Tuesday, 3 November 2026

Topics: interest rates; inflation; spending; superannuation; housing.

E&OE……………………..

Dave Marchese: Well, let's bring in the Shadow Treasurer now, Tim Wilson. Welcome to Hack, Tim.

Tim Wilson: Thanks for having me.

Dave Marchese: As predicted, interest rates up. You're saying young people now are in a worse position than people paying 17% interest rates in the 1990s. Why do you think that's the case?

Tim Wilson: Well, it's off the volume of debt. So, if you go back and look at the 1990s, when you had 17% interest rates, the average cost of a house was about $70,000. Today, it's well above $731,000. So, you get the equivalent impact from an interest rate hike to what you had back at 17% rates, even though they're at a much lower rate at around 4.85%. So, Australians then were paying about 42% of their average earnings financing their debt. They're now paying 52%, and because of today's decision, even more than that because of the rate rise.

Dave Marchese: It's obvious that a lot of people are struggling. I'm hearing from them on the text line now, I'm sure you're hearing from people too.

Tim Wilson: Sure.

Dave Marchese: There's a lot of politics around this as well, and obviously the Coalition's been out there very quickly blaming the government and accusing the government of reckless spending. Some are saying that these claims are hugely misleading. What do you say to that? That it's too simplistic to just say this is all the government spending and that's all it is?

Tim Wilson: Well, inflation is too much money chasing too few goods and services. That is literally all it is. So, if you borrow from the future and then you spend today, it is going to stoke inflation. The government has been doing that at record levels, the highest levels outside of the pandemic, and of course it's then going on and projecting deficits, so borrowing from the future to spend today for the next 40 years. So, what do you do? You get upward pressure on inflation. It's actually just shockingly that simple. And the problem we've got with the government is they can't kick their spending addiction. Today, the Reserve Bank Governor, Michele Bullock, said interest rates can't control global oil prices. This is a domestic problem, and it's a domestic problem driven by government policy.

Dave Marchese: In saying that, though, there are many other countries who are facing a similar outlook, and the Reserve Bank Governor did say, look, we don't look a lot different to other countries. Yes, we have that domestic inflation problem, but we're not completely Robinson Crusoe here, we’re saying. There are other countries, there are global impacts as well. Isn't that an important element to also be pointing out?

Tim Wilson: No one is disputing the global impacts from headline inflation, but headline inflation, and Michele Bullock went through this today, headline inflation is not what the Reserve Bank looks at. They look at underlying inflation problems. Underlying inflation is the core of the domestic problem, and most countries, most advanced or developed countries like us, have had one interest rate rise this year. Australia has now had five. So, we are on a completely different planet economically. We are inflation maxxing at the moment, and not in a good way. That is driving up interest rates for Australian households, and it means that Australians are falling further and further behind.

Dave Marchese: So, are you equating higher interest rates and continued higher interest rates with bad economic governance?

Tim Wilson: Resolutely, yes. If you keep borrowing from the future to spend today, you will get pressure on inflation. Higher inflation leads to higher interest rates. That is precisely what the Reserve Bank Governor is saying. The only way you're going to address it is if you pull your belt in, the government pulls its belt in, takes heat out of the economy. If you do that, you'll get downward pressure, you'll get lower interest rates, but it means you won't get this problem where you're going to the supermarket and you're paying more and you're getting less.

Dave Marchese: So, if that's the case, though, if you're saying that this is just a direct result of bad economic governance and it's an example of the government doing poorly, what do you say to John Howard's increasing interest rates as he left office in 2007? Interest rates were higher then than they are now. Would you call him a bad economic manager?

Tim Wilson: If we want to go back to 2007 and look at the economic conditions, the world was in a completely different…

Dave Marchese: No, but it's an important thing to point out. You said higher interest rates over time and gradually increasing interest rates is an indicator of bad economic governance, so you then need to look at that from both sides of politics, surely.

Tim Wilson: I'm not interested in having a partisan conversation about what is driving things back in 2007 versus what people are having today. The problem we have is we have a government that continues to stoke expenditure. As a consequence, that is what Australians are living. In 2007, the economic conditions, the global circumstances were completely different, and what we had was capacity constraints within the economy that were driving up costs, but at the moment, the core problem is being driven by government expenditure. And whether it's directly, whether it's the number of people who are being employed by the government, the Reserve Bank's data today very clearly shows that the public sector, the government, is going to continue to outgrow the private sector. So long as you continue to have that problem, you're going to have a continued problem of inflation and interest rates.

Dave Marchese: If there is this huge problem of government spending that you're saying we need to address immediately…

Tim Wilson: Well, the IMF is saying it, the OECD is saying it, the Reserve Bank is saying it. Yes, I'm also saying it.

Dave Marchese: So, should the Coalition then stop blocking cuts to government spending?

Tim Wilson: Well, at the moment, their primary focus is on cutting expenditure to healthcare, but it actually adds a bigger cost long term. For instance, they're cutting the private health insurance rebate for over 65s. The problem with that is that people spend most of their healthcare expenditure at the latter stages of their life. What that means then is we're putting more cost further down. Every time the government says they're cutting expenditure, they're cutting two bucks, and then they're then going on and spending an additional three dollars. They're not serious.

Dave Marchese: There would be a lot of people, though, listening now, Tim Wilson, younger Australians, thinking, why should we be subsidising older people to have private health insurance when we can't afford it ourselves? And also, we could be saving billions of dollars a year here.

Tim Wilson: Because you consume most of your health expenditure in the latter stages of your life. We're all the same. Obviously, there are some people with very specific health conditions, but the overwhelming majority of the population has most of their health expenditure in life. That's why the government's interest is always to get the maximum number of young people in because their health expenditure is lower. So, if you take it off older people, you discourage them from having private health insurance, and then it gets put on the taxpayer's purse, and you end up costing more to the taxpayer. So, it actually has the complete reverse effect of what's intended and designed.

Dave Marchese: There are lots of economic experts who have analysis of what's going on right now in the economy. One of those is the ABC's Chief Business Correspondent, Ian Verrender, and he said, look, it's not just government spending we've got to be looking at. It's also deficits and the impacts of ongoing deficits. The government is saying, look, the Coalition is responsible for two-thirds of debt in the budget now. There was a decade of deficits under the Coalition. Is that something that the Coalition needs to take some responsibility for?

Tim Wilson: Well, there absolutely has been an issue of debt in the past, and we had this thing called the pandemic, and to make sure that households didn't fall underwater, there were decisions made. And I've always argued that I think that there was too much expenditure during that time, so you're not going to get me there. And as I've said, deficits are absolutely part of the future problem. The government has projected out 40 years of deficits into the future. As a consequence, inflation is a persistent problem, the government is borrowing from tomorrow to fund today, and that's why we're paying higher interest rates and why you're going to the supermarket and you're paying more and you're getting less.

Dave Marchese: All right. This is Hack. I'm Dave Marchese. My guest is the Shadow Treasurer, Tim Wilson. I'm hearing from you on the text line, someone saying, "Look, I just think this interest rise is bullshit," that person saying. "My partner and I own a home, we have to be frugal and budget. We have a small child on top of that and the costs are crazy." Another person saying, "This one is the straw that will break this country's back." Someone else saying, "What have Liberals done to help young people and first home buyers?" and another person saying, "No solutions, just mudslinging. Typical Coalition politician." So, there's different views on the text line now, Tim Wilson. I mean, you're saying we need to stop spending.

Tim Wilson: Yep.

Dave Marchese: What needs to go?

Tim Wilson: Well, we've already outlined a plan of $31.3 billion of savings. We wrote to the Prime Minister at the start of this year and said, let's have a bipartisan approach to cutting spending so that we can get the budget under control, because if you don't, inflation's going to be a problem and interest rates are going to be a problem.

Dave Marchese: There was an issue with your costings, though, because they were only partial costings. And to be clear, you also want to get rid of stuff like Labor's hikes on capital gains..

Tim Wilson: Hang on, hang on, let's just start, I said we wrote to the Prime Minister and said, let's have a bipartisan solution to cutting spending, because if not, inflation's going to be a problem, and interest rates are going to be a problem. The Prime Minister didn't respond and didn't engage with that process. We've said, let's work together to try and cut and audit the public money that is going towards organised crime. The government has not even bothered to respond to that letter. So, we have actually tried to work with the government to try and address this problem. And now, of course, we're going forward and we're saying there's $31.3 billion of savings that we've put forward. Getting rid of bureaucracies that don't build homes, getting rid of bureaucracies that don't cut emissions, getting rid of welfare for future non-citizens, frankly, making sure that we don't continue to fuel the illicit tobacco market and support organised crime. I would have thought that was a no-brainer.

Dave Marchese: But Tim Wilson, the issue with these costings is that they're not full costings.

Tim Wilson: Yes, they are.

Dave Marchese: And as I was saying, you also want to get rid of Labor's tax hikes on capital gains, negative gearing, trusts, high balance super accounts, you want to slash net migration to 100,000 for two years, you want to lift defence spending. What impact would all of that have on the economy? Why isn't that in the costings?

Tim Wilson: Well, this is why we're going through an offsets process to make sure it's clear how we're going to provide that. The problem we have at the moment…

Dave Marchese: But isn't it fair to make it clear in total before you say, "Oh, we've got this plan"? You haven't accounted for all of these other things that you want to get rid of.

Tim Wilson: Well, Dave, we have two more federal budgets under this government, and we will detail what we are going to put in the third one after that, after we actually know what the numbers are in the first two. But what we've started releasing is where we would cut expenditure so that we can take the pressure off Australian households right now. The government isn't interested in doing that. Every time they say they're going to find savings, they say they're going to cut $2, but they then go on and spend $3. And Australian households, that's why they're living with inflation right now and higher interest rates right now.

Dave Marchese: Tim Wilson, it sounds like there's a bit of a split in the Opposition when it comes to this idea of letting first home buyers access superannuation to get a house. Some are saying it's not a good idea and that you should abandon it. Is it time to give up that idea?

Tim Wilson: Well, I believe that home ownership is the most important financial decision or investment you can make in your life because you get the benefits of home ownership in your working life and your retirement. So, I absolutely, and always have believed, and always will believe, that home ownership is paramount, because the biggest indicator of poverty in retirement, Dave, is that you don't own your own home. That's why we want people to buy earlier and cheaper.

Dave Marchese: Is it an issue when one of your backbenchers is saying he's got enough support to block this idea? So, there seems to be confusion about whether it's a good idea or whether it's not.

Tim Wilson: Easy. It's a good idea. We fundamentally believe that home ownership is the most important thing that people can do to ensure that they live a dignified retirement. But not just that, we want young Australians to get into a home earlier, cheaper, and be in a better position so that they can then not just have their retirement in home ownership, but they can have their working life in home ownership too.

Dave Marchese: Shadow Treasurer Tim Wilson, really appreciate your time.

[ENDS]