Patricia Karvelas:
I want to bring in the Treasurer, Jim Chalmers. And today marked the beginning of the appointment of new Treasury Secretary, Jenny Wilkinson. Treasurer, welcome to the program.
Jim Chalmers:
Thanks very much, Patricia.
Karvelas:
The Foreign Minister says the government is considering operating charter flights to retrieve stranded Australians when it’s safe to do so. This is obviously a very dangerous part of the world, there are many Australians who are dual nationals and others who are trapped in this region. What are the considerations around this? It’s a very hard operation to pull off.
Chalmers:
It sure is, Patricia, and the Foreign Minister is working diligently with her colleagues in the Department of Foreign Affairs and Trade and others to see what can be done for these hundreds of Australians who are potentially in harm’s way in a very dangerous part of the world right now.
Karvelas:
The Middle East war is escalating, the oil price spike caused by that conflict will mean obviously higher petrol prices. What are your expectations around our prices here and the impact on inflation? What’s Treasury telling you about what this will mean?
Chalmers:
This is a perilous moment for the Middle East, and it’s a perilous moment for the global economy as well, and we are focused primarily on the human cost of what’s happening in the Middle East. That’s why we urge dialogue and de‑escalation, but there will be, and there are already substantial economic consequences as well.
On Friday we saw a very substantial spike in the oil price, for example, somewhere between 10 and 11 per cent spike in the price of oil per barrel. It’s still higher now than what it was at the beginning of the last week, but it’s moderated a bit, so very volatile oil prices, and commodity prices more broadly as well.
Now this obviously poses 2 kinds of risks, higher oil prices do pose a risk to the inflation outlook, but they also pose a risk to global growth.
Typically, what Reserve Banks do, Central Banks, not just our own, they try to look through temporary spikes in prices and to consider the broader implications.
It is interesting that after the events of last Friday and Saturday the market’s expectations for interest rate cuts in Australia actually increased rather than decreased. And what that tells us is that the market is more focused on the implications for global growth, particularly if we see some of these sea lanes close down, important sea lanes. The market is more focused on the consequences for growth than any near‑term consequences for inflation.
Karvelas:
That’s really interesting. So you’re saying that the risk to global growth from the Middle East conflict we’re currently seeing, especially if it’s protracted, is more dangerous for our economy. You say the market says this. What is your own department telling you, Treasurer, about the ramifications of a conflict that – you know – could go on for weeks, even potentially months?
Chalmers:
Unfortunately this is an important part of the global economic volatility that we’re seeing, but it’s not the only part. Escalating trade tensions, of course, unpredictability in the global trading system, softness in the Chinese economy, conflict between Ukraine and Russia ongoing, in addition to the risk of broader escalating regional conflict in the Middle East.
So, the global economy is a pretty dangerous place right now. Australia is well‑placed and well‑prepared to deal with all of this uncertainty and volatility, but we won’t be immune from it.
All the advice that I’m getting is that the best defence against this global economic volatility is a stronger economy and a stronger budget here at home. And that’s going to be one of the primary focuses of the Press Club speech that I’ll be delivering on Wednesday, which is primarily focused on the productivity challenge in our economy.
That will be the primary focus but not the sole focus, it will also be focused on budget sustainability, and also how we make our economy more resilient in the face of all this global uncertainty.
Karvelas:
Well, I was going to ask you about that, but now I will, rather than wait, why not; you’ve raised it. Your speech will be centred around productivity. It was at the same place, clearly your government loves it, the National Press Club that the Prime Minister made his announcement about the productivity August meeting.
On that meeting, business representatives are approaching that with some cynicism, I think it’s fair to say, they saw the 2022 Jobs Summit and the Skills Summit as meeting union demands. Will your message be on Wednesday that this will be different, that this will be sort of an even playing field in terms of voices and what they’re calling for?
Chalmers:
Certainly we come to this with an open door and an open mind, that’s our approach to the roundtable that the Prime Minister’s asked me to convene.
It will be in the second half of August. It will be in the Cabinet room which gives you a sense of the size of the gathering. It will be a much tighter, much more focused, much smaller discussion between key peak representatives, whether they’re business, or unions, the community sector, experts or the government. So, a much smaller, more targeted gathering in the second half of August in the Cabinet room.
Its priorities will be productivity, budget sustainability and resilience in the face of global volatility.
Now I give the same commitment to the business community, privately and publicly, to the union movement, to the community sector and experts. This is a genuine attempt to build consensus around the next steps in our economic agenda.
We’ve already got a very ambitious agenda when it comes to making our economy more competitive and dynamic and more productive, we’ve already made some good progress together as Australians when it comes to our economy, but our economy’s not productive enough, and that’s why we are gathering people in this genuine attempt to build consensus.
Now I don’t agree with the interpretation you describe from the Jobs and Skills Summit. I think that was a very useful opportunity to come together and get around some of these big economic challenges, many of which since then we have made substantial progress on together.
But I do give this undertaking to everyone participating in the roundtable, indeed everyone who will provide ideas in the lead‑up to the roundtable and subsequently. We do have an open mind, we do have an open door, this is a genuine attempt to try to build consensus around our shared understanding of what we can do better in our economy. We’ve made all this progress, but our economy’s not productive enough, and so we want to build consensus around next steps.
Karvelas:
Okay. You say it’s going to be in the Cabinet room. I tried to do some maths about how many people fit into the Cabinet room, and I failed, so you can just answer it. That’s not a lot of people, right? How many people are you going to fit into that Cabinet room? It means some people are going to be very disappointed that you reject them.
Chalmers:
First of all, we are very grateful for the really substantial amount of interest that has been shown. Hundreds of organisations have made contact with the government in one way or another indicating their interest.
This is going to be quite a tight conversation, it is in the Cabinet room, somewhere between 20 and 25 people are likely to be invited, we’re finalising the invitation list.
But I want to provide this assurance to everyone who’s indicated their interest in these discussions and these considerations, and that is that the roundtable itself won’t be people’s only opportunity.
I had a really great discussion with Cabinet colleagues today about the work that they will do in their own areas of interest to make sure that we are building broad consensus around these big economic challenges, primarily but not solely, productivity, budget sustainability and resilience, and so there will be a number of opportunities for people to feed in their ideas, and I really encourage them to take those opportunities.
Karvelas:
Are you going to walk out of that meeting with some big bold commitments though, Treasurer, in relation to productivity? Is it the beginning or the end of the process?
Chalmers:
It’s part of the process. I mean let’s see what people propose. I don’t want to come to a concluded view before we’ve heard everybody’s ideas. I think it’s important that we don’t spend the whole duration of the roundtable identifying the problem. I think the problem is broadly understood.
Our economy’s not productive enough, we need to have a broad view about how we boost productivity over time, recognising that if there was some switch that we could flick to make our economy instantly more productive, somebody would have flicked that switch already.
So, it will take time, it will take consensus, it will take people’s good ideas, and ideally, we will come out of that Roundtable with a way forward. I don’t want to pre‑empt what that might look like. It won’t necessarily be the end of our efforts, nor is it the beginning, to be fair.
Now we’ve done a lot of work on our productivity agenda across skills and energy, the care economy, competition policy, we’ve made a lot of progress, but we want to contemplate and build consensus around next steps, and that’s what this opportunity’s all about.
Karvelas:
Okay. At the Jobs and Skills Summit in 2022, I recall the Opposition Leader was invited, didn’t want to come, the Nationals Leader did come, and it was controversial at the time. Will Sussan Ley get an invite?
Chalmers:
We’re finalising the invitations. Again, I’d say to Sussan Ley or to her colleagues that there will be lots of opportunities for people to play a constructive role in this big national consideration of our productivity challenge, whether they’re inside the room or outside the room.
I don’t detect so far a lot of willingness to be constructive about the government’s economic agenda. But there will be people who can play an influential role who won’t necessarily be around the Cabinet table. We are finalising the invitation list. But you can imagine the sorts of people that we’ll be inviting, the heads of the major peak business organisations, obviously the head of the ACTU, obviously we want the community sector to be involved in one way or another, and there will be room for some expert input as well.
And so, people will see the invitation list, not on Wednesday, but subsequent to that –
Karvelas:
I’m guessing that the Productivity Commissioner will be there?
Chalmers:
Of course, and the work that Danielle Wood is doing as the Chair of the Productivity Commission will be central to our considerations. And we’ve commissioned a series of reports from the Productivity Commission, and that will be a key input into the discussions.
Karvelas:
Treasurer, I have to ask, the South Australian Government has so far commented, and it says it needs to be convinced that a takeover bid for the oil and gas company, Santos, represents a good deal. This deal will create a big foreign investment decision for you. It lands in your lap. There’s a lot of concerns about selling gas assets to a foreign government‑owned company. Are you concerned?
Chalmers:
First of all, there will be a range of views, including the South Australian Government’s. I think it’s appropriate that people express a view. This is potentially a very large transaction. There are, as I understand it, still a number of steps that need to happen before it becomes a transaction.
I will listen very closely, if it comes to it, to the advice of the Foreign Investment Review Board, but I won’t pre‑empt that advice.
Karvelas:
Okay. But you understand the principle here that selling gas assets to a foreign government‑owned company would obviously raise alarm bells for many.
Chalmers:
I’m sure you understand as well, Patricia, as the custodian of the foreign investment regime, someone who’s asked from time to time to make decisions, including big decisions like this could potentially be, that it’s not a good idea for me to pre‑empt the FIRB advice. I don’t intend to do that in this case. People will have a view. I welcome people expressing their view.
Karvelas:
Okay.
Chalmers:
I’m unable to, because I may have to make a decision on this at some stage. It would be a big decision, and I do intend to take the FIRB advice seriously, and I don’t intend to pre‑empt that advice.
Karvelas:
The Prime Minister is going to meet with Donald Trump. Is AUKUS the biggest thing that he needs to resolve in this meeting now over tariffs?
Chalmers:
They’re both important issues, as the Prime Minister indicated in that clip that you played a moment ago. Obviously, this is a relationship of mutual economic and national security benefit. We want to maximise that relationship in the interests of our people –
Karvelas:
Okay, but if –
Chalmers:
– our workers, our industries.
Karvelas:
If the US President asks for a bigger spending on defence, which clearly his administration wants, do you have an open mind about increasing defence spending?
Chalmers:
First of all, I don’t think you and I should have the conversation necessarily that –
Karvelas:
Are you sure?
Chalmers:
– the Prime Minister and the President will have before long, but I think it’s been made clear around the world that the Americans would like to see their partners invest more in defence.
We are investing a substantial amount more in defence, almost $11 billion extra over the forward estimates, almost $58 billion extra over the next decade. That’s a very substantial increase in investment in defence, something that I’m proud that we’ve made room for in our budget.
Our allies and friend will have views about that. No doubt President Trump will express those views to Prime Minister Albanese, and we’ll hear all about the meeting after it’s occurred.
Karvelas:
Okay. Just final question: you have 3 women in 3 key roles, the Reserve Bank Governor, the Productivity Commissioner and your own department of Treasury now. Which I think is a very historic moment for women, that women are in charge of the big economic roles, apart from your job, but you know, there’s time. There’s other appointments too, you’ve released today statistics in relation to women being put in key roles. Has it been a deliberate decision of yours to try and stack all of these roles with women?
Chalmers:
For too long women have been under‑represented in key government institutions and particularly when it comes to economic policy. It has been a deliberate strategy of our government in our portfolio to rectify that, and we’re really pleased and proud of the progress that we’ve been making.
I work closely with Katy Gallagher to make sure that we can make these appointments. It is a source of considerable pride for the first time in our history, starting today, a woman leading the Treasury Department.
I’m excited about working with Jenny Wilkinson, an outstanding public servant and economist, also for the first time at the RBA, and the first time at the Productivity Commission, and that is a deliberate strategy, it does recognise that for too long women have been under‑represented.
I pay tribute to organisations like Women in Economics and others who have helped ensure that we can right this wrong, and in the time that I’ve been Treasurer, I think something like two‑thirds of the appointments that I have made in my portfolio have been women. That’s a very good thing. We’ve got more work to do as well. But to have women head up those 3 key economic institutions is something that the whole country should be proud of.
Karvelas:
Yeah, I think that’s right. Thank you so much, Treasurer.
Chalmers:
Thanks Patricia.