JOHN MACKENZIE:
This is Jim Chalmers, the Federal Treasurer - good morning.
JIM CHALMERS:
Thanks for having me on your show, Macca. It’s a real privilege.
MACKENZIE:
Jim, good to have you up here. Tell me about the visit. What inspired it?
CHALMERS:
Well, as you said, I’m a proud Queenslander and I do my best as the nation’s Treasurer to get to regional Queensland as frequently as I can. And I’m quite excited about the economic prospects here in Tropical North Queensland in particular, and partly for the reasons that you identified. Now, there is a lot of investment, working closely with the Palaszczuk government to invest in the local economy, so that we can recognise that if we want our national economy to go well, we need to invest in regional economies like this one. It’s a really, really important one. So I’ll be here at the Marine Precinct expansion with local state member Michael Healy. But I’m also going to convene leaders from the tourism industry at a lunch with the Tourism and Transport Forum, because I think, between those two industries – tourism obviously crucial here but also getting the Marine Precinct right – I think that is a real vote of confidence in the local economy and a sign that we’re prepared to work with locals to invest in the economy so we can create good jobs.
MACKENZIE:
Yeah, Jim, it’s interesting you bring tourism into the picture too. I’m so pleased you’re down there at the Marine Precinct, there’s so much exciting news there but there’s still operators up here suffering. I mean, it was a dreadful setback for tourism operators, they still haven’t recovered. There are still challenges out there. It’s interesting because Margy Osmond is up here today. You may know Margy - it would be good for you to catch up with her, because there’s a lot of encouraging news out there.
CHALMERS:
Yeah, I do know Margy, and I really value her advocacy for what is a crucial sector not just here but around Australia. So Margy will be at the lunch – in fact, I think Margy has put the lunch together. So that will be a good opportunity to have a yak with her about tourism. But I think – and Margy would say this too and certainly when I’m here as frequently as I can - what people say is: let’s make sure that all of our industries are strong, we don’t want all of our eggs in one basket. So even in this relatively brief visit today, the opportunity to talk about shipping and investing in the Marine Precinct at the same time as we invest in tourism and transport here in the Tropical North. I think that’s a good indication of our willingness to talk to people on the ground, to talk with the peak organisations, but most importantly to invest in the local economy so we can make it as strong as it can be.
MACKENZIE:
Let me take to you to page one of The Australian today – I’m sure you would have glanced at it, at least, Jim – it says here that households and businesses face extended power price pain into next year after the energy market operator revealed the cost of generating electricity rose 31 per cent in the three months to June. It goes on to say as families on the east coast are hit with sky‑high winter electricity and gas bills, the energy market operator today will announce the second‑highest wholesale price spike on record for a June quarter. The huge quarter‑to‑quarter jump in wholesale electricity prices, a key component in determining how much household and business bills will rise, was recorded despite price caps on coal and gas, and the strengthening of global supply chains following Russia’s invasion of Ukraine. Can you step us through this crisis and how we might emerge from it?
CHALMERS:
Yeah, I can, definitely. First of all, it’s important to acknowledge and recognise that this is one of the major cost‑of‑living pressures that people are confronting - there’s no use pretending otherwise. But the numbers that we’ve seen today in The Australian and elsewhere, those numbers would have been much higher were it not for the price caps that we’ve put in place. But also, we’re working with the Palaszczuk government to provide some electricity bill relief as well, off people’s winter bills. And so we understand and acknowledge that this is part of the inflation challenge that we’ve had in our economy for a while now. That’s why a big part of the Budget that I handed down in May was to provide some assistance to take some of the sting out of these high electricity prices to make life a little bit easier for people. But there’s a more fundamental issue at play here as well, and that is – and I don’t want to get kind of too partisan about it on your show, Macca – but we’ve had a decade now where there hasn’t been enough investment at the federal level in our energy market. So more capacity was coming out of the market than was going in. And to some extent what we’re seeing now is those chickens coming home to roost. So at the same time as we provide a bit of help for people to get them through a difficult period, we’re also investing in the energy market more broadly so that it can become more resilient to these sorts of international shocks that we see when things happen like the Russian invasion of Ukraine.
MACKENZIE:
Yes. But I need to just stick with – stay with this matter for a moment because it took my breath away - Brisbane households have been slugged the highest electricity price increase of all capital cities, with new inflation data showing the cost is more than 25 per cent higher than in June last year. I mean, that is staggering.
CHALMERS:
Yeah, it’s certainly part of the pressure that people are facing. And, again, I acknowledge that, I understand that. And so when we sit down to put a budget together, as we did in May, one of the highest priorities in this cost‑of‑living package that we released – which does have, as you said in your introduction, assistance with out‑of‑pocket health costs and Medicare and early childhood education – but a big part of it is this electricity bill relief, at the same time as we put the price caps in place. And what that means is these price rises that people are confronting in their household budgets would be much higher and much worse were it not for the action that we’re taking.
MACKENZIE:
Now, just briefly – I want to take you back to the Marine Precinct - it’s something, there’s been a lot of work going on this. The community has been very much involved in getting the dredging done. We eventually got a project completed – not quite what we’d hoped for, but it’s there. And we talked to Commander Alfonso Santos – I hope you get a chance today actually, he’s a delightful bloke – but he’s so proud at what’s happening in our port, the future really is very exciting. You know about all the extra equipment that’s been fitted. You may know about – I think we had 17 ships pulled in there just the other day over the weekend from various countries. But Alfonso was clearly beaming, if you like, verbally on the radio programs. So please catch up with him today. He’s a delight.
CHALMERS:
I’ll look him up. I’ll make sure that I try and find him out there in the precinct. But really we’re excited about it too, and we think that this is a big part of the future of the economy here in Cairns and the Tropical North more broadly. And that’s why I think we’re investing something like $180 million, the state government similarly. We actually put a bit more into that in the May Budget, and I was proud to do that because I do see this as a genuine vote of confidence in the local economy and the local community. And I think that precinct is really going to deliver in spades when we get all this investment flowing. Already there’s a lot of good things happening there and we want to be part of it. And, really, the main reason why I’m here is to go out there to speak with the people at the precinct, to see where our money and our investment is flowing. And our intention here is to get the building started by the end of the year, weather permitting. I know weather is always a big part of the story here when it comes to building projects. But weather permitting, we’d like to get it started before the end of the year so that we can add to that really quite tremendous success story, that exciting story, out there at the precinct.
MACKENZIE:
Yes, exactly. I know you’re going to get dragged away in just a moment. We’ve got another concern up here. It will involve you – obviously tangentially – but homeowners in Cairns have reported a doubling in their insurance premiums despite being promised relief through that Cyclone Reinsurance Pool. Now, a rep for the Insurance Council Australia said the Northern Australia reinsurance pool is designed to give large insurers until December 31 this year – it’s only a few months away – to have all the cyclone reinsurance contracts in the pool. Smaller insurers have to December next year. Now, the quote reads: ‘This means policyholders in Northern Australia should expect to see an impact on premiums only once insurers move their reinsurance contracts into the pool which is a complicated and time‑intensive process.’ You know, Jim, there’s still so many question marks over this bloody thing, and it’s been going for years.
CHALMERS:
Yeah, we’re trying our best to implement this reinsurance pool. We said before the election that we’d implement our predecessor’s policy on this, and we want to make sure that we get it right. And I know that something like this often throws up a series of implementation issues, but I want to assure your listeners we want to get it right. We want to get it bedded down and we want it to make a difference here. But in addition to that, we also want to invest more in mitigation, natural disaster mitigation, whether that’s at the community level or whether it’s the extra $20 million that my colleague Murray Watt has put into the Household Resilience Program. So we see that as a big part of the story too. If we make our homes and our communities more resilient, we can make people safer. We can ideally also put some downward pressure on premiums at the same time as we try and implement this reinsurance pool that to get that – that was put in place before we got to government.
MACKENZIE:
Just before you walk away, it reads, The Australian, page one, ‘A sharper than expected drop in inflation to 6 per cent in the year to June raising hopes the Reserve Bank will hold fire next Tuesday.’ What’s your prediction?
CHALMERS:
I don’t make predictions about the Reserve Bank. I think that’s a useful convention that treasurers of both political persuasions have stuck to and I have stuck to. But I was pleased to see moderation come off a bit in yesterday’s numbers. I think it’s worth remembering that people are still under the pump, as you know, and inflation is higher than we’d like it to be but it is moderating. We are making progress in this fight against inflation. The Reserve Bank’s got its part of the job to do. My part of it is to have a responsible budget, provide this cost‑of‑living help and also to invest in the economy in ways we’ve been talking about - in our case with the Marine Precinct - so we can make the economy stronger and the budget stronger, and that’s how we take pressure off inflation. So, I’m quite pleased to see that we’re making progress on all of those fronts. Inflation is coming off, but it’s coming off a pretty high peak and so we’ve still got a way to go.
MACKENZIE:
Excellent update today, Jim Chalmers, thank you. And say hello to Margy at lunch.
CHALMERS:
I’ll do that. I’ll say hello to Margy, and I’ll say hello to them out at the precinct too, and I’ll say Macca sends his best.
MACKENZIE:
Yeah, Alfonso is his name. He’s a delight and he’s got a great story to tell you. Good on you, Jim. Thank you.
CHALMERS:
Thanks very much.