Jim Chalmers:
Well, new numbers out today show that wages growth is strong and sustainable under this Albanese Labor government. We saw wages growth in the December quarter of .8 per cent, the same as the quarter before it – .8 for both public and private and 3.4 per cent through the year. This now means we’ve had 14 consecutive quarters where wages growth has been higher than 3 per cent. To give you a sense of that, that didn’t happen once in the 35 quarters of the previous government. So 14 quarters in a row where we’ve seen wages growth north of 3 per cent – didn’t happen once in annual terms in the 35 quarters of our predecessors. Has happened 14 times – 14 consecutive times – under this Labor government.
Now, of course, with inflation higher than we’d like, that has implications for the real wages calculation. But the overwhelming story of this Labor government has been real wages growth. We’ve seen 2 years now of annual real wages growth before this quarter, remembering that real wages were falling by 3 and a half per cent when we came to office. We’ve seen annual real wages growth for 2 years now, but with the inflation number coming in higher than we’d like in the December quarter, obviously, this has played out in the calculation of real wages.
Now, our focus as a government is on fighting inflation, addressing these longstanding productivity issues in the economy, and also dealing with this global economic uncertainty. That’s the focus of the government, and it’s also the focus of the budget deliberations in the lead‑up to May. We see strong and sustainable wages growth as part of the solution to cost‑of‑living pressures, not part of the problem. The whole reason for our focus on inflation and productivity and global uncertainty is because strong and sustainable wages growth is a really important part of our efforts to lift living standards over time.
So this number today is another strong quarterly wage price index outcome. It does reflect the fact that wages have grown strongly and in a sustainable way under this Albanese Labor government – 14 quarters in a row north of 3 per cent; 35 quarters in a row south of 3 per cent under our predecessors, and that’s the difference, really. A strong labour market, as the Reserve Bank Governor and others have pointed out, is a good thing. Unemployment is at 4.1. Wages are growing strongly. We have an inflation challenge in our economy, which is impacting real wages, and that inflation challenge and the productivity challenge and global economic uncertainty are the 3 most important things that the government is focused on in our economic plan.
Journalist:
Treasurer, former RBA Governor Philip Lowe has told the Australian Financial Review that your government’s handling of the economy has contributed to inflation, low wage growth and high interest rates. What’s your response to that?
Chalmers:
Well, a couple of things about that. I mean, first of all, I respect Phil Lowe. I worked with him pretty closely when he was the Reserve Bank Governor, and out of respect to him and the institution that he used to lead, I haven’t engaged in any public criticism of his record as RBA Governor or the forward guidance that he gave or any of the decisions that he took. And I’m not interested now in having an argument with Phil Lowe. I wish him well.
Obviously, I think it’s a matter of public record, Phil Lowe would have liked to have been reappointed by the government. After he wasn’t reappointed by the government, he’s become a fairly persistent critic of the Labor government in the pages of the Financial Review and elsewhere. I think, to some extent, that’s just human nature. I understand that. But I have a very respectful view of Phil Lowe.
Now, when it comes to a couple of the issues of substance that he raised, for example, spending, spending as a share of the economy has come down from almost a third of the economy when he was the governor, now to closer to a quarter of the economy. We’ve got real spending growth down from averaging 4.1 to averaging 1.7. We’ve delivered 2 surpluses. We’re saving most of the upward revisions to revenue. We’ve found $114 billion in savings, including $20 billion just in December. And so, we’ve been managing the budget in a much more responsible way than our predecessors. We’ve made good progress on the budget, but we know that there’s more work to do.
And similarly on productivity, we have a very big, bold, broad, ambitious agenda on productivity that we’ve been rolling out. FIRB reform, competition reform, environmental approvals reform, payments reform, establishing Jobs and Skills Australia. There are a whole range of things that we’ve been doing on the productivity front. But, once again, we know that more will be necessary to turn around a couple of decades of poor productivity performance in our economy.
The last few quarters we’ve seen productivity in our economy tick up, but we’re not getting carried away with that. We know that this is a longstanding entrenched challenge in our economy, and that’s why it’s a central focus of our economic plan.
So a couple of the issues that Phil has raised, the government is making progress on, but making progress at the same time as we acknowledge there’s more to be done.
Journalist:
Anthony Albanese has been scathing of Lowe, pointing out he’s the former RBA Governor. He said there are people who are exes who get their name in the paper. Do you agree with that characterisation?
Chalmers:
He’s the former Reserve Bank Governor, and he’s got his name in the paper today. So I don’t have any issue with what the Prime Minister said. I think I’ve answered your question in a pretty substantial way. You know, I respect Phil Lowe. He’s become a bit of a critic of the government since he wasn’t re‑appointed to that role. I wish him well, genuinely. And on the substance of the issues that he’s raised, I’ve answered that in detail.
Journalist:
When do you expect real wages to turn positive again?
Chalmers:
Well, I think it’s clear from the Reserve Bank’s forecasts that the inflation number will be higher than we’d like for a little while now this year. They’ve got inflation peaking around the middle of the year and then coming down after that, and that will have implications for real wages. The important thing to remember about the inflation forecast – and we’ll update ours in the usual way in the May Budget – but they will be impacted in the coming months by some temporary factors, including the unwinding of the Commonwealth’s energy bill rebates. And so there’ll be some factors pushing that number up in the near term. That’s clear from the Reserve Bank forecasts, and we’re in the process, or Treasury is in the process of finalising their forecasts for the May Budget.
But what we’ve seen in these numbers today is wages growth which is north of 3 per cent. Now, that’s a good, strong and sustainable number, but with inflation higher than we’d like, obviously that has implications for real wages for the time being.
Journalist:
Treasurer, how can the government just ask anyone to [indistinct] on a high‑speed rail project connecting Sydney to Newcastle while people are struggling, as today’s figures show?
Chalmers:
Well, first of all, that $90 billion didn’t come from the government; it’s a separate calculation. And as I understand it – I haven’t gone through it in any detail – but as I understand it, it reflects the biggest version of the project and over several decades. But it’s not the government’s number. We’ve provided, I think, around half a billion dollars in the budget since the ’22 election, since we came to office, and that’s because we think that this kind of infrastructure has the potential to be a game changer. And so we’ve made that money available in the budget, about half a billion dollars – not $90 billion – and we’ll have more to say about it in the coming weeks.
Journalist:
You talk a lot about intergenerational inequity. Do you see the capital gains tax discount as part of the problem, and when can we expect any announcements around the CGT?
Chalmers:
Well, we haven’t changed our policy on tax or on CGT. Our tax policy is all about cutting income taxes for 14 million Australian taxpayers this year and next year, the tax cuts that Angus Taylor and Tim Wilson opposed at the last election. And so, that’s our focus when it comes to tax. Now, I’ve been upfront and said that I do acknowledge and do understand and do agree that there are intergenerational issues in our economy and in our society. But we’ve found other ways to address those issues in the housing sector by building more homes and making it easier to save a deposit, and in the tax system by cutting income taxes and boosting the low‑income super tax offset and making superannuation tax concessions fairer, so that the super system is fairer from top to bottom. So we have found other ways to address the, I think, obvious intergenerational issues in our economy and in our society. We’ve already got a tax policy. We’ve already got a housing policy, and any steps beyond that would be a matter for Cabinet in the usual way.
Journalist:
Why is public service wage growth higher than – public sector wage growth higher than the private sector?
Chalmers:
Well, in the December quarter, public sector wage growth was the same as private sector wage growth – 0.8 per cent. And over the life of our government, private sector wage growth has outstripped public sector wage growth. If you look at the cumulative number, I think – in aggregate, I think 13.4 per cent wage growth under us, 13.5 private, 13.1 public, I think, from memory. So overwhelmingly, the story of our time in office has been real wages growth and the private sector outstripping the public sector when it comes to wages growth. This data today has 0.8 for both public and private in the December quarter.
Journalist:
Treasurer, will the federal government back Crisafulli’s pitch to drive up investment into Queensland’s critical minerals projects?
Chalmers:
Well, we don’t need David Crisafulli to be enthusiastic about Queensland mining and about critical minerals in Australia. I mean, we’ve had – we have a critical minerals strategy. We’ve got new policies that we’ve been rolling out over the course of the last 3 and a half years. We don’t need Dave to tell us that critical minerals are important or that Queensland is the hope of the side when it comes to the national economy. These are things I’ve believed all of my time as Treasurer, and more than believed that, we’ve put policies in to back that up. And a lot of the engagement I do with my international counterparts and colleagues, too, is about maximising the unbelievable potential of critical minerals and the resources sector more broadly. And obviously, Queensland is front and centre. When you’ve got a Treasurer from Queensland who understands this state and its economy, obviously, Queensland industry is always front and centre when we think about policy for the national economy.
Journalist:
[Indistinct] he did just make a $300 million pitch for funding from the American – Australian–American framework, critical minerals framework. Do you think that he will be in good stead to receive some of that funding?
Chalmers:
Look, I haven’t seen that. I didn’t tune in to watch the Premier’s appearance. I’ll obviously take a look at what he said. But our intention when it comes to that partnership, our intention when it comes to all of the different ways that we’re supporting the critical minerals sector is to maximise this golden opportunity for Queensland and for Australia. And we engage with governments of both political persuasions in good faith to try and make the most of the big economic opportunities we’ve got in this country.
And it’s another really important reminder that even though we’ve got big challenges in our economy around inflation and productivity and global uncertainly, we’ve got huge advantages as well, and critical minerals is just one of them. But around the world, people are looking at Australia as a destination for investment. That’s a very, very good thing. That’s a central part of how we think about boosting productivity in our economy as well.
Journalist:
Thanks, Treasurer.
Chalmers:
Okay, thanks very much.