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November 5, 2025
SALLY SARA: The Reserve Bank is expecting underlying inflation will be above its target range of two to three per cent until the second half of next year. Joining me now is James Paterson, Shadow Minister for Finance. Senator, welcome back to Radio National Breakfast.
SENATOR JAMES PATERSON: Good morning, Sally.
SALLY SARA: What does the RBA's rate decision tell you about the health of the Australian economy right now?
SENATOR JAMES PATERSON: Well, firstly, it's a bitter blow for households and mortgage holders who are counting on rate cuts before Christmas to help make ends meet. On average, they're paying about $20,000 more a year than they were when Labor came to office, just on their repayments. But I'm concerned that inflation is rising, again, on this government's watch, at the same time that unemployment is also rising. That's a very unusual phenomenon and not a good one. And if that trend were to continue over some time, then you could be back to the era of the 1970s, where we last suffered what's called stagflation.
SALLY SARA: But unemployment is still relatively low.
SENATOR JAMES PATERSON: Yes, but it's up about 1 per cent on this government's watch at 4.5 per cent, and we hope that's a trend that doesn't continue. We hope it moderates, and the RBA forecasts do indicate that it will moderate. But the RBA has also clearly indicated and called out the lack of productivity growth on this government's watch, which has gone backwards by about 5 per cent, as contributing to the inflation problem that we have now, which is why interest rates have remained higher than people expected them to and may yet even rise from here rather than falling.
SALLY SARA: It is six months since the election, what policies is the Coalition considering? How would you deal with the issues around inflation?
SENATOR JAMES PATERSON: Well, I think Sussan Ley, our leader, has set out very clearly the markers of where we intend to go on economic policy. She's given two speeches on this, one to CEDA and one to the Centre for Independent Studies. Where firstly, she said that Australians have to live within our means, and the federal government must live within our means, and we are prepared to make difficult choices on the federal budget to make it more sustainable again. We are forecast to have a $42 billion budget deficit this year on Jim Chalmers watch. And in the second speech for the CIS, she said that she wanted to deliver lower taxes for Australians, because that is what the Liberal Party has always believed and must always deliver. So that's a good indicator of where we're going, but there's more policy work happening in the background, which I hope we'll be able to share in due course.
SALLY SARA: Australia's long been looking for private sector economic activity to pick up. Isn't that a good thing?
SENATOR JAMES PATERSON: Yes, but it's a very modest pick up in private sector activity so far, and public spending remains incredibly elevated. In fact, this financial year, government spending will be the highest it has been as a proportion of our economy in almost 40 years, outside the pandemic stimulus period. And of course, government spending last financial year grew at four times the rate of the economy, and that is inflationary, and it's making the Reserve Bank Governor's job more difficult.
SALLY SARA: You're listening to Radio National Breakfast, and my guest is Shadow Minister for Finance, Senator James Paterson. On another issue, the Nationals have abandoned their commitment to net zero emissions by 2050 over the weekend. Meanwhile, the Liberal Party is trying to determine its energy policy. You're a senior figure in the Liberal party room. What's your position?
SENATOR JAMES PATERSON: As you remember from our previous discussion, Sally, as a member of the leadership group and the Shadow Cabinet, I'm not publicly canvassing my views on this because I've got plenty of opportunities to have my say internally. What I can say to your listeners, though, is that they will not have long to wait for the Liberal Party to articulate its own view on this. The National Party is an independent sovereign party, and they have gone through their process. The Liberal Party is going through ours, and we will determine what we think is in Australia's national interest.
SALLY SARA: How important is finding a path back to government? How important are your calculations on getting energy policy right?
SENATOR JAMES PATERSON: I think it's one of the biggest questions facing Australia. In the inflation data last week, we learned that energy prices have risen 23.6 per cent in a single year on the government's watch. And that's just not pain for households, which is obviously very real. It's also causing havoc for heavy industry. I mean, the reason why the government is running around the country bailing out heavy industry like smelters is because they're underlying energy settings aren't working and Ken Henry, the former Treasury Secretary said this to your colleague David Speers last week on his podcast. We have to get those underlying policy settings right, because it's not sustainable to be indefinitely subsidising heavy industry or risk losing it.
SALLY SARA: You can't return to government unless you win seats in the urban areas, particularly of Sydney and Melbourne. What are you doing to ensure that your policies are aligned with the views of those voters?
SENATOR JAMES PATERSON: It's self-evidently true that in the most urbanised democracy in the Western world, the Liberal Party must compete in our suburbs and in our cities. And we demonstrated, even in a disappointing election result last time, that we can do that. Tim Wilson won the inner-city seat of Goldstein back from the Teals. And I'm confident we can win more seats like that, as well as our traditional strongholds, for example, in Melbourne, like Menzies and, Aston and, Chisholm and Deakin. And it will require a policy which gets the balance right. I think it will be important for the Liberal Party to demonstrate we are committed to emissions reduction, that Australia will do our fair share, but that we also won't ask Australians to do more than the rest of the world or go ahead of the rest of the world at the expense of our own economy or their electricity bills.
SALLY SARA: Do you agree with your colleague, Andrew Bragg, that while it would be good for the Coalition to stay together, it shouldn't be at, quote, any cost?
SENATOR JAMES PATERSON: I mean, it's self-evidently a true statement that if the Liberal Party and National Party views are completely irreconcilable, then we couldn't be in Coalition. But it is my very, very strong preference that we remain in Coalition because we cannot form government without being in Coalition with the National Party. And history shows what happens when Liberal and National Parties do not run in Coalition. The 1987 election is not widely remembered as a great success for either the Liberal or National Parties. And we should all be determined to ensure that doesn't happen again.
SALLY SARA: We've heard from Sussan Ley on AM this morning on ABC radio. She's confident that she will remain leader of the party until the end of the year. Is that confidence warranted in your view?
SENATOR JAMES PATERSON: Yes, it is, and I strongly support Sussan's leadership. It is critical as a party that we resolve these big questions, like net zero. But when we've done so, we will be able to then turn our fire on the government. And frankly, their energy policy has been relatively unexamined in recent times because we have been distracted. But focusing on that, I think, will demonstrate just how weak the government's energy policy is, how much harm it's doing to our country. And I think we can win a lot of support in the community after doing so.
SALLY SARA: How would the Coalition bring down energy prices for businesses and consumers? We haven't heard that articulated clearly since the election.
SENATOR JAMES PATERSON: No, you haven't, and that's because we're still resolving these big issues internally, and I don't want to mislead your listeners that we've been out there articulating that argument. We have to articulate that argument, and that is why resolving these issues is a prerequisite to having that debate with the government, and we will have a burden on us to demonstrate what our alternative policy vision is to bring electricity prices down, and I assure you we will do that. But certainly we can't do worse than the government, on whom's watch electricity prices are up by about 40 per cent. Now they have been trying to mask that with energy subsidies, but that can't go on forever, as the Treasurer himself has said, that is not something that can continue indefinitely. So at some point, consumers are going to have to pay on Labor's watch.
SALLY SARA: Your colleague, Andrew Hastie, and others appear to have suggested that women with late-term abortions shouldn't have access to paid parental leave. Sussan Ley, this morning, has described those recent comments as insensitive. What's your view?
SENATOR JAMES PATERSON: Well, the Liberal Party supported the passage of Priya's bill through both the House and the Senate. Andrew Hastie and other colleagues raised questions about some potential unintended consequences of that bill in the House, but they didn't vote against it. They didn't even move amendments to the bill. Conscience issues relating to life and death are some of the most difficult issues that parliaments have to deal with. I think we want to live in a country where people can respectfully raise questions like that, but ultimately, it was critically important that the Liberal Party supported this bill because it is about looking after families and women in particular who suffered the terrible tragedy of a stillborn birth and should not be forced back to work because they didn't previously qualify for parental leave.
SALLY SARA: So just to come back to the question, Sussan Ley has described the comments as insensitive. What's your view? Was it right to raise those concerns or questions about this?
SENATOR JAMES PATERSON: I don't want to live in a country where people cannot raise their sincerely held genuine convictions in a place like the Parliament, where we have to do so on behalf of our constituents. But when we do so, it's critical we do it in a way that is measured, that is calm, that is respectful, that understands the sensitivities that exist.
SALLY SARA: Were the comments from Andrew Hastie respectful and calm?
SENATOR JAMES PATERSON: Well, Andrew Hastie's speech is one that I actually have read. I haven't read all of my colleagues' contributions. And if you read Andrew Hastie's speech, I think it is a measured, calm and respectful speech. He asks a question about a potential unintended consequence of the bill, but he does so in a way that's mindful of the genuine and heartfelt feelings that many people have.
SALLY SARA: So you have a different view from Sussan Ley on that issue?
SENATOR JAMES PATERSON: Well, I listened to her interview before, and it was not clear to me that she was specifically commenting on Andrew Hastie's speech. I think she was talking generally about the risk of linking these sensitive issues to divisive debates about abortion, and I understand and respect that view.
SALLY SARA: James Paterson, thank you for being my guest this morning.
SENATOR JAMES PATERSON: Thank you.
ENDS