Kieran Gilbert:
Let’s go live to Devonport, Tasmania. Joining me is the Treasurer, Jim Chalmers. Thanks for your time. The government’s spoken so much about stabilising relations with China. Is this visit about moving beyond that now?
Jim Chalmers:
Good morning, Kieran.
There couldn’t be a more important time to strengthen an economic partnership and relationship which is full of opportunity but not short of complexity either. And so, these meetings between Prime Minister Albanese and President Xi and Premier Li, CEOs and businesses from both sides of the relationship is a really important one.
It recognises that China is a big part of our prosperity. That makes it a big and important obvious focus of our economic diplomacy, and that’s what the Prime Minister’s visit is all about.
Gilbert:
Do you see it, though, as not just stabilising relations anymore? This is about maybe not returning it to the equilibrium we saw during the Howard years, but closer to that than what we’ve seen in recent years?
Chalmers:
Certainly we want to strengthen this relationship. It’s in the interests of our economy, our workers, our businesses, our investors, to strengthen this really important relationship.
I think around a third of our exports go to China. So, it is a really crucial part of our prosperity and a big focus of our diplomacy. That’s why the Prime Minister is there for this trip this week.
We’ve worked really hard to stabilise this relationship. We’ve worked through issues in a calm and consistent way without compromising what’s important to us. We’ve raised issues and complexities when it’s been important that we do that. But overall, our efforts to stabilise the relationship and how to strengthen that relationship in the interests of our people and their economy, there couldn’t be a more important time to do that.
That’s why it’s so good that Prime Minister Albanese is engaging with leaders in China, businesses in China, to try to maximise these opportunities that are so central to the relationship.
Gilbert:
When – you spoke about the economic importance, and it is vital – I was looking through the numbers over the weekend and the amount that iron ore itself to China provides our budget bottom line is massive. It’s actually one‑fifth of our total exports is iron ore, that commodity and that market, China. Is it too risky to have so much relying on that one market and that one commodity?
Chalmers:
Look, it’s a really important part of the trading relationship. No doubt about it. It’s a very good earner for Australia. We’re very supportive of the industry and its efforts to create that prosperity with that trade with China.
But it’s not the only part of the story. As Cameron rightly identified in his cross a moment ago, there are a number of elements to this economic relationship. Whether it be tourism, whether it be mining and resources.
There are a whole range of industries where a more prosperous, a more productive, constructive relationship will bear fruit for a whole range of our industries. Not just mining, as important as that is.
Gilbert:
With tourism, you touched on it, the Prime Minister’s going to be overseeing the launch of that next phase of a big campaign trying to get more tourists here from China. They spend more, apparently than other comparable visitors from other nations. So, obviously lucrative to tourism in the state where you are, Tassie, and beyond. Tell me, do you think that we can get those numbers back to where they were pre‑COVID?
Chalmers:
It’s certainly our objective to make the most out of our wonderful tourism industry.
I’m coming to you from Tasmania today and Tasmania’s tourism industry is world‑class. As is the industry, the tourism industry, right around Australia – my home state of Queensland, every part of our country has a good story to tell the world when it comes to attracting tourists. It’s a very important earner for our economy. It’s a very important employer. And I think it’s a terrific thing that the Prime Minister has made this an important part of the discussions that he is having in China.
We want tourists here, we want them spending money in our economy. We want that to employ more Australians in good, well‑paid jobs. And that’s why it’s a central focus of his trip.
Gilbert:
You’re heading to the G20 in South Africa later this week. How crucial are those multilateral forums, those groups, now, in a very uncertain world, the world of tariffs from the United States and Donald Trump? Do you see it as even more important to try and build the ties in settings like the G20?
Chalmers:
More important than ever. Australia is a big believer in multinational forums and a big beneficiary of the contribution that we can make there. The global economic environment, the uncertainty, the volatility, the unpredictability in the global environment I think will be the primary influence that will shape and constrain the government’s choices in this second term.
We are trying to navigate together a world where conflict and tension and unpredictability and volatility are the norm rather than the exception. And so, we come at this challenge of international engagement in that light.
I’ll be at the G20 speaking with my economic ministerial counterparts in South Africa in the second half of this week. I’ll be having bilateral conversations as well as the multilateral opportunity, but discussions with my counterparts from Indonesia, from Japan, from Canada, the UK and Germany and others. Because we recognise as Australians that when the world is more fragmented, we need more, not less, engagement. And that’s what drives our efforts and motivates our efforts, whether it be at the G20, whether it’s looking for more diverse and reliable markets around the world and around the region, that’s our motivation.
Gilbert:
And so, on that issue of diversifying the markets, I want to pick up on that because it was a focus of the government, certainly a few years ago, when we hit the rocky period with China. Is it still a main focus for the government? I remember, again, the Prime Minister, his big visit initially and the message was all about Indonesia. Is that still on the table?
Chalmers:
Well, first of all, I’ll be meeting with my Indonesian counterpart. I hope to have actually a specific way to announce later in the week that we can advance that really important economic relationship, speaking with my colleague Sri Mulyani.
But more broadly, if you think about the fragmentation in the world, you think about the uncertainty, unpredictability and volatility which defines the times in the global economy. Our strategy is more engagement, more diverse markets, and more resilience in our own economy as well. Those are the principles which drove our response to the tariff announcement out of D.C., but also which drive our trade and investment and foreign policy as well, and you’ll see that in the Prime Minister’s engagement this week.
We believe that more diverse markets are good for Australia. In a world of more fragmentation, we need more engagement and more resilience. That’s why I’m off to the G20 to talk with my counterparts. It’s why the Prime Minister is in China talking to his counterparts, because Australia is a big beneficiary of free and fair and open markets. We’re a big believer in those things and we will advocate that cause wherever and whenever we can.
Gilbert:
And you sort of gave us a little bit of a hint that you’ll be announcing something with the Indonesian counterpart. Can you give us any more of a sneak peek as to what that might be to strengthen ties with Jakarta?
Chalmers:
There’ll be a number of elements to that discussion. Obviously, critical minerals will be part of it, 2‑way trade. But I’m particularly interested in speaking speaking with my counterpart, Sri Mulyani, about the flow of capital between our countries. This has been a difficult challenge to approach over the years, but we think there’s a good opportunity there which could benefit both sides, be of mutual benefit to Australia and Indonesia. I look forward to advancing those discussions with her and ideally, hopefully, making an announcement later in the week.
Gilbert:
Can you understand, if we return our focus now to domestic issues, specifically the decision by the RBA. Can you understand why many mortgage holders, many Australians, were disappointed with that?
Chalmers:
I can, and I made that point on the day. I don’t think it’s especially controversial to point out that the decision which came on Tuesday would have come as a disappointment to millions of Australians who were hoping for more rate relief from the Reserve Bank. And it came as a surprise to most economists and certainly the market which follows these sorts of decisions closely.
But the Governor of the Reserve Bank made it really clear that the decision taken on Tuesday was a matter of timing, not a matter of direction. The direction of travel when it comes to inflation and interest rates is already quite clear. The Governor made that even clearer on Tuesday. We’ve already had 2 interest rate cuts in the last 5 months. That’s because of the progress we’ve made together on inflation. That’s already providing some relief to millions of people with a mortgage.
But of course, people are looking for more rate relief where they can get it. The Governor of the Reserve Bank has made it clear that that will come at some point, but that she and her board would like more information before they make that decision to cut rates for the third time this year.
Gilbert:
So, do you think mortgage holders should be reassured by that message that we’re, as she put it, on an easing path?
Chalmers:
I think people will watch closely what the Governor of the Reserve Bank says. I think it’s a good thing that the Governor runs through the reasons for each decision, makes herself available. I’m very supportive of that, very grateful to her for doing that. And she has talked through the reasons. She’s made it clear about the direction of travel in interest rates. I think people can take some comfort from that.
But rates have already gone down a couple of times, there’s cost of living rolling out in our community, we’ve made very substantial and now sustained progress in the fight against inflation. And I think the Governor’s approach to cutting rates already a couple of times this year and saying that there are likely to be more interest rate cuts on the way, I think that reflects that progress that we’ve made.
Gilbert:
On the reform roundtable, it’s coming up not that far away now, next month. I wonder, initially it was called a productivity reform roundtable, then you broadened it out to an Economic Reform Roundtable. Are you having to drag some of your senior colleagues to the table when it comes to serious reform?
Chalmers:
A couple of things about that. I mean, I don’t mind what you call it. I think the productivity challenge is central to our economic reform efforts. It already is, but we’re looking to build consensus on the next steps in that agenda. And so, I think productivity and economic reform are inseparable.
I said at the Press Club, and the Prime Minister said at the Press Club, that this is all about building consensus, building on the progress that we’ve made, building on our substantial agenda. Productivity will be the major focus, but it won’t be the only focus.
I’ve spent a fair bit of time in the last couple of weeks finalising the agenda, trying to work out how we issue the next set of invitations. It’s been difficult, frankly, because there’s been so much interest from my ministerial colleagues, from business leaders and union leaders and community leaders and others. That’s a very good thing. That’s a very welcome thing. And so, we’re almost ready to issue the next set of invitations beyond the 10 or 11 that we issued already.
I can tell you today, Kieran, that the agenda will be 3 days. The first day will be resilience, the second day, productivity, the third day, budget sustainability. Those are the 3 priorities that I indicated at the Press Club when I fleshed out our thinking when it comes to this particular roundtable.
Gilbert:
And on that final one, the budget sustainability, I know you’ve got young kids, as I do. Is it a focus, is it on your mind when you think about budget sustainability? You don’t want to leave a legacy of mounting and piling debt for the next generation?
Chalmers:
Absolutely. We try to apply an intergenerational lens to all of our considerations in my portfolio, whether it’s budget sustainability, indeed. The productivity challenge is all about lifting living standards and sustainably lifting wages over time so people can earn more and keep more of what they earn and provide for their loved ones. And we see that in intergenerational terms.
That is a big motivation for what we are putting together for the discussions in August. It will be a big influence on the work we do in July as well, whether it’s our international engagement, the work that I’m doing with states and the regulators, the work that I’m doing with peak organisations.
I’ve already had good, long discussions with leaders of the business community and the union movement and others. Because we don’t want to waste this opportunity to build consensus around the next steps. And tax will be part of the discussion, productivity will be part of the discussion, you can imagine a big focus on AI and technology, attracting capital and investment, quickening approvals, better regulation, an emphasis on people and skills. These are the sorts of things that people should expect will be central at the roundtable in August.
Gilbert:
And finally, you’re at the Tasmanian Labor launch ahead of the election this weekend. There’s a big focus on the economy, on that stadium, but I know there’s a minerals processor, Nyrstar, that needs some federal support as well. Is it important to you to keep a sovereign minerals processing capacity in Australia, particularly there in Tasmania where you are today?
Chalmers:
Absolutely. You know, we’re in discussions with the company and also with the governments. It actually involves, these discussions, 3 governments: South Australia, Tasmania and the Commonwealth.
As the Prime Minister said earlier in the week, I think it’s clear and obvious that we’re in those discussions, we’re trying to come to a good outcome here. And our support for this industry is illustrated by the fact we’ve already got $70 million jointly on the table for Nyrstar.
We’ve got a $2 billion aluminium fund which is all about the future of smelters. And so, we come to the table in good faith. We do want to see a good outcome. We’re obviously aware of the issues there and we’re in discussions with the relevant government.
But the reason I’m here in Tasmania today, Kieran, is because this election here in Tasmania has been made necessary by the economic mismanagement of the Rockliff Liberal government here and by the absolute disaster which is the Spirit of Tasmania program, the infrastructure program there.
So, the election here in Tasmania is a pretty simple choice: 4 more years of farce and failure and economic mismanagement from a Liberal government stumbling from one stuff up to another, or a fresh start under Dean Winter and Tasmanian Labor.
I know Dean Winter. I think he has all the ingredients to be a wonderful Premier. And I’m really proud to be in Devonport, Tasmania, to support him today and to help him with the formalities of launching the campaign. I encourage every Tasmanian to vote Labor at this election.
Gilbert:
Treasurer, thank you for your time. Thanks for joining us this Sunday, ahead of that election next week.
Chalmers:
Appreciate it, Kieran. All the best.