JACQUELINE MALEY:
From the newsrooms of the Sydney Morning Herald and The Age, this is Inside Politics. I’m Jacqueline Maley and it is Friday, August the 23rd.
Today is a very special episode of Inside Politics because we are interviewing the Treasurer Jim Chalmers in our flash new Canberra studio. Welcome to the podcast, Treasurer.
JIM CHALMERS:
Thanks. I really like your digs. This is great.
MALEY:
It’s very exciting. And, as usual, I’m also joined by our intrepid chief political correspondent David Crowe. And today we also have a special guest star – our senior economics correspondent Shane Wright, who secured the interview with the Treasurer. Welcome to everybody.
DAVID CROWE:
Thank you.
MALEY:
Now, Treasurer, I want to ask you first of all – why did you agree to do our podcast?
CHALMERS:
I like the podcast because it gives us a chance to have a proper yak about some of the big issues, and the reason why I’m pleased that we’ve got all 3 of you here is because, between the 3 of you, I think you take some of these big issues really seriously and when you get to chat in a podcast format you get to have a bit of a broader chat than you might in 2 or 3 minutes grabbed here or there in the press gallery hallway.
MALEY:
Yep, that’s what we’re hoping for too. Now, I was reading about you this week, and I read the Deb Snow profile of you in the Good Weekend, which was great and I was interested in this quote that you told her; ‘I worry all of the time. I worry from the moment I wake up to the moment I go to sleep.’ So what are you worrying about at the moment?
CHALMERS:
Well, first of all, I really enjoyed talking with Deb. Deb is – as you all know, you get to work with her – a first‑class journalist, and I think like all good journalists, I probably said more to Deb than what I was anticipating or planning and that’s one of the things that Deb pulled out of the conversation. And really for me I think there’s no shortage of challenges in the global economy and the domestic economy and for me obviously cost‑of‑living pressures are the main thing that keeps me up at night. I know that people are doing it especially tough and we’re trying to respond to that, deal with that and help people address that and there’s a fair bit of global economic uncertainty too. And so some combination of those 2 issues are really top of my list of worries at the moment.
MALEY:
Yep. We’re going to get into that a bit later. I want to just ask you about another quote from that piece, because when you took over as Treasurer in 2022 you gave an inspirational speech to Treasury bureaucrats. And you said that – to them that the goal was to be quote ‘the most influential part of a successful reforming government that builds big reserves of economic credibility.’ So I want to ask you: do you think you have become a successful reformer government, and do you have big reserves of economic credibility? More importantly, perhaps, do voters see you as that?
CHALMERS:
I think that’s partly for others to judge but certainly we’ve engaged in a lot of reform and that reform is not always recognised. Even in the last little while, big reforms to competition policy, the Foreign Investment Review Board process, the flow of capital, particularly when it comes to the energy transformation, the Future Made in Australia agenda, our fiscal strategy, the way that has been bearing fruit – there’s been a heap of economic reform. And the point that I was trying to make to the Treasury colleagues was trying to convey to them how much I was looking forward to working with them again, really just such an impressive group of people. And I feel like we have made a bit of progress but whether you’re a reforming government or whether it comes to easing the pressures that people are confronting, we don’t think that the job is ever necessarily done. We see budgets not as kind of points in time but staging points of progress. We’ve made a heap of progress in the economy over the first couple of years in office, but we don’t pretend that the job of reform or the job of easing the pressures that people are under is necessarily finished.
MALEY:
Do you think you’ve got economic credibility with voters?
CHALMERS:
Again, that’s for them to judge. I’m not the perfect person to ask about that.
MALEY:
What’s your sense? What’s your sense?
CHALMERS:
I think people understand that we are dealing with a series of hard issues and we’re not just doing the best we can, we’re also trying to run the economy in their interests, whether it comes to turning around stagnant wages growth, whether it comes to changing the tax cuts so that everybody gets a tax cut not just people on higher incomes, when it comes to energy bill relief and cheaper medicines and all of those things, I think or I at least hope that people understand that as we grapple with these really difficult decisions in the economy, in budgets and in terms of economic management and reform more broadly, everything is guided by their interests. We’re trying to do the right thing by people. We’re trying to make good decisions for the right reasons. And again, it comes back to your podcast – we’re trying to be upfront with people about these challenges. We’re trying to convey to people a sense that we know that there’s a series of tricky balances that governments have to strike, and we’re grappling with that. We don’t pretend we instantly have the right answer to every issue and so explaining to people where we’re coming from, what we’re grappling with and why we’ve come to the decisions that we’ve come to I think is an important part of building credibility.
WRIGHT:
I was going to say, you touched on cost of living. Is that going to be the defining element of the coming election? And if you don’t get it right, does that mean Jim Chalmers no longer Treasurer, the government is out of office because you’re unable to deal with the cost‑of‑living issues?
CHALMERS:
Cost of living is obviously the defining pressure that people feel right now and it’s the government’s major focus and so I see that really in 2 ways. And you’ve put it in the election context. Every taxpayer gets a tax cut, we’ve made sure people are getting help with energy bills and pharmaceuticals and early childhood education and we’ve got wages moving again I think in a way that we can be proud of, so we have a record of helping people, easing some of these cost‑of‑living pressures that they’re under, but so much of our forward agenda has a cost‑of‑living element to it as well. The Prime Minister’s indicated he wants to do more on early childhood education – that’s about cost of living. We’re rolling out tens of billions of dollars that you spoke with my wonderful colleague Clare O’Neil about in housing. Housing is about cost of living. We’re interested in getting more renewables in the grid. That’s about putting downward pressure on the cost of living. So so much of what we want to achieve in the second term if we are fortunate enough to be given one is about a reform agenda in each of those areas but also it has a cost‑of‑living element and so that’s really what’s at risk if the government is changed. We’ve got a record of providing cost‑of‑living help in a substantial way but in a responsible way, and our forward agenda is about cost of living too.
WRIGHT:
So you’ve touched on cost of living and you’ve had to spend a fair bit to provide a lot of this. And that relies on the strong trade flows. You’ve touched on China. You talked about one of the – the biggest global factor is what’s going on in China right at the moment. We’re seeing it, say, in the fall in the iron ore price, the fact that house prices are falling in China. Michelle Bullock, the Reserve Bank Governor, noted this is one of her big concerns. Is that one of those worries – what and how China plays out – and what does that mean to you, the economic agenda and also the budget?
CHALMERS:
Yes, I think there’s a lot of global volatility and that is a concern to us. A lot of the challenges that we’re dealing with – inflation, slower growth – has a global element to it. It’s not 100 per cent global but it’s not 100 per cent domestic, there are global issues playing out.
I feel like the risks in the global economy are finely balanced at the moment. You think about the geopolitical element to that – Russia‑Ukraine, the concerns about a broader regional conflict in the Middle East, tensions around the world – there is enough in all of that to concern us and if you think about one way to understand that, you think about the global oil price and you’ve observed the really quite remarkable volatility in the global oil price and what that represents as it bounces back and forth is people trying to work out are they more worried about developments in the Middle East which pushes the price of oil up, or are they more worried about weaker unemployment numbers in the US or softness in China which pushes the global oil price down? And so I think in that global oil price you see that kind of push and pull of global uncertainty.
And for us the China story is obviously very, very front of mind. That is partly because of the impact on commodity prices but broadly as well. If our Treasury forecasts for Chinese growth play out as we expect them to, that will be the weakest period of growth in China for some time and I think most Australians understand how important that is to us, not just to our commodity prices and therefore revenue and therefore the budget, but also the economy more broadly.
CROWE:
Where does that leave you on economic reform? Because you made a big decision at the beginning of this year on tax. You overhauled the stage 3 tax cuts. A lot of people liked that, according to our polling. But it still means that bracket creep will erode some of those gains for workers over, you know, the next few years. Do you think the tax system as it currently stands is actually fair for working Australians, and do you have any ambition to fix it?
CHALMERS:
Well, I think we were ambitious and we took a political risk, frankly, at the start of this year in recasting those tax cuts so that everyone – every taxpayer got a tax cut and not just people who are already doing really well and the reason we did that is because we recognise – I think alone amongst the major parties in the parliament – that there is more than one way to return bracket creep. And I think one of the unfortunate elements of this welcome national conversation about tax reform and income tax and the cost of living is that a view has settled, I think a wrong view, that it’s only returning bracket creep if it disproportionately advantages people who are already on the highest incomes. What we’ve shown and what the Treasury analysis that we released when we made that decision at the start of the year shows is that we have found a more effective way to return bracket creep right up and down the income scale with bigger benefits for workforce participation and to do that in a way which recognises that a lot of people are under cost‑of‑living pressure, not just some.
CROWE:
And so, you know, clearly I was trying to get you to sort of expand on whether you can do more to fix the system. And just to explain where the question comes from, I was talking to one economist the other day, thought the government could have done more through the course of this year to explain the case for further change to tax, not necessarily unveiling the full package, but we are looking at a period where we get ahead to the election, questions arise about a second‑term agenda, do you think tax will be part of that second‑term agenda?
CHALMERS:
I think tax is always a part of the national economic debate, that’s a good thing, but our priorities really are still trying to finish some of the big tax changes that we are already trying to legislate – the changes to superannuation tax concessions at the very top of the balances, the multinational tax agenda, there are developments this week in the parliament around the global minimum tax, we’ve only just legislated the PRRT changes. So we have had a big agenda on tax, we have a big agenda on tax, which is unfinished because we haven’t legislated the things that we have announced. No doubt in future parliaments there will be other opportunities for tax reform, but our focus is on what we’ve already announced.
WRIGHT:
I was going to say, talking about reform, the Reserve Bank, the most important economic institution in the country by some margin, you had your plan. We’ve had the review from last year and the plan was to have the major change, the monetary policy committee that would set interest rates, from July 1. We’ve missed that. Are you still in talks with Angus Taylor, and where are you guys up to? Are we going to see some change, some movement in the next few weeks or fairly soon?
CHALMERS:
Yes, we are still engaging with the Shadow Treasurer and I’m grateful for that engagement. There’s a fair amount of things that I disagree with Angus Taylor about, but I think in fairness, his instincts and his intentions on Reserve Bank reform are broadly the right ones. It’s a bit of a test of whether he can carry his colleagues on that, but I’ve engaged with him in good faith and I believe he’s engaged with me in good faith on Reserve Bank reform. We’ve had, I think, 3 face‑to‑face meetings. He’s had, I think, 3 briefings with the Treasury. We’ve been communicating in other ways throughout that period for I think at least about 18 months and I think that’s a demonstration of how serious we are about trying to get to a bipartisan outcome. We don’t pretend that we will govern forever, and I want these reforms to endure and so I’ve been really forward‑leaning when he’s raised issues with me in good faith. And I don’t want to engage in that negotiation via the media if I can avoid it.
WRIGHT:
Well, you can – we’ve got a whole platform here.
CHALMERS:
What I could say is that Angus Taylor has raised with me probably half a dozen areas where there are potential choices to be made or potential areas of disagreement. There have been about half a dozen and in every single instance – all 6 of those instances – I’ve accommodated his view and again, I think that’s a demonstration of the willingness that I have not to be pig‑headed about it. I’m not going to be pig‑headed about these reforms. I’ve got a view. The review that they’re based on was a really great piece of work in my view. There are instances even in the review where we’ve been given a couple of 50/50 calls to make and wherever there have been 50/50 calls to be made or wherever the Shadow Treasurer has had a strong view, I’ve accommodated his view and I hope that that means that we can come to an agreement and legislate these changes in time for a start not in the middle of the year, which is what we had originally intended, but perhaps closer to the start of next year. And everything that I’m doing is about trying to get that agreement.
WRIGHT:
One of those was actually the membership of the monetary policy committee where the Liberal Party was saying it just moved the entire existing board on to the monetary policy committee. Is that one of those changes or concessions you’re willing to make?
CHALMERS:
Well, I don’t mind saying, because he’s raised that publicly, that is one of the things that we’re discussing at the moment. If you think about the sorts of things that he has raised – and I’m confident that most if not all of these have been raised publicly and so I can run through them – he wanted to be sure that the Governor was the chair of the governance board, we’ve made that possible. He wanted there to be flexibility in the term limits, we’ve done that. He wanted to have RBA executives have oversight of the operation of the place, we put the Deputy Governor on the governance board. He was worried about how we described the dual mandate in terms of equal weight between price stability and employment, we’ve accommodated his view, not just in the legislation but also in the statement of conduct which you’ve covered extensively.
There are outstanding issues around section 11 – which is the parliament’s override power. He’s said that publicly, so I don’t feel like I’m breaching any confidences there and he has made the point that you referred to about everybody staying on the monetary policy board. Now, the Reserve Bank Governor herself has said that she would like there to be continuity on both of the new boards, not just on one board, I take that view from the Governor very, very seriously and so we’re in discussions with the Shadow Treasurer to see if we can come to some kind of acceptable landing point on that one.
CROWE:
A lot of Australians talk about the Reserve Bank, highlights this question of pressure on inflation, on interest rates and the debate about whether government spending is a factor. Now, I don’t want to rehash the debate from a few weeks ago, but it seems to me pretty clear from this debate there’s got to be some constraint on the government when it gets to the next budget update, which is coming up toward the end of the year. So how much will that constrain you in what you can spend money on when you do the MYEFO, the budget update?
CHALMERS:
Yes. The mid‑year budget update will be very focused on inflation, also these other risks in our economy, global and domestic but we will take the inflation challenge very seriously in the MYEFO. We’ve made a heap of progress on inflation, as you know. It had a 6 in front of it when we came to office, it’s got a 3 in front of it now. It’s been moderating really quite substantially over the course of the last couple of years, but it’s not mission accomplished because people are still under pressure and so the MYEFO will be very focused on that. But not just the MYEFO, the first 3 budgets that we’ve handed down, we found almost $80 billion in savings, banked almost all the upward revisions to revenue to turn 2 big Liberal deficits into 2 big Labor surpluses. The Governor says that that’s helping in the fight against inflation and so I hope you take that – I can see you warming up there –
CROWE:
Well, because what you’ve done in the past does raise this question of what happens in the future, and we all know election – well, I think safe assumption, election next year. You’ve mentioned the idea of a March budget, I think. And so, therefore, does that, you know – what’s the word – cramp your style, basically, when you’re going into an election with an election budget where you can’t spend any money. Is that what it’s going to be?
CHALMERS:
I guess the point I’m making by raising the recent history is to talk about our bona fides, and not just in this mid‑year budget update on the eve of an election in the first half of next year but in every update, every budget that we’ve handed down we’ve been responsible and we’ve been restrained, and that’s deliberate, because inflation is still the primary challenge in our economy, so people can expect us to be responsible and restrained in the MYEFO and in the election context.
CROWE:
So we won’t have a spendathon election?
CHALMERS:
I don’t believe so, certainly not from our point of view. What we’ve shown – and again, I appreciate that this is about the last couple of years, not necessarily the next couple of years – but what we’ve shown is a willingness to make the right economic decisions for the right economic reasons and the politics, I believe, will take care of themselves if you get those big calls right. I think even when you think about in the last Budget I got a bit of grief in the press gallery about saying that there are not just inflation risks but there’s global economic uncertainty – that’s proven to be the case, we’ve been right. Our judgements about the economy have been right the last couple of years and that’s because we prioritise good economic decisions over political decisions and people can expect that, even in the context of an election.
MALEY:
Treasurer, just quickly on housing, the average mortgage now is $637,000 which is actually quite a small mortgage if you live in Sydney, as I do. It’s climbing at $154 a day over the past year. Does the huge size of Australian mortgages worry you in terms of its macro economic implications? And is it time that a government – any government – fronts up to the Australian people and says maybe house prices can’t keep growing exponentially if we want to increase supply and let people afford homes?
CHALMERS:
Well, our primary motivation when it comes to increasing supply is to make it easier for people to find somewhere to buy, get a toehold in the market, or somewhere to rent. We are not primarily trying to take a big hit off people’s house prices, for a lot of people that’s the foundation of their economic security and so that’s not our motivation. Our motivation is building more homes for people to buy and rent. And on the part of your question about mortgages, one of the reasons why Australians are especially sensitive to interest rate changes, one of the reasons why one of the main pressures on people right now has been those interest rate rises is because of 2 things – big mortgages, as you rightly identify, but also variable mortgages and that means that sometimes when interest rates change in Australia it has a bigger – a disproportionate impact than what you might see in other comparable countries.
WRIGHT:
Do you think, though, do you look at your 3 kids and go; they’re going to be coming to the bank of mum and dad to get into the property market when and if they ever move out, because they can’t afford to get into the property – to buy their own place?
CHALMERS:
Look, my concern about this is much broader than what’s happening with –
WRIGHT:
Yeah.
MALEY:
But that’s a broad concern of being a parent.
CHALMERS:
Yeah, it is.
MALEY:
Some of whom honestly can’t afford that.
CHALMERS:
No, it is and that’s one of our motivations really. If you made a list of our major economic challenges, housing is on it and that’s why we’ve got the $32 billion, the $6 billion extra in the Budget, all of the things that Clare spoke with you about far more eloquently than I can and the reason for that, there’s an intergenerational element to that, which is – to pick up your question and take Leo and Annabel and Jack out of it for a moment – there is an intergenerational element to it that we acknowledge, and that’s one of the reasons we’re responding to it in the way that we are. We don’t want this to be a country where finding a good place to live near where the jobs and opportunities are being created is a memory. We don’t want it to be a memory, we want it to be a feature of our economy and that’s why so many billions of dollars and so much effort and commitment is going into it.
MALEY:
Okay. We’ve pretty much run out of time. I just want to ask you one more question slightly out of left field, because you have in the past consulted the mindset coach Ben Crowe who has famous celebrity clients like Ash Barty and your beloved Brisbane Broncos. I wanted to ask: what was the most important piece of advice that he has given you or principle that he’s given you that you take with you?
CHALMERS:
I ran into Ash Barty at the airport the other day, and Ben is our mutual friend. Is he a relation?
CROWE:
He’s no relation.
CHALMERS:
David Crowe and Ben Crowe are not related. Ben Crowe is an absolutely magical person. Absolutely magical. He has the kind of insight which is rare. And one of the things that stands out for me talking with him is about drawing inspiration from different places, and his big thing is drawing inspiration from your own story – understanding your own vulnerabilities and your own kind of the things that you’re grappling with in your own life but finding inspiration elsewhere. And I love talking with him about the athletes that he works with because I don’t believe that being good at something is necessarily limited to different fields of endeavour and so I try and learn from other people that he works with in the sporting world and elsewhere. One of the things that we talk about, there’s a wonderful clip of LeBron James after he wins a title with the Miami Heat. And LeBron James says, ‘I’m LeBron James from Akron, Ohio. I’m not even supposed to be here,’ which is amazing that this all conquering, powerful American athlete, one of the 2 best players in the history of the sport, has this sense that he’s not even supposed to be here, that his story is a little bit improbable. And so Ben and I talk a lot about this sense of where we are from and this remarkable opportunity that we have. When I hear LeBron say that I feel a little bit of that myself. We’re in very different fields but really, I talk with Ben a lot about this sense of where you’re from and where you’re headed, trying to make the most of this really quite remarkable opportunity that we have, all of us have. Steering the national economic conversation is an amazing opportunity and it will end one day, it will be fleeting, and so trying to make the most of it, so I speak to Ben a lot about that.
CROWE:
But it won’t be fleeting if you have your way. Does Ben Crowe offer you any advice on what’s next for you, including advice on becoming Prime Minister?
CHALMERS:
No, not for one second. I’ve never discussed that. Never been anything that we’ve talked about. But without kind of going into every element of it, what Ben does for athletes and the bit that I’m trying to kind of understand from his world is he really tries to help people understand where this opportunity fits in in how you see yourself because in doing that, you recognise how remarkable this chance is. I’m sure you all feel it when you see your byline in the paper or online, you have moments where you realise what a wonderful chance we have and we don’t want to waste it and so Ben helps me not waste it.
MALEY:
Just a very quick follow‑up question. I mean, you talk about that almost sense of imposter syndrome, that you’re not supposed to be here. Is that something that stays with you? And does someone like Ben Crowe help you overcome that or come to terms with it?
CHALMERS:
Probably not perfectly in those terms, but it’s not lost on me that there is a kid from Logan City who gets to be the Treasurer of Australia, put it that way. And I draw a lot of inspiration from my local community, as probably a lot of members here do. And so I don’t see it in those kind of – almost kind of negative terms. I see it as the wonder of this opportunity that we have to go from a community like mine, a family that had no involvement in politics, to discover that there’s this chance that we have to do something really meaningful and really substantial and to try not to waste that.
MALEY:
Thank you so much for being with us, Treasurer. We know how busy you are and we appreciate you making the time. And thank you to my 2 co‑stars or co‑hosts.
WRIGHT:
No stars. We’re not stars.
CHALMERS:
Thanks everyone.