DAVID SPEERS:
Cost of living remains one of the biggest pressure points for millions of Australian families and the Albanese Government. There was, however, some better news today in the latest figures. While prices are still rising, the rate of inflation fell from 4.9 to 4.3 per cent in November, the lowest level in almost two years. It means the next move in interest rates might be down rather than up, but the government knows many households are still struggling. I spoke to Treasurer Jim Chalmers a short time ago. Treasurer, welcome to the program.
JIM CHALMERS:
Thanks very much, David.
SPEERS:
This easing of inflation today was better than expected. What does it mean in terms of further cost‑of‑living relief from the government?
CHALMERS:
Well, these new numbers out today show that we are making welcome and encouraging progress, but it's not yet mission accomplished in this fight against inflation. We know that people are still under pressure, even as inflation has come off substantially from its peaks in 2022. We've made some good progress, but we need to go further because people are still under the pump. And one of the most encouraging aspects of the numbers today is that the ABS has said without our policies on electricity rebates and rent assistance, inflation would be much higher in our economy. And that's why the Opposition needs to explain why they voted against that cost‑of‑living relief, which is helping to put that downward pressure on inflation.
SPEERS:
Well, just on that, look, you're right. The Bureau of Statistics does point out those price rises, energy price rises would have been much higher had it not been for those rebates. However, gas prices are still up nearly 13 per cent, electricity prices more than 10 per cent over the year. You've extended the gas price cap that you brought in. What about the electricity price cap? Will you extend that?
CHALMERS:
The two price caps that we worked closely with the state governments to implement, particularly the state governments of Queensland and New South Wales when it came to the coal caps. We work closely with them to put the electricity rebates into place and they are helping. As the ABS has said today, the gas caps are helping and the coal caps have been helping as well. We've already transitioned the coal caps into a more enduring regime, which has got that $12 cap, but with exceptions and exemptions when gas producers commit more gas to the east coast market, and also exceptions for smaller players and the like. So, we've already transitioned those gas arrangements. The coal caps don't run out until around the middle of the year. They are primarily the responsibility of those two states that I mentioned. As I understand it, there hasn't been a decision taken to extend those.
SPEERS:
If they have been such a success, will you extend that coal cap? You're the Treasurer, just give us a sense of what you're thinking.
CHALMERS:
Well, again, the coal caps are primarily the responsibility of the states. That's just how the system works. Coal was primarily them, gas was primarily me, and the rebates we worked on together. And so that is fundamentally a choice for those two state governments. And as I understand it, they haven't –
SPEERS:
You do have some say on this.
CHALMERS:
Obviously, we work closely with the states, as we have. I'm proud of the work that we've done with the state and territory governments when it comes to taking some of the sting out of these electricity prices. There hasn't been a conversation about extending those coal caps. We have moved the gas caps into a more enduring regime. We're still rolling out the electricity rebates. And as the ABS said today, that is one of the reasons why we've got this downward pressure on inflation combined with the responsible economic management we've seen, which is deliver the surplus in 15 years and has a second one in prospect.
SPEERS:
But those prices for electricity might jump again is the point, if you don't extend the caps.
CHALMERS:
We can't be complacent, obviously, about the price pressures in our economy – whether it's electricity, obviously rent, and some of these other price pressures in our economy – we can't be complacent about it and we're not complacent about it. It's not mission accomplished on inflation yet, because people are still under pressure. And so what we commit to do, and what we assure all of your viewers, David, is if there's more that can be done to ease the pressures that people are still feeling in communities right around Australia, then obviously we'll consider that.
SPEERS:
Well, one area hinting at further action is on grocery prices. Food prices we see in today's figure still going up. You're urging supermarkets to pass on more of the savings they might be receiving to customers. There's a review of the industry code underway. Can you give us a sense of what options you are actually looking at?
CHALMERS:
Well, there's a combination of things, David, but they're guided, really, by one objective. We want a fair go for families and farmers. We want to make sure that the market works in the interests of people and producers, so that when prices come off at the farm gate, they come off on the supermarket shelves as well. That's really our guiding principle. And so we've got the overarching Competition Review – we've appointed Craig Emerson today to lead our fresh thinking about the Food and Grocery Code, which is an important part of this. And I'm in ongoing discussions with the ACCC Chair about what, if any, further monitoring might be necessary. We want to make sure that we've got downward pressure on these prices. We want to unleash the power of competition. That often begins with a robust monitoring regime and also the right kinds of codes. And so you asked me for an example – the sorts of things we might be looking at – we want him to tell us; should we move from an industry‑led code to something more robust. That is one of the key questions that we're considering.
SPEERS:
So, would that mean, for example, a requirement for supermarkets to make public what their input costs are so that we can all see whether the prices they are setting are fair?
CHALMERS:
Well, I'm certainly a big supporter of transparency. I think price transparency is in principle, a good thing. And certainly, as I just said, we'd be contemplating, or Craig would be contemplating in the first instance, and advising on whether there should be some kind of more mandatory elements rather than these industry‑led elements to the code. We've also made some statements today about how we resolve disputes in the supply chain, which is another important part of it.
SPEERS:
On rents, which you did mention we saw in today's figures they went back up again in November, despite all of the National Cabinet meetings and announcements last year about the rental crisis, do you now need to think about further steps on rent?
CHALMERS:
Well, first of all, and forgive me if I've got these numbers, not absolutely bang on, but I think instead of going up by 8.8 per cent in the 12 months to November, they went up 7.1 per cent. That's still more than we would like.
SPEERS:
Just to be clear, the November monthly figure was higher than the October monthly figure.
CHALMERS:
Yeah, but the point I'm making is those rents which are too high would be even higher were it not for the steps that we have taken, our changes to rent assistance are making a difference. They're taking some of the edge off these rental pressures that people are under. I just want that recognised. But clearly, we've got about 15 or 16 different elements to our housing strategy. It's broad, it's comprehensive, it's rolling out, it's got public housing, build to rent, rent assistance, the Housing Australia Future Fund. We need more homes in our economy, that's no secret. We're working with the states, the local government and the industry to make sure that we can build the homes that Australians need to try and get downward pressure on rent again. You can't click your fingers and make that happen overnight.
SPEERS:
Final one. Treasurer, you've said tackling inflation is your number one focus at the moment, yet we still don't seem to know what impact the stage three tax cuts coming this year are going to have on inflation. You've only said that they're baked into the forecast. What does that mean? Why can't you tell us what these tax cuts will do to inflation?
CHALMERS:
Well, what happens with these sorts of big changes in this case, which were legislated in 2019, is whether it's the Treasury or the Reserve Bank or others, they factor in the changes to the tax system when they come up with their forecasts for inflation. And so they've been doing that more or less continuously since the tax cuts were first legislated in 2019. They don't disaggregate that. We don't get provided with a disaggregation.
SPEERS:
But you could pick up the phone to your Treasury Secretary and say – ‘hey, Steven, let us know what impact these tax cuts are going to have.’
CHALMERS:
Well, what we do is we take into consideration everything that's already been legislated, everything that's already in train, and we work out what we need to do elsewhere in order to manage this inflation challenge. And once again, we got this welcome and encouraging news today that our policies are helping to put downward pressure on inflation. So, we're making that progress. Now, we've got these tax cuts legislated some years ago. They are baked into the forecasts. What we do when we come up with a new policy, like the various elements of our cost‑of‑living plan that we've been rolling out, electricity bill relief and the like, that you and I have been talking about is we seek a view about the inflationary impact on that. We were told about electricity bill relief. It would take some of the edge off inflation. We're really pleased that's been the case.
SPEERS:
Treasurer Jim Chalmers, thanks for joining us.
CHALMERS:
Thanks very much, David.