Patricia Karvelas:
Treasurer, welcome to Afternoon Briefing. It’s actually our first show for 2025, so an honour to have you on.
Jim Chalmers:
It’s a real honour for me, too, Patricia. Thanks for having me on the show.
Karvelas:
Let’s talk about the Treasury analysis you’ve released today. It assumes wages would have continued to grow at just 2.2 per cent under Peter Dutton. That, of course, is at a higher rate under your government. And also that the stage 3 tax cuts would have been unchanged under the Coalition. But those assumptions you’ve made, they’re not accurate, though. Both of those things aren’t necessarily the way things would have turned out.
Chalmers:
Australians would be worse off if Peter Dutton had his way, and they’ll be worse off still if he wins the election.
The analysis that we’re releasing today shows the thousands of dollars difference that we have been able to make as a government when it comes to wages, tax cuts for every taxpayer and energy bill relief for every household.
We know that the Liberal Party that Peter Dutton leads would prefer wages to be lower. They said that it’s a deliberate design feature of their economic policy. We know that Peter Dutton called for an election trying to stop the tax cuts for every Australian taxpayer. And we know that he opposed 2 rounds of energy bill relief.
It’s entirely within our rights to point out to people that they would have been thousands of dollars worse off if he had his way, and they will be worse off still if he wins the next election.
Karvelas:
But Australians are being told by Peter Dutton that, in fact, they are worse off than they were 3 years ago. Do you think that this data coming out of Treasury deals with that critique?
Chalmers:
What it shows is that this Labor government under Anthony Albanese’s leadership has been working around the clock to provide as much cost‑of‑living help as we can in the most responsible way.
The energy bill relief, the tax cuts are an important part of that.
Getting wages moving again, remembering real wages were falling when we came to office and they’re growing again now.
We have acknowledged for some time that people are under very real, very genuine pressure. What matters is how you respond to that. We’ve responded to that with cost‑of‑living help and by fighting inflation.
Our opponents would have done something very different and a consequence of not providing that cost‑of‑living relief, if Peter Dutton had his way they would be worse off.
That’s why it’s so important as we get closer and closer to an election later this year to understand that choice.
When times are tough, Labor is there with cost‑of‑living help and fighting inflation, strengthening Medicare and building Australia’s future.
What Peter Dutton would do is what he did last time when they were in office. When he was Health Minister he went after Medicare. The Coalition government went after wages and conditions. We know that he’d push up electricity prices with this nuclear insanity that he has been going on about.
This is the choice at the election as we get closer and closer to the decisions that the Australian people will make.
Karvelas:
Treasurer, Wednesday’s quarterly inflation figures are clearly really important. But my colleague Alan Kohler has written a piece today saying that the RBA cuts interest rates when unemployment goes up, not when inflation comes down. And right now the unemployment rate is falling; it’s not rising. Do we need unemployment to rise for interest rate cuts to become a reality for people?
Chalmers:
A couple of things about that. First of all, Alan Kohler is terrific and I pay a lot of attention to what Alan says about the economy and he’s earned the right to express a view. Unemployment actually did tick up a little bit in the most recent data, but it is extraordinarily low.
Average unemployment under Anthony Albanese is actually the lowest it’s been of any government for the last 50 years. What that shows and where I differ a little bit from Alan’s analysis just on this occasion is that what Australia has shown is we can make really substantial and sustained progress on inflation at the same time as we get wages up and keep unemployment remarkably low and create those 1.1 million jobs, which is a record for a parliamentary term.
Alan is engaged in the debate that a lot of economists are engaged in right now, that is to try and work out what do they think full employment is. I released on behalf of the government a full‑employment white paper not that long ago which engaged with some of these questions.
Whether it’s 4 and a half per cent, which is the current Reserve Bank estimate, 4 and a quarter, which is what the Treasury has, a lot of the private sector economists and banks think it’s much lower than that and academics as well. There is a pretty willing debate going on about what full employment looks like.
But I would just point to the experience that Australia has had. We’ve been able to chop 5 percentage points off headline inflation at the same time as we’ve kept unemployment low. That hasn’t been the case in a lot of other countries. A lot of other countries have paid for the kind of progress we’re making on inflation with much higher unemployment.
We’ve been able to get inflation down, wages up, keep unemployment low, roll out cost‑of‑living relief, deliver 2 surpluses, all simultaneously –
Karvelas:
Okay, but –
Chalmers:
– and that, I think, is a tribute to the Australian people and the progress that we’ve made together the last 2 and a half years.
Karvelas:
Can Australians afford for interest rates to be kept on hold, or do they need to be cut?
Chalmers:
As you know, Patricia, over various media over a long period of time I don’t make commentary or suggestions or give free advice to the independent Reserve Bank –
Karvelas:
No, but in terms of Australians and how they’re coping right now.
Chalmers:
Yeah.
Karvelas:
You can make a call about that.
Chalmers:
What I can say –
Karvelas:
Can Australians afford their mortgages as they are, or do they need an interest rate cut, Treasurer?
Chalmers:
Interest rates are one of the substantial pressures on household budgets right now, not the only one, but a very substantial pressure on household budgets. That’s acknowledged and recognised across the board.
For me, I take responsibility for my part of this, which is fighting inflation – and we’ve made that progress – keeping unemployment low and rolling out this cost‑of‑living relief, making sure that real wages are growing again, making sure we’re delivering those surpluses which the Reserve Bank Governor has said has been helpful in the fight against inflation. Those are my responsibilities.
I don’t want to say anything to you, Patricia, and to all of your viewers on your first program which would be confused with me giving free advice to the independent Reserve Bank. I respect them too much to do that. They will weigh up all of these developments in the economy over the last little while when they meet towards the middle of February. They’ll come to a decision independently.
Karvelas:
The WA Premier Roger Cook has written to the RBA board imploring it to cut interest rates. Is that appropriate?
Chalmers:
It’s a matter for Roger. We have different responsibilities. Roger Cook, very fine Premier of WA, someone I have a lot of time for, someone I speak to from time to time, including on the weekend. He’s within his rights to make his views known. I’ve got a different set of responsibilities.
My objective is the same as the independent Reserve Bank – to get on top of inflation, to maintain low unemployment, to keep the economy ticking over. These are our objectives, but we’ve got different responsibilities, I recognise that. I respect that, and that’s why I focus on my job, not Michele Bullock’s.
Karvelas:
Okay. At the moment you’d be across the latest Newspoll which shows most Australians, at least in that survey, think the Coalition will win. Do you go into this election as the underdog?
Chalmers:
Certainly we acknowledge that the election is going to be really tight. It’s going to be –
Karvelas:
But do you see yourself as an underdog? Do you see yourself as being behind and, therefore, this is Peter Dutton’s election to lose?
Chalmers:
Governments around the world, incumbent governments, are under a lot of pressure, and we’re no exception. I’m reluctant to get into the kind of political analysis of opinion polls. Obviously I notice them, but I don’t obsess over them.
Those opinion polls we’ve been seeing for a little while now again reflect the very real and genuine pressures that people are under. But as we get closer to the election it will be less about people expressing a view about whether they’re under the pump. We know that they are.
What really matters is that Labor has been there to help people with cost‑of‑living help, and that’s been because of Labor and despite the opposition who didn’t want to see this cost‑of‑living help rolled out and who will take the country back to cuts to Medicare and lower wages.
That’s the choice as we get closer and closer to the election. They do reflect the pressures that people are under. We understand that, but more than understand those pressures we’re responding to them in a meaningful but responsible way.
Karvelas:
Treasurer, I want to move to superannuation. Are you in negotiation with senators to try and get your super changes through before the next election?
Chalmers:
There were some discussions towards the end of the parliamentary year last year. Obviously we’re open for any further discussions with crossbench colleagues in the Senate –
Karvelas:
But we’ve got 2 sitting weeks coming up.
Chalmers:
Yeah.
Karvelas:
Do you see those 2 sitting weeks as being the opportunity to pass the superannuation changes?
Chalmers:
Yeah.
Karvelas:
Is it likely to get through?
Chalmers:
Look, ideally, I would see that fortnight as an opportunity to pass those changes. Those changes reflect or impact a very, very tiny sliver of people with the highest superannuation balances.
I’ll work respectfully with the crossbench colleagues to try to pass that important legislation, and I say to the Coalition, to Angus Taylor and Peter Dutton, if you oppose this responsible change to the budget, they’ve got to nominate where they’ll find this couple of billion dollars a year when it’s up and running completely.
We know where Peter Dutton found it last time – he went after Medicare and imposed a GP tax on bulk billing and Medicare. We’ve got a different set of priorities. We think this is a responsible measure. We think it should pass the Senate, and if the Coalition doesn’t think so, they should nominate and cost an alternative.
Karvelas:
But you’ve got senators like David Pocock who are opposed to this. Are you in negotiations with somebody like David Pocock to try to convince them, or are you talking to him about changes that you could make to that legislation?
Chalmers:
We have been from time to time. We haven’t in the last week or 2, but we closed the parliamentary year deep in negotiations with the Senate crossbench. That’s why I pay tribute to Katy Gallagher and Penny Wong and the Prime Minister for the progress we were able to make on the legislative program. A lot of discussions then. They haven’t really restarted in the last week or week or 2. But no doubt there will be conversations with crossbench colleagues in the Senate to try to pass as much of our agenda as we can when parliament comes back in February. And this is part of that.
Karvelas:
You are working on your March Budget, although, of course, there are question marks about whether we will have a March Budget.
I know you won’t tell me whether it will happen or not, that’s up to the Prime Minister to run – of course, to call the election. But I’m just wondering what discipline you’re applying to this process given elections, we know politicians love spending money during elections. Are you asking ministers that are coming through that budget process to provide offsets, cuts for any spending that they’re projecting or asking for?
Chalmers:
Yes. And, frankly, one of the untold stories of our responsible economic management over the course of the first 3 budgets and which would be a feature of the fourth is we’ve found something like $92 billion in savings to help pay for our priorities – Medicare, building the future, cost‑of‑living help and all of our priorities.
That’s been a part of the reason why we’ve delivered 2 surpluses, delivered a $200 billion positive turnaround in the budget got the Liberal debt down and avoided tens of billions of dollars in interest costs in the Budget. So savings were a feature of the first 3 Albanese budgets, they will be a feature of the fourth as well.
That’s because we recognise that in order to fund the things that our society and our country desperately needs, we need to make room for that. We’ve shown an ability to do that in the past, and we’ll show the ability to do that in the future as well.
Karvelas:
Just finally and on a very different topic, but, of course, Australia Day was yesterday and there have been some discussions in relation to that and that date. Sussan Ley has compared the arrival of the First Fleet with Elon Musk’s efforts to build a colony on Mars. The Prime Minister criticised her. What do you think is wrong with the comparison?
Chalmers:
Honestly, if I focused my time and energy on crazy stuff that Sussan Ley says, I wouldn’t get anything else done.
The maddest thing that Sussan Ley has said was when she was asked a year ago this month whether the Coalition would roll back Labor’s tax cuts for every taxpayer, she said that was absolutely their position. And so I can’t focus on mad stuff that Sussan Ley says from time to time –
Karvelas:
Why do you think it’s mad, though?
Chalmers:
It’s mad because at a time when people are under cost‑of‑living pressure, they’ve got a government, this Labor government under Anthony Albanese, focused on the cost of living and beating inflation and they’ve got a Coalition led by Peter Dutton focused on conflict and culture wars.
That’s what this speech was all about – it was deliberately written to try to provoke a response. I’m not going to take the bait. Sussan Ley says crazy stuff all of the time.
I’m focused on the cost of living. They’re focused on culture wars.
I’ll keep doing my job without obsessing over every B‑grade speech that Sussan Ley gives.
Karvelas:
So did the Prime Minister take the bait?
Chalmers:
He was asked about it as a press conference, just as you’ve asked me about it on this occasion. We try to answer your questions as respectfully as we can. He was asked about it at a press conference. You’ve asked me about it as well.
I know the Prime Minister and I know he’s focused on the cost of living and inflation and building Australia’s future, and there’s a very clear contrast there.
Peter Dutton is always trying to pick fights. He’s always looking for conflict and culture wars when Australians desperately want and need and deserve a Labor government which continues to focus on the things that really matter – and that is primarily the cost of living.
Karvelas:
I look forward to many conversations in the future. Thanks for joining us.
Chalmers:
Thanks, Patricia.