KARL STEFANOVIC, HOST:
Treasurer, good morning. Thanks for your time. The next 24 hours are going to be crucial, aren’t they? This is a crisis, potentially across multiple states?
JIM CHALMERS, TREASURER:
It’s a very serious situation for the economy and for employers and for households right around Australia. There’s no use beating around the bush about that. We’ve got spiking gas prices, spiking electricity prices, and spiking prices for petrol as well. And so that will put extreme pressure on people and on our national economy as well. We will obviously engage with the major energy companies. I’ve already had a discussion with Chris Bowen, our Energy Minister this morning. We’ll engage with Madeleine King as well, our Resources Minister, and with industry as well. But there’s no use beating around the bush. These challenges in the energy market are part of this cost of living crisis that we’ve inherited. It extends beyond energy into building supplies and all the rest of it. We’ve got people’s real wages going backwards at the same time. So, this is a serious set of economic circumstances.
STEFANOVIC:
Well, supply – first let’s deal with that - because that’s probably the most urgent thing to guarantee. How will you guarantee supply over the next few days, or is that impossible for you to do?
CHALMERS:
Well, it’s important to recognise that there’s not kind of one measure that can fix this overnight. This is a big problem. It’s a consequence of a perfect storm of international and domestic factors, but it’s also the costs and consequences of almost a decade now of energy policy chaos. And so, we want to work to turn that around, to inject some certainty into the energy market to make transmission more effective, to get cleaner and cheaper energy into the grid. That will take a little bit of time. The more immediate options will obviously be part of a discussion with the companies and with the relevant ministers as well, and I don’t really want to pre‑empt those discussions.
STEFANOVIC:
But something’s got to happen, and something’s got to give in the next little while because people may not have supply. I do find it astounding that we produce and export - a huge amount of the world’s natural gas - and we’ve run out at home. That doesn’t make any sense.
CHALMERS:
Gas is really important to our economy. There have been challenges in the gas market at times over the last decade or so. Ideally there would be more certainty. Ideally there would be more energy supply - particularly cleaner and cheaper energy. Ideally, we’d have better transmission. But what we’re seeing right now, we’ve seen some changes, some near‑term changes in the energy market here with retailers. We’ve seen – obviously it’s colder right now and so people’s energy needs are higher. We’ve got the implications of Russia and Ukraine. But I think what sits over the top of all of that is there has been under our predecessors almost a decade of energy policy failure and chaos, and that means that a lot of these issues have been left unattended for too long.
STEFANOVIC:
Okay. So, isn’t it a very simple fix? And look, let me assure you, I’m no expert on this. But if we’re producing so much of it and exporting it, don’t you do what WA has done for years and just guarantee local supply if there’s a shortage?
CHALMERS:
Well, those considerations are what led to the so‑called trigger, which is one of the policy mechanisms available to government. What that does is, that changes the export arrangements when there’s issues in domestic supply. I don’t want to pre‑empt any of those kinds of discussions…
STEFANOVIC:
But that’s a no‑brainer, right?
CHALMERS:
…well, it brings its own challenges as well.
STEFANOVIC:
Okay.
CHALMERS:
It has its own challenges and it’s not immediate. There’s a series of processes that we’d need to go through.
STEFANOVIC:
But you’re open to it?
CHALMERS:
We know that the manufacturers and others would like us to pull that trigger. We will engage with them as well. But we need to be upfront and recognise that there’s not one thing that we can do to fix this overnight. It’s a problem that has been developing for a long time.
STEFANOVIC:
You’re not going to have any drama from any Australian if you guarantee local supply. This is not going to be a drama. But you’re saying there might be with the exporters or whatever, but that’s just – to me it’s a no‑brainer. You’re saying also more onshore gas developments. Where exactly would they go and have you held discussions with the states about that, because in the past they haven’t been all that receptive to gas?
CHALMERS:
That hasn’t been the case all around Australia, but you’re right, in parts of Australia it’s been trickier. I was asked about this yesterday, Karl, and I said my view about gas development is it should be based on the science. If it can tick all the boxes from an environmental point of view and a commercial point of view, then that would be appropriate. Gas is an important part of our economy. But even there we’re talking about long‑term development of potential gas fields. So even if we went down that path, that won’t solve these issues that are ahead of us right now.
STEFANOVIC:
Okay. We’ve got some speculation this morning in some publications that when you add that to the growing list of higher priced items, including petrol, power, that wages aren’t quite there - that people are paying in excess of $600 more a month. They’ve got to find that. Where are they going to find it? And what mechanism are you going to introduce in order to take the heat off those prices?
CHALMERS:
We’ve been upfront before the election and after the election, Karl, about this cost‑of‑living crisis. That’s why we supported the measures in the budget from the former government to give some relief at the bowser and also some cash relief and some other forms of cost‑of‑living relief as well.
STEFANOVIC:
Yeah.
CHALMERS:
Our job as the new Government, and my job in the October Budget, will be to bring down a cost of living package that encompasses areas like child care, like cheaper medicines, like our efforts to get power bills down, like our efforts to get real wages moving again because this is a cost of living crisis. Our responsibility is to work hard to address it.
STEFANOVIC:
Yep.
CHALMERS:
None of these solutions come cheap to the Budget. We are inheriting more than a trillion dollars of debt from our predecessors, and so we have to weigh up our priorities. But what Australians should expect in October is cost of living relief that comes in after the current tranche of relief runs out.
STEFANOVIC:
One final question – a busy morning for you, and I appreciate you spending time with our audience this morning, and they do as well – Justin Hemmes is also saying this morning that his hospitality empire, along with just day‑to‑day small businesses, are struggling for staff. They can’t get them. I mean, this is a crisis for them and for the entire industry. What are we going to do to alleviate those staff issues and how long is it going to take for that to happen?
CHALMERS:
Yeah, well there’s three ways, just very quickly. Obviously, there’s a role for training. There’s a role for cheaper child care so that we can – if people want to work more and earn more - we can tap that really big workforce of parents that find it too hard because they get priced out of work by the child care system. Thirdly, we’re up for a sensible conversation with business about migration settings to make sure that they’re appropriate so that they’re not a substitute for doing those other things here at home.
STEFANOVIC:
Excellent, Jim. Thanks for your time this morning, Treasurer. Appreciate it.