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Transcripts
September 17, 2025
SENATOR JAMES PATERSON: Thank you for having me.
MELISSA CLARKE: So in her speech today to CEDA, Sussan Ley said, every new dollar of spending would require a saving, a reprioritisation, or a reform. So to be clear, does this mean that the Coalition government would offset new spending and rely on economic growth to gradually remove the structural deficit? Is that the formula?
SENATOR JAMES PATERSON: Generally speaking, yes. What Sussan is doing is outlining some principles which we think are good principles for sound budget management. They're principles that previous governments that have achieved surpluses consistently over the long term, like the Howard-Costello government, have adhered to, which is that you shouldn't bring forward new spending unless it can be offset, or, as Sussan said, also accompanied by some other reform. Now, the only exception to that Sussan alluded to is in times of crisis or, indeed, significant national security matters like defence, where the sums involved are so significant that offsetting that spending, particularly within those portfolios, is not something that's realistic.
MELISSA CLARKE: So the promise from the Coalition to lift defence spending to 3% of GDP, that won't require an offset in savings somewhere else.
SENATOR JAMES PATERSON: No, we think that that is an increase which is necessary for Australia's national security needs and they are imminent and serious and we're not going to wait to deliver that increased spending on defence to secure our country to find other savings. But that will require discipline elsewhere in the budget to make sure that we are on a sustainable trajectory, which we're clearly not right now.
MELISSA CLARKE: That increase in defence spending is a very large whack of money that we're talking about. Given Sussan Ley was making the case for having stricter fiscal guardrails and the need for that to make sure that future generations aren't paying for the debt that we are accumulating now, doesn't that sort of undercut the broader argument she's making if defence spending is given a free pass?
SENATOR JAMES PATERSON: I think it actually reinforces the argument. There are some things which we have to do that are just essential. Defence spending adequately is one of them, but so is delivering essential services and providing a safety net. And because those things are essential, then all other forms of government spending must be subject to really strict and rigorous oversight. We have to make sure it is delivering value for money. We have to make sure it is sustainable. We have made sure it is genuinely going to people of need, not people who don't require it.
MELISSA CLARKE: But if the social safety net, which as you say is essential, if that can be very closely examined and if it can be tightened with things like changes to eligibility and indexation and demand caps, the sort of things Sussan Ley was talking about in her speech today, why wouldn't we take that same rigorous approach to defence spending and other essentials?
SENATOR JAMES PATERSON: Well, defence spending also needs and does have that scrutiny, and we do want to make sure that every defence dollar is adequate and spent in the right places. But when Sir Angus Huston, the best-informed now private citizen on the state of Australia's defence readiness, says we need to spend 3% of GDP, then we should heed that advice. And he's not alone. It's almost unanimous across the national security community, the expert community, that if you want to have a capable ADF and also deliver AUKUS submarines, the current spending trajectory is just not enough to meet those two things. We have to do more.
MELISSA CLARKE: If we look at the broader budget position, we do have a structural deficit now. If the spending offsets, there for new spending that the Coalition wants to put in place, but looking at economic growth to deal with the current deficit, is that going to be enough for the task of reducing that structural deficit? I mean, economic growth hasn't been great in recent years. Is that really going to be able to do the task of budget repair, or do you need to be prepared to go further with a program of savings cuts?
SENATOR JAMES PATERSON: Well, certainly you're right. If we had economic growth like what it has been over the last three years in the Albanese Government's first term, that would not be enough in its own to achieve that task. We need to lift economic growth in this country, and we'll be taking to the next election a pro-growth agenda that articulates exactly how we'll lift that rate of growth. But very clearly, with productivity sliding backwards, and business investment sliding backwards, we're not in the place where we need to be. But if you do get economic growth up and if you keep government spending in control and it grows at a slower rate than the economy, then over time you do return to surplus, and that's what we should be aiming to do.
MELISSA CLARKE: So Sussan Ley has talked about fiscal guardrails. I take that as a spending to GDP cap for that ratio. Is that something the Coalition wants to return to?
SENATOR JAMES PATERSON: In the past, we haven't had an explicit spending-to-GDP cap, but there has been a tax-to-GDP cap. And if you have a tax to GDP cap and you want to deliver a budget surplus, it kind of implies a spending-to-GDP cap. Under the Howard-Costello government and under the previous Liberal government, under Tony Abbott, Scott Morrison and Malcolm Turnbull, they set that tax-to-GDP of 23.9 per cent. Now this government plans to blown way through that, going right up to 27-28% of GDP at the end of the forward estimates.
MELISSA CLARKE: So do you want to bring it back to 23.9?
SENATOR JAMES PATERSON: Well, we're not setting that number today, and we couldn't responsibly set that today because there'll be several budgets from this government before the next election, which will have an impact on where we're at and the decisions that we'd make. So we can't set that today. But what we're saying, as a principle, the government should apply that discipline to itself. It just shouldn't allow tax or spending as a proportion of the economy just to rise inexorably and unsustainably as it is under this government.
MELISSA CLARKE: I understand you might not want to give a specific figure today, but can you give us a ballpark? Do you want it to be closer to 23.9 than 27, 28? I mean, can you just give us that level of guidance?
SENATOR JAMES PATERSON: It's fair of you to ask, but I really can't speculate this far out because the decisions that the government makes in its subsequent budgets, there'll be at least two, maybe three before the next election, will have a material bearing on that and it would be irresponsible of me to lock in even a range at this point in time. Obviously, I think that at the moment, the government is spending too much money. We've been very clear about that. It's far above the long-term averages, and they plan to increase taxes significantly over the next decade to close the deficit. That was in their pre-election fiscal outlook, which said that basically, bracket creep, tens of billions of dollars worth of bracket creep, was the only thing that would close the budget deficit.
MELISSA CLARKE: The Coalition spent the period before the election backing a lot of the government's big spending promises on health. I mean, you went into the election campaign with pretty similar, very large spending promises on health. In hindsight, was that a bit of a mistake, particularly in light of the rhetoric of Sussan's comments today?
SENATOR JAMES PATERSON: I don't want to commentate too much on what happened in the last term, except that I've already said that I think that we shouldn't have opposed tax cuts and that we should have taken our stronger budget bottom line to the last election, and that I'm determined that at the next election we do offer lower taxes and a stronger budget bottom line under a Liberal government, because that's why people vote Liberal and we want to give them that offering at the next election. That does put a burden on us to be very judicious in which spending commitments that the government makes which we match. And one of the big questions I have is, how does the government plan to deliver sustainably its idea of universal childcare, where people on a million dollars a year will have their childcare paid for them by the government, when we already have a structural budget deficit, and this has been costed in the tens of billions of dollars? Now they haven't explained how they're going to do that, we'll be watching very closely.
MELISSA CLARKE: All right, well, we're getting low on time, so I do want to turn briefly to issues on net zero. We have heard Andrew Hastie say today that he's in the minority in the Liberal Party room as someone who wants to scrap the net zero target. Is that right? What's your counting of the situation? Are the majority in favour of keeping net zero at the moment?
SENATOR JAMES PATERSON: Look, I don't want to misrepresent my colleagues' views publicly. They have the opportunity to speak for themselves, and they haven't had a proposition put to them on exactly what that would look like, and so I want to give them the opportunity to have their say in our internal party processes.
MELISSA CLARKE: So was Andrew Hastie a bit too quick to come out and declare that there was a majority in favour of net zero?
SENATOR JAMES PATERSON: I don't provide advice to my colleagues through the media, certainly not to my good friend, Andrew Hastie. He's entitled to say what he thinks and what he feels, and I respect that. What I would say is that there is a very strong consensus in the party room, because it dates back to John Howard, that we do have a responsibility to reduce emissions. We accept that responsibility, and every Liberal leader since John Howard has accepted that. But also that it should not come at an unacceptably high cost, either for households in their electricity bills or for people's businesses or their jobs. And right now we think it is coming at an unacceptably high cost under the Albanese government. They are not managing the transition well because not only are prices up, not only is our grid less stable, but emissions haven't even fallen. In fact, emissions fell more under both the Abbott, Morrison, and Turnbull governments than they have under the Albanese government, despite its so-called commitment to these issues.
MELISSA CLARKE: If I can just ask one last brief question to get a sense of the principle of the approach that you take when considering issues of tackling climate change and reducing emissions. Do you think it's important for the Liberal Party to reflect the views of the Liberal Party membership when making a decision about this policy, or do you think it's important to reflect the views of the wider voting public?
SENATOR JAMES PATERSON: When Robert Menzies established the Liberal Party in the ashes of the United Australia Party, he was very clear that it is the responsibility of the parliamentary party to set policy. It is not the responsibility of the organisational wing, which runs elections and endorses candidates. Now, members of Parliament and Senators like myself are very respectful and listen to the views of our members, but that is not the only determinant in our public policy. We have to weigh up a whole lot of other factors, including our judgement of what is politically achievable and our judgement of what is in the national interest. And it is the parliamentary party which reserves the right to decide our policy. We're not dictated to like the Labor Party is by their National Conference resolutions or any other means like that.
MELISSA CLARKE: Alright, thanks for setting that out for us. I really appreciate it. Senator Paterson, thanks very much for joining us on Afternoon Briefing.
SENATOR JAMES PATERSON: Thank you for having me.
ENDS