Wednesday, 30 September 2026

Topics: inflation; interest rates; tobacco excise; Fuel Price Shield.

E&OE……………………..

Evan Wallace: Tim Wilson is the Shadow Treasurer. Tim Wilson, good afternoon to you, and welcome to Drive.

Tim Wilson: Good afternoon, thank you for having me.

Evan Wallace: The government and various economists are pointing to the international conflict and global oil prices as the key factor behind these ugly numbers. Are they right?

Tim Wilson: Well, there's different numbers, we're talking about inflation, you just went through it. There's headline inflation, no one's disputing that international offense having an effect on headline inflation. But then there's the inflation that the Reserve Bank looks at, which is core inflation, which is the inflation at the heart of the domestic economy, and the driver there is government spending, and that's the challenge. You know, the reason they strip out those international factors is because some of them come and go and they're beyond our control, whereas core inflation is what's domestic, what's caused particularly by government, and the problem is we have too much money chasing too few goods, which means people are paying higher prices on their mortgages, and they're going to the supermarket and getting less but paying more.

Evan Wallace: So, if the tables were turned, what would you be doing right now to tackle inflation?

Tim Wilson: Well, the most important thing is to pair back government spending. This government spending at a 40-year high outside of a pandemic, and if the government pulled its belt in as much as it's asking Australians to, the budget would be $22 billion in surplus. We've made it clear that there are bureaucracies we’ll can, in particular a housing bureaucracy that doesn't build homes, the net zero bureaucracy that doesn't reduce emissions, and doing things like making sure that corporate welfare is paired back, because the government's got to live within its means if it expects Australians to do the same.

Evan Wallace: Do you think that would make a meaningful difference when it comes to tackling inflation? I mean you mentioned the various cuts to government agencies, but don't we need potentially deep spending cuts if we're actually going to see any sort of difference when it comes to inflation changing at a substantial level?

Tim Wilson: Well, the surplus that I outlined before would have a meaningful impact on interest rates, up to seven interest rate cuts. So, this is serious and this is real. The government keeps denying the reality of their economic model and the consequences that are flowing from it. They said there wasn't a problem around inflation. There clearly is, and the only way you're going to get there is if you actually get the budget back to a sustainable position, but the government instead has projected out in their intergenerational report last week, 40 years of deficits. That means we're always going to be spending more than we're getting, which means inflation and higher rates are being baked in by this government.

Evan Wallace: Most spending though comes back to service delivery in this country. Do you think that needs to be looked at if we're going to see inflation addressed? Is that something that you're open to considering, say, spending on health, spending on, we've already seen disability cuts that have gone through, spending on education. Is that something that needs to be considered, Tim Wilson?

Tim Wilson: Well, I've already said many times that we need to get the fraud and the corruption out of public services and schemes, and while the legislation to stop some of that fraud and corruption has been passed, it hasn't been delivered in outcomes and so that, of course, is part of the problem. We have public money, honest money from taxpayers going to dishonest outcomes, and it's inflationary. When the National Disability Insurance Agency estimates that about 10% or $5 billion to $6 billion of the NDIS is going towards fraud and corruption, we've got a serious problem, and we've got to stop that.

Evan Wallace: I think everyone would agree that corruption needs to be addressed, regardless of what side of politics you're on, but just coming back to my question there, I mean what about those deeper spending cuts? Is that something that you think an Australian government and its potential government that you're part of needs to consider and to examine?

Tim Wilson: Well, I'm not going to turn around and cut spending in areas if we haven't addressed the fraud and corruption point, but we'll come up to the next election, there's two more budgets between now and the next election to map out a sustainable pathway forward for a budget so that we don't get this inflationary pressure, so that we do make sure that there's proper restraint on government and most importantly, the government doesn't turn around to Australians and say, ‘you pull your belt in’, when they're not prepared to do the same.

Evan Wallace: You are listening to Drive with me, Evan Wallace. My guest is Shadow Treasurer Tim Wilson. Earlier today on Drive, I was speaking with independent economist Saul Eslake. He weighed in on other ways to combat inflation other than just the RBA shifting interest rates, this is what he had to say:

Saul Eslake: The problem with doing what governments used to do between 1945 and 1975 is that it would require politicians to accept responsibility for decisions that made people temporarily worse off. And these days they're not prepared to do that.

Evan Wallace: And essentially saying there, Tim Wilson, that the government should be considering putting temporary surcharges in place if it wanted to get creative when it came to inflation. Is this something that you'd consider?

Tim Wilson: I don't think that's the answer to the problem. The problem we've got right now, and what Saul Eslake's talking about is in years past, politicians basically set interest rates, then we gave it to an independent Reserve Bank to make these decisions. Now, they're not disconnected from economic conditions. There's, of course, a choice, which is we can cut back government spending and solve it that way, or we can have economic growth and have a better outcome for the productive side of the economy, so the economy is outgrowing public spending. Adding more taxes doesn't achieve that outcome, and in fact what we saw in the last budget is the complete reverse. The government is knee-capping the productive part of the economy because it can't manage its spending addiction. I think we should be focused on growing the private economy, not kneecapping it.

Evan Wallace: Wherever you go and however you talk to, the conversation inevitably comes back to fuel prices at the moment. The Coalition, it's calling for a cut to the fuel excise funded by a cut to the tobacco excise. Tim Wilson, this is a plot line to the magic pudding or is it a serious policy?

Tim Wilson: Yeah, well, the Parliamentary Budget Office has estimated that if we cut tobacco excise by 80%, what we'll see is a collapse in the business models of the illicit market and organised crime. It will lead to $2 billion, and this was this was analysis completed by the Parliamentary Budget Office, $2 billion or thereabouts annually will go back into government coffers. That's both an inflation offset, but we can then use that to cut excise on fuel. So, you're essentially getting money taken out of the profits of organised crime so that we can give Australians fuel relief, temporary fuel relief, in response to an international crisis.

Evan Wallace: I imagine that would take a long time though to see that revenue correction, if indeed that did translate to real life.

Tim Wilson: Well, we of course won't be in a position to implement that policy until, well both policies until, after the next election, but we are very aware that Australians are doing it tough right now, but we also believe that we can't tolerate the volume of organised crime that we have, particularly in the illicit tobacco trade, which is leading to firebombings of small businesses, increases in insurance premiums, and making otherwise lawful citizens engage in criminal acts.

Evan Wallace: Tim Wilson, appreciate your time this afternoon on Drive. Thanks so much for chatting with me.

Tim Wilson: Thanks for having me.

[ENDS]