Wednesday, 21 October 2026

Topics: MYEFO; government spending; inflation; interest rates; HSC/VCE.

E&OE……………………..

Clinton Maynard: The Treasurer, Jim Chalmers, is due to present his mid-year budget update in December. The Federal Government's budget position has now changed dramatically since it was handed down in May. Effectively, it would appear there's a black hole worth $11 billion. For instance, have a think about this. The interest that we, the taxpayer, pay on our debt is rising because, of course, interest rates are rising all over the world, but there's been a surge in bond yields since the budget was handed down by Dr. Chalmers in May. There are also revenue measures the government wants to introduce, that they've been banking on, that haven't yet passed through Parliament. The changes to the private health insurance system, the rebate, which I don't agree with this change, and fortunately it's been knocked back at the Senate, but the rebate for people aged over 65 is going to be reduced if they have private health insurance. It is designed to save $3 billion. A lot of that money would then be redirected towards aged care. But it means there's a problem: there's a hole in the budget. It hasn't gone through Parliament. The Shadow Treasurer, Tim Wilson, joins us. G'day, Tim.

Tim Wilson: G'day, Clinton.

Clinton Maynard: So, the budget deficit was to be $64 billion. What do you fear it could be?

Tim Wilson: Well, this is the thing. It's not clear because the government hasn't reined in its spending. We know that for every $2 they claim as savings, they go on to spend another $3. So, of course, there are estimates that it could be about $11 billion more than originally projected. This is very worrying because, at the end of the day, the government can't kick its spending addiction, and every time it tries or claims to target spending, it's targeting spending focused on backing Australians and, frankly, in many cases, what will save money in the long run instead of focusing on how they cut the government and cut government spending that is actually stoking inflation.

Clinton Maynard: The Prime Minister, when Parliament was sitting last week, he pointed the finger at your side of politics, and he said whenever they propose a savings measure, you won't support it. Why not?

Tim Wilson: Well, that's very cute from the Prime Minister. We know that every time they claim they're going to find $2 of savings, they go on and spend an additional $3. We've looked at and made a series of proposals. Firstly, we wrote to the Prime Minister earlier in the year and said let's have a bipartisan approach to conversations around savings, to reduce the pressure on spending, but the flow-on then to reduce the pressure on inflation. They rejected that. We've put forward proposals like ending welfare for future non-citizens. We've put forward proposals to remove housing bureaucracies that don't build homes, climate bureaucracies that don't cut emissions. But they've all been rejected. Instead, what they're focused on is targeting over-65s with private health insurance. Let's be clear, we need people who are older Australians to have health insurance because that's the time of life where people consume the most in their health expenditure.

Clinton Maynard: I think that was a crazy decision that they want to push through, and hopefully they're going to revise that, even though Mark Butler doesn't want to, because it just means there'll be more pressure on public hospitals at a state level. Maybe that's just blame-shifting. Bond yields are rising, so the Australian Government's 10-year bond yield has risen to 5.3%. There were some calculations the AFR did a few weeks back that that would mean an extra $6 billion. So yes, spending's an issue here, no question. But the fact is, interest rates, bond yields are increasing all over the world. So, really, is the government's hands tied because we're in a higher interest rate environment?

Tim Wilson: The government's hands aren't tied. The government needs to take control, and this is the problem we've got. They continue to contribute to the national debt; they've projected our deficits for the next 40 years. Remember, every time we have a deficit, what it means is they're borrowing from the future to fund today, and in the process stoking inflation. By the end of the decade, the debt is expected to go from $1 trillion to $1.25 trillion. A lot of the estimates that were made off the back of the deficit we have at the moment is based off bond yields at 4.8%. They're now, as you say, up around 5.3%. In France, they're going towards 6%. We hope and pray it doesn't get up to that level, but it's the markets saying they don't have confidence in the government to control its spending or for it to be able to continue to honour its debt into the future.

Clinton Maynard: If there was one spending measure that you could address now that would have an effect on this current financial year's budget, what would it be?

Tim Wilson: Well, as I said, I think the most important thing is to get rid of these bureaucracies that don't…

Clinton Maynard: You can't do that quickly; that's not going to turn around quickly.

Tim Wilson: It's an important part of the story, though, because we know there's been corruption, fraud, and waste in programs like the NDIS. I'd love to target the corruption there and focus on that. At the moment, the government has mostly focused on targeting clients rather than focusing on the corruption in the system. We've seen duplication in other parts of programs, from home aged care packages, phantom children enrolled in childcare, and then, of course, we've had these bureaucracies that have been built that aren't actually doing anything or delivering any outcomes. So, individually these things won't be the silver bullet, but it's the discipline that you need across government spending, one, to stop the pressure of inflation, but secondly, to stop the contribution towards future debt.

Clinton Maynard: The Reserve Bank Deputy Governor today has, I guess you could say, opened the door and definitely pointed towards an interest rate increase on Melbourne Cup Day, and the market's now factoring a 53% chance of rates rising by 0.25 of a percent on November 3. What do you think's going to happen in the first week of November?

Tim Wilson: Well, I think a lot of households are looking at it right now and saying, "We cannot bear any more," and the last one, I think, for a lot of people came as a shock. I was hoping that we would get through Melbourne Cup Day without a rate rise, but I still saw the spectre of one being in the new calendar year. I've taken note of what the Reserve Bank has said today, and it says to me that it's quite worrying that this might be the case, and until the government kicks its spending addiction, we're going to continue to have this inflation pressure.

Clinton Maynard: Last one for you, Tim, appreciate your time. I’m with the Shadow Treasurer, Tim Wilson. We're talking about some research that's been released today that links high school results, well, it finds that really a high school result doesn't matter about what you go on to become in your career and how much money you earn. Can you remember, what would it have been, maybe it was a TER or from a Melbourne school, your VCE, can you remember your final high school result?

Tim Wilson: I can, yes.

Clinton Maynard: I think you probably would have been about 98.

Tim Wilson: No, I won’t go into what it was, but I can confirm for everybody that it has no correlation to what happens in your future career or your earning capacity. Really, the biggest factor, I think, in people's earning capacity is their attitude, whether they want to get on with it, because we need a society of people who stand up and are more independent and whether they want to go out and live life to their fullest rather than expecting the world to be handed to them.

Clinton Maynard: So, you won't share your TER with us?

Tim Wilson: Haha, those things are very much in the past.

Clinton Maynard: Thank you, Tim.

Tim Wilson: Take care.

Clinton Maynard: The Shadow Treasurer, Tim Wilson.

[ENDS]