be at its highest level since 1986-87, outside the pandemic.

“Nominal spending is growing at 16 per cent over the next two years, double the rate of nominal growth.”

Mr Taylor will also flag that the Coalition would inject flexibility back into the workplace as a critical plank of restoring productivity, which is now running at historical lows and driving the underlying inflation problem.

“Productivity of government is now a crucial part of overall economy productivity,” he will say.

“Meanwhile, this government’s productivity performance is dreadful and unprecedented.”

Mr Taylor will highlight that at a time when inflation was too high and now driven mostly by domestic pressures, Labor’s spending trajectory was “the exact wrong approach”. He has rejected Labor’s claims that much of the spending was “unavoidable”, claiming the bulk of it was on Labor projects.

Mr Taylor accused the Albanese government of corporate welfare by planning to spend $13bn in grants to critical minerals and hydrogen programs. He cited $450m on the failed referendum, funding of anti-resource project activists, 36,000 additional commonwealth public servants and $45bn in off-budget spending.

“This kind of spending is only ‘unavoidable’ to Labor,” Mr Taylor will claim, and he says it is only making inflation worse. “And despite some of the strongest commodity prices and labour market outcomes in decades, Labor has wasted the windfall.

“Personal income taxes are 23 per cent higher than when Labor came to office.

“The structural deficit is growing, leaving Australia vulnerable to future financial shocks. This is leading to growing debt, and making commodity-driven surpluses look like a mirage.

“None of this is helping bring down inflation. None of this is helping boost productivity and capacity for sustainable growth.”

“We have seen three budgets now that have tried to have it both ways – increasing spending, while claiming to bring down inflation. Increasing taxes, while claiming families are better off. Increasing red and green tape, while business will increase investment.”

The government on Tuesday came under further fire from economists over the spending elements of the budget.

Judo Bank chief economist Warren Hogan accused the government of trying to shift the blame for the cost-of-living crisis to the Reserve Bank of Australia.

Mr Hogan told an Australian Shareholders Association conference in Melbourne on Tuesday the budget was set up for an election, that the government was doing little to tackle inflation and instead was adding to demand with its stimulus measures.

“This government is all about spending. Government spending right now is about 25 per cent of GDP,” he said. “The only time in history it has been at this level is when the economy has been weak, ie, the early ’80s or ’90s. They’re changing the fundamental approach to government finances … (they want) bigger government.

“If we do decide to go down the route of bigger government, more deficits and more debt, then we should be expecting some sort of adjustment … which is most likely to come in the form of higher interest rates and some kind of credit constraint on the housing sector.”

Mr Taylor will say the next election would be more than choosing a different government. “It’s about choosing a different future – a future where fairness, opportunity, and prosperity are within reach for all Australians, not just the select few,” he will say.

“One that restores hope, and confidence in our economy, our country, and its great potential.

“It’s time to get our economy back on track and back to basics, to simplify taxes, to cut red tape, and to ensure that every Australian has the opportunity to succeed.

“This is the key to restoring what has always made Australia strong: fairness, opportunity, and enterprise.”

Treasurer Jim Chalmers has accused the Coalition of its own “budget black hole”, claiming its unfunded promises so far amounted to $45bn, despite Liberal leader Peter Dutton having yet to announce any significant economic policy beyond plans to cut the net overseas migration rate.

Mr Chalmers said reinstating the Coalition’s Stage 3 tax cuts would cost $38.9bn, while the permanent extension of the Instant Asset Write Off would cost $2.5bn. Doubling the work bonus would have a price tag of $400m, while repealing Labor’s superannuation earning concession for high balance super funds would cost $3.3bn, he said.

“The Liberal-Nationals have a $45bn black hole in their budget,” Mr Chalmers said.

“Spending tens of billions of dollars more while calling for a slash-and-burn budget shows why the Coalition have no credibility and can’t be trusted to run the economy.

“After two years in opposition, it’s time for Angus Taylor to finally explain what vital services the Coalition wants to cut and whether they will go after pensioners and Medicare again like they did the last time they were in office.

“The Coalition left behind rising interest rates, a trillion dollars of debt, falling real wages and rising inflation. Now real wages are growing, inflation is moderating, and we’re forecasting the first back-to-back surpluses in almost two decades.”