SUBJECTS: inflation data, May Budget, Future Made in Australia, non‑compete clauses, domestic violence
GREG JENNETT:
Treasurer, once again, welcome back to the program. Let's start on inflation. It's coming down, running fractionally below, actually, the government's most recent forecast. At current trajectory, when will inflation be back in the target band between 2 and 3 per cent?
JIM CHALMERS:
Well the numbers that we got today, Greg, don't change our expectations for when we'll get back to the band in the course of the next financial year. Obviously we'll update our inflation forecasts in the usual way in the Budget which is only 20 days away now, but what we saw today was welcome and encouraging progress in the fight against inflation. Obviously we would like inflation to moderate further and faster. We know that people are still under substantial pressure but we are making progress and we see that in the fact that last quarter inflation had a 4 in front of it, now it's got a 3 in front of it, it had a 6 in front of it when we took office a couple of years ago, and that tells us that we're making welcome and encouraging progress, but we understand that people are still under pressure, and that's why the Budget will maintain a primary focus on the fight against inflation and easing cost‑of‑living pressures rather than adding to them.
JENNETT:
You will have observed that the RBA has previously said it may not need to wait for inflation to actually fall back within the 2 to 3 per cent range before cutting rates.
Now I know you're not going to comment on their decision making processes but speaking theoretically, do you agree with that, there may be a sweet spot with a 3 still in front of it that triggers those sort of deliberations, if not decisions?
CHALMERS:
I think for the reasons you're anticipating, Greg, I'm reluctant to comment or colour that in for you. The Reserve Bank will take its decisions independently, they'll weigh up the inflation data, the consumption data, growth, what's happening around the world, a whole range of influences, and I'm not going to tell them how to go about doing that really important job.
From my point of view, what we saw today in the inflation numbers is that the government's economic plan is putting downward pressure on inflation. It took something like half a percentage point off inflation because of the combination of our energy plan, our policies in early childhood education and our rent assistance as well and what that tells us is that it's possible to design cost‑of‑living help in a way that takes the edge off inflationary pressures in our economy rather than add to them.
Again, we understand that people are still under pressure, people are still under the pump, but our policies, whether they're cost‑of‑living help, or whether it's responsible economic management that saw us deliver the first surplus in 15 years – all of this is combining to put downward pressure on inflation – that's my job, the Reserve Bank has its own job to do.
JENNETT:
All right. Well, rising prices are very patchy across the basket, aren't they? You will have noticed that tertiary education costs rose very sharply, and CPI itself, once plugged into HECS calculations will bump up HECS fees by, I think it's 4.8 per cent when applied in July.
Now I know you're contemplating, along with Jason Clare, alternative indexation systems, one that might peg more closely to average weekly earnings, but even that is running at above 4 per cent, isn't it? There's not going to be much relief whichever way you go on this? Is that your promise to people, that there is relief, or that there, on those 2 indices can't be much?
CHALMERS:
We'll finalise decisions about the Universities Accord in the course of the next week or 2 and we'll make clear our policies and plans in the Budget itself.
It's a first‑class piece of work that Universities Accord and Jason Clare is going through it with his characteristic diligence to make sure that we get to a good landing point which recognises the pressures on young people and students but also the pressures on the Budget and the economy more broadly, so we've got a little bit more work to do on that front. But I did want to recognise that we know when inflation is moderating but lingering, the impacts of that lingering inflation can be felt disproportionately in different parts of our community and our society and one of the reasons why we substantially recast the stage 3 tax cuts was so that we could give a bigger benefit to young people who are doing it especially tough. So whether it's a tax cut for every taxpayer but a bigger tax cut for younger workers on lower and middle incomes, whether it's the rent assistance that we've already got in the system courtesy of the last Budget, whether it is our other cost‑of‑living measures, they are very attuned and very attentive to the pressures that young people and students are under.
If we can afford to do a little bit more on that front, that's something that we'll be considering in the course of the next week or 2 as we put the finishing touches on the Budget.
JENNETT:
All right. We're in that zone where I guess we've got to sit and wait on that.
Can I take you to Future Made in Australia and your pick at the Productivity Commission. Danielle Wood has not mellowed in her outlook on the subsidies and incentives – she's been talking to our colleague, David Speers, especially on solar panel manufacturing like Solar Sunshot where you've already dedicated a significant amount of funds.
She says, "you shouldn't try to fetishise manufacturing, we need to be super clear that this comes with costs. What starts as an infant industry, your infants grow up, they turn into very hungry teenagers, it's hard to turn that off."
Now it's probably too late for Solar Sunshot, but will you factor her advice in and moderate your ambitions on the Future Made in Australia?
CHALMERS:
Of course I listen very closely to Danielle Wood. I think that was a fine appointment that we made to head up the Productivity Commission and I think that she has raised some important points, but also with respect to her, some obvious, some self‑evident points and we were already considering some of the issues that she has raised, whether it's making sure we get value for money, making sure that there are strict frameworks and robust guidelines that govern the investment of public money, whether it's the ability to have exit strategies and off‑ramps at a certain stage of industrial development, I think these are important points but relatively obvious points.
I take Danielle's considerations very seriously and a lot of the work that I'm doing behind the scenes, working closely with my colleagues and with the Prime Minister is to make sure that we're not just replacing private investment, that we're attracting private investment, making sure that we've got those robust frameworks strictly applied so that we get that value for money that Danielle and I are both keen to see.
JENNETT:
Do you feel like this argument may be getting away from you? Even before we've got the full details on the deck there is a mobilisation of opinion here. If it's not Danielle Wood, it's John Howard. He says Bob Hawke knew that the world was round, the present Prime Minister is a flat earther with the best of them. If you were serious, and he included you in this, if you were serious about building stronger foundations you'd reform and not further tighten IR. So by extension I guess, Jim, he's calling you a flat earther too. How do you respond to that?
CHALMERS:
Well, a couple of things about that. First of all, I don't consider Danielle Wood to be part of the group that you are describing here. Some of the commentary comes from the expected places.
There will always be people obsessed with industrial relations. It's like they've just wandered out of a meeting, a 1980s meeting of the H.R. Nicholls Society. There will always be those people on the editorial pages who see their role as dusting off the same kind of tired old talking points from the past.
When it comes to John Howard, I respect John Howard, and I think John Howard deserves better than just to be wheeled out when the Liberals and Nationals are losing an election or losing an argument and that's what we're seeing here.
I respect John Howard, but his commentary belongs to another era. He was the Prime Minister some time ago. He hasn't updated his views since then, at a time when the world is changing, and the pace of change in our global economy is accelerating. And what John Howard would have us do is to do nothing to recognise the global net zero opportunity that can be a huge earner for Australia if we align our national interest, our national security, our economic interests in a way that makes ourselves an indispensable part of the global net zero economy – that's our objective, I don't think John Howard understands that. I say that with respect. There will always be people who will just say the same things that they were saying in the 1980s and the 1990s without recognising that the world has changed and is changing, and we want Australian workers and businesses and investors to have a slice of the action.
JENNETT:
All right, thank you for that. We might just cover off 2 more matters before we let you go on what's a pretty hectic day, Jim Chalmers. Non‑compete clauses. I think we might have discussed these previously with you.
CHALMERS:
We did.
JENNETT:
They limit workers changing jobs between businesses or even creating their own. The US Federal Trade Commission has outright banned them. Will you, can you, under federal law here?
CHALMERS:
I thought that was a really interesting and welcome development in the US and I thank you, Greg, for your interest in it. We think this is a really important part of our considerations when it comes to updating and upgrading and renovating and reforming the competition landscape in this country.
My colleague, Andrew Leigh, is doing a mountain of work in this area – we've got a consultation paper where the consultation ends, I think next month, and we'll take all of that into consideration. But we have flagged a really strong interest in dealing with non‑competes, so they have gotten out of control. They do prevent workers from going to higher‑paid and better, more secure opportunities in our economy, and we don't want to see that and so you can expect us to be very forward leaning. Whether it's the outcome that we saw in the US or some other more nuanced reform, I think we've demonstrated – Andrew, myself and the government have demonstrated a willingness to act here if we can line it all up, and that will be of a piece with some really substantial competition policy reform that we're already undertaking, including when it comes to mergers and acquisitions – the biggest change to mergers and acquisitions in half a century.
We want to make our economy more competitive, more dynamic, and that is likely to include making it easier for workers to get and grab those better opportunities in our economy.
JENNETT:
All right. Well, I think you are signalling some intentions there. We'll keep a close eye out for where you take us. And something just finally, Jim Chalmers, not related to your Treasury portfolio at all, but keen for your views. You'll have noticed the strong attention being paid to the horrible recent spate of domestic violence incidents and general violence against women, 25 alone this year. When the government was first formed, you were very strong about bringing parties together, you had a Jobs and Skills Summit. Has the time come for some sort of summit to tackle this national scourge?
CHALMERS:
Whether that consultation happens in a summit or the way that colleagues like Amanda Rishworth and Katy Gallagher and others are undertaking a lot of consultation, I think the government has demonstrated, first of all, a recognition that this level of violence against women and kids is a national tragedy, and in some ways a national shame. And that's why we are investing billions of new dollars in trying to tackle domestic and family violence and doing that in consultation with all of the really terrific service providers who are there for women and kids right around the country.
We are as well, whether it's domestic and family violence leave, whether it's the billions of dollars that we're investing in prevention and in the response, I think we've shown ourselves to be a willing partner with all of those people who want to end this.
JENNETT:
And more to come in the Budget are you flagging?
CHALMERS:
I think we've demonstrated a willingness to invest, and quite substantially in the past, and if anything, what we are talking about today and what we've seen in recent times strengthens our resolve rather than weakens it.
JENNETT:
All right. Well, look, I just wanted to cover that one off with you as well as all of the economic data that's around.
Jim Chalmers, appreciate it as always. Thanks so much.
CHALMERS:
Thanks very much, Greg, all the best.