MICHAEL ROWLAND, HOST:
Let's bring in now the Treasurer Jim Chalmers at Parliament House in Canberra. Treasurer, good morning to you.
JIM CHALMERS, TREASURER:
Good morning, Michael.
ROWLAND:
You said inflation is going to get worse before it gets better. On that front, will Treasury confirm via your statement today that inflation could exceed 7 per cent by the end of the year going into next year?
CHALMERS:
That is the Treasury's expectation, Michael, that we will have inflation higher than 7 per cent later this year. That will be, in their expectation, the peak and it will begin to moderate after that. Things are very difficult already for a lot of Australians. It will get more difficult before it gets better on the inflation front. And today's opportunity in the Parliament is to speak directly to Australians, to bring them into our confidence about these economic conditions that we confront as we work towards the Budget in October.
ROWLAND:
You also confirmed that economic growth is slowing by at least half a per cent this current financial year and next as well. So, Jim Chalmers, is one of the confronting facts you're going to tell voters that as a result of a slowing economy, unemployment could rise?
CHALMERS:
I think it's worth explaining to people who are watching the show, Michael, that when you've got rising interest rates and you've got dramatically slowing global growth that has implications for growth in our own economy, and that in turn has implications for the unemployment rate as well. And so, what I'll be releasing later today is Treasury's best estimate of the impacts on our economy of the rate rises, of the global downgrades on economic growth. As you've just rightly identified that will lead to a modest increase in the unemployment rate as well in their expectation.
ROWLAND:
There's a big gap between the ever‑rising inflation rate and where wages growth is at the moment. I know you said yesterday in your media conference it's your expectation that real wages will grow at some stage over the next 3 years. But the question I want to ask you this morning is that realistic? And can you realistically hold out hope to voters that real wages will increase given the dire set of figures you and everybody else is dealing with over the next 3 years?
CHALMERS:
Yes, that is our expectation, Michael, that we will get real wages growth this term. But equally, there's no use pretending to people that with inflation north of 7 per cent that there will be wages outcomes in the near term that keep up with that inflation. And so, this challenge has two parts: the inflation challenge, which is that we need to get inflation down to more manageable levels; and we need to get wages growing again after a decade now of deliberate wage stagnation. The difference now between this Government and our predecessor is we want to work around the clock to get wages growing again. They had stagnant wages, a deliberate design feature of their economic policy. That's the difference. And so, we need to get wages growing again after a decade of stagnation. We need to see that inflation moderate. And when we see those two things together, we'll get the real wages growth that Australians desperately need and deserve.
ROWLAND:
So many Australians are copping it from all directions: rising prices, but also interest rate increases if they happen to be a homeowner. There's a bit of commentary around, including, it has to be said from the Reserve Bank that as a whole, Australian households are well placed to deal with what are fast rising interest rates. Do you agree with that commentary, or do you think it's a bit, I guess, out of touch?
CHALMERS:
Look, it is true that some Australians have been able to build a buffer in their home loans over the last period of extremely low interest rates. And so, what the Reserve Bank is talking about there in aggregate is that some people have been able to do that. My focus is on the people who aren't able to do that to easily accommodate those interest rate rises. But I think more specifically and more directly for people on low incomes, including some of the people you played footage of a moment ago, is it's this inflation that's putting pressure on their household budgets – people who are living from paycheque to paycheque trying to work out what they can substitute out of their household budget. So, my commentary yesterday about this was focused on the inflation challenge and what it means for people doing it especially tough. Some people have the means to deal with higher interest rates, but not everybody does.
ROWLAND:
Okay, Treasurer Jim Chalmers in Canberra. Appreciate your time this morning. Thank you.
CHALMERS:
Thank you, Michael.