11 November 2025
Evan Lucas
Ted O’Brien is The Shadow Treasurer, and he joins me this evening, Ted. Welcome to the program.
Ted O’Brien
Thanks very much, Evan.
Evan Lucas
So you’ve written in the AFR today about the pitfalls of government spending. Is the agenda of the Albanese term, Chalmers government, kicking the can down the road and making inflation a worse problem.
Ted O’Brien
Yes, it is and I think it is timely to be having this conversation, given its 50th anniversary of the Whitlam dismissal. And while a lot of people are focusing on the politics of that today, I think the economic story is even more interesting, because the Whitlam government learned the hard way that once you overspend, then that’s bad for the economy. In the 70s, we did see stagflation, so high unemployment, high inflation, low economic growth. And what we’re seeing today is a similar trend, where you see an uptick in unemployment, inflation is looking as though, again, it’s going back up, and the economy is barely growing. And so unfortunately, while Labor had learned the lessons from the Whitlam era, Hawke and Keating, they did inject some rational economics into the thinking. All of those lessons have been unlearned by the Albanese government. So Albanese and Jim Chalmers, unfortunately, are going back to the Whitlam days, and they are on a spending spree.
Evan Lucas
So on that how much of the spending, though, is actually discretionary versus structural pressures like the NDIS, aged care and defense, though?
Ted O’Brien
Oh, look, the increase in spending has been really through measures taken by the government, separate from the latter that you referred to as pressures. So there are pressures coming through. So of course, whether that be on health and education and NDIS and all of these sorts of things, we’re not beating the government up on that. Of course, there’s more work to be done. We’ve got to drive efficiencies across the whole of government. But where I am very critical of government is separate from that. The Albanese government, Jim Chalmers in particular, has made decisions which are only now increasing the deficits and therefore debt. So to give you an example, Evan this financial year, they are assuming a deficit of $42 billion. $37 billion of that decisions taken on measures since they’ve come to government, they are not to do with those ongoing pressures of government. So this is the problem. There is no set of fiscal rules. So usually, ever since Peter Costello introduced the charter of budget honesty, treasurers have had to contain their spending according to some rules. Jim Chalmers is the first treasurer since then to have no rules, which is why the spending is now out of control, reminiscent of the Whitlam era.
Evan Lucas
Isn’t it inconsistent to criticize Labor for running deficits when the coalition, when you were in power, presided over record stimulus debt growth during Covid-19 pandemic and also before that, under the Morrison government?
Ted O’Brien
Not really, I would argue differently Evan because, I mean, if you’re talking about a pandemic, I do know that Jim Chalmers likes to compare some of his record to a pandemic era. I don’t think that cuts the mustard in any serious way. At the end of the day, when an economy is in recession, there is a different role for government. What we see today is there is no pandemic going on, none, and yet, government spending is growing four times the rate of the economy itself. I mean, that is horrific. It really is. Over the last three years, the economic activity has risen about $300 billion a year, right, about half of that is due to the government. So the government is creating about half of all additional growth.
Evan Lucas
So you do talk about that in your piece, you put in the AFR that you know, the government spending accounts for half of all new activity. However, we also need to look at this is that during that period, the private sector has stalled, basically sitting still. In fact, the uncertainty has been so strong that even right now with lower rates, they’re still not spending. How do we therefore balance that? Because without public spending, we would have actually seen ourselves in recession.
Ted O’Brien
No, well, see the problem is the public spending so. Government spending is basically crowding out the private sector. And this is the problem because, you know, the government’s doing this at a time when the economy is already beyond its capacity. And so when you keep pouring money into the economy when it’s working beyond capacity, it only increases inflation. So basically, the government is effectively competing for goods and services in the economy with consumers and businesses, and that is what happens then why inflation goes up, inflation goes up. Interest rates stay higher for longer, and that obviously puts downward pressure on economic growth. So basically, what the government has done is the government has said, for the Albanese government, a Labor government, we believe we should be at the center of the economy, and not the private sector, which is why productivity has gone back by 5% growth remains low, and you do not see an uptick at all when it comes to investment by the private sector-
Evan Lucas
So on that, that’s the economic agenda that you’re alluding to there, the movement in productivity. Obviously, you are talking about how we can increase product and services with the output. At the moment, I understand that you are alluding to what we saw from the deputy governor from the Reserve Bank yesterday said about us being boxed in with productivity. But the question I have is, what would be a Coalition plan to not just cutting expenditure but actually reforming the economic agenda to allow that productivity to expand?
Ted O’Brien
Yeah, look really good question, Evan, because it’s not just about stopping the spending spree. That’s only half the equation. The other half is we have to start growing the economic pie. That means you’ve got to deal with the productivity crisis that the Albanese government has overseen. So the sort of things the government should be looking at in there is removing and improving regulations. It needs to finally tackle the energy crisis. The energy system is broken. Every single business, therefore every investor considers Australia now paying among the highest prices in the world for electricity-
Evan Lucas
So on that, sorry, just come over the top there. Sorry, Shadow Treasurer, we know that right now the AI revolution is the discussion around energy. So in this us, we have just seen Jensen Huang this week. You know, being quoted, slightly misquoted, around the race with AI, is around energy to getting towards as lower costs as possible, which is why China is argued to be ahead of the curve. As you just pointed out, we’re a long, long way away from we have some very expensive energy. The government has been using things like rebates, which is, you know, a can kicking policy. But what’s your alternative? Because at the moment, you’re obviously arguing about net zero. Where you sit with net zero. How would you change the energy cost system in the short term to actually make us competitive, as you just alluded to?
Ted O’Brien
Look in the short term, the number one thing that needs to be done is pour more gas into the system. Two, they need to not prematurely close coal fired power stations. And three, they need to continue to roll out renewables where they can now. The problem we have with the government is they are ideologically opposed to gas. They are forcing the early closure of coal, and their renewables plan has stalled.
Evan Lucas
The catch with gas is still quite expensive. So the catch is, I understand it’s a transition or energy, and there’s no doubt it is, but it’s not, it’s not going to bring us to that competitive edge that China has, or the competitive edge that the US has, because-
Ted O’Brien
Well, there’s a couple of things here, Evan. Yes, you’re right, gas is expensive, but remember, the rules of demand and supply, supply also apply to gas. So in other words, if we can get more supply out of the ground and get it to where it’s needed, then prices come down because you have more gas in the system, and that’s been a big problem, because currently, the way it operates is gas is only used when it’s absolutely needed just to keep the system going. And so it comes into the market at the highest price. The way the system works is in the market works that sets the price. So unfortunately, by holding gas too tightly, gas prices are too high, that has to change. The only way that changes is if the government starts to appreciate that gas is important and we need more of it. You mentioned artificial intelligence, whether it be cloud, big data, the entire digital economy, it has an insatiable demand for more energy. Yet the government is closing down the current energy system before they’re building another one out. And this is the problem. We’re actually running out of energy to survive today, which is why our smelters are needing help to survive. Our manufacturers are closing down. That’s before you even look at artificial intelligence. So you’re dead right to call it out. And this is why energy is one of those things that has to be fixed if we are going to again, have an economy which is growing, and if you don’t grow the economic pie, your only option then is to redistribute wealth. That’s Labor’s approach. It’s not the Liberal approach.
Evan Lucas
Mr. O’Brien, sorry to interrupt, I’m running out of time, but because there’s one other question I really, really want to ask you, which is that economists have been calling for tax reform for years. Right now, we are seeing in the Budget papers that next year, 62% of the government’s total revenue will come from personal income tax. How do we actually start making the step forward to have a proper discussion about tax reform that actually makes us listen to the experts, makes it simpler and fairer and actually can see the political divide come together for fairer tax reform.
Ted O’Brien
Evan, I think it’s doing exactly what you did just then, it’s how we do it. We’ve got to talk about it. A lot of people don’t realize it, but the government is currently planning at least another 10 years of deficits. The only way they think they bring the budget back to balance is by increasing personal income taxes. And this is a big problem, which means everyday Australians. The plan under the Albanese government is to have everyday Australians pay higher personal income taxes. That is their only plan. It’s like 100% of the way they get the budget back to balance is to tax Australians more. We need to talk about this so people understand that is the plan of the Albanese government, which is why we are talking about the need for tax reform. We are talking about the need to prioritize personal income tax cuts.
Evan Lucas
Shadow Treasurer Ted O’Brien, thank you so much for joining Money.
Ted O’Brien
Thank you very much, Evan, all the best.
Evan Lucas
That’s Ted O’Brien, the Shadow Treasurer for the Opposition. That’s a fascinating discussion.
ENDS