James Glenday:
Welcome back to the show. On this Thursday morning, you’re watching News Breakfast. It is always lovely to have your company.
Emma Rebellato:
We’ll get an update on the latest with the global tsunami alerts in just a moment. But first, borrowers will be hoping the latest inflation data will be the confirmation the Reserve Bank needs to cut rates next month.
Treasurer, Jim Chalmers, joins us now from Canberra. Treasurer, thanks for joining us this morning.
Jim Chalmers:
Thanks for having me back on, Emma.
Rebellato:
So homeowners are hoping for a rate cut. Are you worried though that if there is a cut it will encourage more investors into the market, and that will price out people wanting to buy their own home?
Chalmers:
I’m not going to pre‑empt decisions that the Reserve Bank takes independently. I think rate relief is welcome, certainly when interest rates were cut twice already this year, that provided some very, very welcome rate relief for millions of Australians with a mortgage. That’s how we see it, but I don’t want to make predictions or pre‑empt the decisions that the Reserve Bank will take.
What yesterday’s numbers showed when it comes to those inflation numbers is really quite remarkable progress. The progress that Australians have made together over the course of the last 3 years on inflation has been outstanding because we’ve been able to get inflation down at the same time as we deep unemployment low, we’ve got real wages growing again – but it’s never mission accomplished, because the global environment’s uncertain, we’ve got some persistent structural issues in our economy, growth in our economy is soft and people are under pressure. And that’s why the primary goal, the main priority of the first 2 weeks of the parliament sitting has been to roll out more cost‑of‑living help.
Rebellato:
Treasurer, your productivity roundtable is on in just a few weeks. Will you be looking – and we know housing going’s to be on the agenda – will you be looking specifically at property investors. Do you want to change the capital gains tax discount?
Chalmers:
That’s not why we’ve put this Economic Reform Roundtable together. It’s all about making our economy more resilient and more productive, and our budget more sustainable.
I expect and I hope that building more homes is one of the central considerations of the Economic Reform Roundtable. I’ve been working very closely with Minister Clare O’Neil with a number of people who will be at the roundtable and with a whole range of people around the country.
We’ve all got an interest in building more homes sooner; that’s the government’s priority. The primary focus there, I think, at the roundtable will be around how we speed up approvals and get the zoning for housing right, because we desperately need more homes. The Commonwealth government has come to the table with tens of billions of dollars in investment, our political opponents want to cut funding for housing, but overwhelmingly, people want to see where there’s common ground to build more homes, and that will be the focus.
Rebellato:
Treasurer, one of the stories we’re following today is the latest Productivity Commission report on closing the gap. Again, so many targets are showing so little progress, and some are worsening. How would you characterise this? Is this a failure by governments?
Chalmers:
We need to do much better. I think from memory, 10 of the 15 measures, we’ve seen a little bit of progress in the report released overnight, some have gone backwards in worrying ways.
I think every member of the government, and I think many Australians would acknowledge that we need to do better, and the reason why these reports are so important is because they make sure that we keep governments and the community more broadly up to the mark. We need to do better when it comes to closing the cap.
Minister Malarndirri McCarthy is working in her characteristically diligent way with all of the stakeholders, all of the communities to try and turn these numbers around. There has been progress in 10 of the 15, there has been some worrying outcomes in the rest, but overall, we need to do more and we need to do better.
Rebellato:
Treasurer, we know the issue in the Middle East is a big talking point in parliament and in the government at the moment. Is it now inevitable that Australia will recognise a Palestinian state; do you want to see that happen?
Chalmers:
I do, and I think it’s a matter of when, not if Australia recognises a Palestinian state for a long.
Rebellato:
So could we see it before September, before that UN meeting?
Rebellato:
I don’t want to put a timeframe for it, it’s been a long‑standing bipartisan policy that we see a two‑state solution in that part of the Middle East. From my point of view that progress that has been made, that momentum that we’re seeing in the international community is welcome, but it’s also conditional.
There are a number of obstacles still in the way to recognition of a Palestinian state, for example, the treatment, the release of the hostages, making sure that there’s absolutely no role for Hamas. These are the sorts of things that the international community is working through.
That statement that came out yesterday that we signed as Australians via our Foreign Minister Penny Wong is a really important one. It condemns the terrorist act on 7 October, it demands a ceasefire, the release of hostages and access for humanitarian aid; it encourages countries to work towards recognition as a really important part of that two‑state solution, and the reason we want to see a two‑state solution is because Israeli families and Palestinian families need and deserve to be able to raise their kids in peace, and that’s what this is all about.
Rebellato:
Treasurer, let’s stay with issues overseas, and the issue of tariffs. Now, Donald Trump has now said if he’s not negotiated with a country that they’re now looking at between a 15 and 20 per cent tariff. Is that what you’re working towards now; forget about 10 per cent, it’s now looking 15 to 20?
Chalmers:
We haven’t heard differently from the 10 per cent baseline that’s been levied on Australia; obviously we continue to engage with the Americans on this. It’s one of the main issues playing out in the global economy, it’s a major source of uncertainty in the economy, whether it’s what’s been said overnight about India, whether it’s the back and forth between the US and China or the tariffs levied directly on Australia. We’ve got the baseline rate as far as we are aware, and as we understand it, which is 10 per cent.
Rebellato:
So you don’t expect that to move?
Chalmers:
I think it would be a brave person to assume that there won’t be – whether it’s with other countries or – there will always be more announcements about this. These tariff announcements are a moving feast. But our understanding, our expectation is we get the baseline.
We think that the best outcome is zero because these tariffs are an act of economic self‑harm. We see inflation is going up in the US. Earlier in the year they had slowing growth, interest rates on hold again in the US overnight, they’ve got higher interest rates than we do in Australia.
We think these tariffs are bad for the American economy, certainly bad for the global economy. We’re better placed and better prepared than most countries to deal with that, but we won’t be immune. We’ll continue to engage with the Americans on it.
Rebellato:
Treasurer, just to change things up a little bit, this is possibly the hardest question you’ll be asked today, we’ve been talking about theme songs. Do you have a favourite theme song?
Chalmers:
It’s hard to go past the themes – the 2 theme songs in the Rocky movies, or the theme song to that great Eminem movie, 8 Mile. I’m a hip‑hop guy –
Rebellato:
Oh, yeah.
Chalmers:
– as James on the couch knows, but I think the best theme song, now that you put me on the spot, the best theme song I can remember is when Powderfinger, These Days kicks in during that wonderful Australian movie, Two Hands.
I think These Days by Powderfinger came in at number 14 on the week in the Triple J Hottest 100 Australian songs. Like everyone who loves Powderfinger, I think that should have been higher. But that’s an amazing theme song, and that’s an incredible, Two Hands, Heath Ledger, Bryan Brown, Rose, all the great Australian actors and a wonderful Australian theme song too by Powderfinger from Brisbane.
Rebellato:
Treasurer, thank you so much for joining us this morning, we appreciate it.
Chalmers:
Thanks very much.