JAMES GLENDAY:
So, let’s get more on this story and go straight to the Treasurer, Jim Chalmers. Treasurer, good morning.
JIM CHALMERS:
Good morning.
GLENDAY:
We’ve got so much to talk about and so little time, so let’s start with Rex. Its services, those key regional areas. What’s your government doing to ensure that those flights do not stop?
CHALMERS:
Well, these are very concerning developments for Rex, but most importantly for its workers and also the communities that it serves. And as we understand it, overnight the company has communicated to its customers that those regional services will continue. If that’s the case, that will be a big relief, I think, for a lot of people, because servicing these regional routes is really important for regional communities and for regional economies, we know that.
The Prime Minister, Minister King, the Premier of NSW have all made a similar point, which is that we want to see those regional services continue. Minister King, Catherine King is also talking with the other airlines to make sure that if there are job losses, that the other airlines can re‑employ and re‑deploy some of these workers as well.
So, we’ll see what the company says later today and through the course of the week. Obviously, as a government, we are prepared to play a constructive role, helping people to find jobs, but also, we want to make sure that those regional services continue because they’re so important to regional communities and regional economies.
GLENDAY:
Ok. In terms of a constructive role, does that mean some taxpayer support to keep those regional routes operating? And I know it’s not your portfolio, but surely, you’ve been involved in discussions behind the scenes on this?
CHALMERS:
Look, obviously there have been discussions, but I don’t want to pre‑empt the company’s statement. You know, we want to hear next from the company. They’ve indicated that they will be making a statement before long. We also know from the contact they made with customers overnight, as I understand it, that these regional services will continue.
That’s our top priority, to make sure that we can continue to serve and service regional communities and regional economies because we know how important it is. We’re prepared to play a constructive role. The nature of that I don’t want to pre‑empt, before we hear from the company.
GLENDAY:
We’re going to be hearing from administrators later in our program. Treasurer, the Prime Minister seemed to criticise Rex for competing on busy routes like Sydney to Melbourne. But some are saying that your government should have acted on the recommendations of a former Productivity Commissioner to give the airline better access to peak slots in Sydney. Should that have happened?
CHALMERS:
I think we’ve got a good record, whether it’s Sydney Airport or the white paperwork that Catherine King’s been doing. You know, this is a difficult industry, but we want to make sure it’s as competitive as possible.
Our priority right now after these concerning developments at Rex is those regional routes. But we know that there’s always work to do to make this sector, a really important sector of our economy, as competitive as it can be.
That means involving the ACCC when that’s appropriate. It means the hard policy work that’s being done in the context of the Aviation White Paper, but also the changes made around slots, for example, at Sydney Airport. All of this is really important. It’s a difficult industry, and we are playing a meaningful and constructive role in making it as good and as strong as it can be.
GLENDAY:
I’m sure we’ll find out more about what that constructive role is later in the day. On another topic, the June quarter inflation figures outlaid this morning have been described as the most important of this parliamentary term. You’ve said we need to be realistic about what to expect. Are you preparing us for bad news today?
CHALMERS:
The point I’m making is that most people expect inflation in the June quarter to have been sticky and stubborn and more persistent than anyone would like. But we need to remember that inflation has come down really considerably since we were elected. When we were elected, it had a 6 in front of it.
We’ll see what the numbers say later on this morning. We also know from around the world that even as inflation has moderated really substantially here in Australia, it rarely moderates in a perfectly straight line. It zigs and zags on the way down. That’s been the experience.
GLENDAY:
If it – sorry to interrupt, Treasurer, but if it zigs or zags in the wrong direction, would you expect another interest rate rise?
CHALMERS:
Well, a couple of things about that. I mean, first of all, as you’d expect, you know, I don’t pre‑empt decisions taken independently by the Reserve Bank and its board, and I don’t give them free advice. They will weigh up a whole range of factors in our economy, not just today’s inflation numbers, but also the conditions in the economy more broadly. They’ll do their work independently. I take responsibility for my part of this.
My part of the fight against inflation is turning those big Liberal deficits into big Labor surpluses. The Governor of the Reserve Bank says that’s helping in the fight against inflation. We’re also providing meaningful and substantial cost‑of‑living relief but doing it in the most responsible way we can, to put downward pressure on prices in our economy.
Now, if the inflation figure today is a bit persistent, a bit sticky and stubborn, more so than we would like. That would obviously be an unwelcome outcome, but also an unsurprising outcome, given the pressures coming at us from around the world, but also the pressures here at home, including some temporary factors around fruit and vegetables and travel costs and the like.
GLENDAY:
Yeah, just on spending then, Treasurer, we’ve had the modified Stage Three tax cuts come into effect, and some states are also giving out energy rebates to households. If spending was lower, would inflation therefore be lower? Don’t governments have more of a role to play in this space?
CHALMERS:
I think it would be a very big mistake to pretend, as our opponents sometimes do, that budgets are the primary determinant of prices in our economy. That’s frankly ridiculous. We’re talking about a tiny, tiny sliver of a $2.6 trillion economy with all kinds of influences and pressures. But we can be helpful.
That’s why the 2 surpluses are so important. It’s why that cost‑of‑living relief, which is responsibly delivered, tax cut for every taxpayer, energy bill, relief for every household, cheaper medicines, rent assistance.
The way that we’ve designed our cost‑of‑living package is not just to not add additional pressure to inflation, but also when it comes to energy and rent and in other ways, to put downward pressure on prices in our economy.
GLENDAY:
Well, we’ll see more later this morning when those figures come out. Just finally, Treasurer, this is outside your portfolio, but Israel says it’s carried out an airstrike on the Lebanese capital, Beirut. Of course, tensions between Israel and Hezbollah have been increasing over the past few days, dramatically. How worried are you about the possibility of a wider Middle East war?
CHALMERS:
I think any of these developments which point to the possibility of a wider regional conflict are very concerning for us here in Australia and indeed around the world. Primarily, the human consequences of that would be diabolical, and that’s our major focus. We don’t want to see more innocent lives lost to this conflict in the Middle East. It would also have economic consequences.
We’ve already seen shipping costs triple since November last year. We’ve seen oil prices up about 10 per cent since this time last year as well. And that’s putting upward pressure on inflation here in Australia. So, primarily our concern is for the human consequences, but there would be economic consequences, too, of a broader regional conflict.
GLENDAY:
All right, Treasurer Jim Chalmers. It’s a massive day, not just with Rex, but also the inflation figures. And I think you’re off to Fiji, too, so we better let you go. Thanks for speaking to us this morning.