Wednesday, 4 November 2026

Topics: interest rates; inflation; spending; artificial intelligence; Canva; private health insurance.

E&OE……………………..

Hamish Macdonald: Well, let's hear now from Tim Wilson, who's the Shadow Treasurer. Good morning to you.

Tim Wilson: Good morning, Hamish.

Hamish Macdonald: What's your response to the situation that so many of our listeners find themselves in this morning, making those adjustments to the monthly bill calculation? Who do you think they should point the finger at?

Tim Wilson: Well, they should point the finger at the government, because it's part of their deliberate design of policy, which is to continue to spend, grow the size of government, but not in line with the size of the private economy. But the choices Australians are making now are really tough. A lot of people are trying to figure out, can they afford their mortgage? Can they even afford to send their kids on excursions? Every time they go to the supermarket, they're paying more and they're getting less, and households are breaking.

Hamish Macdonald: So, what in your view should the government be doing ahead of this mid-year budget update, ahead of next year's full budget, where do you think the government should be reducing its spending?

Tim Wilson: Well, for starters, we wrote to the government at the start of this year and offered them a bipartisan approach towards reducing government spending to get inflation and interest rates under control. They refused that pathway, and so we've outlined $31.3 billion of savings already, looking at bureaucracies that don't deliver outcomes, welfare for future non-citizens, crushing the illegal tobacco market because we're forgoing revenue to organised crime rather than to the government to be able to address the government's debt and budget problem. So, there's plenty of ways to address this, but the government seems tin-eared, and they're turning to Australians saying they've got to pull their belt in when the government isn't prepared to pull its belt in.

Hamish Macdonald: Obviously, the Reserve Bank though is pretty clear. It's not the only driver of inflation. There's the external shock, I think Michele Bullock described it as. That's obviously relating to the war in the Middle East, but also the private sector demand domestically, in part driven by the growth of AI and data centres, which we're experiencing a lot of here in Sydney. How do you think the government should deal with those factors any differently to what they're doing currently? Is there a different approach?

Tim Wilson: It's not about having a different approach around AI investment; that's just the reality of the world we live in. The same problems are being faced by lots of other countries…

Hamish Macdonald: But if that's the biggest driver domestically of inflation, are you saying there's nothing that should be done differently on that score?

Tim Wilson: The biggest driver of inflation is ultimately government spending. That's the big lever that's being pulled.

Hamish Macdonald: But is it though? I thought the government was saying that government spending is only one-fourth or one-fifth of overall demand in the economy.

Tim Wilson: But it's the one that they have control and a lever over, and it's the one that is actually driving the problem where the government can actually be part of the solution. The problem is we're not getting private sector growth, productivity improvement in the economy to outstrip the size of government growth. It's still almost double, that's the problem. You look at what the Reserve Bank outlined in their Statement on Monetary Policy yesterday, and it's very clear: unemployment is going to rise, productivity continues to decline, we're not going to see improvements in private sector growth that we need to match government spending, and that's the core nature of the problem…

Hamish Macdonald: I just want to tease that out a little more, because if we're acknowledging, and the Reserve Bank is clearly pointing to this, that productivity is a key issue. I think the data centres and AI question is quite important for Sydney listeners. There's so much investment going into data centres here. The promise in the longer term is that this might lead to improved productivity, but not immediately. And I think everyone in this city can feel the impact of all of the resources of the construction industry, for example, so many of them being thrown at building these data centres, which very few people want in their area anyway. How would you as a government deal with that?

Tim Wilson: We would simply address it from a position of balance, which is we need to make sure that there's the investment infrastructure for the future of the country, particularly to have sovereign data so that we can control our data and it isn't being held overseas. But part of it is, when the government keeps spending money on public infrastructure at inflated prices, and we know that's happening across Australia because of sweetheart deals with the CFMEU at the expense of taxpayers. It only continues to drive up inflation pressure. This is the problem with the economic model of the Albanese Government and, frankly, state governments. Chris Minns is just as bad, and we've seen this, I'm a Victorian, so we're seeing this explicitly in Victoria, where the government, through its spending priorities, pushes up costs, we get poor value in return for Australians, and as a consequence, we get inflation pressure and interest rate pressure.

Hamish Macdonald: You're listening to Mornings on 702. Tim Wilson is the Shadow Treasurer. 1300 222 702 is the number if you want to get in touch this morning. A few questions coming through for Tim Wilson, which I might put to you in a minute. News just coming in this morning that Canva, a very big Sydney-based design company, has got to cut more than a thousand jobs. They're blaming slowing growth, but obviously they're a digital company, software-focused, AI having a big impact on that business as well. Is this just the reality for all businesses as AI becomes more and more a part of our economy, that jobs will go and large numbers of them?

Tim Wilson: That doesn't have to be that way if we get private sector growth and we get a focus on productivity. We're very sorry for the people working for Canva who have found themselves in this situation. Last week, we had 2,500 redundancies being announced at the National Australia Bank. These are going to have huge impacts, but it's also a reflection of where things unfortunately are heading. Yesterday, in their Statement on Monetary Policy, the Reserve Bank outlined that we will see an uplift in unemployment to 5.1% from what is currently 4.7%. That's tens of thousands of Australians that are going to find themselves out of work, and of course, with that goes demand across the economy for support for local jobs and small businesses. This is going to be a very challenging and tough time until we change the approach and change the government…

Hamish Macdonald: But isn't that precisely, if we're talking about increased productivity from AI, these are the sorts of things that happen, jobs go?

Tim Wilson: We don't just have to have increased productivity from artificial intelligence…

Hamish Macdonald: Sure, but that is the argument behind all of this investment in artificial intelligence. I suppose I'm just getting at the fact that, this morning, 1,200 people have woken up to an email saying their jobs are going to go. Isn't that a natural consequence of productivity improvements through the delivery of AI?

Tim Wilson: That's why we need an alternate growth trajectory for Australia. That's why I've been so very clear about the importance of productivity focused on improving the conditions for small business and making sure they have a pathway. They disproportionately employ Australians to their size, they're more likely to be productive and innovative to be able to drive the future growth of the Australian economy, and that's actually what we need. But instead, the solution we've seen, particularly from the last federal budget, is to attack small business, their growth and opportunity, and discourage Australians from backing themselves. What are we seeing? We're seeing a decline in wealth in the country, and we're seeing wages go backwards, including, of course, some people very unfortunately today who are being told that they no longer have a job.

Hamish Macdonald: I wonder if you could address a question that's come in from one of our listeners just on where the government should find cuts. Some of the reporting this morning points to the issues that the government's had with the savings measures that it's tried to introduce, and the other parties in parliament have pushed back against some of those. One listener asks, "Can you ask Tim Wilson why he didn't support cuts to the health insurance subsidies for seniors that would have instant disinflationary impact?"

Tim Wilson: Because people consume most of their healthcare expenditure at the latter stages of their life. We actually need older Australians to take up private health insurance, because if not, we actually increase the costs that are being put on the taxpayer and end up with the budget in a worse position. It's false economics to do what the government is doing. They're just doing it so they can look like they're achieving cuts, targeting and cutting healthcare, when in fact, they're actually going to increase costs for the Australian taxpayer and deliver worse outcomes for older Australians.

Hamish Macdonald: Tim Wilson, really appreciate your time this morning. Thanks very much for dropping by.

[ENDS]