KIERAN GILBERT, SUNDAY AGENDA:
Good morning and welcome to Sunday Agenda. Coming up this morning, my interview with the Opposition Leader Peter Dutton from Washington after his talks this past week in the United States. First though, to the G20 in Indonesia, where I spoke to Treasurer Jim Chalmers.
At the G20, the Indonesian Finance Minister talked about strengthening the spirit of international cooperation. I spoke to the Treasurer on the sidelines of the summit and began by asking him how the global community can achieve that when you have one member of the G20, Russia, so violently invade its neighbour in Ukraine.
JIM CHALMERS, TREASURER:
Well, Kieran there's no doubt that it makes it more difficult to achieve the level of cooperation that we desperately need in the global economic community right now, when you have Russia sitting there as the target of people's understandable and warranted anger.
And that anger is white hot in the international community, primarily because of the human cost of this illegal and immoral and unjustified invasion of Ukraine. But it also comes with a huge economic cost. It turbocharges so many of the difficulties that we're seeing in the global economy right now, the difficulties which have come from COVID, and from other sources. So there's a lot of anger in the room right now, particularly when you consider that most countries are dealing with high and rising inflation. They've got rising interest rates, which will slow economic growth, and downgrade people's growth expectations. We've got serious issues with food and energy insecurity. We've got big issues with the management of debt globally, but particularly in places like Sri Lanka and most of us have got very serious fiscal constraints. So when you combine all of that, much of that comes from the war in Ukraine. But it also turbocharges some of those other difficulties. So a lot of contributors in the G20, a lot of friends of Australia have been making that point forcefully.
GILBERT:
And you said in your comments in Indonesia that the collective response will need to be carefully calibrated. Again, I ask you, how do you get that, that calibration? How do you work together given this world is so divided right now as we speak, and not just with Russia, but those that have been lukewarm in their criticism of Russia?
CHALMERS:
I think even factoring that in there's an enormous appetite around the world to navigate these economic challenges together. And even if you accept as I do, the points that you're making about Russia, primarily, but also, in some instances, China, there still is an enormous amount of goodwill around other nations and an appetite to take meaningful action. If you think about one example ‑ we've got this serious issue where some countries have got themselves into substantial difficulty managing their debt. And so there is some prospect of coming to an agreement about how that debt is managed under a common framework. And so I really wanted to pay tribute to my colleague, Sri Mulyani, as well, the Indonesian Finance Minister, well‑known to a lot of Australians, and her efforts to try and bring people together around these challenges have been extraordinary. And with that kind of leadership, and with the appetite that people have to get their heads around and come together around some of these big challenges, progress is still possible, despite those obstacles that you rightly mentioned.
GILBERT:
Now Treasurer, we obviously have experienced the issues relating to energy security and the prices around that. But other neighbours in our region are really dealing with issues of food security, as are many others around the world. Is there more that our country, that our government can do in that regard to help our neighbours deal with that sort of issue?
CHALMERS:
There are various ways that we can support other countries, I think, particularly in our region, where we have a direct interest in our own neighbourhood. And there's a variety of funds that we have made available to help with this challenge. But really, the most important thing we can do, whether it's the energy insecurity challenge, or food insecurity, is to make these global supply chains more resilient, more reliable, whether it's energy or food and that's where a lot of the effort is directed.
GILBERT:
We've seen a shift in government policy on COVID support payments. I'll ask you about that specifically in a moment. But more broadly, given you’re there at the G20 Finance Ministers meeting, is this something that we have to deal with for the foreseeable future? Is this going to affect confidence in economies around the world for the foreseeable future? Is that your assessment?
CHALMERS:
I think everybody here understands that this pandemic is not going to be over any time soon and indeed, we need to be prepared for future pandemics as well. One of the big outcomes of this meeting will be a fund that helps particularly the developing world come to terms with pandemics like this one ‑ this one and future pandemics as well. So I think there is that recognition.
But different countries around the world are dealing with this now in different ways, transitioning off some of the extraordinary support that was provided in earlier stages of the pandemic and trying to work out what a more sustainable version of that is. We've all got that challenge in one way or another, dealing with our serious fiscal constraints, as well. So one of the most useful things I've been able to do, I've spoken to my counterparts from the US, from Indonesia, from Canada, and from elsewhere around the world. And one of the big things that we can learn from others is how we manage this pandemic. Clearly, for us, we're about to have another spike in cases. We're very cognisant of the health advice on that. And that's why we've taken the step that you alluded to in that question.
GILBERT:
The deputy Liberal leader Sussan Ley says this has come days too late after universal criticism, and that the Prime Minister owes those people, those who have had COVID casual workers, those without sick leave that have faced stress around this, that he owes them an apology. What do you say to her?
CHALMERS:
I think one of the reasons why that comment is so obviously ridiculous is because it was her government a little over eight weeks ago that designed this program to end at the end of July, at the end of June, excuse me. And this was the former government that left us with a trillion dollars in debt. And so I think ‑ whether it's this or whether it's the comments the other day that we shouldn't have a Jobs Summit, but they should be invited to it ‑ you know, I think if fails at the first credibility hurdle.
They will whinge and they will complain, we will get on with our work. Working with the states and territories, led by Premiers and Chief Ministers of both political persuasions, there's an appetite in the community to come together around these problems and not to constantly carp and whinge about them. And I think that those comments from ‑ whether it's Sussan Ley or from others ‑ are frankly ridiculous in the context of us trying to do the right thing by people but restrained and restricted in lots of ways by the enormous amount of debt that our predecessors racked up and handed over to us.
GILBERT:
On to those energy issues and specifically the climate targets that Labor wants to legislate, the Greens are suggesting they could well block it or seek to block it in the Parliament. And the Liberal Party, the Opposition Leader Peter Dutton, has told me as well that he's not going to budge. He says that Labor doesn't need to legislate the target. He asks ‑ what if Australia's trading partners and allies went into a broader conflict or there was an economic downturn? Would the government want to have a legislated 43 per cent? Or would they rather be able to adapt to the demands of the times? Is it better to not legislate and have that flexibility?
CHALMERS:
No, I don't believe so, Kieran. I think these comments ‑ whether they're from Peter Dutton, or from the Greens ‑ show that neither the Greens nor the Liberals, nor the Nationals have learned a single thing from this wasted decade of missed opportunity on cleaner and cheaper energy. The difficulties in our energy markets make it more urgent that we get that cleaner and cheaper and more reliable energy into system, not less urgent. [INAUDIBLE]... meaningful, responsible action on climate change, which is designed to get our energy prices down and to make our energy sources much more reliable in the context of extreme energy market volatility. They're always looking for an excuse to do nothing here. Legislating the target is international best practice. It's the best way to give our businesses and our investors and the broader community certainty over that target. So that's our intention to legislate it. If they think that we should be doing something about climate change in a responsible way, then all parties in the Parliament should vote for it.
GILBERT:
Now China reportedly is set to lift its sanctions on our coal exports. Obviously, that would be a welcome move. How important would such a development be if that does eventuate?
CHALMERS:
That would be a very welcome development. As it stands so far, we've heard reports about that being considered, but that hasn't been officially confirmed. Clearly, that would be good news for our exporters, and we'd like to see it happen. We've made it clear, really, for the whole duration, so far, of this government, that an important part of stabilising relations with China is to see some of those sanctions lifted on our employers here in Australia. So that would be a welcome step, but it's not yet been officially confirmed. We would like to see it happen. And we'd like to see it not stop there. It should extend to the restrictions that are placed on some of our other exports as well in the interests of our employers and our exporters here in Australia.
GILBERT:
Now finally, the unemployment rate in the last week, the numbers out showed down to three and a half per cent, its lowest in nearly 50 years. You've got the inflation rate looming again later this month, cost‑of‑living pressures remain. It's a tight economy. What can you do, if anything, in terms of easing cost‑of‑living pressures with speculation now that the RBA is going to potentially lift rates by 75 basis points next month?
CHALMERS:
Well, there are a few parts to that, Kieran. First of all, that unemployment rate was an incredibly strong and very welcome outcome. But it reinforces the need at our Jobs Summit to bring people together around some of the associated challenges with labour shortages and skills shortages, but also making sure that more people can access the opportunities in a relatively tight or historically tight labour market. That's the first thing.
On inflation, unfortunately, we expect this inflation challenge to get worse before it gets better but it will get better. We expect inflation to moderate next year. But we're in for a tough time for a lot of families. And what I'd like to do is to update the Parliament in a substantial way, update the government's forecasts and expectation for inflation when the Parliament returns later this month as part of a detailed Ministerial Statement that I will provide. Now, it's self‑evident that inflation of the kind that we're seeing now will bring interest rate rises from our independent Reserve Bank. And clearly, that will slow the economy or slow our expectations for economic growth in the near‑term, as interest rates rise in the manner that the Governor of the Reserve Bank has indicated that they will. Now this will make life even tougher for a lot of Australians who are already dealing with the skyrocketing costs of living. I think a lot of people are expecting these rate rises, but it won't make it any easier for them to accommodate them in their family budgets, and it will have consequences for the economy more broadly. And once again, I expect to be able to detail our expectations for our economy and for our Budget which flow from the circumstances that we have right now ‑ high and rising inflation, rising interest rates, falling real wages in the context of a Budget, which is constrained by that trillion dollars in debt that we've inherited from our predecessors.
GILBERT:
Treasurer Jim Chalmers, thanks for your time. Appreciate it.
CHALMERS:
Thanks very much, Kieran.