JIM CHALMERS:
As we head into 2023, we've got a lot of things coming at us in the global economy, but we've got a lot of things going for us as well. We are very pleased and very proud after a decade of wage stagnation and deliberate wage suppression, that we're seeing the beginnings of wages growth in our economy now. This wages growth that we're seeing in the economy is long overdue. When people are under cost‑of‑living pressures, one of the most important things that a government can do and your government is doing is get wages moving again in a sustainable way - wages growth more than three per cent at the moment compared to 2.3 per cent the average of the 10 years prior.
Our predecessors had a policy of deliberate wage stagnation and wage suppression, we take a different view. We are really pleased and really proud that when it comes to wages growth, our economic plan is already beginning to work. We want Australian workers who work hard to be able to get ahead and provide for their loved ones and wages growth is absolutely central to that.
One of the most pleasing aspects of this wages growth is that it is being disproportionately felt by people on low incomes and low skilled workers who have missed out for too long in our economy. So this wages growth is partly a function of the minimum wage increase that the Albanese Labor Government enthusiastically supported. We've also got policies on industrial relations to fix enterprise bargaining. We've also got a pay rise coming for aged care workers. And we will work around the clock to make sure that this wages growth is strong and sustainable into the future.
Our cheaper childcare policy is about people being able to earn more and work more if they want to, particularly new parents. Our skills policy is about training Australians for the higher wage, higher skill opportunities in the economy of the future. So, very pleased and very proud to see this wages growth in the economy. It shows that our economic plan is beginning to work when it comes to one of our highest priorities in the economy, which is to get this strong and sustainable wages growth.
I'm optimistic about our economy, I'm optimistic about our country and our future, but it is going to be a difficult year. And one of the most important defences that we have against global turbulence is low unemployment and decent wages growth. We've got both of those things and that shows that our Budget and our broader economic plan is working.
JOURNALIST:
Inflation is still at 30‑year highs, the cash rate is probably going to go up again in February, obviously, so there's still issues, turbulent times ahead. What will the Government be delivering – cost‑of‑living relief - in the May Budget?
CHALMERS:
Well, we intend to provide substantial cost‑of‑living relief in the form of cheaper early childhood education, we've already got cheaper medicines as a consequence of the October Budget, we'll provide electricity bill relief prioritising people on pensions and payments and small businesses working with the states and territories. So we are providing and we will continue to provide meaningful cost‑of‑living relief without adding to this inflation problem in our economy and cognisant of the trillion dollars of debt that we inherited from our predecessors. We will always do what we can to ease the pressure, particularly on working families and people on payments and pensions, we need to weigh that up against all of the pressures in the Budget at the same time. We have found room in a budget that did begin to put our Budget on a more sustainable footing. We've already found room when it comes to early childhood education and medicines and there will be relief when it comes to electricity bills. This is how you provide cost‑of‑living relief without making our inflation problem worse.
JOURNALIST:
There's been calls from the BCA for a reform in the permanent migration - calling for an increase in the cap even though it was obviously increased, another increase - would that be considered?
CHALMERS:
We work really closely with the Business Council and with the unions and with others to make sure that we can fill these skills and labour shortages which are acting as a handbrake on our economy. One of the big focuses of the Budget in October, and one of the big focuses of the government going forward is how do we fill these skills and labour shortages which are holding our economy back. We've got unemployment in the middle threes which is a terrific outcome, we've got the beginnings of wages growth, we've also got big investments in TAFE and universities to try and fill these skills and labour shortages but we recognise a challenge of this magnitude requires us to act on multiple fronts at once. Migration is part of the story, but not the whole story, it can never be a substitute for training, or for boosting workforce participation with cheaper early childhood education. We intend to move on all of those fronts at once. We've made a good start, laid a good foundation and I'll continue to work with the BCA, the unions and others to make sure that we have the workforce that we need to grow our economy and to support the way that our population is changing.
JOURNALIST:
Treasurer, wages growth at 3.1 per cent is good news for a Treasurer, good news for a new government. Is it frustrating though that most people at home are probably sitting back saying what wages growth, my wage still isn't keeping up with the cost of petrol, still isn't keeping up with my power bill or my groceries? So is that frustrating to you that, yes, you've got the needle moving but people aren't really feeling that yet? And secondly, what number if not 3.1 would make you feel a little bit more comfortable? Is there a number in your mind that you'd like to see in terms of wages growth?
CHALMERS:
We understand even with this wages growth, that Australians are under pressure. They're under pressure because we've got a war in Ukraine pushing up energy prices, we've got COVID causing havoc in supply chains and we've got issues around labour shortages and building materials shortages and for all of these reasons, we've got an inflation challenge. And these pressures are coming at us from around the world, but they're being felt around the kitchen table. And so one of the reasons that we're pleased to see the beginnings of wages growth is because wages are lagging behind inflation and people have been going backwards in this country and in this economy for too long and we want to turn that around - it's one of our highest economic priorities. We expect to see real wages growth next year, to the extent that inflation could moderate quicker and we get that strong and sustainable wages growth sooner, then as soon as we can get those two things happening, we'll get that real wages growth that people need. But for too long in this country, really for a decade now of wage stagnation, people who work hard have been going backwards. We want to turn that around. We can't do that overnight but we're seeing the beginnings of some decent wages growth which shows that our approach and our plan is working.
JOURNALIST:
So you'd like to see inflation down obviously from 7.3 but wages growth with a four in front of it?
CHALMERS:
I'm not going to put numbers on it, we'll update the forecasts in the Budget in the usual way. But we want to see real wages growth in this economy. And when inflation has a seven in front of it, that's especially difficult so we need that inflation to moderate and it will through the course of this year, but it will be higher than we'd like for longer than we'd like. And one of the reasons why the Budget showed such remarkable restraint, one of the reasons why we're investing in these skills and labour shortages, one of the reasons why we're providing cost‑of‑living relief is we want to take some of the edge off that inflation at the same time as we get wages moving again. That's the best way to provide genuine, long‑standing cost‑of‑living relief for Australians who work hard and need to put food on the table.
JOURNALIST:
And one very quickly on rents - rents have increased 10 per cent in the last year, rental vacancies are still incredibly low. Is now the time to freeze rents or cap rent increases and what's your message to Australians who either can't find or can't afford to put a roof over their heads?
CHALMERS:
The rental market is a really difficult place for Australians right now and I think particularly for younger Australians and older Australians at the other end of the age spectrum and we're doing a couple of things. First of all, and I pay tribute to Julie Collins for her work here, she has unlocked hundreds of millions of dollars of housing infrastructure facility money, she opened 130 new units in Adelaide I think last week. And really what this is about is we understand that the best way to deal with the pressures in the rental market is to boost supply. We're doing that in the near‑term with the funding that's already available. We've got a Housing Accord from 2024 to build a million affordable properties to try and get more supply in there. We've got vacancy rates too low, rents are growing too fast and that's because we don't have enough supply so we're working in the near‑term and in the longer‑term to fix that problem.
Thanks.