Michelle Grattan:
Jim Chalmers, I know you don’t delve too deeply into predictions about interest rates. But in general terms following the decision this week, do you think that the economic conditions are there for one or more rate cuts later this year?
Jim Chalmers:
Well, you’re right that I don’t make predictions about that. There are good reasons why Treasurers don’t do that. I don’t want to interfere with the independence of the Reserve Bank. The market certainly expects there to be more interest rate cuts. The market is usually but not always, as we learned last month, right about these things. And so that’s the market expectation. People can draw their own conclusions about that.
But let’s not lightly skip over the good news from this week. The third interest rate cut in 6 months is welcome news because it’s welcome relief. It puts more money into the pockets of millions of people who are under pressure. It’s meaningful cost‑of‑living relief, but it’s also welcome because it gives us confidence that we’re on the right track. We are getting inflation down, we are getting real wages up, keeping unemployment low and all of those things together have given the Reserve Bank the confidence to cut rates 3 times in 6 months. Whether they cut again is a matter for the independent Reserve Bank. The market expects that they will.
Grattan:
Now, let’s turn to the roundtable of next week. There’s been some confusion, I think, on the purpose that it will serve for future decision‑making. The Prime Minister was quick to say that it wasn’t a meeting of the Cabinet. You have said these ideas are for the next 2 years, not the next 2 months. Can you just outline what you want to take away from this exercise? And how you want to use it in making decisions and the government making decisions?
Chalmers:
Well, I think the important point the Prime Minister was making is a point that I made as well, which is that the Economic Reform Roundtable is to inform the decisions of the Cabinet, not to take decisions instead of the Cabinet.
And so, what I’ve tried to be all throughout is respectful to the colleagues. They’re all working in their own areas on the next steps in economic reform. But the Economic Reform Roundtable will be a really important opportunity to see where there’s broad consensus about the work that we need to do to build on the agenda that we’re already rolling out. The Prime Minister and I have both made that point really clearly.
Grattan:
It’s hard to believe that even though you say you’re going in to this with an open mind that you don’t actually have in your mind some agenda.
Chalmers:
My agenda is to make the economy more productive because that’s the best way that we lift living standards over time and make people better off. That’s my agenda. The objectives of the roundtable are to work out how we build on our productivity agenda. We need to recognise we’re already rolling out a whole bunch of competition policy, investment in skills, making our economy more dynamic, the energy transformation. All of this is about making our economy more productive, and so we’re looking at building on that very substantial policy agenda that we’re delivering.
And the objectives there are productivity, but also making our economy more resilient in the face of all of this global economic uncertainty, and also making our budget more sustainable. But the primary focus of the roundtable will be productivity. Because if we can make our economy more productive over time, recognising that it will take time to do that, then we make people better off, we lift living standards and we make our economy more resilient and our budget more sustainable too.
Grattan:
We’re doing this in your office suite, and we have on the table before us to stop the glasses knocking on the table a sort of very upmarket coaster – a copy of today’s Fin Review.
Chalmers:
Let’s not tell Phil Coorey we’re using his work as a coaster, Michelle. That will just be between us.
Grattan:
Well, I see where you have a Phil Coorey story before us which talks about a frisson between you and the Prime Minister on this whole productivity roundtable issue. What’s the relationship been like?
Chalmers:
We’re aligned on this and we’ve been working very closely on it. I find it strange, if I’m to be blunt about it, Michelle, that it’s front page news that the Treasurer and the Prime Minister meet to discuss issues in the economy and issues on the agenda. We actually do that quite regularly. We speak or correspond most days about the economy and obviously in recent weeks the big focus has been on the reform roundtable. That’s described as ‘secret talks’ in the story that’s in the paper today but treasurers and prime ministers meet all the time and have these sorts of discussions all of the time.
We’re aligned when it comes to this Economic Reform Roundtable, and we’re reformed on the economic agenda that we’re focused primarily on delivering. And we see the fruits of that agenda in the inflation figures coming down and interest rates coming down and real wages growing and unemployment being low and getting the debt down with Katy Gallagher working with the Cabinet colleagues. And so we are aligned on the purpose of this Economic Reform Roundtable. We’re aligned more broadly when it comes to our economic agenda, and we’re making progress together in our economy and we’ve got more work to do.
Grattan:
Is he more cautious, though?
Chalmers:
I wouldn’t describe it like that. In fact, on radio this week the Prime Minister was talking about his ambition, his reform ambition. I think it’s important to recognise that this government is already a reforming government. You think about the energy transformation, you think about the competition policy reforms, I’ve knocked off 500 tariffs unilaterally. There’s a whole bunch of economic reform, tax reform underway already. There’s a whole bunch of reform underway, and our primary focus is on delivery. We’ve made that clear, both of us.
I think most importantly in the context of the Economic Reform Roundtable is we both believe in our very core that the best way to make progress is together and that’s why we are inviting people to grapple with the big economic challenges and choices that governments grapple with every day. That’s really the main point of the roundtable next week.
Grattan:
One area of reform which you’ve just mentioned – the energy transition – it’s sort of tangentially on the agenda but not so much directly next week. But it does seem to be running into problems, serious problems, meeting the 2030 targets even. Are you concerned about that?
Chalmers:
I’m not sure about that. I’m still optimistic that we’ll meet that target. That target was always ambitious, but I think achievable and I think we will get there. I think the energy transformation is really a feature of almost every session at the reform roundtable. It goes to our resilience, it goes to our productivity, it goes to the cost of doing business. Energy costs are obviously fundamental to the cost of doing business, and the cheapest new forms of energy are renewable energy. And so I think it will be a key focus, the energy transformation.
It’s certainly one of the 5 productivity pillars that I’ve asked the Productivity Commission to work on, the energy transformation. Because if you take a step back for a moment, all this work that we’re doing, it’s occurring against a backdrop of 5 enormous shifts in our economy and the global economy as well – the energy transformation, the industrial transformation, technology, geopolitical fragmentation and demographic change. So all of this is situated amongst all of this quite extraordinary and accelerating churn and change in the world, and energy is a big part of that. It’s a big part of our economic reform agenda, and it will be a big part of the roundtable too.
Grattan:
Now, the ministers have been doing a hell of a lot of work. They’ve got these mini roundtables which are in progress. What sort of feedback have you got so far from them, and how are you going to feed that work into next week?
Chalmers:
Well, first of all, I want to say my colleagues are outstanding, the way that they have grasped this opportunity, picked up and run with it. I’m really just extraordinarily grateful for –
Grattan:
You didn’t have to get out the whip?
Chalmers:
No, on the contrary. Their efforts here have exceeded my expectations. People have really grabbed this opportunity in ways that I am extremely grateful for. So 41 different ministerial roundtables, often involving more than one minister at a time, hundreds of people consulted, key stakeholders. And so we’ve got a way to basically funnel the ideas that come from those ministerial roundtables into our considerations as a government but also into the discussions next week as well.
We’re very aware that once you hold a meeting in the Cabinet room with 25 or so chairs you can’t have everyone in there. And so the ministers have done a wonderful, wonderful job making sure that as many voices as possible can be heard.
Grattan:
So how exactly are you going to funnel it into the meeting?
Chalmers:
Well, I have bilateral discussions and group discussions with colleagues who’ve been holding these roundtables. My diary has been pretty full of those sorts of conversations informally and formally. And so there’s that. But also a number of the people who come as core participants next week have been involved in one way or another with these ministerial roundtables. So it has been a very, very useful exercise in making sure that we can collate these ideas and see where there’s common ground.
Grattan:
But you’re not providing any summary of what’s come out of those roundtables to the delegates?
Chalmers:
No, I’m provided a summary for the discussions that I have with the core participants. I make sure that the sorts of things which are raised are made available to them.
Grattan:
Let’s go to some specifics. You’ve already flagged fast tracking for a new road‑user charge for EV vehicles since they don’t pay the fuel excise. Why only EVs, though? Wouldn’t it be better to have a broader reform, get rid of the fuel excise and just include all forms of transport on wheels?
Chalmers:
I’ve never used the language of fast tracking. In fact, I’ve made it really clear publicly and privately we’ll take the time to get this right. I’ve been saying now for I think a couple of years but certainly since well before the last election that we’re working with the states and territories on these issues.
The status quo on this won’t work in 10 or 20 years’ time because fewer people will be driving petrol cars and more people electric vehicles, and we still need to fund the roads. And so I’ve made it clear publicly and privately that we need to work through these issues. We’ll do that in a considered, very consultative way with the states and territories and we’ll take the time to get it right.
Grattan:
Will that time be in terms of months or years?
Chalmers:
I think it’s a longer term project.
Grattan:
So we’re talking years?
Chalmers:
Well, without settling on the substance of it, without settling on the design of anything that the states and territories and I might agree to work up. It’s hard to determine the time frame from that, but people shouldn’t anticipate that there will be a change very soon. We’re still doing all the work with the states and territories, including this week I’m meeting with them and it will probably come up in the context of discussions ahead of the roundtable.
Grattan:
Artificial intelligence is, I guess, the topic of the moment and there’s now alarm about possible changes to copyright provisions to give these companies more ability to mine data and especially mine creative material. What’s your thought on this? You have said you favour light regulation rather than heavy regulation. But what do you say to artists and other creators who are in something of a state of alarm?
Chalmers:
On the specific issue of copyright law, we have strict copyright law in Australia. That’s not always the case in other jurisdictions where they’re trying to work this out. And we’ve made it really clear – I have, the Attorney‑General has, the Industry Minister has – made it really clear that we’re not in the cart for weakening or watering down those copyright arrangements.
In this country we value our musicians, our artists, our writers, our content creators, even our journalists, dare I say it, Michelle. And so we’re very alive to this challenge and we value the contribution that people make to the creative arts and we approach this question in that light, that’s why we’ve said we’re not interested in weakening our copyright arrangements.
On the broader issue of AI, I’ve tried to encourage a sensible middle path here. By that I mean we need to work out the best way to maximise the game‑changing economic benefits of AI – which are extremely substantial if we get it right, without dismissing by managing the obvious risks. You’ve identified one risk. There are obviously concerns in our labour market as well. I wrote a book about that with Mike Quigley a few years ago.
So there are obvious concerns and risks that we need to manage, but we need to do that in a way that we can maximise the upside as well. And so I wrote a piece for The Guardian about this, trying to sketch out what this responsible middle path looks like. And, really, the objective there is to regulate as much as we need to to protect people, to respond to their legitimate concerns. But as little as we can to encourage innovation and productivity, economic growth and all of those upside game‑changing economic benefits if we get it right.
Grattan:
So do you think we need an overarching new law about regulating AI, or do we need to change, tinker with existing legislation?
Chalmers:
Well, there are range of views about that, as you know.
Grattan:
What’s your view on it?
Chalmers:
We’ll work through those issues. Primarily responsibility for that lies with the Industry Minister. I don’t want to cut across the work that he’s doing. His predecessor, who knows a lot of about these issues, Ed Husic, has got a view about it. The Productivity Commission has got a different view to Ed on it. We’re aware of all of that.
Grattan:
A different view to Ed?
Chalmers:
Yes, some people say we need an act, some people say we can do it via existing regulatory mechanisms. Tim Ayres is working through those issues to see what the best version of that is for Australia. I don’t want to kind of pre‑empt or cut across his work.
Grattan:
He’s pretty sympathetic to the union view, and the unions say they want a lot of intervention.
Chalmers:
You’ve got to be careful about caricaturing people’s views on this. This is a much more complex area of government and the economy than a lot of the commentary can allow for or can capture. I speak with Tim Ayres about this a lot. I speak with Andrew Charlton about it a lot who’s got responsibilities here. I respect Ed’s view. I respect the PC view. And because there’s so much complexity and there are big choices to be made here, those views are, I think, rarely going to be unanimous.
Tech is contentious, and tech change is accelerating. There’ll be different views about how we catch up and keep up with that tech change and what the appropriate regulatory stance is. From my point of view, my objective as the Treasurer is to regulate as much as we need to but not more than we have to. We want to capture the upside without dismissing the potential downside.
Grattan:
So when could we get some clarity on the government’s views? Again, is this a matter of months or –
Chalmers:
I don’t want to put a time frame on Tim’s work but, I mean –
Grattan:
It’s a bit urgent though. It’s getting urgent.
Chalmers:
Well, it’s a big, important part of the government’s work and we know that we need to get it right. We’ll take as much time as we need to to get it right. But it’s a big part of what everyone’s thinking about right now. No doubt it will be a big part of the discussions at the reform roundtable next week. That’s a good thing. We want to hear what everybody thinks, and we’ll do the work as quickly as we can.
Grattan:
Ed is, as you say, Ed Husic, is an expert on this and is pretty obsessed with it. He’s now on the backbench. Have you given any thought to using him more actively in this consideration?
Chalmers:
Well, I’ve spoken to him because he’s the chair of the House Economics Committee now. And so I’ve had some discussions with Ed about the way to make that work for him and for the government and what his contribution might be there. I’m reluctant to kind of go into the detail of those conversations.
But I’ve said publicly on a number of occasions I think, including earlier with you today, Michelle, that he’s thought long and hard about a lot of these sorts of issues. I take his views very seriously about it. Whether or not that’s a structured contribution or not, his views are important to me.
Grattan:
Now, you’ve said that AI will be on the agenda next week. But IR – industrial relations – has been carved out, it won’t be. I just wonder how we can talk about improving productivity if we exclude discussion of industrial relations.
Chalmers:
Well, first of all, I haven’t gone out of my way to tell people not to talk about that stuff. I have tried to have an open mind to the issues that people will raise. The Prime Minister and I have made it clear that we’ve got an agenda on industrial relations which we’re rolling out based on non‑compete clauses, protecting penalty rates, extending paid parental leave, all of that. And so I think the community broadly knows where we’re headed on industrial relations.
Really, what I’m trying to do – and I’ve been trying to do this for some time now and the roundtable has provided another opportunity – is to say when it comes to making our economy more productive, let’s not just get caught up in all of the old binary barnies about productivity. For too long people have assumed that the only way we can make our economy more productive is if we go down the path of kind of scorched earth industrial relations. And I think that the productivity challenge is bigger and broader than that.
I’ve tried to make it about technology and human capital, energy, competition policy, increasingly regulation, speed of approvals. And so that’s where the progress is most likely to be and so that’s where I’ve tried to focus the discussion a bit broader than what people have tried to focus on in the past, recognising that our productivity challenge is longstanding and global.
It has a number of sources – not enough capital deepening, the human capital base isn’t quite right yet, our economy is not dynamic enough yet, these are the sorts of things we want people to focus on. And I’ve been really heartened that these are the things that people have been focused on in the private discussions I’ve been having with them.
Grattan:
Nevertheless, you’d have to agree that industrial relations is relevant. Anyway, regardless of that, the ACTU has certainly decided that it’s going to put industrial relations items there or one big item. They’ve come out today with proposing a 4‑day work week. What’s your view on that?
Chalmers:
Again, I’m trying not to limit the contribution that people will make, whether it’s from the union movement or the business community or other experts and stakeholders. We don’t believe that the path to productivity in this country is to make people work harder and longer for less. That is a summary of our political opponents’ view. It’s not our view.
We believe we’ll make our economy more productive by investing people, their ability to adapt and adopt technology in a more competitive economy that runs more efficiently. And the ACTU has flagged this as a priority. It’s not something that we’ve been working up or considering. Our industrial relations priorities are in those areas I nominated – non‑competes, penalty rates, paid parental leave. But people will bring all sorts of ideas next week, and it’s a good thing that they will.
Grattan:
Well, some companies seem to make work a 4‑day working week for the same amount of pay. Do you agree with that sort of approach in principle?
Chalmers:
Well, yes, I think what it shows is that industries and businesses are capable of working out how do they hold on to their best staff by making it easier for people to balance their work and family responsibilities. Whether it’s work from home, which has also been a matter of some public focus, whether it’s having the time to do life maintenance and family responsibilities, good employers find a way to make that possible.
And so when it comes to the sort of flexibility that makes it easier for parents to be parents, for example, obviously we are interested in that. That’s why we’ve got a pretty accommodating view on work from home. That’s why we’ve tried to make it easier for people in the early childhood education system or paid parental leave. It’s all about trying to make it easier for people to make choices about how they balance work and family. And some employers are taking the kinds of steps that you nominate to make sure that they can hang on to great people.
Grattan:
And what’s your view on the Jacinta Allan proposal to make work from home a right?
Chalmers:
Well, we think that work from home has got an important role to play in the economy. We’ve made that really clear. It was one of the central features of the election campaign not that long ago. Obviously it’s got to be within reason, obviously it’s different in different industries. But the idea that work from home should be made available to people so that they can balance their responsibilities – I think overwhelmingly work from home is a good thing. Not without limit, and always within reason. I try not to get into kind of being a commentator on state policies, but when it comes to supporting work from home, the Commonwealth is very supportive as well.
Grattan:
But on the principle of it being a right as opposed to a desirable thing if it can be negotiated, do you have a view? A legal right?
Chalmers:
Again, I don’t get into the kind of legal, legislative mechanics of it. We have found our own ways to be supportive of work from home. The states and territories make their own decisions about that. We’ve got our own IR environment to tend to, and we’ve made it really clear that where it works, where it’s within reason, work from home can be a really good thing in our economy.
Grattan:
Now, coming back to next week specifically, it’s become very confusing where things are on tax. You’ve actually ruled out a couple of taxes for consideration. And there are some areas where you’ve said, fine, they’re on the table but we know they’re actually ruled out, like the GST. What areas remain seriously up for discussion on taxation? Can you give more clarity around this?
Chalmers:
Again, you can understand what I’m trying to do here, Michelle, which is having invited people to the Cabinet room to provide their ideas, I’m trying not to artificially or excessively narrow the contributions that they want to make. People have taken up that opportunity with gusto and there’s a whole bunch of ideas flying around on tax. I want to be respectful to people. I want people to be able to raise stuff in the Cabinet room, otherwise there would be little point inviting them.
People know the government’s position on the GST. They know that we haven’t changed our policies or our plans on tax. They know that our highest priority is rolling out 2 more sets of income tax cuts for 14 million workers, the same people that our opponents wanted to jack up taxes on. They know that we’ve got an agenda on multinational taxes that we’re rolling out. They know that we’re doing the work with states and territories on road user charging and the like.
And so really the point that the PM and I have tried to make is that we’ve got an agenda on tax, it’s primarily about cutting taxes, there is work under way in other areas like the road‑user charge with the states and territories, but we want to hear people’s ideas. And if that means that there are a lot of ideas out there and the government can’t pick up and run with all of them, I think that’s broadly understood.
Grattan:
But if I were a participant at this roundtable –
Chalmers:
There’s an idea, Michelle.
Grattan:
I would know that I would be wasting everybody’s time by talking about taxing the family home, right? But would it be productive if I gave you a suite of ideas on how to improve taxes around superannuation?
Chalmers:
Well, changing the arrangements for the family home, I think, from memory – maybe a couple of times ago that you and I were talking – I gave that as an example of a reform that no sensible government would touch. And so I think people listen to the public comments that we make and they obviously understand that the government doesn’t intend to change that.
Now, when it comes more broadly to the sorts of things that we have said, we have tried to make it really clear. We haven’t changed our view on the GST or some of these other contentious areas of tax, but people will raise them. That’s fine by us.
Grattan:
But superannuation is a pretty live area, right?
Chalmers:
Well, we’ve got changes that have been before the parliament for a couple of years now –
Grattan:
Not that superannuation, not that particular change. I’m talking about fresh areas of superannuation.
Chalmers:
We’re trying to focus on the agenda that we’ve announced. A lot of people want to focus, understandably, on the things that we’re not progressing, we’re focused on the things that we are. We’ve got those superannuation tax changes. Again, they’re pretty contentious. We’ve got the multinational agenda. We’ve got changes to capital gains for foreigners. But primarily the focus is on rolling out those income tax cuts.
And I’m trying to be respectful to people who will bring all kinds of different ideas to the roundtable, but I think people broadly know what our agenda is on tax, and it’s centred on those income tax cuts for 14 million people.
Grattan:
I guess it’s a bit unclear what the agenda is actually on negative gearing and the capital gains tax discount because while that was ruled out before the election. Nevertheless, there’s a feeling that maybe – maybe – in the depths of Treasury or whatever there’s still work being done on that and maybe you and the Prime Minister eventually will come around to that.
Chalmers:
Well, I think that there’s a view that there is a constituency for change in the community in some of those areas. But we’ve tried to make it clear in the election campaign and subsequently that that’s not part of the work that we are doing. It’s not part of our agenda to change that. We haven’t changed our policies or our views on that. It is self‑evident from the commentary and from the ideas that people are proposing to us that there is a constituency for that kind of change. And I suspect – I don’t know for sure – I suspect that it will be raised next week.
Grattan:
And so you’re not totally ruling it out?
Chalmers:
We’ve made our view pretty clear on it, I think –
Grattan:
So are you saying it’s no good raising it?
Chalmers:
No, I’m saying we haven’t changed our policies or our plans on that. We made that clear in lots of different ways, including in the parliament over the course of the last year or so. But, again, being respectful to people, I would expect that people will raise it.
And what I’m trying to avoid here is I’m trying to avoid a situation where I invite 25 very busy people to Canberra and I give them a very small list of only a few things that they’re allowed to raise. I respect them. I’m grateful to them for being part of it, and part of showing that respect is to listen when they raise ideas which might not be consistent with the government’s current agenda.
Grattan:
Just finally on the specifics, the housing challenge remains enormously difficult for the government let alone for aspiring house buyers to cope with. Can we expect out of this roundtable and as a result of the roundtable a serious deregulation agenda for that industry – specifically for that industry?
Chalmers:
Well, that’s what we’re working towards. And it remains to be seen the specifics of that agenda, but I work really closely with Clare O’Neil in the Treasury portfolio on this housing challenge. It’s one of the defining challenges in our economy that we don’t have enough homes. And we think there is a role for better regulation and faster approvals in building more homes. We need to make the sector more productive. We need to get these approvals going faster. We need to make sure that states and territories are playing a helpful role. And I think they will because this is a huge challenge and the status quo won’t cut it.
That’s why we’re investing tens of billions of dollars. That’s why we’re engaging with the states and territories. That’s why it’s so important that the investor community, superannuation and others are showing increasing interest in this, because we need to build more homes for more Australians. And I think that will be one of the primary motivations next week – is how do we crack open the fact that it takes so long to approve a house when we desperately need more homes in communities right around the country.
Grattan:
It does seem that we actually know the answers to those sorts of questions, but we never seem able to get it done, get things done, moving.
Chalmers:
I agree that it’s a very big challenge. And part of the reason it’s a big challenge is because it involves multiple levels of government. So I’m engaging with my colleagues this week on it and I hope that Treasurer Mookhey, when he comes to the roundtable, represents the views of states and territories on this. We all need to do our bit. We all need to quicken the pace of building homes in this country. It’s a productivity challenge. It’s an approvals challenge and a regulation challenge, and we’re certainly open to any ideas about how we make that work better.
Grattan:
Lastly, the Prime Minister during the campaign was asked what he wanted his legacy as Prime Minister to be. So what do you want your legacy to be as Treasurer?
Chalmers:
I think the thing about this job is whether it’s the Prime Minister’s job that he’s doing or the Treasurer’s job that I’m doing, we have this privilege and responsibility to be going at a time of really quite extraordinary and accelerating change. And so my obsession is how do we make more of our people beneficiaries of that change rather than victims of that change in really all of the areas you and I have discussed today. AI, housing, productivity more broadly, the energy transformation – we want to make people beneficiaries not victims of that change. And I want to make sure that more people, including in communities like the one that I represent can get the upside benefits of a more modern, competitive dynamic economy.
And so those are really the motivations that I bring to the reform roundtable next week, but also to my job every day as Treasurer because we have this remarkable privilege. The pace of change in our society, in our economy and in the world is accelerating. And we have a responsibility to people to make sure that that change is a force for good in their lives rather than something which makes their lives harder.
Grattan:
Jim Chalmers, thank you for talking with us today. It’s going to be an interesting week to come and hopefully an important week.
We’ll be back with more interviews on the roundtable in the days to come. Meanwhile, thank you to my producer Ben Roper. That’s all for today. Goodbye for now.