Shadow Treasurer Angus Taylor has flagged the Coalition will mount a challenge to Labor’s plan to pump billions into the technology and manufacturing sectors and in rebuilding the energy grid, claiming the so called ‘off-budget’ spending should be dropped because of rising inflation and not enough detail had been provided during the election campaign.
But Labor insists it will deliver on its election commitments, with Finance Minister Katy Gallagher saying the Coalition is ignoring the mandate voters delivered Labor at the election.
Mr Taylor told the ABC on Wednesday a planned $45 billion Labor investment in technology, manufacturing, power infrastructure and home building is “not necessary” and should be dropped given the rising inflation and interest rates, despite the policies being election commitments.
Within hours new Nationals leader David Littleproud had backed Mr Taylor’s call for Labor to not “add that extra $45 billion on top of budget spending “.
Mr Littleproud was unable to name measures accounting for the $45 billion figure he was warning against on air, and Mr Taylor’s office did not respond to similar questions from InnovationAus.com.
However, the figure is likely a reference to Labor’s $15 billion National Reconstruction Fund, its $20 billion rewiring the nation corporation, and a $10 billion Housing Australia Future Fund.
These initiatives are considered “off-budget” because cost of the programs is not set against normal budget expenditure and instead would be added to the national debt profile.
The Coalition’s warnings follow a report in the Australian Financial Review that a global credit agency would still factor the spending into its assessment and Labor’s off budget spend posed a risk to Australia’ AAA rating.
Mr Taylor has seized on the potential risk as global inflation pressures bite, warning it is not the right time for the government to be investing heavily in the areas.
“The $45 billion that Labor has committed in off budget spending is not necessary,” he said.
“Now is not the time to spend that money. Now is the time to pull in the budget belt and make sure that households aren’t competing with government to borrow money and pay more than they otherwise would have.”
But Finance Minister Katy Gallagher said the new government will be delivering on its election commitments.
“Angus Taylor’s comments just show that the Liberal Opposition haven’t learned anything from their election result and haven’t listened to the clear message that they were sent by the Australian people,” Ms Gallagher told InnovationAus.com.
“All of our commitments were carefully considered and were designed to have a focus on driving productivity in the economy, creating jobs and supporting business growth.
“It’s a shame that Angus Taylor can’t put politics aside to support policies that will deliver positive outcomes for Australians and the broader economy which has been neglected for the last decade that the Liberals were in office.”
Mr Taylor, who was Energy and Industry minster in the former Coalition government, claimed Labor’s spending would “fuel higher inflation and higher interest rates”.
“That’s what we don’t need and now’s the right time for Labor to make the decision to drop those initiatives, to take the right economic decisions in the interests of those Australians.”
Mr Taylor accepted the Labor majority government has a mandate to implement election commitments but said they had been made as “vague promises” during the campaign.
“As the specifics come in we’ll consider them in an appropriate context recognising they won the election, of course. But at the same time, knowing that the national interest has to be our focus, and we’ll be holding them to account on doing the right thing by all Australians,” he said.
The challenge suggests the Coalition will look to block Labor’s planned funds and a new government-owned corporation.
Labor has promised the $15 billion National Reconstruction fund will be set up in the same way as the Clean Energy Finance Corporation and provide loans, guarantees and equity to support job creating projects target areas like advanced manufacturing, critical technologies and value-add resources.
Investment returns from a new $10 billion Housing Australia Future Fund will be used to build 30,000 new social and affordable housing properties within five years, according to Labor.
The new government is also planning to establish a Rewiring the Nation Corporation as a government-owned entity. The corporation will partner with industry and provide low cost finance to build the Australian Energy Market Operator’s Integrated System Plan to transition Australia’s electricity market from a centralised coal-fired generation system to a more diverse one built around renewable energy sources.
Labor says its plan includes a $20 billion investment and will ensure the grid is “rebuilt at the best price possible”.
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