Inflation the Price to Pay for Big Government: Shadow Treasurer

Inflation the Price to Pay for Big Government: Shadow Treasurer
Shadow Treasurer Angus Taylor speaks to the media during a press conference in Sydney, Australia, on July 4, 2023. (AAP Image/Bianca De Marchi)
Rebecca Zhu

SYDNEY, Australia—Federal Shadow Treasurer Angus Taylor says every day Australians are suffering the consequences of big government with their wallets.

“Inflation is the price that everybody pays for excessive government. It is a thief in the night,” he said in a speech at the Friedman Conference in Sydney on July 8.

Championing the late American economist Milton Friedman’s words that inflation was “always and everywhere a monetary phenomenon,” Mr. Taylor emphasised that large government bureaucracies would inevitably drive inflation.

This idea was taken up by leaders such as Margaret Thatcher, Ronald Reagan, and John Howard, who implemented policies to reduce government intervention in people’s lives and spur the free market, Mr. Taylor said.

The shadow treasurer said Australians were not only paying for inflation via higher prices for goods and services but also to the taxman due to bracket creep.

“It’s no wonder the government has rivers of gold coming in—big government by stealth,” Mr. Taylor said.

Australia has experienced two significant inflation surges in the last century, the first right after World War II and the second after the 1970s oil price shock.

“Both of these surges, by the way, were precipitated to some extent by energy crisis,” Mr. Taylor said.

The shadow treasurer said the current situation was an “enormous opportunity” to deal with the consequences of what excess government means for middle Australians.

Citing Liberal Party founder Sir Robert Menzies, Mr. Taylor said the current party’s leadership needed to provide more economic freedom to individuals and outline a clear alternative to the Labor Party.

New ‘Classical’ Agenda Needed, Taylor Says

“I think it is a time to rebuild what I call a new classical agenda,” Mr. Taylor said. “To reestablish those foundations that were so strong back in that time,” he said.

To beat inflation, he called for cuts to government spending, noting that the current Albanese Labor government “added $185 billion (US$123 billion) of spending since it came into office,” which is around $7,000 per Australian.

“[The Coalition has] opposed $45 billion of spending in recent months in the federal parliament,” he said. “We'll keep doing it.”

When commenting on the previous Morrison government’s big spending during COVID-19, Mr. Taylor said a little-known fact was that from the end of 2021 until its defeat in the 2022 May election, the federal budget had been “in balance.”

“It was a truly remarkable outcome, and that’s because the spending was temporary,” he said.

“The not-so-temporary spending was at the state level. Huge debt at the state level combined is three times what it was. And I think we have a problem now where that is actually going to cause a lot of inflationary pressures.

Gene Tunny, director of Adept Economics and adjunct fellow at the Centre for Independent Studies, said while economists would agree with many of Mr. Taylor’s talking points, it remained to be seen whether a Coalition government could actually deliver.

“The Morrison government ... introduced the largest fiscal stimulus package in Australian history,” he told The Epoch Times.

“A lot of it was wasteful and contributed to the inflation problem we have today.”

Four Areas of Focus

One economic agenda the Coalition would focus on is re-establish incentives to work and eliminate disincentives in the welfare system.

Mr. Taylor said nothing improved a person’s life more than being able to work.

“We’ve lost track of the importance of that kind of economic freedom and that kind of economic focus,” he said.

Another area was ensuring the energy security of Australia, with Mr. Taylor declaring it was time to have a sensible debate about nuclear energy.

A security agent stands in front of the OL3, the latest among three reactors at the nuclear power plant Olkiluoto on the island of Eurajoki, western Finland, on Oct. 5, 2022. (Olivier Morin/AFP via Getty Images)
A security agent stands in front of the OL3, the latest among three reactors at the nuclear power plant Olkiluoto on the island of Eurajoki, western Finland, on Oct. 5, 2022. (Olivier Morin/AFP via Getty Images)

But he added that the nuclear debate needed to include short-term energy solutions.

“And that’s why there is a big fight now over gas in particular, and we’ve got to have that fight, too. So we’ve got to have the broad range,” he said.

A third area of policy for economic freedom was education, with Mr. Taylor saying freedom of choice for schools and parental rights was critical.

“That freedom of choice, that parental control is absolutely essential if we’re going to get our standards back to where they need to be in our education system,” he said.

“We need to take our education back to basics, to delivering to our children and grandchildren the education they deserve.”

Finally, Mr. Taylor highlighted that high levels of regulation and industrial relations had caused Australia’s productivity levels to collapse in recent months.

“[We’ve seen a] 4.6 percent reduction in labour productivity in this country in [the last] four months,” he said. “This is an economic disaster in the making.”

He criticised Labor’s proposed “same job, same pay” legislation, which, if passed, would require employers to pay labour-hire contractors the same amount as their direct employees who do the same job.

This includes incentives and bonuses, overtime pay, and other benefits.

“[Same job, same pay] is all wrong, for economic freedom, all wrong for productivity, and all wrong for creating the prosperity that middle Australia wants and deserves,” Mr. Taylor said.

When asked about the role of the Reserve Bank of Australia in the fight against inflation, Mr. Taylor said the monetary policy had a significantly smaller part to play compared to fiscal policy.

“I think this has been this is the thing that has been lost in this debate—what the government does is far more important for fighting inflation than what any central bank does,” he said.