Kieran Gilbert:
Treasurer Jim Chalmers joins us off the back of the growth figures today, softer than many had expected. Are you worried we’re seeing a scenario, Treasurer, where capacity constraints are preventing the economy growing any stronger without driving up inflation?
Jim Chalmers:
Well, these are very positive and very promising numbers today. The reason the quarterly numbers came in a touch below expectations is because they revised up the quarter before and there were changes in inventories which detracted a little bit from growth. But overwhelmingly, this is a very positive, very promising set of numbers. And the main reason for that is because private investment has come back really strongly over the course of this year. And it’s private investment, whether it’s new business investment, whether it’s investment in homes, these are the things which are really driving growth now and that’s really encouraging.
Gilbert:
In relation to that question that you’ve gone straight to private sector investment. I wonder, given public sector spending is up 3 per cent for the quarter. It was down 3.5 per cent the previous quarter. But do you need to do more to drive down public sector demand to make more space for the private sector, in terms of just the economy growth, but the inflationary pressures as well in the economy?
Chalmers:
Look, we’ll always manage the budget in the most responsible way that we can, making room for our priorities. In the course of this mid‑year budget update, the main task is actually making room for some of these upward variations in spending, these spending pressures that we’ve been grappling with behind the scenes in advance of the mid‑year update being provided later this month. But on the issue of private demand versus public demand, a really important shift has occurred over the course of this year. Private demand is making all the running here. It’s come back substantially, whether it’s consumption, business investment, dwelling investment. And public demand, government spending has become less and less a part of the story over the years. So, if you think about it this way, over the course of the last year, I think private final demand, the private economy has grown around 5 times at the same time as public final demand, government, is less than a third of what it was a year ago. And so, I see this commentary about public spending, I see this commentary about public demand, but what the numbers tell us today is the growth is coming from the private sector in ways that we’ve been planning for, preparing for and frankly hoping for and that is the big story out of these National Accounts.
The private sector is the big story out of these National Accounts. Public demand is making less of a contribution than private demand and that’s a very good thing.
Gilbert:
In terms of the labour market, would you expect that to show up in jobs creation as well? Because as you know, public sector jobs have really driven a lot of those over recent times as well. Will that balance shift back?
Chalmers:
First of all, on the 1.2 million jobs that have been created under the life of the Albanese Labor government, 4 in every 5 of those jobs have been in the private sector. But the key to the quarters and years and decades ahead is to get more private investment in because that’s how we make our economy more productive. It’s how we strengthen our labour market, create the kinds of opportunities that people need and deserve. And it’s really welcome in these numbers to see private investment galloping in the quarter and through the year as well, because that can only be a good thing for the strength of our economy going forward, the opportunities in our labour market and also making our economy more productive. And that’s the other big thing that jumps out of these numbers. We’re very careful about the productivity numbers because they jump around. And we’ve had an issue in our economy for 2 decades now, but we’ve now had 4 consecutive quarters of productivity growth, still not as strong as we would like it to be, but 4 consecutive quarters. And in the private sector, the market sector, we’re seeing 1.1 per cent growth in productivity and so that’s an encouraging sign as well, not getting carried away. The big story is business investment and housing investment, but a welcome development on productivity as well.
Gilbert:
On the issue of wages, wages are up, inflation is up as well. Is there any risk, what whatsoever of that, that phenomenon known as a wage price spiral?
Chalmers:
No, I don’t believe so. And I don’t think the objective observers of our economy feel that that is in prospect. What we’ve been able to achieve over the course of the last 3 and a half years or so is we’ve seen inflation come down substantially from what we inherited. At the same time as we’ve got wages growing again, we’ve had 2 years now of real wages growth. That’s a good thing. You see in the National Accounts today that the wages measure is pretty strong and again driven by private sector wage outcomes and that’s helping to drive a recovery in per person incomes as well in our economy. So, if you put it all together, mortgage costs have come down this year because of 3 interest rate cuts, we’ve got wages growing again, people are benefiting from the tax cuts, this is all about helping ensure, as we say, we’ve said on multiple occasions that more people are working, they’re earning more, they’re keeping more of what they earn, and that’s driving that recovery in private incomes and it’s helping to drive the very strong performance of the private sector in these National Accounts.
Gilbert:
Finally, I know you’ve got to go. Anika Wells is at the Press Club. Senate estimates numbers came out that she charged the taxpayer more than $100,000 for airfares to New York a couple of months back. Does that pass the pub test?
Chalmers:
As you rightly point out, I think Anika is on her feet right now and no doubt getting asked about that. Now, this is official travel. It’s within the guidelines. It’s about representing Australia on an issue where the world is listening to us on these social media restrictions to help protect our kids online. People will make judgments about the cost of it, but from my point of view, a very, very important trip, very important way to represent Australia on the world stage. Official travel consistent with the guidelines.
And also, I think, as you would understand, Kieran, my focus hasn’t been on that today, my focus has been on the National Accounts that you’ve been kind enough to ask me a bunch of questions about.
Gilbert:
Yes, and we appreciate you making the time for us today. Thanks, Treasurer.