David Lipson:
Jim Chalmers, thanks for joining AM. How optimistic are you that today’s inflation figure will have a 2 in front of it?
Jim Chalmers:
These monthly numbers bounce around a little bit. They’re not often as reliable as the quarterly figures we get on inflation but what these numbers will show today will be an indication of the very substantial progress we’ve made in the fight against inflation. Remember when we came to office inflation had a 6 in front of it and was rising, it now has a 2 in front of it. We have made some pretty substantial progress on inflation. We know that people are still under pressure but what we’ll see in these numbers today is an indication of the progress that we’ve made together from inflation with a 6 in front of it to inflation with a 2 in front of it.
Lipson:
Inflation certainly has come down, but you would know when you speak to voters, it doesn’t feel that way. Why isn’t the message getting through? Could Labor communicate the message better?
Chalmers:
I think we’ve said it on a number of occasions now, we know that the big national aggregate figures don’t always perfectly translate into how people are feeling or faring in local communities around Australia. We acknowledge that, that’s why our cost‑of‑living help is so important: the tax cuts, the energy bill relief, cheaper medicines, early childhood education, rent assistance, getting wages moving again, fee‑free TAFE, all of these ways that we’re providing cost‑of‑living help opposed by the Liberal and National parties. This is how we don’t just recognise and acknowledge that people are under pressure, it’s how we’re responding to that at the same time as we get these inflation numbers down quite substantially compared to what they were under the Coalition. Any number today with a 2 in front of it shows that inflation has more than halved since we came to office, that’s a good thing, but we know there’s more work to do because people are still under the pump.
Lipson:
Would a number with a 2 in front of it be enough, do you think, for an interest rate cut in February?
Chalmers:
I won’t pre‑empt the decisions taken independently by the Reserve Bank, but we do know that inflation in the monthly figures and in the quarterly figures is now within the Reserve Bank’s target range. They’ve provided a fair bit of commentary in December about how they’re reacting to the most recent data, but I don’t really want to predict or pre‑empt decisions that they’ll take independently in the meetings that they’ll have this year.
Lipson:
This week, Justin Trudeau became the latest incumbent leader on the global stage to succumb to anger over cost of living as one of the significant factors in his decision to step down. This has been happening all over the world, as you would know. What makes you think the Australian people will give your government a pass and return you to power when their cost‑of‑living pain is so great?
Chalmers:
First of all, we don’t take any outcomes in the election for granted. The election will be very tough, it will be very tight, it will be contested, as it always is and as it always should be. We’re not complacent about the outcome of the election. And we know, as I said a moment ago, that people are under very substantial pressure and they often express themselves politically. Our job is to take the right economic decisions for the right reasons. The cost‑of‑living help that our opponents opposed is a really important part of the way that we show that we know the pressures people are under, we’re responding to them in a meaningful and in a responsible way. And if our opponents were in charge, people would be much worse off. People would be much, much worse off under our opponents because they opposed our cost‑of‑living help, because last time Peter Dutton was the Health Minister he came after Medicare. They come after wages as Coalition governments, their nuclear madness would push up electricity prices, and so people would be much, much worse off under the Coalition. We’ve been providing this cost‑of‑living help, that’s really important, and we’ve managed to get inflation down substantially from what it was under the Liberals and Nationals but we know that there’s more work to do.
Lipson:
The Financial Review is this morning reporting a $7 billion shortfall in the budget for public sector wages. Can you explain why you’re forecasting almost no growth in public service wages for 3 years from 2025–26?
Chalmers:
This is how the budgets under governments of both political persuasions, they try to get the best estimates that they can about wages and salaries. It’s important to remember that the numbers in the budgets reflect the best current estimates that we have for departmental expenses, and those departmental expenses are considered each year from budget to budget. Usually what happens is that departments are required to meet these wage increases from within their existing allocated resources, that’s been standard practice for some time now, and that departmental funding is subject to regular indexation. But it’s important to remember here, David, very, very important difference between us and our political opponents. The Coalition want to slash a whole bunch of jobs; that will cost more, it will deliver less and it could herald a return to the days of Robodebt. We saw how badly they mismanaged the public service. We’ve been cracking down on external consultants and contractors. We’ve been rebuilding the frontline capacity of the Australian Public Service, remembering that three‑quarters of these new jobs are created outside of Canberra. And that’s about delivering better services for people. And we will budget for that in the best, most accurate way that we can.
Lipson:
Treasurer Jim Chalmers, thanks for being with us.