Transcript | Sky News First Edition | 27 November 2025

TRANSCRIPT 

INTERVIEW
SKY NEWS FIRST EDITION 

Thursday, 27 November 2025 

Topics: Chalmers reckless spending drives up inflation, Labor's public service cuts, EPBC   

E&OE………………………………………………………………………………………… 

PETE STEFANOVIC: Well let's keep that going because the inflation genie is certainly it's been shot back out of the bottle again. Let's bring in the Shadow Finance Minister James Paterson. James, good to see you this morning. So how are you reflecting on all of that this AM?  

SENATOR JAMES PATERSON: Good morning, Pete. Well, frankly, I thought that this Treasurer Jim Chalmers looked more like the Iraqi Information Minister yesterday when he said inflation was flat. It was like he was trying to argue Baghdad hasn't fallen, we still control the airport. Nothing to see here. When the reverse is the case, inflation is now out of control again. It's firmly above the Reserve Bank's target band, both in underlying terms and the headline rate. And that is a direct result of government policy. And you don't need to take my word for it anymore. Penelope Smith, a senior official at the RBA, gave a really important speech yesterday where she said one of the factors that meant that the neutral rate, the cash rate, had to be higher than normal was growing fiscal deficits. And Jonathan Kearns, who's now the Chief Economist at Challenger Bank, but is also a senior former RBA official, attributed loose fiscal policy and fiscal stimulus to higher interest rates. So there is a direct relationship between Labor's inability to control the budget and higher inflation and higher interest rates which is hurting Australians.  

PETE STEFANOVIC: So let's get your reaction to what the government has said about it because I questioned the Treasurer about this yesterday and they put the ball firmly in the court of state energy rebates being withdrawn and also denied any accusations that it was because of excessive government spending.  

SENATOR JAMES PATERSON: Yes, well of course they would, Pete, but the truth is that there are a range of factors contributing to higher inflation, not just energy rebates being withdrawn. Of course, a 37% increase in electricity prices over a year is a stunning failure of their energy policy. If you have to rely on subsidies to keep that under control, there's something fundamentally wrong with the underlying settings, as Ken Henry and others have argued. But that wasn't the only thing that was up over the last month. Many other categories of spending showed higher inflation as well. It's very clear that inflation is rising again on Labor's watch.  

PETE STEFANOVIC: Well, it's housing as well too. I mean and when we're talking about subsidies, James, it's proof, is it not, that rebates only mask a problem and then leads to bigger problems?  

SENATOR JAMES PATERSON: I think that's self-evident, Pete. It was always the case that Labor was just trying to mask their energy policy failure. Frankly, what they were really doing politically was compensating for their failure to deliver on their promise to reduce energy prices by $275. It's not an accident that the first rate of energy subsidies that they chose was $300, so they could say that they'd delivered their promise. But of course, you're not delivering your promise to lower energy prices if you're just masking higher energy prices with taxpayers' money. Really what you're doing is taking it from them in the one hand and giving back to them on the other. Taxpayers are actually still worse off.  

PETE STEFANOVIC: Okay, so will you be the first member of the Coalition then to demand the Treasurer axe those federal handouts beyond the end of the year?  

SENATOR JAMES PATERSON: Pete, points for effort. You've tried a couple of times on this programme over a couple of weeks and I'm just not biting... 

PETE STEFANOVIC: Well I feel like it's a reasonable... Sure, sure. I realise you know you kind of don't want to get ahead of the Treasurer on this one, but when you say, you know, subsidies where you're pointing to subsidies as being a failure, then how can you keep them going?  

SENATOR JAMES PATERSON: Well, what I'm pointing to a failure is the energy policy under this government's watch. Their mindless pursuit of net zero and unachievable 2030 and 2035 targets are driving up the cost of energy, and Australians are paying the price for that. And they're trying to mask those failures for a while. But as even Jim Chalmers has admitted, this can't be a permanent feature of the budget. It's not sustainable to pay people's power bills in perpetuity. So whether Jim Chalmers withdraws these subsidies this year or in six months time or in twelve months time, at some point he's going to have to turn the tap off because a $42 billion forecast budget deficit this year means that even Labor has to take budget management more seriously and be concerned about debt and deficit. And so it will come off at some point. That's the truth.  

PETE STEFANOVIC: Yeah, I mean look but this is already cost I mean these handouts and I'm no doubt they're helpful. But it's costing the budget billion, multiple billions of dollars. I mean, can the country really afford to keep them going?  

SENATOR JAMES PATERSON: Well Jim Chalmers himself has said that we can't afford to keep them going in perpetuity forever. They may extend them for a short period of time. That would be my bet that Labor will extend it because...  

PETE STEFANOVIC: Ok and would you support that?  

SENATOR JAMES PATERSON: They don't actually want Australians to confront the reality. Well we'll make our position clear once the government makes their position clear. They're going to be in power at least for the next two and a half years, and they have to take responsibility for the decisions they've made. They put these subsidies in in the first place. They're also responsible for rising energy prices.  

PETE STEFANOVIC: I get a feeling that there's a policy call around the corner on this, but do you think there now needs to be a greater rush on gas reserves? Something other than band-aid fixes?  

SENATOR JAMES PATERSON: Well we did take a policy to the last election, as you know, Pete, to make sure that Australians' gas was available to Australians first. It's a crazy thing that one of the world's largest exporters of gas, Australia, has some of the highest domestic gas prices, and clearly there are flaws in the way the market is operating. But it's also equally important to preserve what is an incredibly important export industry for Australia and something which underpins our bilateral relationships with very important partners, especially in the region, like Japan and Korea. So Labor is catching up to us in some respects by saying they are looking at an east coast domestic gas reservation policy. We'll wait and see what they bring forward and we'll respond to it then.  

PETE STEFANOVIC: Just elsewhere this morning, James, looks like cuts are coming for the public service. The Treasurer called them reprioritisations though, not cuts yesterday when I asked him about it. But this is an area where it cost you at the last election, potential cuts to the public service. So do you support cuts being made now at departments which are quote 'lower performing'?  

SENATOR JAMES PATERSON: I thought it was very cute for Jim Chalmers to say that when they do cuts, they're called reprioritisations, but when the Opposition does reprioritisations, they're called cuts. I mean it's pretty disingenuous, particularly because Labor ran at the last election saying there'd be no cuts to the public service. Very clearly there are going to be cuts to the public service. As the PBO called out in their post-election review, they said that Labor's budget implies a reduction of 22,500 public servants. Let's see what actually comes to pass. But the bare minimum the Australian public is entitled to from this government is some transparency. It's been reported in the Financial Review that they wrote to government departments and agencies to tell them to find these savings. That correspondence should be released. And David Pocock and I put a motion through the Senate yesterday to ask them to do so.  

PETE STEFANOVIC: So would you get behind your old policy again and say cuts are cuts are needed because I mean it it's been bloated by forty thousand since Labor's been in power.  

SENATOR JAMES PATERSON: Well we've acknowledged the limitations of the policy that we took to the election Pete and we are not continuing to prosecute that policy. And it is now up to Labor to demonstrate how they can make the budget add up without making any cuts to the public service, which is what they promised before the last election.  

PETE STEFANOVIC: Alright, we'll see where that ends up. Just a final one here, James. Just on the environmental reforms. It looks as though well, leader to leader talks are taking place involving Anthony Albanese, Larissa Waters and Sussan Ley as well. Can you shed any light on where that's at this morning from the Coalition point of view?  

SENATOR JAMES PATERSON: Only Pete that we've said all along that we're willing to be constructive and bipartisan and act in the national interest if the government is willing to respond to the very serious policy reservations that we and the business community have raised about this government's legislation. As the draft legislation stands, we could not support it. We would have to vote against it because it would take us backwards in terms of approvals and allowing projects to proceed, not forwards. So unless there's big change from the government, we'll find it very difficult to support.  

ENDS