James Macpherson:
Joining me now is IPA Senior Fellow and Chief Economist Adam Creighton. Adam, thanks for coming on the programme. Two questions. Should the Albanese government accept the position on Trump’s board of peace, and do you think they will?
Adam Creighton:
Yeah, they certainly should accept it. In fact, I’m actually shocked that they’ve delayed. They’ve known about this invitation for something like 12 hours and they haven’t said no, and this is a country whose ambassador has just had to leave in some disgrace, basically. So I think this is an extraordinary opportunity for Australia to finally exert some authority on the world stage again.
I think my view, as former U.S. correspondent for The Australian, I was there for four years. The whole time I was there, I saw Australia’s power diminishing, I think, in the international stage. Trump has given us a fig leaf, and we should take it. There’s only five or six or seven spots on this board, and it’s been offered to Australia. I think it’s a great offer from the U.S. president, and we should accept it, and it actually could also go some way to defusing some of the problems at home we have.
James Macpherson:
Indeed. All right, let’s talk about inflation. The International Monetary Fund is warning Australia’s inflation problem is proving stubborn. That’s their word. They say we’re in for a drawn-out period of above-target inflation, and they’re urging the Reserve Bank to remain vigilant. What do you read into the IMF calling Australia out like this?
Adam Creighton:
Well, stubborn? It’s embarrassing. The inflation rate is almost 4%. It’s something like 2% in the U.S., 2% in the UK. The reality is the interest rate in Australia is too low and there’s too much money creation. I mean, the volume of money … M3, it’s called technically … is growing at about 7% a year. So obviously, if you have more Australian dollars and say the same number of houses and apartments, then those houses and apartments are going to be worth a lot more. So this idea that they’re more expensive is really just a fiction. It’s just the fact that there are so many Australian dollars being pumped into the market that these prices go up.
So I think the Reserve Bank should increase interest rates. I know that’s not great for first-home buyers, but for the economy as a whole, I think you could make the case that it calms the housing market. You’re less likely to get stupid investments. And let’s face it, house prices, dwelling prices, the share market even, are completely out of control in terms of price, and it’s causing a lot of social discord as well. That’s why you’re seeing a turn away from the two major parties.
James Macpherson:
Well, like inflation, the housing crisis isn’t easing either, and now an urban planning expert is arguing that affordability won’t improve unless immigration is cut sharply. New ABS data shows nearly half a million migrants arrived on a permanent and long-term basis in the year to November, while house prices rose more than 9% last year. So without slowing demand, we’d need to build entire new cities to cater for everyone. Cutting immigration to numbers we can handle seems to me like a pretty obvious solution, or am I missing something? And if it’s obvious, what’s the holdup?
Adam Creighton:
No. Look, it’s certainly true. I mean, under the Hawke-Keating years, the average migration rate was about 80,000 a year, and it was that for a very long time. It jumped up to about 200 or 180,000 in the Howard era, and now as of last year it was 300,000, and of course it was 500,000 just a few years ago. That is far too high. The government has a homebuilding rate of something like 240,000. That’s the target, but the actual building rate’s about 180,000, so it’s far lower, so of course rents are going to go through the roof. And if rents go through the roof, then you get more expensive dwellings as well.
I mean, if they’re really concerned about housing affordability … and let’s face it, both sides of politics are not, really, they both want house prices to go up … but if they were really concerned about it, they would put a massive pause on immigration. These levels, 250, 300 a year, it is just too much. We have the highest growth rate in the Western world, right? I mean, that’s crazy, and yet there’s very little discussion of it. I mean, we’ve talked about the Liberal Party and their declining popularity. Where is their policy on this? It’s only One Nation that says anything about it.
James Macpherson:
Well, you’ve perfectly segued to the next topic I wanted to ask you about, and that’s One Nation outpolling the Coalition in the most recent News poll. Surprised at that result?
Adam Creighton:
Not at all. And this is two polls, not just a News poll. There was another one just a few weeks ago that basically also had the primary vote at 23%, which is an earthquake in Australian politics. This is a party that for years and years, since Pauline Hanson came on the scene in 1998 or whatever it was, 1996, has been at 10%, roughly, and now they’re at 23. And I do also note that they’ve drawn support from Labour just as much as the Coalition, so this is an earthquake. And just in terms of the way the cookies are falling, the cards are falling with these speech laws. You’ve got the Liberal Party supporting the government and the National Party again are saying no. So I see you could easily see a fracture in the Coalition here and the Nationals go with One Nation, which would be very interesting indeed.
But, yeah, we are entering, in my view, the sort of territory politically that we’ve seen in the UK for the past few years, which is the destruction of the major parties and the rise of new parties, through just general frustration about immigration and prices, and it is perfectly understandable, in my view.
James Macpherson:
You mentioned Labor’s hate speech laws. Just before I let you go, they look set to pass. They’ve gone through the Lower House, now the Senate will decide. Is this good legislation? Are you happy about the Liberals supporting it, or do you think it’s a big mistake?
Adam Creighton:
It’s a huge mistake, I think, for the Liberal Party. And I think it actually could kill the Liberal Party, actually, supporting this, agreeing with the government. These laws are actually, at least according to my analysis, even more tough than China’s laws on hate speech, right? But you don’t even have to cause any offence. It’s just hypothetical offence. That’s the only standard, so I think they are terrible laws.
They’re an overreaction. They are an emotional response to a tragedy, and so in that sense it’s understandable, but we already have so many laws against speech at the state and federal level. They were toughened last year, in fact, in Victoria and New South Wales and federally. But the laws need to be enforced, the ones we have on the books. We don’t need all these new vague laws. I think it’s a very sad day for free speech in Australia if this law’s passed.
James Macpherson:
Adam Creighton, I always enjoy speaking with you.
This transcript with Adam Creighton talking on Sharri – Sky news Australia from 20 January 2025 has been edited for clarity.
