Kieran Gilbert:
CPI numbers are out on Wednesday, you’ve released some analysis. I’m really interested in this. These numbers, you’re looking at the 5 major categories that have driven the moderation in inflation. Number one is energy. What would you say to those that will respond by suggesting that that’s all because of the government rebates, that that’s artificial?
Jim Chalmers:
Hi, Kieran. That’s part of the story, but it’s not the whole part of the story.
Electricity prices would have gone down even without the government’s rebates, but they are an important way that we help people with the cost of living.
If you look at the year to September, the most recent data that we have, the moderation in inflation has been driven by, mostly by 5 things, electricity, petrol, furniture, toys and textiles.
Those have been the big movers when it comes to what Australians have been able to achieve together, which is this substantial and sustained progress on inflation, and that’s what we expect to see in the numbers on Wednesday.
We have made, together as a country, substantial and sustained progress on inflation and Wednesday’s numbers will reflect that. Any headline inflation number with a 2 in front of it will show that inflation has more than halved since we came to office. Any inflation number with a 2 in front of it shows it’s within the Reserve Bank’s target band, and obviously any progress on underlying inflation would be welcome as well.
Gilbert:
And on the underlying inflation, that’s what the RBA looks at. It also looks at unemployment, and this is the debate that’s being had. As you know, I’m sure you get your ear bent on this all the time from economists. But does the RBA need to reduce the level of unemployment at which it believes it is appropriate to start reducing rates? Does it need to? I know it’s technical, but they refer to it as the NAIRU. Do they need to change that?
Chalmers:
First of all, we’ve been making progress on headline inflation and underlying inflation. That’s an important point to remember.
The monthly inflation numbers we got not that long ago showed that we had continued to make that progress on both fronts.
The Reserve Bank takes into consideration both numbers, and you’re right that they take into consideration other numbers in the economy as well, the unemployment rate and in other ways as well.
That concept of full employment is contested amongst economists. We’ve seen a lot of people express a view that they think full employment is a little lower than what Treasury and others have considered for some time now.
I don’t want to say anything which is confused with trying to give free advice to the independent Reserve Bank. They’ll meet towards the middle of February, and they weigh up all of this data that we’ve been receiving in our economy.
The broader point that I would make is Australia has shown that you can make that substantial and sustained progress on inflation without seeing big spikes in unemployment. Other countries have had to pay for that progress on inflation with many more jobless people, and we have been able to avoid that situation.
The overriding story, the overwhelming success of the Australian people over the last couple of years, is we’ve got inflation down, we’ve got wages up, we’ve kept unemployment low, and we’ve got the debt down in the budget as well.
That’s why the election is so important, not just that record when it comes to the economy, but also the choice. The same people who have been under pressure for the last few years in our economy would have been worse off if Peter Dutton had his way on tax and energy bill relief and wages, and they would be worse off still if he wins.
I know you’ve been talking about these schmaltzy videos that Peter Dutton has been making. No summary of Peter Dutton’s experience is complete without pointing out that when he was the health minister, he came after Medicare. When he was in a coalition government, they tried to push wages down, and now he wants to push up electricity prices with this nuclear insanity. That’s the full story when it comes to the choice of this election,
Gilbert:
The number you referred to there that the Coalition would have seen average income earners, $7,200 worse off.
It’s hard, though, isn’t it for a government to say what you avoided, as opposed to what you’ve delivered. I just remember back in the global financial crisis, the Labor government at the time said it’s hard, it was hard politically, to explain to people what they had avoided because of government policy. Is this inherently a problem for what you’re saying here as to what the Coalition would have been, or what the situation would have been, people know what the reality was, and it hasn’t been that easy?
Chalmers:
We understand that. I think we see some of that pressure that people are under reflected in opinion polls from time to time, but as we get closer to the election, the choice really crystallises between the 2 major parties.
We have provided cost‑of‑living help and tax cuts, energy bill relief, and in a number of responsible ways, at the same time as we’ve delivered those 2 surpluses and got that liberal debt down.
It’s up to us to point out to people that if Peter Dutton had his way, they would be thousands of dollars worse off just if you consider the difference in wage growth between Labor and Liberal governments, you consider the position they took on the tax cuts and on energy bill relief, Australians would have been thousands of dollars worse off under Peter Dutton. They will be worse off still if he wins.
That’s part of the choice that people will make when we get closer to the election day itself.
Gilbert:
One of the policies he’s announced recently is that FBT change for businesses to be able to take their workers out for lunch. I spoke to the Hotels Association about 40 minutes ago, and they said on this program that it’s about fairness, that if the butcher wanted to take his workers to the pub for a feed, he can’t claim that, whereas the big consultancy firms, they bring the luncheon into the boardroom. They can claim it. They’re saying it’s about fairness. Is that a fair point?
Chalmers:
First of all, I’ve got a lot of time and a lot of respect for Stephen. I know him really well. I see him quite frequently. My beef is not with Stephen Ferguson, it’s with an opposition that has had 3 years now to come up with alternative economic policies.
The best they can come up with is nuclear madness, which will push up electricity prices and now taxpayer funded long lunches for bosses.
The reason that we don’t support what the Coalition has put forward is they won’t tell people how much it costs or how they’ll pay for it and what they’ll cut to pay for it.
They won’t tell people how they’ll stop it being rorted. They’ve had different stories to tell about golf days and all kinds of other things.
We found other ways to support the small businesses that Stephen and others represent and that we represent, energy bill relief, which Peter Dutton opposed, the instant asset write‑off, which the Liberals tried to hold up in the Senate, we’ve taken actions for small business on payment times, trying to make our economy more competitive with mergers reform.
These are the ways that we help small businesses in our economy, not in this uncosted, unfunded way, which is very open to rorting, and it’s a reminder, really, of the economic mismanagement which was the defining feature of the last Liberal government. They want to go back to all of that waste and rorts.
They won’t tell us how much it costs. They won’t support tax cuts for workers or wage rises for workers, but they’ve got this half cooked idea about tax breaks for long lunches and golf days for bosses, and that’s another part of this choice, the choice that we keep coming back to.
Gilbert:
Since we last spoke, the new President has had Inauguration Day and the 45th President is now the 47th President. Donald Trump is back and tariffs are being implemented. Colombia the latest country to cop it. Are you confident Australia can avoid tariffs from the second iteration of a Trump presidency, like it did the first?
Chalmers:
I’m confident that we can navigate the different policies which come from a change of administration in the US.
We are well placed and we are well prepared to deal with these changes in policies. The economic relationship between Australia and the US is very beneficial to both countries.
The Americans run, for example, a trade surplus with us. That’s been the case since 1952, theTruman administration.
So we’ll work very closely with American colleagues and counterparts to make sure that the change in administration, the change in policies that we expect to see out of DC, that we can navigate them in a way that is consistent with our national interest.
Gilbert:
Do we also need to boost productivity through maybe reconsidering some of the IR changes, where you’ve heard it yourself from the resources sector, BHPs, among others, saying we need to make ourselves more productive and our labour market more competitive, are some of the labour hire changes and so on are going in the wrong direction, as the chief of BHP had argued late last year?
Chalmers:
I don’t believe so. I’ve got a very respectful relationship with the resources sector. I meet frequently and discuss policy matters openly.
We know that they’ve got a different view to us on some of these issues around industrial relations, but I believe, and the government believes, that we won’t make our economy more productive by making people work longer for less, or letting people exploit these kind of labour hire loopholes.
We’ll make our economy more productive by investing in skills and training and human capital, by adapting and adopting technology, by making the most of the energy transformation, by making our economy more productive and dynamic and competitive. These are the ways that we boost productivity in our economy. They are a big part of our agenda, huge part of our agenda.
I work closely with all parts of the economy to bed down that productivity agenda. And there will be more to come.
Gilbert:
Treasurer, we’ll let you go. Know you’ve got a few other commitments. Thanks for you time.
Chalmers:
Appreciate your time, Kieran, all the best.