Labor’s promised spending in child and aged care comes at a fraction of what the Federal Government spent in last week’s budget, shadow treasurer Jim Chalmers insists.
In his budget reply speech to the National Press Club on Tuesday, Chalmers reiterated Labor’s five-point economic plan, which includes cheaper child care and reforms to the aged care sector.
“When you take two of our largest budget commitments so far in child care and aged care, together they make up only one-fifth of the Government’s new spending decisions that they unveiled in their latest budget,” Chalmers said.
Putting that in context, he says by 2025/26 Labor’s largest commitments will make up only 0.3 per cent of GDP spread over the next four years.
In comparison, the Government’s decisions in this year alone are larger – at 0.4 per cent of GDP – and represents around 1.5 per cent of GDP over the forward estimates.
“So we maintain that our approach is necessary and responsible and right for the economic conditions,” he said.
“That’s why the quality of spending matters as much as the quantity.”
He is also acutely aware of the risks to interest rates and what it means for household and federal budgets, noting the Commonwealth Bank’s latest forecasts see the cash rate rising to around 2.5 per cent
That compares with its current record low of 0.1 per cent.
This will push mortgage payments as a share of household disposable income to a record high.
“This reflects the worsening housing affordability under the Liberals and the near record household debt-to-income ratio, which has increased by 20 percentage points after remaining stable during Labor’s last term,” Chalmers said.
“We know rising mortgages are bound to impact the recovery.”
He again attacked the design of last week’s Budget that was more about shielding the Government from voters and setting it up for a fourth term, rather than setting the country up for a better future.
“Last week we got a document that gloried in its shallowness and wallowed in its triviality,” Chalmers said.
“Deliberately, overtly, insultingly conceived as a prop for the election.”
Prime Minister Scott Morrison is expected to announce the election date this week.