NEIL MITCHELL:
Cost-of-living – look, it’s been self‑evident for some time, it’s the biggest issue facing Australians. There were actually some good economic figures yesterday, which raised the question in my mind: if there’s a boom, who’s actually benefitting? 13 36 93. Interest rates have gone up again. We’ve talked about it at length. On the line in Canberra is the Federal Treasurer, Dr Jim Chalmers. Good morning.
JIM CHALMERS:
Good morning, Neil. How are you?
MITCHELL:
I’m okay, but I’m a bit confused. I’ll just play you something that the Prime Minister said in Question Time this week.
ANTHONY ALBANESE:
We are engaged in cost‑of‑living relief and that is what you will see in our Budget.
MITCHELL:
Okay. There will be cost‑of‑living relief, but nothing new, is that correct?
CHALMERS:
I think it’s right for your listeners to expect, Neil, that we will implement in the Budget the cost‑of‑living relief that we’ve announced. So the most important parts of that are childcare, medicine costs, TAFE fees, the cost of electric vehicles and also the core of our economic plan is to get wages moving again, which is a big part of the story when it comes to the cost-of-living as well. So those are our priorities, and we are leveling with people about our capacity to do more much more than that, because we’ve got that trillion dollars of debt that you’re aware of. Our choices are a bit constrained by that and, also, we need to be really careful that we don’t make it harder for the independent Reserve Bank as they try and deal with some of the issues in the economy. We don’t want our extra spending in some of those areas to be counterproductive. That’s why our cost‑of‑living relief has got an economic dividend as well, and it won’t add to these inflationary pressures that people are dealing with.
MITCHELL:
Okay, so childcare, medicine, TAFE, electric vehicles and wages.
CHALMERS:
And wages.
MITCHELL:
All up, what will that cost the public?
CHALMERS:
Well, the childcare policy, we’ll tally it up in the October Budget, but it’ll be around $5 billion. The medicines policy is about, just under $700 million. The EV policy is a couple hundred dollars million dollars. The TAFE policy will be costed in the Budget and wages are obviously treated differently. But we’re making some pretty responsible investments. Some of them are relatively modest; some of them are much bigger like childcare. But what we’re trying to do is to make sure that wherever we’re giving cost‑of‑living relief there’s an economic dividend as well, but we’re not adding to these pressures.
MITCHELL:
We’re still looking, and without the TAFE, at over $6 billion worth. Can we afford it?
CHALMERS:
I think we can. I think we can’t afford not to do some of these things. Budgets should never be a free‑for‑all. I’m pretty – I want to be really responsible with the Budget, but that doesn’t mean there isn’t room to invest in areas that make life a bit easier for people, particularly in childcare for new parents, but also to make is easier for them to work more and earn more if they want to and that will solve some issues in the economy as well, so that’s worth the investment.
MITCHELL:
Okay. But am I right childcare, medicine, TAFE, electric vehicles and the wages issue, but nothing else – no other cost‑of‑living relief in the Budget?
CHALMERS:
We haven’t finished putting the Budget together. It’s in about 6 or 7 weeks, but it will be hard to find room for much more than what we’ve announced already. We’ve got an open mind if we can find a responsible way to provide more assistance for people, but I just want to level with your listeners, Neil. I want to be upfront with them.
MITCHELL:
Fair enough, but what would be top of the list?
CHALMERS:
Our choices are constrained a bit here.
MITCHELL:
I understand that. But if you’re looking at doing other things, what will be top of that list? What would you like to do if could you find the money?
CHALMERS:
There are lots of good ideas that are pitched up to us to make it easier for people, whether it’s a different start date for childcare, whether it’s different arrangements for paid parental leave, whether it’s different arrangements for JobSeeker. There are a lot of quite good ideas that are put to us from time to time, but I think people understand that you can’t do everything. You can’t even fund all the good ideas that are put to you. We’ve got to be responsible with the Budget and that’s what we’re doing.
MITCHELL:
Dr Chalmers, I’ve been around a while. I’ve talked to a lot of Treasurers before and after budgets and I’ve heard them soften me up time and again by telling me about dreadful times. It sounds like you’re softening us up. You’ve been telling – even The Sydney Morning Herald the other day told you to stop whinging and get on with it. I mean, are we perhaps being softened up here for some pain as well?
CHALMERS:
I don’t see it that way, and that won’t surprise you either Neil. I don’t see it that way. But what I’ve tried to do, we had a good chat a few weeks ago, Neil, which I appreciated, and what I tried to do and what I decided to do, frankly, since I got this job is to try and always err on the side of frankness and bluntness and candour, and I think if people don’t want to take my word for it in some of these areas, then just look at the facts. I mean, the fact is the Budget has got a trillion dollars in debt, no hiding that. The fact is we’ve got high inflation, no hiding that. Real wages are falling.
MITCHELL:
But is the –
CHALMERS:
These are the realities.
MITCHELL:
But is the pain coming from the government as well?
CHALMERS:
No, I don’t believe so. I think the government is doing what it responsibly can to ease some of these pressures, but also, equally, being realistic about our capacity to kind of flick a switch and make all of these problems go away. Some of these challenges have been building for a long time, not just during COVID but well before that as well. The issues in the Budget, the issues with wages, the issues with business investment and productivity. A lot of these issues have been around for the best part of a decade. You can’t turn them around in 3 months.
MITCHELL:
I’ll allow my suspicions to continue. The stage three tax cuts come to mind. They’ve been legislated. You’ve said they’ll be implemented. Will they be implemented exactly as legislated, or could they be adjusted?
CHALMERS:
That’s our intention. We haven’t changed our view on that, as you know. You’ve probably heard, you’ve probably been asked a hundred times about this recently and I’ve tried to be up‑front and say we haven’t changed our position on it. But also, they come in in a couple of years’ time and we’ve got some far more pressing issues to deal with. We’ve got these labour and skills shortages, we’ve got these inflation issues with wages, some of the issues that were central to the Jobs and Skills Summit that and I convened with the Prime Minister last week in Canberra, and that’s our focus. And I understand people will ask us about the tax cuts that come in in a couple of years, but we’ve been busily working on some of these nearer term pressures.
MITCHELL:
So, we can, therefore, expect that you will, at this stage, at least you’re promising, to implement them as legislated?
CHALMERS:
Yes, that’s our position, Neil. We’ve said every time we’re asked, our position on that hasn’t changed.
MITCHELL:
Figures yesterday suggest the economy’s doing well. If it’s booming, who’s benefitting?
CHALMERS:
That’s right. The numbers that we got yesterday were pretty encouraging. In normal times we would see those numbers as pretty solid, but they’re a couple of months out of date now. They were driven by a lot of people spending more in the services economy coming out of that horrible summer that we all had, and they were driven by exports because the world wants what we are exporting to them and they’re prepared to pay a lot for it, so that drove some pretty solid numbers. But since then, we’ve had these rate rises, the global situation’s deteriorated a bit and we’ve got these issues in our supply chains that you’d be aware of as well, so, we need that extra perspective.
When it comes to who’s benefitting, one of the big developments in the economy, which was really quite stark in those numbers yesterday, is that the profit share of the economy is at record highs. The wages share is very low, and we want our businesses to be profitable, but we want our businesses to be profitable and for wages growth to be strong and sustainable, and we’re not seeing the latter.
MITCHELL:
So, if these figures are a couple of months’ old, does it mean that Josh Frydenberg got something right, did he?
CHALMERS:
Well, the numbers are a mixed bag, as I said.
MITCHELL:
Come on!
CHALMERS:
Well, they are, Neil.
MITCHELL:
You just admitted they’re good and it’s mostly the previous government’s doing, isn’t it?
CHALMERS:
I think if you’re prepared to say that Josh Frydenberg is responsible for the export price and for the level of consumption in an economy that’s opening up again, then I look forward to getting credit for those things in the future, Neil.
MITCHELL:
What about the unemployment rate? Is he responsible for that, which is pretty good?
CHALMERS:
I’ve said before the election and since, that one of the things that we’ve got going for us is that remarkably low unemployment rate. I think I’ve been pretty open about that. To have unemployment – it’s the lowest it’s been in my lifetime, Neil, if can you believe it, and that’s really a great start. But we’ve got to make sure that full employment actually means something for people. We’ve got to get more people into the labour market. We’ve got to make sure that they’re paid in rewarding wages.
MITCHELL:
You’ve said in the past – and the housing policy, housing affordable, the cost of rents, all an issue – you’ve said in the past that any decent housing policy needs to dump negative gearing and capital gains tax exemptions. Do you stand by that?
CHALMERS:
No, I don’t, Neil, and I’ve said. That was some years ago, that was my view. I’m not hiding from that. I’m not pretending I didn’t say that. I did, and that was my view at the time. My view changed. I think the best thing that we can do in housing is build a lot of social housing and make it easier with our help‑to‑buy scheme to get people in the market. But also, I’m having these really productive conversations – I even had one before I came on the air with you with some of the big investors, including super funds, about how we get them investing in affordable housing, too, because if we want to get people where the jobs are and if we want to have a sensible migration program, we’ve got to have places to put people, and the housing shortage is a real handbrake on that, so I’m working with big investors to see if we can get some substantial investment into the sector.
MITCHELL:
Will not short‑term increase in migration, I know we’re doing it, I can see that, won’t that worsen rental affordability, though, because there’s going to be more people there and we’re not going to have a whole lot of new houses built by the time they get here?
CHALMERS:
That’s why we’ve got to get cracking. We’ve got to get cracking and building more houses, more stock, more supply –
MITCHELL:
But surely short‑term it puts up rents at the very least, doesn’t it?
CHALMERS:
We don’t really have a choice here, Neil, unfortunately. We’ve got these labour and skills shortages and we do have a housing shortage, too, and we’ve got to get cracking on both, frankly.
MITCHELL:
But am I wrong in that logic that you bring in more migrants, and I understand why we’re doing it, but you increase immigration, you have to increase the rental prices and reduce affordability of property, have to?
CHALMERS:
You’re not wrong to say that more people looking for somewhere to live has an impact on prices, but the rent has already been going through the roof, absent these changes that we are proposing.
MITCHELL:
Is that a rip‑off by landlords, do you think? I mean, the Greens keep telling it is. Do you think the landlords are that hard‑heartened, they’re ripping people off?
CHALMERS:
I don’t know, Neil. I’m reluctant to agree with that without much evidence of it. I’m sure there’s some people not behaving as they should, but, overall, the reason why we’ve got sky‑rocketing rents, we’ve got a housing shortage, and we’ve got to do something about it. And quite often people will put to me what you just did, which is you can’t build a house overnight; that’s obviously true, but that doesn’t mean we shouldn’t get cracking now. This problem has been with us for a while, and we’ve got to do something differently to deal with it.
MITCHELL:
Have you caught up with what they’re doing in Queensland where they’re going to assess your land tax on interstate properties as well? That’s just bizarre to me.
CHALMERS:
I’m aware that they’re making a change there. I’ve got a meeting, actually, with all the State Treasurers tomorrow, I believe, where these issues around land taxes and stamp duties and all the rest of it often come up, so it may be that it comes up there. I’m broadly aware of what they’re proposing to do there.
MITCHELL:
Does it concern you? I mean, you have a property in Queensland and before they assess the land tax they throw in your property in Victoria. That’s just bizarre to me. They’re taxing a property in another state.
CHALMERS:
I need to know more about it, Neil. But what I’ve tried to do, not just Labor Treasurers but Liberal Treasurers as well, is we’ve all got these big pressures on our Budgets and people are trying to do what they responsibly can to put their Budgets on a more sustainable footing and so I’ve tried not to take shots at them, not just in Labor states but also in Liberal states. We’ve all got a job to do, and I’ll be talking with them about it tomorrow.
MITCHELL:
A couple of quick things, and I’ll let you go. Pensioners, I was bit disappointed there’s only a 10‑month plan to let pensioners work more without losing their pension. Will that be extended beyond the 10 months, do you think?
CHALMERS:
We’ll have a look at it towards the end of that 10 months. To be honest with you, Neil, I thought you’d be really pleased with the policy, because one of the reasons why we landed there was because of that good conversation that we had, and some of the conversations that we had with National Seniors so I thought would be backing it in.
MITCHELL:
Oh, no, it’s a step in the right direction. There’s no question it’s a step in the right direction. I was disappointed it was only 10 months and that it was only, what, between 70 and 100 bucks, they can earn, that’s all.
CHALMERS:
I understand. What we’re trying to do is to say: you can earn another $4,000 for the remainder of the year. We think it will make a difference. But as I said to you the last time, we had a yack about it, there’s a cost associated with it because people who are currently working more than the threshold, then qualify for the pension that comes with a modest cost, probably around 55 million bucks, but we’ll get it properly costed up before the Budget, so we’ve got to be careful there. And we want to make sure it works. If there’s all this appetite out there for older workers to work a bit more, then that’s great. That would be a terrific outcome. But let’s have a look at it once we know when the program has been up and running for a while.
MITCHELL:
If it costs $55 million, it’s also going to be bringing in money in tax, isn’t it?
CHALMERS:
Yeah, I think that’s the net cost as far as I understand it.
MITCHELL:
Oh, is it, okay.
CHALMERS:
But what we wanted to do, is we didn’t want to say – look, we’ll tell you what it costs in October. We will tally it up properly and cost it up properly before October. This is an indicative cost; we think it’s about $55 million.
MITCHELL:
And a very Victorian thing – there’s a lot of debate here about the Suburban Rail Loop. I know the government’s pledged money; the Federal Government’s put $2.2 billion in to have a look at it. Will the Federal Government contribute to that project without assessment by Infrastructure Australia?
CHALMERS:
I’m not sure where Catherine King’s up to that, the Infrastructure Minister. I talk with her relatively regularly about these big projects, but I haven’t been able to have a yack with her about that yet. There are some big important projects going on around Australia. We’ve got to make sure that we’ve got the skills to build them and that we factor in the construction costs. Infrastructure Australia’s always got an important role to play but I’m not quite sure, to be honest with you, Neil, where she’s up to with that.
MITCHELL:
But it would be unlikely you put the money in without a business case being assessed, wouldn’t it?
CHALMERS:
I’m not sure where it’s up to, to be honest, Neil, and I don’t want to kind of weigh into that without having all of those facts. Infrastructure Australia, ideally, has got an important role to play, but it depends where the projects up to and where the commitment is from other levels of government and all those sorts of things. I will be having a yack with Catherine out about before long.
MITCHELL:
So, is the money there; we don’t know yet?
CHALMERS:
We’ll budget up all of our infrastructure commitments in October. What we’re working on now, as I said yesterday, working with the states and with local governments to make sure that we are not just bidding up the price against each other on some of these projects where there’s limited labour and high costs for materials, so we want to make sure that we get the time frames right.
MITCHELL:
Thank you so much.
CHALMERS:
And the funding of it right, and that’s what we’ll do.
MITCHELL:
Thanks so much for your time. You’re sure you’re not softening us, just a bit?
CHALMERS:
I’m not. I’m not.
MITCHELL:
Okay. Thank you very much, Jim Chalmers, the Federal Treasurer.