E&OE TRANSCRIPT
SUBJECTS: Reserve Bank; interest rates; cost of living pressure; Sydney Morning Herald China reports
SARAH ABO, HOST: Welcome back. Well, all eyes are on the Reserve Bank today as they prepare to hand down the latest interest rate rise. Joining us to discuss, Minister for Government Services and the NDIS, Bill Shorten in Canberra and Chris O'Keefe from 2GB in the studio with me. Good morning to you both. Now, Bill, this is a rate rise that really could push families to breaking point.
BILL SHORTEN, MINISTER FOR THE NDIS AND GOVERNMENT SERVICES: Yeah, I think families are already doing it very hard, the mortgage holders. We've seen nine rises. This is the 10th. So, the news could be very painful for people and I'm certainly thinking of them today. The challenge is beating inflation, but making sure that we don't beat up the families on the way through too. At least our government is helping on child care, medicine and energy costs. But it's pretty tough. You can't sugarcoat this.
ABO: Yes, a lot of money to try and find at the moment as well. And Chris, we've obviously heard from the Westpac chief economist on the front page of The Australian, Bill Evans, saying that if we don't act, we're going to see the recession that we saw back in the day and levels of 1990, which was awful to get through. Do you think that these rate rises are necessary?
CHRIS O’KEEFE, 2GB: Well, it's up to the Reserve Bank and I'm not going to second guess the governor. I'm not an economist. I wouldn't propose to second guess the governor. However, inflation numbers came down in January. We're seeing a slowing in growth in the economy. We're seeing consumer sentiment down and we're seeing households struggling. So, at what point does the Reserve Bank board say, you know what, I know we haven't got mortgages, so we're not feeling it around the Reserve Bank board table however, maybe this is enough. My sense is that this probably will be the last one, speaking to economists on our radio program every afternoon that this will be the last one. It's been priced into the market so you can take it to the bank that rates will rise this afternoon at 2:30. But whether or not that then tips us into a recession, well, that remains to be seen. But it doesn't sugarcoat the fact that Australian families are doing it really, really tough. And the last thing we want is a recession. So, look, I don't I feel sorry for the governor, Phillip Lowe.
ABO: Do you?
O’KEEFE: Well, imagine trying to walk that balance. It's impossible.
ABO: Do you think they're out of touch, Bill?
SHORTEN: Oh no, that would be unfair of me to say that. I do think inflation is what they call a lag indicator. In other words, when you get an inflation number, it describes what happened in the last quarter, whereas of course, rate rises have a future impact. So sometimes I've seen some commentators say that raising rates too far is a bit like shutting the door after - the gate after the horse has bolted. I think Chris is right. All the experts seem to say will be an increase today, which has got to be mindful that sometimes - you've just got to always be mindful that the cure is not worse than the problem you're solving. We've got to tackle inflation. Absolutely 100%, but you know, fingers crossed this is towards the last of the increases.
ABO: Well, I think none of this may even matter if the front page of the SMH is to be believed. If we're going to be at war with China in the next three years. I mean, there is a warning that our armed forces are woefully underprepared. It's quite alarming, Bill. The threat from China, it's always been there. It has been escalating, certainly. But do you see conflict in our very near future?
SHORTEN: Oh, I'm not going to start speculating or inflaming any war talk this morning over breakfast. I mean, we've got the Reserve Bank doing its thing. That's probably where my head's at and the local stuff. It's important that we stabilise our relationship with China. In the last few months, we've seen the Prime Minister and several ministers hold very constructive bilateral discussions. We've got to prioritise national security. Labor will always do that. In terms of China, we should, you know, engage where we can disagree where we must and of course try and find the points of common interest, but at all the time maintaining Australia's interests.
ABO: But the reality is we aren't prepared for war with China.
SHORTEN: Say that question again, sorry?
ABO: The reality is we simply aren't prepared for war. We just don't have enough ammunition. We don't have enough firepower.
SHORTEN: Well, Labor's doing a Defence Force review. That's a sensible thing. It hasn't been done for a long time. But I'm just not going to start fuelling this sort of pretty hot and fevered discussion that it was on the front page of the paper today. I don't think you know, I don't think that gets us anywhere.
ABO: It's alarming though, Chris, isn't it?
O’KEEFE: But it's a hysterical the reporting. Now, I know that Nine owns the Sydney Morning Herald and The Age, so there our colleagues, but the reporting this morning is hysterical. Now, if you've got the Australian Strategic Policy Institute, who are the ones saying, ‘Oh, well, we could be going to war in three years’, well, they're funded by the Australian Defence Force, Lockheed Martin, Thales and Boeing. Defence material companies that provide, need money to provide, defence hardware to Australia. So, where's the bread buttered here? And I just think that it does Australia no good having discussions about going to war in three years. It's hysterical, it is over the top. And the CIA, the chief of the CIA said, well, President Xi actually has said we'll get your army prepared to invade Taiwan by 2027. However, they're thinking to themselves, well, maybe we can't do it. In that same article, it says the President Xi is now considering whether or not it's an achievable outcome, invading Taiwan. None of that's in the newspaper, but we're talking about going to war in three years. How is that good when someone wakes up in the morning and says, Oh, no. Everybody knows China is a threat, a strategic threat, but going to war in three years. Talk about scaring the pants off people for no reason.
ABO: I mean, it does seem a bit unrealistic. I guess the main point of it is that we aren't prepared. We don't have –
O’KEEFE: Prepared for what?
ABO: Well, we don't have any of the defence -
O’KEEFE: Prepared for what? Is this going to be, Kokoda Mach 2? Is that what we're talking about? Well, no one no one can explain to me what we're supposed to be prepared for. I mean, do you how big Australia is? Do you know how hard it’d be to attack?
ABO: There's a lot of people in China.
O’KEEFE: What are we supposed to do? Do we think their armada is going to show up in Darwin? Please. Come on. Can we just settle down a bit and have an adult conversation about this?
SHORTEN: Okay, listen, Field Marshal Christian, you know, Admiral Sarah, just. I think there was something Chris said. Look, I'm not going to wake up this morning and start saying Australians should be, you know, gigantically alarmed. We've got to work with China, but we always have to maintain our own national security and our own defence interests. I tell you what I think people want to hear this morning is the government doing everything we can in defence of national security? Yes. We also trying to maintain constructive bilateral relations with China? Yes. We'll engage where we can, but we'll always, we’ll disagree where we must. I don't think the speculation about all the other stuff's really going to take us too far, is it?
O’KEEFE: Do you think it's hysterical, Bill?
SHORTEN: Oh, listen, I certainly don't think it's helpful to speculate about, you know, the dramatic headlines in the paper. I don't see where that gets us, frankly.
O’KEEFE: Well said.
ABO: Well said. Oh, wow. Agreement. I like it. Let's have more of it. All right, Bill, Chris, thanks so much for your time today.
SHORTEN: Cheers. Good morning.
