GREG JENNETT:
Today's Bureau of Statistics figures on wage growth for October, November and December of last year were very eagerly anticipated for any sign that pay packets might have caught up with inflation. And the data shows they did, posting 4.2 per cent wages growth over the full year. Now, Jim Chalmers is deep into budget preparations at the moment, so there's much more to ask him about today than wages alone. We did that when he joined us a short time ago from the Port of Brisbane.
Jim Chalmers, good to have you back with us today from the Port of Brisbane there. Let's talk about these Wage Price Index figures out today – annual growth running at just over four per cent annually, the highest in its 14 years – isn't it running ahead of inflation. But governments are driving a high proportion of this wage increase through their own workforces. Doesn't this mask an unhealthy imbalance if government is having to do the heavy lifting here when the private sector can less afford it?
JIM CHALMERS:
There's nothing unhealthy about these numbers today, Greg, and we're seeing strong wages growth in the public sector and the private sector. Growth in the public sector is not coming at the expense of workers in the private sector. What these numbers show today is that real wages growth is back. We're seeing real wages growth ahead of schedule and that is a very, very good thing. These numbers today are very welcome, they're very encouraging, they're very pleasing but we know that people are still under pressure which is why our tax cuts from the 1st of July are so important as well because we want people earning more and keeping more of what they earn and today's numbers show that we're making welcome progress on those fronts.
JENNETT:
Well, as you note, sort of in passing there, there is an illusory element to this, isn't there? Because a very high proportion of workers would not have noticed this wage increase quite simply because their bank got to it before they did via higher interest rates and higher mortgage repayments?
CHALMERS:
Look, if your question, Greg, is are people under pressure still, of course they are, we understand that – but we don't just acknowledge that, we're doing something about it. We made it very clear over the course of the year and a half or so that we've been in office that among our highest priorities are to get wages moving again and to help ease some of these cost‑of‑living pressures that we know people are confronting right around Australia, and higher mortgage rates are part of that story. But there are other price pressures as well.
And so what Australians do know is that compared to the situation that we inherited a bit over a year and a half ago when real wages were falling, almost three and a half per cent, real wages are growing again. We're not getting carried away with that because we know people are still under pressure. But it's a much, much better wages outcome than people were accustomed to under our predecessors who oversaw what was, in the end, the best part of a decade of deliberate wage suppression and stagnation.
JENNETT:
Now, I guess every lever helps when it comes to getting wages moving again. And can I take you, Treasurer, to something a little obscure, but it is capturing more attention now. These are these non‑compete or restraint clauses for those who aren't familiar – clauses that might stop a hairdresser or a mechanic from starting a rival business as soon as they finish with their current employer. Now, Tony Burke has told us that he's very concerned about this, and for the first time, the Bureau of Statistics has tried to get a handle today on how many businesses are using them. The answer is a lot. Almost half, in fact. Are they being overused and does the government have the power to do anything about it?
CHALMERS:
Well, the use of non‑compete clauses is getting out of hand, I think that's very clear. I'm grateful to the ABS for putting out these new numbers today. This is an issue to his great credit that my colleague Andrew Leigh has been highlighting. It is a central focus of the Competition Review that I have underway with Andrew at the moment because we want people to be able to move to better opportunities, including better paid opportunities. We want to make sure that where these clauses are used, they're used in the way that they're intended, so I am concerned that these non‑compete clauses are getting out of hand, that's why they are a central focus of the work that we're doing on competition policy. And I thank and appreciate Andrew Leigh for the way that he has put this on the national agenda.
JENNETT:
Does that work include trying to quantify what sort of wage suppressive effect the rampant use of these measures might be having across the economy?
CHALMERS:
Oh, certainly part of the work that we're doing is to get the analytical base right and the ABS today, as you rightly said in your first question about this, they've done something very valuable for us here to help us get to the bottom of how widely they are used and if there's other analytical heft that we can bring to our considerations, obviously we'll try and do that. But I think it's pretty clear now. It was clear before these ABS numbers, but especially clear now, non‑compete clauses do feel like they're getting out of hand. We want to make sure that they're used for the intended purpose and we want to make sure that people can grab those higher wage opportunities when they are available to them.
JENNETT:
All right, boom times for Woolworths at the moment, Jim Chalmers. Close to a billion dollars of underlying profit for six months. This is before some business write downs. But included in that is a six per cent profit growth on food. Do these numbers scream to you excessive market power?
CHALMERS:
Our interest here, Greg, is making sure that there's a fair go for farmers and families at the checkout. And certainly this is a concern, I think, and this is exactly why I've given the ACCC more powers to get to the bottom of some of these pricing practices. We've got the ACCC work, we've got the review of the Food and Grocery Code led by Craig Emerson, and we've got other work under way as well to ensure that people are getting a fair go at the checkout. We know people are under some fairly substantial cost‑of‑living pressures – real wages growth is good for that, tax cuts are good for that, inflation is moderating in welcome ways, but we also need to make sure there's transparency and competition when it comes to our supermarkets so that people aren't getting ripped off at the checkout.
JENNETT:
And price monitoring, how is it going to have any impact on those figures, the ones I quoted from this profit result today?
CHALMERS:
Well, what we're doing and what we have asked the ACCC to do is more than price monitoring. I mean, transparency is an important tool, but it's not the only tool at the ACCC's disposal. Typically, in a piece of work like this which we have resourced and which we have commissioned from the ACCC, there are often policy recommendations or directions that are put forward as a consequence of that work. So, transparency is important, but it's not the only bit of the work that we're doing. We're doing a heap of work on competition policy and we're working closely with the ACCC to make sure that people aren't getting ripped off and to make sure that farmers and families are getting a fair go.
JENNETT:
All right, let's move on to short stay holiday rentals, Jim Chalmers. You might be aware the Prime Minister took a talkback call on Sydney Radio earlier today. In it, he said he'd asked the Tax Commissioner to take a look at situations where a property might not be full or booked out for an entire year, but the full benefits of negative gearing and capital gains on that investment property are still being deducted for the owner. Is there room to move on those two measures in this circumstance of short stay holiday rentals?
CHALMERS:
I was aware of those comments that the Prime Minister made and I think, like a lot of Australians, the PM recognises, as I do, that one of the big changes in the housing market in recent years has been this short stay accommodation. We want to make sure that the arrangements, policy arrangements and tax arrangements and the like are suited to those changes in the market.
I think there's a lot of concern out there when people are looking for homes, when we need more housing supply, when vacancy rates are so low and rents have unfortunately been going up, people are legitimately looking for ways to address that. We haven't been considering changes to negative gearing like the one that you described just then, but we are more broadly focused on the sorts of changes which have been brought about by that short stay accommodation and how do we make sure that we can get this housing market working for people and not against people. Part of that is building more supply and we're doing that with billions of dollars of investment, part of that is giving more Rent Assistance, which we did in the last budget, but if there are other things that we can consider, obviously we'll do that in the usual methodical and careful and considered way.
JENNETT:
All right but limiting or capping numbers of nights that can be booked out, as I understand it, this is squarely in the realm of the states and territories, isn't it?
CHALMERS:
There's a lot of collaboration, though, between the states and territories and the federal government. I pay tribute to my colleague Julie Collins, the Housing Minister, who is in constant communication with the housing ministers at the state level. I engage with the state and territory treasurers as well. There are a lot of responsibilities here in the state's domain, but we try and coordinate our activity to make sure that we can build more homes so that we can deal with these very, very low vacancy rates and this pressure on people who rent.
JENNETT:
All right, let's go to your mentor, I think that's an accurate term to be applied here. After turning 80, Paul Keating has granted a lengthy interview – I'm sure you've read it Jim Chalmers – with the Australian Financial Review. The top tax or, sorry, any top tax rate of 39 cents or above he describes as confiscatory above that level, quote; "you just lose all that impetus to make a dollar and do clever things." Now, this goes to the chief criticism of your stage three tax cuts, doesn't it? That it's anti‑aspirational. Are you prepared to tell your mentor that he's wrong here?
CHALMERS:
Well, obviously I've got a lot of respect for Paul, and as you rightly indicate in your question, I spend time with him and I'm grateful for the time that we spend together talking about some of these sorts of issues in the economy more broadly. I don't accept that the changes that we are making are anti‑aspirational, as you just described them, and I don't think necessarily that's what he's saying either.
What we're doing with our tax changes is we're cutting two rates and we're lifting two thresholds. We're actually the first government to lift the top threshold since Labor was last in office – that's a fact that's very inconvenient to our political opponents, but the direction of travel in our tax package is clear. We're giving a tax cut to every Australian taxpayer, but a bigger tax cut for middle Australia, a bigger tax cut for 84 per cent of people and that's what fuelling aspiration is all about. We are trying to encourage people and reward people who work hard, provide for their loved ones and just want to get ahead.
Now, I met with a bunch of workers here at the Port of Brisbane today, they are working really hard to provide for their loved ones and get ahead – that's what aspiration is. Aspiration isn't limited to the people who are already doing relatively well, aspiration is really the kind of defining feature of our communities and our economy, and that's what our cost‑of‑living tax cuts are all about.
JENNETT:
All right, well, hopefully Paul Keating will hear and note your response to those musings today. Just wrapping up, Jim Chalmers, I know you're very busy at this time of year, deep into budget preparations in May. Now, it does look like this may not be the last budget of your current term because you've moved next year's budget to March, right. Where does that leave the election timing window for the Prime Minister now that he's laid that out there publicly, and when was that decision taken?
CHALMERS:
Well, whenever I'm asked about this, Greg, I make two points. The first point is the election is when the PM says it will be, and I'll be ready for that whenever it is. And secondly, one of the natural consequences of an election cycle that is currently running May to May is that that would run into the timing of our fourth budget as a government. So, it's just common sense to be flagging and to be considering and to be talking about publicly a budget that might need to be a bit earlier if the election is in May. The Prime Minister will call the election when he sees fit. I'll be ready for that. The Prime Minister and the government will make it clear what date the government's fourth budget is and I'll be ready to go for that as well but the focus –
JENNETT:
But didn't he do that today? Sorry to interrupt, but didn't the Prime Minister actually do that today, didn't he tell us that it is in March?
CHALMERS:
Yeah, he indicated today that if we go full term that the budget would be in March and that's just common sense. I'm more focused on our third budget than I am focused on our fourth budget. We've been working more or less around the clock on this May 2024 budget. We'll be ready to go in March 2025.
JENNETT:
Yeah, I get that. I get that you've got a more pressing commitment to meet in this May before we get to the next March. Jim Chalmers, with that in mind, I'm going to thank you for your generous allocation of time with us today. We'll talk again soon.
CHALMERS:
I appreciate your time, Greg. All the best.