GREG JENNETT:
Jim Chalmers, so good to have you back with us on Afternoon Briefing. And I’ll have more to say about that at the end of our conversation. But let’s get to the news. By any measure, these growth figures today are insipidly weak. I’m struck, though, by your observation made earlier that the decisions made in the Budget are vindicated through these numbers we see.
Now, back at Budget time, you had growth heading for 2 per cent and still do on the books as they speak. How do you reconcile that – that it’s produced growth of half that amount and was therefore still the right setting?
JIM CHALMERS:
Well, because Greg, we got a lot of free advice at budget time that we should be slashing and burning in the Budget, and that would have sent the economy backwards at different points of this year. And so what we’ve done instead is we’ve taken a very balanced approach. We’ve taken a primary focus on fighting inflation but without ignoring these very substantial risks to growth. And you need to remember, Greg, and your viewers need to remember that in the course of the last 18 months or so, three-quarters of OECD economies have gone backwards, our economy has continued to grow. It is ticking over but it’s ticking over very slowly and that’s why the balanced approach that we’ve taken to continue to grow the economy as we get inflation down and get wages up and roll out this cost‑of‑living relief has been exactly the right combination in these very difficult economic times.
JENNETT:
Your settings can, though, be both supportive and inflationary at the same time, can’t they?
CHALMERS:
Well, the point that the Reserve Bank Governor has herself made is that those 2 surpluses that we delivered in our first 2 years are helping in the fight against inflation. We know from the bureau of statistics that our cost‑of‑living relief is putting downward pressure on inflation, not upward pressure on inflation and those are really important elements of our economic strategy to roll out this cost‑of‑living relief in the most responsible way we can to be part of the solution when it comes to inflation, to see that inflation moderate very substantially, while at the same time we protect jobs in our economy and make sure that we’re not ignoring these risks to growth. And so when you have economic growth come in lower than what most economists were expecting and forecasting, it makes it more important than ever that as we maintain this primary focus on inflation, we don’t ignore what’s happening in the economy more broadly, and the economy is very soft.
JENNETT:
You’ve made a lot today of growth in real wages caused by a number of factors. But significantly, government wage support in the care sector is a part of that. You could say public sector wage growth is also on the figures we see today. How sustainable is that? At what point do you see a crossover where those income supports can be wound out so that private sector growth picks it up?
CHALMERS:
First of all, we acknowledge and I’ve acknowledged earlier today, that the best kind of growth in the medium term in our economy is private sector‑led and so much of our economic policy is about attracting private investment and generating private activity, recognising that public activity is not designed to be a permanent substitute for that – we acknowledge that. But when it comes to wages in our economy, our focus in getting wages moving again – whether it’s our support for decent minimum wages, whether it’s our support for pay rises in industries dominated by women – this is a really important part of the story today. And I think the most important part, the most encouraging part of the numbers we got today is that intersection between wages growing, prices moderating and the tax cuts rolling out in our economy because that combination of 3 welcome developments means that on a per capita basis, real household disposable income is growing again. That’s a key objective of our economic policy particularly when you consider when we came to office, people were going backwards so substantially.
JENNETT:
At any cost? I mean, you’re running a $28 billion deficit for the current financial year that we know of, you’re soon to update that. So for how much longer can those wage supports on the public dimension be maintained?
CHALMERS:
When it comes to this year’s deficit, it’s much smaller than what it was anticipated to be when we came to office, so we’ve made progress in this year. We delivered 2 surpluses in the first 2 years, we got the third deficit smaller and so the direction of travel compared to what we inherited at the election has been a good one and because of that – a couple of hundred billion dollars turnaround in the Budget, $150 billion less debt, less interest on the debt, all of those are good developments – welcome progress when it comes to getting the Budget in much better nick.
What we’ve been able to show by finding savings and banking upward revision to revenue and reprioritising in the Budget is that we can get wages moving again in the care economy and in industries dominated by women. That’s one of the reasons why the gender pay gap is the narrowest it’s ever been and we’ve got some more work to do there, so it’s a high priority for us. We don’t think that people on low incomes or in industries dominated by women should carry the can for this fight against inflation. We’ve shown that we can get wages growing at the same time as inflation is moderating very substantially and the tax cuts as we see in today’s data are a really important part of that too, because there are more people working, there are more people earning more and there are more people keeping more of what they earn and those are 3 of our keys economic objectives.
JENNETT:
Yeah, an important part, and I think, you know, all have acknowledged, at least through the data that it’s working, are the existing support, such as energy bill relief. You would acknowledge yourself and have, I think, many times, Jim, that many households would be in a much worse situation without it. That is an argument to extend it further now, isn’t it?
CHALMERS:
I’m not making that argument today. I think it’s self‑evident now from the data we get from the bureau of statistics that the energy bill rebates are helping. They’re taking some of the pressure off household budgets and they’re playing a meaningful role in the economy. That’s a good thing. I’m not speculating about extending them today but what we see in today’s data, particularly when it comes to incomes, particularly when it comes to the tax cuts but also in all of the ways that we’re rolling out this cost‑of‑living help that hasn’t come at the expense of inflation moderating – the prices measure in today’s National Accounts came off substantially again and what that shows is we can get wages growing, we can get inflation down, we can roll out this cost‑of‑living help at the same time as we get the Budget in much better nick.
JENNETT:
All right, so you’re not speculating on an extension. You’re not ruling it out either, to be clear?
CHALMERS:
It’s not something that we’re proposing. People shouldn’t expect to see it in the mid‑year Budget update later this month. Our focus is on rolling out the cost‑of‑living relief that we’ve already funded and that we’ve already announced and which we know from today’s National Accounts is helping people. And when it comes to the tax cuts in particular, the big political risk that we took almost 12 months ago has paid off in economic terms because we see in today’s National Accounts just what a meaningful role those tax cuts are playing when it comes to boosting incomes in our economy. We know that people are still doing it tough, we know there’s always more work to do, but one of the most encouraging elements is what today’s numbers say about the impact of the tax cuts on household budgets and on the national economy more broadly.
JENNETT:
Alright, some of my questions might be answered in the March Budget, if in fact we have one. Let’s move on from the National Accounts.
Jim, if I could – you’ve had something of a successful conversation with Matt Comyn, the Chief Executive of the Commonwealth Bank about those $3 fee imposts for many customers seeking in‑person cash withdrawals. At the same time, you maintain this exercise in work about redistributing costs, I suppose, for branch networks across banks generally in Australia. Are you open to having small smart ATMs in the regions and a heavier reliance on Australia Post as an alternative to some of those levy proposals that you are working on?
CHALMERS:
I welcome the Commonwealth Bank’s change of heart and I did have a conversation with Matt Comyn late this morning about these issues and I think to his credit and to the bank’s credit, they recognise that the changes which were flagged yesterday were neither acceptable nor appropriate and so they’ve had a change of heart and that’s a good thing. We made our views very clear about the changes that were flagged yesterday. People are doing it tough enough as it is, particularly vulnerable people, without the kind of imposts that were flagged by the bank yesterday and so, we welcome that change of heart.
We engage with the major financial institutions in a very respectable and productive, constructive way and that applies to our efforts as well to make sure that Australians in regional communities get the kind of services that they need and deserve and that’s an ongoing conversation with the banking sector to see what might be possible here. Those couple of matters that you raised in your question are part of the conversation but not the only part of the conversation. We haven’t come to a concluded view on that yet. We’ve got a bit more work to do and we’ll do that in the usual consultative way and that’s why you read about it in the papers, because we put so much effort into the consultation.
JENNETT:
All right, now, just to follow up something on the programme here yesterday, a discussion with Adam Bandt, the Greens leader. He’s pretty much signalled that in the event of a hung parliament, he will try to work with the Labor minority government for a progressive and reformist parliament, complete with advance, perhaps in writing agreements on reform proposals. Why wouldn’t you provide those assurances in writing in the interest of a stable parliament?
CHALMERS:
Well, we want to govern on our own, not with the Greens and we take no outcome of the election for granted. We know we’ve got a lot of work to do and we know that campaigns are contested, as they should be, because the prize is to govern the best country on earth. And so, we take no outcome for granted. But all of our efforts, all of our thinking, all of our work is about returning a majority Labor government because the alternative, particularly when it comes to Peter Dutton and household budgets and the economy more broadly, is a very risky alternative. And so we’ll be making the case for a majority Labor government. I haven’t given Adam Bandt’s comments this morning a moment’s thought and that’s because we want a majority Labor government. We want to keep delivering for people, boosting wages, getting inflation down, rolling out cost‑of‑living help and because we recognise and understand as Australians will by the time the election rolls around that the biggest risk to their household budgets and the economy is the return of a Coalition government.
JENNETT:
All right, somehow, I think questions like this will persist in the lead up to the election. Perhaps answers like that too.
Jim Chalmers, look, it has been a hell of a year and it’s not over for you yet, with MYEFO just around the corner. We do want to wrap it up with you, Jim Chalmers, by saying thank you for your involvement. You’re a very busy man but you’ve been very accommodating of Afternoon Briefing throughout the year, so thanks so much.
CHALMERS:
Can I say to you, Greg, I know that you’re moving on to other pastures. I really want to say how much we appreciate the wonderful conversations that we’re able to have. Good, often difficult questions, but always well motivated and always based on the best understanding of developments in the economy and in our society and in our country. We really just wish you the very best. Greg. I’ve known you for a very long time. I’ve always enjoyed our interactions, whether they’re on camera or off camera and I just really wish the best for you and your loved ones.
JENNETT:
Jim Chalmers, that’s very generous. I appreciate it. Thanks so much.
CHALMERS:
Thanks, Greg.