KIERAN GILBERT:
I want to go live now to the Treasurer, Jim Chalmers, who joins us on today’s National Accounts number. This number has come in below what the RBA had thought and had forecast, below market expectations. I know you say we’re on track for a soft landing, but for many households it does not feel like that, does it?
JIM CHALMERS:
I acknowledge that, Kieran. Even as we make welcome progress in some of the key economic indicators, inflation coming down, wages growing, the tax cuts rolling out, we know that people are still under substantial pressure. We know that the national data, as it improves, we know that that doesn’t always directly translate to how people are feeling and faring in their own household budgets. That’s why one of the really encouraging things about today’s data, probably the most important element of what we saw in the national accounts is what’s happening with incomes. That combination of moderating inflation, growing wages, and the tax cuts rolling out means that real household disposable income is growing again on a per capita basis. That’s a good thing because elsewhere in the economy we’re seeing a lot of weakness. As you rightly point out, this GDP growth number today is below what economists were expecting, it is a weaker economy than was anticipated. But we are seeing that growth in real household disposable incomes again on a per capita basis and that’s a good thing.
GILBERT:
For 7 quarters, though, when you look at GDP measured on a per capita basis, things have been, they’ve been sinking. So, you know, for day‑to‑day lives for households, the kitchen table budget, it feels like they’re in a recession, doesn’t it?
CHALMERS:
People are under substantial pressure, as we acknowledge, have acknowledged at every turn and the choice that we have as a government in acknowledging that pressure that people are under is whether or not you do something about it. Our political opponents, they’d do nothing about it, people would be worse off as a consequence. We’ve taken a different approach. We’ve rolled out meaningful cost‑of‑living help in the most responsible way that we can. We see the impact of the tax cuts in these numbers today but energy bill rebates, cheaper medicines, cheaper early childhood education, rent assistance, fee‑free TAFE, getting wages moving again, this is a really important part of our response to the cost‑of‑living pressures that people are still under. And again, you see that in the income measures in the National Accounts which were released today. We know people are doing it tough, but we’ve been working very hard to turn that around. When we came to office living standards were falling very substantially, we’ve worked very hard to turn that around but we know that people have got a lot of ground to make up in their household budgets.
GILBERT:
What do you say to the critics of yours and the government that where you’re basically seeing the RBA have to delay rate reductions because of how much you’re spending?
CHALMERS:
First of all, I’m very careful not to put words in the mouth of the Reserve Bank Governor. I think one of the welcome developments in recent times has been the opportunities that Governor Bullock and other senior members of the bank have taken to explain how they’re seeing the economy and how they’re thinking about it. But I think it’s hard to justify the position taken by our critics that the economy is running too hot. We hear that from time to time from Angus Taylor and Peter Dutton and others. There’s nothing in these figures which would suggest that. Consumption is flat, discretionary consumption went backwards again, people are under substantial pressure. And so the investments that we’re making are all about helping people with the cost of living, fighting inflation and making our economy more productive. And if you think about public spending in this new data today, and some of the data that we saw yesterday, most of the increase in public final demand is the states and the biggest part of the Commonwealth contribution is actually defence spending. So if our critics and opponents think there’s too much spending and the biggest part of that is defence spending, let’s hear what Peter Dutton is proposing when it comes to winding that back because that’s the biggest part of the numbers we saw today when it comes to government investment.
GILBERT:
When it comes to the election, it’s going to come down to really the argument that the Coalition will make ‘are you better off than 3 years ago?’ Many, the vast bulk of Australians aren’t. Your message obviously has to be the next 3 years, things are going to turn, things are going to get better. How do you make that case? How do you prosecute that argument?
CHALMERS:
A couple of things about that. First of all, people need to acknowledge that living standards were falling very substantially when we came to office. You don’t always get that sense from some of the commentary that’s been written in recent times but living standards were falling very, very substantially when we came to office. Real wages were falling when we came to office, and we’ve been working very hard to turn that around. And people would be much, much worse off and the economy would be much weaker without our cost‑of‑living help and without our investments in strengthening the economy at the same time as we get the budget in much better nick and knock out a couple of surpluses and $150 billion less debt than what we inherited. But I think the future is the most important part of this, and people need to understand that the biggest risk to household budgets, and the biggest risk to the economy more broadly is a Coalition government. And that’s because we know their record: they come after Medicare, they come after wages, they didn’t support the cost‑of‑living help. So people would be much worse off if they had their way, and the economy would be weaker. That’s why people should understand the risk that is posed to their household budgets and to the economy by Peter Dutton and Angus Taylor. We’ve taken a very different approach. We are going for a soft landing in our economy. We prefer that than cleaning up after a hard landing. They want to pull $315 billion out of the economy. They don’t want to support people who are doing it tough. We’ve taken a different position, and our position has been vindicated by the fact that growth has been very weak in our economy. Inflation is moderating, we’re creating jobs, we’re maintaining the strength in the labour market, and that’s what responsible economic management looks like.
GILBERT:
Is there a chance, if you look at that number, I know you’re saying things are softer than many had expected, but if you look at that retail sales number recently, is there a chance that things are coming back much more forcefully and strongly than, you know, other economists and you might be hoping right now?
CHALMERS:
I think when you look at those retail figures, they’re often pretty volatile month‑to‑month and you have sales and all kinds of different elements of that. You’ve got to look at the longer‑term picture. And I think that the household sector has been really weak in the data that we’ve had for most of this year. Look at what’s happening consumption. Consumption is flat, it goes backward when it comes to discretionary consumption and that shows the impact of that combination of interest rate rises, cost‑of‑living pressures and global economic uncertainty. That’s why the focus for us has been getting wages growing again, getting inflation down, providing that cost‑of‑living relief, including through the tax cuts that our opponents wanted to call an election over. And what we see in the data today is we’re making some progress, we’re not carried away by that we know people are still doing it tough, but there has been some good progress made. And the alternative to not help people with the cost of living would have been diabolical in these circumstances.
GILBERT:
Treasurer Jim Chalmers, thanks for your time, as always. Appreciate it.
CHALMERS:
Thanks for your time, Kieran.