JOHN STANLEY:
The Treasurer joins us on the line now. Jim Chalmers, good morning to you.
JIM CHALMERS:
Good morning, John. Happy New Year.
STANLEY:
And to you too. I just ask first of all because you've seen the stories today, and I'm sure you'd been involved in the decision, why did the Government go against the health advice to bring these tests in for people coming from China?
CHALMERS:
We took this decision, John, out of an abundance of caution and consistent with what a lot of countries around the world are doing. US, Japan, India, South Korea, Malaysia, Italy, Spain, England, and France are all taking steps a bit like this one - so an abundance of caution. We work closely, of course, with the chief medical officers around Australia. They've got a number of other proposals to strengthen even more the surveillance that we do when it comes to monitoring this virus as it relates to travel. So an abundance of caution.
STANLEY:
An abundance of caution is right but you can confirm that Paul Kelly [provided] written advice he didn't think this was needed?
CHALMERS:
I think as part of that advice one of the things that the Chief Medical Officer was talking about was that there's very limited official data out of China about the situation and that we do need to boost our surveillance efforts. Now the Government took this decision based on a range of advice that we received around the traps. We wanted to err on the side of caution.
STANLEY:
So just on that, this is advice other than the chief health officers' and the state health officers'? So other advice, you say, around the traps?
CHALMERS:
As I understand it, the Chief Medical Officer's advice is available to people this morning in the media - that's what you're referring to. The point that I'm making is that we have to factor that in and a range of other ideas and influences as we take these decisions. But even the Chief Medical Officer in that advice he provided to Government talks about how we do need more surveillance - this is of a piece with that. Government takes decisions in the best interests of the Australian people. We think that's what this is and we'd rather be cautious about it than not.
STANLEY:
Do we know how it works because you've got the airports and others saying they're not sure - is it PCRs, is it rapid antigen tests, what happens if someone turns up with symptoms, are they let into the community - we don't know any of that, do we?
CHALMERS:
There's a whole bunch of information made available now on the Health website, the Australian Department of Health website this morning. There's a whole bunch of fact sheets and the like that people can check out if they're uncertain about the arrangements, and if there's more clarifying that we need to do in addition to that obviously we'll do it.
STANLEY:
Is this risky because now it's public that you've gone after all of the efforts over the successive governments saying we're relying on health advice, clearly now it's other than health advice?
CHALMERS:
No, I don't think that's the case, John. We factor in the health advice of course. We work very closely with the chief medical officers, federal and state. We'll continue to do that - we've got a mountain of respect for them. And every decision that we take is influenced by their advice. In this case, we decided - the Health Minister, the Prime Minister and others - the Government decided that we wanted to err on the side of caution. I think Australians understand that. This is not necessarily a particularly draconian thing that we're putting in place here - simply a test and a negative test in order to come here from those places where the waves are most acute and consistent with what all of those countries that I rattled off before are doing.
STANLEY:
Because there's a smell, isn't there of everyone else is doing it so it's more political than health based?
CHALMERS:
I don't see it that way. The Government's got to make the best decisions that they can based on the best available information that we have before us. We try and do that in a considered way. We work closely with the experts in coming to those kinds of outcomes.
STANLEY:
Okay, let me get to the question of the Chinese economy. You've talked about this because we know, and they're talking potentially a billion people with COVID in the not-too-distant future - that has a big effect on their economy, the factories that we rely on for the supply chain. So how serious is that in terms of the impact on us and the world economy?
CHALMERS:
Quite serious. This is one of the main things that will influence our economy in 2023 - China's management of COVID and this really quite extraordinarily large wave that they've got there at the moment is a big thing. Obviously, the war in Ukraine will influence us. What happens in the US, UK and Europe will influence us. What happens with interest rates and when and how they bite here in Australia, and also, the ongoing threat of natural disasters. Those are the big 5 things that will be the biggest determinants of how we fare in our economy in 2023. But the Chinese situation is something that we're monitoring really closely because with a wave of this size, and everything that it means for the Chinese workforce, at the same time, as they're transitioning from COVID zero into a different way of managing the pandemic, then that obviously brings a substantial amount of risk to those supply chains and that has implications and consequences for us.
STANLEY:
Is there anything we can do about that? Are we just relying on what happens there?
CHALMERS:
What we're trying to do, and you can't just flick a switch and do this overnight, we've made a good start on it - but what we're trying to do is make our supply chains more resilient. And we're trying to make sure that where we can do a bit more value-add here then we should. We're trying to work out how we can invest with the private sector through things like our National Reconstruction Fund so that we're manufacturing more things here. But that's a process, you can't just do that in one hit with a click of the fingers, but we need to make our economy more resilient to these sorts of big international shocks and that's what we're working hard to do.
STANLEY:
And the ramifications for interest rates with a lot of predictions about what might happen with that this year. I know as the Treasurer you don't like to forecast this, but is there a chance that we might not get as many as perhaps had been thought not that long ago?
CHALMERS:
No, you're right that I don't get into the prediction game about it. Certainly different people in the market think different things. Some think that there'll be a bit of a pause. Others think there'll be one or two more interest rate hikes to come in the course of the next few months - that's a matter for the independent Reserve Bank. I think one of the big issues here will be almost a fifth of fixed rate mortgages become variable rate mortgages through the course of 2023 - it's a number like that from memory. And so one of the things we're keeping an eye on is when people come off those really low fixed rate mortgages onto a higher variable rate mortgage then that will put a lot of pressure on people. So that's one of the issues at play here and one of the things about interest rate rises is that they have an immediate impact on people who've got a mortgage, but the impact on the economy takes a little bit longer to flow through. And so the middle of the year, I think is where the Treasury expects those interest rate hikes to bite the hardest.
STANLEY:
Twenty-two past eight. We're speaking with the Treasurer Jim Chalmers. You're also talking about population today. We know migration has increased and now got up, back up, to pre-pandemic levels. There's a lot of foreign students coming in. You're saying, looking at that in overall terms, it's not going to be enough to grow the economy. So you think our population should grow even further?
CHALMERS:
No, I think the numbers that we're putting out later this week in the Population Statement from the Treasury are really about what our expectations are for population growth. And my view about population is that migration will always be important to our economy but it should never be a substitute for training Australians for opportunities or making it easier for parents or seniors to do a bit more work if they want to. And we've got to make sure that we can house people and that's why we've got our policy, the Housing Accord to build a million between 2024 and '29. And so all of these things are important but what we're saying here about population today is that there was a big dip, as you'd expect, over a couple of years when we had the COVID restrictions in place. It's now expected to go back to what it was before COVID. But in that dip, there's about almost half a million fewer people that came in that period. And so there's been a dip, it's going back to more normal levels. Our job as the Government is to make sure we get a really sensible migration policy that strikes a really good balance between migration but also training and housing and cheaper childcare and all the other things that matter. Because we've got an aging population, and we need the kind of workforce to support people who need and deserve those services as they get a bit older.
STANLEY:
So what you said with population, so when you say the migration we have at the moment isn't enough to grow the economy, you're not necessarily saying we'll ramp it up even more, you think that within our communities that we have here, you can train people, and we can grow the economy that way without ramping up migration levels even further?
CHALMERS:
I think you need to come at this challenge from a variety of fronts. So you'd have a lot of people in small business listening, John, and they would know that they found it really hard to find workers. And I think the mistake that's made too frequently - as people in the newspapers and elsewhere might say `oh you need to do migration or childcare or skills or housing'. And my point is that you need to do all of these things at once. We've got these big skill shortages and labour shortages in the economy. We want to make sure we're creating jobs and opportunities for Australians but we've got a lot of work to do across all those fronts to get a sensible policy.
STANLEY:
I'm almost out of time, but I would ask you because apparently there's no detail we're told on the Department of Health website about the RAT tests or what's going to apply or how it will work with those people coming in from China. You think that's going up there soon?
CHALMERS:
I'm looking at it now. On health.gov.au resources, publications, COVID‑19 testing - there's a page called COVID‑19 testing requirements for travellers from China, Hong Kong and Macau. If that is in any way insufficient or there's not enough detail for people, then we'll get that feedback and we'll try and provide as much information as we can but it's on the Health website now.
STANLEY:
Thanks for your time. We'll talk again through 2023.