NATALIE BARR:
Good morning to you. So, the government says it doesn’t want Rex to fold. Obviously no one does. And you’re looking at the books, are you? What are you finding?
JIM CHALMERS:
Well, first of all Nat, these are really concerning developments for Rex and for its workers and also for the communities that it serves and our priority here needs to be to make sure that these regional services can continue because we know how important it is that we get these flights to regional communities. It’s important for people in those communities but also for local economies as well. So the Prime Minister, Minister Catherine King, the Premier of NSW, have all said more or less the same thing which is we want to see these regional services continue and that’s got to be the priority.
As I understand it, overnight the company contacted its customers and said that the regional services will continue. If that’s the case, then I think that would be a big relief for a lot of Rex customers. We are obviously prepared to play a constructive role here but we need to hear from the company and its administrators first. I don’t want to pre‑empt the sorts of considerations that we might be making. I also wanted to say to the hundreds of Rex workers who would be really worried this week that the Minister, Catherine King has been speaking with the other airlines to make sure that where it’s possible we get people re‑employed and redeployed so that we can try and minimise these job losses and focus on those regional services which we know are so crucial to regional communities.
BARR:
Okay, we’ll stand by for an update on that. Moving on. Mortgage holders are anxiously awaiting today’s critical inflation figures with economists warning the latest consumer price data could make or break the Reserve Bank’s cash rate decision next Tuesday. Treasurer, we know inflation is not under control in this country. In other developed countries they’re starting to cut interest rates. Why?
CHALMERS:
A couple of things about that. We do expect inflation in the numbers today to be sticky and stubborn and more persistent than anyone would like but we need to remember that inflation has come off really substantially since we were elected, it was higher than 6 per cent when we came to office, it’s come down a lot since then but we know from experience around the world that you’re right to reference that inflation hasn’t been coming down in a perfectly straight line – it zigs and zags on the way down. Now, some of those other countries had a higher inflation peak than we had in Australia and they peaked earlier, a lot of them have got higher interest rates, a lot of them have got higher unemployment as well, and so our experience is that inflation has moderated a lot, we want it to moderate further and faster. We expect today’s inflation numbers to be unwelcome but unsurprising given the pressures coming at us from around the world but also from around Australia including some temporary factors in that June quarter, so we’ll see what the numbers say but we expect it to be sticky and stubborn in unwelcome but unsurprising ways.
BARR:
Yeah. A bit more zigging than zagging maybe. So, the RBA, for months, right, has been hiking rates to stop us all spending in an effort to kind of be nice. You’ve been giving us tax cuts, giving us power relief. Aren’t you encouraging people to spend? Aren’t you working against the RBA?
CHALMERS:
Well, first of all, there hasn’t been a change in interest rates since last year, since November last year. That’s the first point. Obviously, I’m not going to give free advice to the Reserve Bank, it takes its decisions independently, but our role is to provide that cost‑of‑living relief that you refer to in a really meaningful and substantial way but also a responsible way – and so the tax cuts for every taxpayer, they don’t put additional pressure on inflation beyond what the original tax cuts were going to do. Our energy bill relief for every household will put downward pressure on prices, rent assistance, similarly cheaper medicines. So, the way that we’ve designed that cost‑of‑living relief is to take some of the edge off these cost‑of‑living pressures that we know that people are confronting but to do that in a way that makes it part of the solution to our inflation challenge rather than part of the problem and that’s a very deliberate design feature of our substantial but responsible cost‑of‑living relief.
BARR:
But you’re putting all this money into the economy. Aren’t you just a little bit worried that you’re getting it wrong here?
CHALMERS:
No, I think the strategy that we’ve got which is to turn those big liberal deficits into big labour surpluses – which the Reserve Bank Governor has said is helping in the fight against inflation – at the same time as we provide that cost‑of‑living relief in a responsible way, I think that is broadly the right strategy. I think it would be wrong to pretend as our political opponents sometimes do quite dishonestly, that this cost‑of‑living relief in the billions of dollars is somehow the primary determinant of prices in a $2.6 trillion economy, that’s frankly absurd. There’s a lot of pressures on inflation right now, some of them are global, some of them are domestic, some of them are temporary – we expect to see that play out in the figures that we’ll get later on this morning.
BARR:
Okay. Inflation figures out today, RBA next week. Treasurer, thank you for your time.
CHALMERS:
Much appreciated, Nat.