Hamish Macdonald:
To begin with this morning, have you calculated how much you’ll save from yesterday’s interest rate cut? The major banks have announced they will pass it on to borrowers in full. For most people though here in Sydney it’s about $100 or so, the difference, if you’ve got a mortgage of about $600,000. I know many of you will have mortgages much larger than that given the house prices in this city.
Maybe you’re waiting on a second cut, a third cut, a fourth cut. That was what some economists were forecasting all within the space of this year. Some experts though this morning suggest the RBA’s wording means we’re likely to head to an election before there’ll be any chance of another interest rate cut.
The federal Treasurer is Jim Chalmers. He’s here this morning. Good morning to you, Jim.
Jim Chalmers:
Good morning, Hamish, how are you?
Macdonald:
Very well thanks. I read in the Fin Review this morning that you’d actually called the heads of the major banks to urge them to pass on the rate cut in full immediately. What did you actually say to them?
Chalmers:
You’re right that I rang each of the 4 of them. They were the first 4 calls I made after the announcement of the rate cut, and I said to them how important it was that they be passed on in full.
And I want to give them credit, Hamish, and I want to take no credit for the outcome, because they were all 4 of them already of that mind and they all announced pretty quickly that they’d be passing on the full benefit. Which is a good thing because this is the rate relief that Australians desperately need and deserve. After all of the progress that we’ve made together on inflation, it was very important that it be passed on in full and I’m pleased that it will be.
Macdonald:
I’ve seen you out and about spruiking the government’s message today on the economy on the breakfast shows, saying things, you know, looking pretty good, better than they were. But I think if we look at what Michele Bullock, the Reserve Bank Governor, was saying yesterday it’s a slightly different picture. Are you on the same page about how strong the Australian economy actually is at the moment?
Chalmers:
I think we have a similar outlook, the Governor and I, particularly when it comes to the comment that she made yesterday that she’s optimistic about the future of the economy but alive to the risks, particularly the global risks. And that’s a view that I share.
I also think we’ve made a lot of progress together as Australians over the course of the last few years. If you think about the progress since we came to office, inflation is down, wages are up, unemployment is low, and now interest rates are coming down as well.
Now we don’t pretend that this rate cut will solve all of the challenges in the economy or all of the pressures on household budgets, but it will help and that’s it was such welcome news for millions of Australians with a mortgage. But also good news more broadly for our economy.
Rate cuts are good for the economy. There hasn’t been a lot of growth in our economy. People have been under pretty substantial pressure and the rate cut announced yesterday will help on both of those fronts.
Macdonald:
This is what Michele Bullock had to say.
[Excerpt]
Michele Bullock:
The market is expecting quite a few more interest rate cuts to the middle of next year, about 3 more on top of this. Whether or not that eventuates is going to depend very much on the data. Our feeling at the moment is that that is far too confident that that’s as many rate cuts as we’ll be having.
[End of excerpt]
Macdonald:
It’s effectively a message to us here in Sydney, ‘Don’t expect more cuts any time soon’. I’ve noted that you have indicated that you’re working on more cost‑of‑living incentives to be delivered in a Budget if you deliver one before or after the election, or during the election campaign. Can you give us any sense of what you might be thinking about doing?
Chalmers:
First of all, just on the Governor’s comments, I mean it’s not unusual or unprecedented for a Central Bank Governor to choose their words carefully or to be cautious about the outlook, and you won’t hear me making predictions about future movements in rates or pre‑empting the discussions that they will have.
My job, as you rightly intimate in your question, is to focus on my responsibilities. We’ve got the same objectives, the Reserve Bank Governor and I, to get inflation down, to keep unemployment low. Those are the shared objectives. But we’ve got different responsibilities. And for me and for the Albanese government, we’ve embraced our responsibilities to help people where we can with the cost‑of‑living; the tax cuts, energy bill relief, cheaper medicines, cheaper early childhood education, fee‑free TAFE, rent assistance, getting wages moving again. Those are our responsibilities, and we have embraced them by providing that cost‑of‑living help in the most responsible way that we can.
When people are looking for hints, as you are in your question, about what a fourth Budget might look like, the hints are in the first 3. Budgets defined by responsible economic management, providing help with the cost‑of‑living of where we can do that in a responsible way, that is the framework through which we approach the fourth Budget, just the same as the first 3.
Macdonald:
But so, you can confirm that you are looking at more cost‑of‑living incentives or measures given the circumstances that we’re all living in?
Chalmers:
We are more or less constantly trying to work out what are the economic conditions, what are the pressures on people, what are the pressures on the budget, and what are responsible, affordable ways that we can provide more cost‑of‑living help if and when that’s necessary and warranted. And so –
Macdonald:
So what are –
Chalmers:
To be upfront with you, Hamish –
Macdonald:
What are the pressures –
Chalmers:
– and your listeners.
Macdonald:
What are the pressures that you’re looking at most, what are you focusing on?
Chalmers:
We’re focusing on the trajectory of inflation, we’re focussed on keeping unemployment low, we’re focused on getting – making sure that real wages continue to grow, and we’re focused on making sure that we can continue to get the budget in better nick than what we inherited. Those 2 surpluses, getting the Liberal debt down, these are all of the things that we weigh up.
You know, we’ve spent hours and hours in the Cabinet room yesterday and the day before weighing up all of these sorts of trade‑offs and decisions for our fourth Budget. And I want to assure your listeners that when we can afford to provide more cost‑of‑living relief in a responsible way, weighing up all the pressures on their household budgets, all the pressures on the economy and our budget, if we can do more responsibly, we will do more.
Macdonald:
Okay. You’re listening to 702 ABC Radio Sydney. I’m talking to the federal Treasurer Jim Chalmers.
I’m getting plenty of texts in as I’m talking to you about what specific banks are doing or not doing and how long it takes them to pass on the cut. I know the major banks; you started this conversation by saying they had already planned to hand it on in full. Is there any excuse for it being delayed into March, for example? Some of the banks, you know, saying, ‘Well we will do but it just takes us some time to sort of figure out how to do it’.
Chalmers:
From memory most of them are February. There might have been – off the top of my head I think there might have been one March date. We need it passed on as soon as possible. They have cycles that they do this with, they can explain that to people.
But our interest as a government, and I think the broader Australian community’s interest, is to make sure it’s passed on as quickly as it can be.
Macdonald:
Treasurer, we will go to an election soon, I know you’ve avoided all questions on the timing of it. I’m not going to waste anyone’s time with that. What’s your pitch to Sydney voters, why should you get another term in office? I suspect many Sydney‑siders don’t necessarily feel better off after a few years of this Labor government. Times are pretty tough. Would it be any different if you had another term?
Chalmers:
I believe so. The choice for people at the election is a government that’s getting inflation down, wages up, keeping unemployment low, seeing interest rates begin to be cut, versus a Coalition led by Peter Dutton who would make people worse off and take the country backwards. I mean that is primarily the choice at the election.
We’re providing this cost‑of‑living relief that you and I have been talking about. We’re getting inflation down. We’re keeping the labour market in good condition and we’re seeing real wages grow again. And so that’s our record. But our offer is to –
Macdonald:
I note just on that, since you mentioned Peter Dutton, I mean the Prime Minister’s been saying that the Coalition would cut. What would they cut? What’s the evidence of what they’d cut?
Chalmers:
It’s not the Prime Minister saying that on his own, the Opposition Leader has said that there’s $350 billion too much spending that he will cut, but he won’t tell Australians what those cuts are until after the election. That’s what Peter Dutton said on the Insiders program a couple of Sundays ago.
That’s one of the real risks that people have to weigh up when it comes to this election. You know, the guy who was, when he was the Health Minister went after Medicare, they deliberately kept wages down, they’d push up energy prices with this most expensive form of energy which is nuclear, and there’s $350 billion of cuts that he won’t tell people about until after the election.
And it gets worse than that, Hamish. They need to find $600 billion to pay for their nuclear reactors, and you can’t find $600 billion without going after Medicare or pensions or housing. So this is the risk that people will weigh up.
Whenever he has talked about cuts, he’s said that there will be substantial cuts, but he won’t come clean on them until after the election, and I think that should send a shiver up the spine of Australians who are doing it tough enough as it is.
Macdonald:
Treasurer, I think you have to go by 8.45, if I can very quickly – Murray Watt, who’s the Workplace Relations Minister, has been on television this morning talking about the train situation in Sydney. I know it’s a state issue but there is the possibility for the federal government to intervene to overrule, effectively, the industrial action. Sydney‑siders are pretty sick – I think it’s fair to say – of what’s been going on, regardless of whether they support the unions in this or the state government in this. Given how critical Sydney is to the national economy, do you think there is a case for the federal government intervening so that this doesn’t drag on even further?
Chalmers:
Obviously everyone wants to see it sorted out. We need to see it sorted out as soon as possible. Beyond that, when it comes to the Commonwealth powers and role I’ll leave you in the capable hands of Murray Watt. I’ll be seeing him in a couple of hours.
Macdonald:
You might want to talk to him about the engine room of the national economy which is right here in Sydney.
Chalmers:
I do talk to him about these issues, but I leave you with his comments that he made earlier today, and no doubt he’ll be asked about it when we stand up together in Annika Wells’ electorate later today.
Macdonald:
Okay. Are you planning a bachelor party for the Prime Minister? I notice it’s a spring wedding we’re told.
Chalmers:
I’m not in charge of the arrangements, which is probably a good thing. It’s been a long time since I’ve arranged a buck’s party for anyone. But I know they’re a very happy couple. I see some lovely photos in the media today. My focus has been on other things, including this rate cut that you’re kind enough to talk to me about today.
Macdonald:
All right, Jim Chalmers. Thanks very much for your time, I know you’ve got a busy day. Thank you.
Chalmers:
Thanks, Hamish.