Andrew Clennell:
Joining me live is the Treasurer, Jim Chalmers. Treasurer, thanks for your time.
Jim Chalmers:
Thanks very much Andrew.
Clennell:
You’ve been Treasurer of Australia for 3 years. Why do you need a roundtable to tell you how to approach economic reform?
Chalmers:
Well, good morning, Andrew. We’ve got a big economic reform agenda already which we’re rolling out and the primary focus is on delivering that agenda and we’ve made good progress together as Australians, as a consequence. We have seen in the last week interest rates have been cut for the third time in 6 months. We saw wages grow strongly and the real wages data last Wednesday. Unemployment fell on Thursday.
But this is all about working out the next steps in our substantial, ambitious economic reform agenda. It’s going to be a really important week because these 3 days will help inform the next 3 Budgets. The timing couldn’t be better, the responsibility couldn’t be bigger. Our economy is finally balanced between the progress that we have already made and the productivity that we will need to sustain to grow living standards into the future. And so we believe that the best way to work out the next steps is to do that together, to involve people where we can, to build consensus and to build momentum around some of these next steps which build on the very substantial economic agenda that we’re already rolling out.
Clennell:
Whose idea was the roundtable, yours or the PM’s?
Chalmers:
It came from a conversation that the PM and I had after the election. We agreed that we would both run up to the Press Club and we would detail the progress that we’ve made, the plan that we’re rolling out, the big focus, if not obsession, with delivering the government’s agenda that we’ve been working up. But also we agreed in those conversations quite soon after the election that we would bring people together to build that consensus, to build that momentum around the next steps and to put productivity front and centre in that. Productivity is the main game here, we’ve got our eyes on the prize. We’ve got a big productivity agenda already, but the best way to work out the next steps is to do that together. And that’s a view that the Prime Minister and I both share.
Clennell:
Ok, just asking that question again. Whose idea was it? Was it yours or the PM’s?
Chalmers:
Well, to be honest with you, Andrew, it came from a couple of discussions after the election. I’m not sure who first raised it, but we’ve been on the same page on this throughout. We think the best way to work out the next steps is to do that together, to involve people where we can. We worked very closely on the speeches that we both gave to the National Press Club.
I think it’s no secret that really, one of the defining features of the Prime Minister’s government is the considered and consultative way that he goes about leading that government. And so it was his view, and my view, more or less simultaneously, that this is a good way to go about it and the reason why it’s a good way to go about it is because we’ve got a lot going for us in Australia, but we’ve got a lot coming at us as well. We’ve got a lot of work to do to build on our agenda and that’s what this Economic Reform Roundtable is all about.
Clennell:
See, I was at the Prime Minister’s address at the Press Club and I was away with the Prime Minister when you gave your address, and he called it a productivity roundtable, and you then called it an Economic Reform Roundtable. So, what’s the correct name?
Chalmers:
It’s called an Economic Reform Roundtable, but productivity is the main game, the major focus of the roundtable this week. And that’s because, as I said a moment ago, productivity is the main game. We’ve got our eyes on the prize when it comes to productivity, and that’s because making our economy more productive is the best way to lift living standards and make people better off over time. It’s the best way to build on the progress that we’ve made on inflation and jobs and real wages and living standards more broadly.
And so the Prime Minister is right to say that the major focus is productivity, making our economy more productive. That’s an important way as well that we make it more resilient, which is another objective, and that we make our economy and our budget more sustainable as well. So, productivity primarily is the focus and economic reform is the way that we go about it, and that’s how we’ve set up the 3 days in the coming week.
Clennell:
Are you more ambitious than Anthony Albanese when it comes to reform?
Chalmers:
I think we’re aligned when it comes to the ambition we have to build on this progress that we’ve made, this plan that we’re rolling out, that we are delivering. We are similarly ambitious. I think we both recognise that we need to do more and we need to do better when it comes to productivity and resilience and budget sustainability.
We have made a lot of progress together in this first 3 years that he’s been Prime Minister and I’ve been the Treasurer. But we’re on the same page when it comes to our level of ambition. We’re on the same page when it comes to the way that we’re rolling out our plan and we both think the best way to build on that agenda is to do that together, involve people where we can and that’s what the coming week’s all about.
Clennell:
There’s scepticism in the papers this morning that you already know what you’re going to announce at the end of the roundtable. Things like a freeze on the construction code and environmental laws. Are they the main things on the table to be announced later this week?
Chalmers:
I’ll come to that specifically, but first of all, let’s remember that there will always be the usual suspects that will want these kinds of efforts to fail, that’s pretty obvious. There will always be the usual kind of grumps and cynics who say the usual grumpy and cynical things about this. Their argument essentially is to involve people less, which would seem to me to be a strange way to go about things.
I think the effort has already been worth it because all of this consultation that we’ve done, the progress that we’ve made with the regulators. Hundreds of ideas from the regulators about how we make our economy more productive, how we cut red tape, how we quicken the approvals process to build more homes and build more energy projects, all of that I think shows that the effort is already worth it. We focused the country on this productivity challenge. We’ve got people accustomed to grappling with the sorts of trade offs that governments grapple with.
Now, on those specific issues that you raise, Andrew, which were a subject of some media reporting in the last week, I think it is entirely unsurprising that when people put literally hundreds of ideas to us, that the Treasury does the work on that. So, we’re not pre‑empting the outcomes of the Economic Reform Roundtable, we are preparing for and preparing advice on a number of the issues that have been raised with us and those examples that you gave have been raised with us. And so we’ll see if there’s consensus and momentum around some of those ideas. Not pre‑empting the discussion in the coming week, but certainly preparing for it.
Clennell
So, those environmental laws to take away some regulation and freezing the National Construction Code briefly, they’re things that could be done by government out of this?
Chalmers:
Well, they’re things that have been raised with us and we’ve done some work on it, as you are aware, but they’re not the only ideas that have been raised with us. I don’t think it’s a secret, Andrew, the government is desperate to build more homes. We do want to reform the environmental approvals process. My colleague Murray Watt, the whole Cabinet are working on a number of elements of building more homes, getting the approvals moving more quickly. They are government priorities, but on the specifics, not pre‑empting the sorts of ideas that will be floated in the course of the next week or so. We are preparing for that. Treasury has done a lot of work, as you would expect, analysing some of the suggestions that have been made to us, including those couple of examples that you raised.
Clennell:
Tax reform, as I’ve just pointed out, is left here until the very last item on the agenda Thursday afternoon. So, that gives the impression you’re not about making tough calls on tax reform, doesn’t it?
Chalmers:
I think tax will come up every day and I think that there will be a number of cross cutting themes. We thought the neatest way to do it was to do resilience day one, productivity day 2, the budget on day 3. That’s not to diminish any one of those things. Productivity, as I said a couple of times now, is the main game. And I suspect in the course of the first couple of days, tax will come up as well. But we want to maintain that focus on productivity. We want to maintain that focus on budget sustainability and economic resilience and we figure that’s the best way to make the conversation useful.
Clennell:
We’ve had a lot of talk about free trade in recent times. In March last year, you announced you were eliminating 500 nuisance tariffs on everything from toothbrushes to hand tools to fridges to dishwashers. Do you have any intention of going further on tariffs?
Chalmers:
I think there are good reasons to swim against the tide a bit when it comes to tariffs. You know, some of these nuisance tariffs in our economy risk doing more harm than good. And tariffs are essentially a tax on the workers and families of the country that levies them. So, we’ve made a heap of progress abolishing 500 nuisance tariffs, working closely with Don Farrell and other colleagues to do that. We’re very proud of that progress that we’ve been able to make unilaterally because tariffs push up compliance costs on business, they risk pushing up prices for workers and families as well. And so that progress we’ve made, those 500 nuisance tariffs that we’ve already abolished, I think represents good progress.
If I can build consensus and momentum to go further on that, I would like to, but I’ll do that in a way that works closely with Don Farrell, conscious of the negotiations that he has underway. But I think we’ve shown a willingness and enthusiasm to cut those nuisance tariffs. I would like to go further if I can. They do often do more harm than good, and so we approach the challenge in that light. Let’s see if it’s raised in the context of the Economic Reform Roundtable and I’m certainly keen to build that momentum and consensus around next steps, if I can.
Clennell:
How many other tariffs are there that you’d consider lifting or would examine?
Chalmers:
There’s hundreds of tariffs that I would still consider to be nuisance tariffs. There’s a lot in the system where in those first 500 that we abolished, there are a lot of instances where it costs more actually to levy the tariff than the benefit that we get from it. So, I’m not prepared to put a number on any additional steps that we might be prepared to take. But this has been a pretty constant interest of mine. I’m proud of that work that we’ve done already. I would like to go further if we can, conscious of all of the views of the stakeholders around the table in the coming week. But if we can do more, we should try to.
Clennell:
When I interviewed the Prime Minister at the economic summit in July, the Sky economic summit, he ruled out any changes to the GST, Treasurer. He said, quote, ‘I’m a supporter of progressive taxation. Consumption taxes by definition are aggressive in their nature. So, that’s something that doesn’t fit with the agenda,’ end quote. Do you have the same view or would you like to see an increase in the GST or broadening of it in order to reduce income tax, or do you agree with the PM, it’s regressive and shouldn’t be touched?
Chalmers:
I have the Prime Minister’s view and I’ve expressed that publicly for some years now actually. The comments that he made in that good discussion that he had with you at your forum really reflect the public comments that he and I have both made over a longer period of time here. And that’s a good example where we’re trying not to constrain the ideas that people put to us, but clearly the ideas that we pick up and run with, we’re more likely to be able to do that if it’s consistent with the direction we’re taking, the government’s values, building on the very substantial economic plan that we’re already rolling out. And so I don’t think the comments that he made on that occasion were especially controversial. They were consistent with what we’ve both said on other occasions. And I’m trying my best not to constrain the things that people will raise. But I think people already know where we’re coming from on the GST.
Clennell:
Do you think it’s appropriate that the GST doesn’t apply then to private school education?
Chalmers:
Look, people have got views about that, but it’s not something that I’ve been focused on changing. It’s not something that I’ve been working away on behind the scenes. I think the GST arrangements as they stand, are broadly right. The point that the Prime Minister made and that I’ve made is that there are lots of opportunities for economic reform here, but changing the base or the rate of the GST is not something that we’ve been working on.
Clennell:
Would you like to see a reduction in either/or, or perhaps, and, the company tax rate and/or the income tax rate?
Chalmers:
Certainly, I think wherever governments can afford to do more to reward work, to increase workforce participation, to help people with the cost of living that’s obviously a very good objective and more than an objective for this government. This is a government which cut income taxes last year, we’re cutting them next year, and we’re cutting them the year after and that shows our bona fides, I think, when it comes to cutting income taxes.
We know that one of the best ways that we can provide ongoing, enduring, cost‑of‑living relief to reward people’s effort to increase workforce participation is to provide these 3 rounds of tax cuts, not just to some taxpaying workers, but to all of them. And that was at stake at the most recent election, Andrew. Don’t forget our political opponents took to the election a policy to increase income taxes on 14 million working Australians. And so that’s a key difference between the 2 parties – we’ve been cutting income taxes, the other side of the parliament wants to jack them up.
Now, when it comes to the company tax system, again, I’ve said that there is a willingness to try and work out an affordable way, a responsible way to attract more investment in our economy. One of the biggest parts of the coming week and one of the biggest parts of our productivity challenge is what’s called capital deepening. And that’s really about making sure that all these hundreds of billions of dollars in investment that we are attracting, that it’s doing the most good, that it’s building the capital base in this country. And there are a lot of views about using the tax system to encourage that investment. We’ve got to make sure it’s affordable, we’ve got to make sure it’s responsible and aligned with our other priorities but I suspect that will be raised in the context of the coming week and that’s a good thing to grapple with.
Clennell:
Would you like to see a reduction in the top marginal rate of income tax or do you think it’s at the level it should be at?
Chalmers:
It’s not something I’m trying to pre‑empt here when it comes to income taxes. We’ve cut income taxes for all taxpaying working Australians not once, not twice, but 3 times. And that, I think shows a willingness to provide that kind of tax relief not just at the top, not just at the bottom, but indeed right up and down the income scale. And that shows where we’re coming from. Now, obviously, with all of these things in the income tax system, the company tax system, you’ve got to do what you can afford to do.
One of the key trade‑offs that I’m asking people to make next week in the Cabinet Room is to understand that there are a lot of good ideas. We need to make sure that they’re affordable. The ones that we can pick up and run with are the ones that we can pay for, because budget sustainability is a key priority for this government. Again, we’ve delivered a couple of surpluses. We’ve engineered the biggest ever positive turnaround in the budget in a single parliamentary term, we’ve got the debt down. But we need to make the budget more sustainable over time and so we need to see all of these ideas, many of them good ideas, in that light. We need to be able to afford the changes that people propose to us.
Clennell:
Because, Treasurer, one of the arguments is that you need to – that all the talk’s always about tax reform. You need to look at spending reform, you know, things like the NDIS, et cetera. When you talk about budget sustainability, do you accept that?
Chalmers:
I do, Andrew, and indeed, we’ve made good progress on the NDIS. It’s still growing strongly, but it is growing at a slower rate than what we inherited and that’s helped to make the budget more sustainable. We’ve been able to do that while maintaining a focus on the highest priority, which is to provide the services that people need and deserve in the NDIS, but that has been a priority of this government. Similarly, aged care, the aged care reforms towards the end of the last parliamentary term have been part of that effort as well.
And so we do more than acknowledge there’s more work to do on the budget. We have been making progress in all of the ways that I’ve outlined here. The budget is in much better nick than what we found it, but it will require ongoing attention and ongoing work. And I suspect, and I hope and I welcome the fact that these sorts of issues will come up in the course of the next week as well.
Clennell:
Andrew Fraser, a former Queensland Treasurer, I think he’s a friend of yours. I believe he might have been invited to the roundtable as well. He’s penned an op‑ed where he says that perhaps you should consider a cap on super at $5 million. Does that have some merit to you? If you have concerns about people avoiding tax by putting up to $100 million in their accounts.
Chalmers:
Again, that’s an idea that’s been put to us from time to time, particularly in the course of the last couple of years. I suspect Andrew will raise that at the Economic Reform Roundtable and he’s welcome to raise that. We’ve got a way to make these superannuation tax concessions more sustainable, we announced that more than 2 years ago, I think 2 and a half years ago now. That has been bouncing around in the parliament, but that’s the best way, we think, to go about solving this challenge, to make the concessions in super still concessional, but to make them more sustainable at the same time. So, we’ve already got our own proposal there.
Andrew and others, I think are welcome to raise alternatives, whether it’s before the roundtable or during the roundtable. There are a range of views about it. I acknowledge that and I’ve acknowledged that before. But the government’s got a way to go about that. It’s based on Treasury advice, it’s based on the Treasury model and that’s the model that we are intending to proceed with.
Clennell:
On road‑user charges. Are you hoping to introduce them? How would it work? Would fuel excise be abolished and replaced with this or would it be just for electric vehicles? And is it your hope or intention they could be levied on heavy vehicles?
Chalmers:
Well, we haven’t settled on a model or on the timing of implementation. But in the last parliamentary term and including as recently as Friday, this is something I’ve been discussing with the state and territory treasurers. This is work that we’re doing together, working up options but we don’t have a concluded view on the best model, we don’t have a settled view on the best timing, but I think there is appetite. I know that there’s appetite amongst the state and territory treasurers to progress this agenda. We did talk about it publicly before the last election.
We have been working on it for some time. Some of these changes are complex. Even some of the issues that you rightly raise in your question, there’s a lot of complexity, there’s a lot of trade offs there and so we’ll take the time to get it right. We’ll go about it in the usual consultative and considered and methodical way. There has been a bit of work done already. There was a good discussion of this on Friday when I convened a meeting of the state and territory treasurers. It will come up in the course of the next week. I’m pretty confident about that. And we’ll work through all those issues, including the ones that you’ve identified.
Clennell:
Now, 2 things, way back when you were Shadow Finance Minister, you were in favour of changes to negative gearing and capital gains tax. Is it the position of yourself and the government that there is no circumstance where you would look to reform these?
Chalmers:
Well, I think we’ve been pretty clear, Andrew, that we haven’t changed our policy on that. We haven’t changed our position on that. Clearly, there’s a range of views in the broader community. There’s a range of views amongst the people who are attending the Economic Reform Roundtable. But in housing, we’ve made it abundantly clear that our priority is supply and building more homes.
And that’s really one of the primary focuses, I think, of the discussion that we’ll convene in the Cabinet Room, because the biggest challenge we have in housing is building enough homes. One of the best ways that we can make progress there is to make approvals quicker, to make sure that the regulation is appropriate so that we can build the homes in communities right around Australia that people need. And so that’s been our focus, rather than some of these other tax issues.
Clennell:
All right, we’re nearly out of time. I wanted to play what Shadow Treasurer Ted O’Brien said on Politics Now last week about whether or not he gets to talk at the Roundtable, have a listen.
[Excerpt]
Clennell:
Do you get to speak? Do you get to make a contribution? Or you just sit there and watch?
Ted O’Brien:
I don’t know, Andrew. If you find out, let me know and then I’ll tell you and we’ll both know.
Clennell:
What have you actually been told about what’s going to happen in terms of your attendance there? No one from the Treasurer’s office has said, hey, you’re just there to watch the sessions or some sessions.
O’Brien:
You know, there’s a series of lectures that’ll be held and I look forward to listening to those, Andrew. And I’m sure there’ll be an opportunity for everybody to contribute and have a say. It’s all a bit of a mystery still, but, you know. But you don’t have many more sleeps to go, but we’ll find out.
[End of excerpt]
Clennell:
Is he at the Cabinet table? Does he get a say, Jim Chalmers?
Chalmers:
Of course he is, and of course he does. We’ve invited him in good faith. We’ve provided him, I think, a pretty generous opportunity. It’s up to him whether he grasps that opportunity and whether he takes it seriously. If he wants people to take him seriously, he needs to take this opportunity seriously. There’s no sign of that so far. He’s been briefed on the roundtable in the same way that other people coming along have been briefed.
In fact, of the core attendees at the Economic Reform Roundtable, there’s only one person who hasn’t pitched any ideas, and his name is Ted O’Brien. And so I think that’s a pretty strange way to go about it. I fear that they haven’t learned a thing about the nasty negativity that the Australian people rejected on the 3rd of May. They haven’t changed and they haven’t learned. I’m trying to provide him an opportunity in good faith. It’s up to him whether he grabs it.
This is a party, remember, that took to the last election, a policy for higher income taxes for everyone, bigger deficits and more debt and they haven’t shown any signs of learning from their failure at the election and in the last parliamentary term. This is his chance to try and invest in that credibility. And unfortunately, the sorts of commentary that he’s given so far shows that he doesn’t mean to make the most of it. It’s a pretty strange thing, Andrew, to accept an invitation to something which you’re describing as a waste of time. I would have thought you’d have to decide one or the other.
Clennell:
All right, Treasurer, I am out of time, but in 30 seconds or less, could you give me a reaction – that’s probably a tough ask. Can you give me a reaction to Donald Trump and Vladimir Putin’s meeting and what’s going on there?
Chalmers:
The Americans have got a key role to play here, working with European allies, an absolutely crucial role in ending the Russian aggression in Ukraine. We support American efforts to get Vladimir Putin to the negotiating table. Putin needs to show that he’s actually serious here. We need a proper, lasting peace on Ukrainian terms. The war has dragged on for too long. The Russian aggression has dragged on for too long. We support the Americans’ effort to get Putin to the table and Putin needs to take this opportunity seriously, too.
Clennell:
Treasurer Jim Chalmers, thanks so much for your time.