PATRICIA KARVELAS:
Treasurer, welcome back to breakfast.
JIM CHALMERS:
Thanks very much Patricia.
KARVELAS:
Do you have the appetite for big changes to resuscitate productivity in this country?
CHALMERS:
We do, Patricia, and already we're moving in a number of the areas that the Productivity Commission will be talking about when they release their 5‑yearly review around the middle of today. Already in areas like skills and universities and cyber and technology and migration ‑ really right across the board, across all 5 themes identified by the Productivity Commission today, we are already acting, and we've got some more work to do. And that doesn't mean that we'll agree with every one of the 71 recommendations put forward by the PC today. In the last 5-yearly review, the last government fully implemented precisely zero of the recommendations of the 5-yearly review. There'll be some that conflict with our priorities and our values. But overwhelmingly, the directions and the themes set out in the report today are areas that we're interested in and that we're progressing.
KARVELAS:
What are those areas where there will be conflict? Is industrial relations one of those areas?
CHALMERS:
I think you can expect that and I gave a speech yesterday in Brisbane to CEDA, where I talked about the multiple ways that you can achieve our objectives for productivity. And you mentioned in your introduction, the thing about what will happen to Australians if we don't strengthen our economy, if we don't make it more productive. We don't want Australians to have to work harder for less money, and one of the reasons, the primary reason really, why we want to make our economy stronger and more productive is so that we can lift incomes and lift living standards. In our view, the best way to do that is invest in people, invest in their abilities and their capacity but also to fix the energy markets and also make sure that we are adapting and adopting technology in ways that work for us, not against us. And those are really our priorities coming out of this Productivity Commission review.
KARVELAS:
When Australians, like Australians all over the country listening to this hear that our productivity is low I think sometimes some of the language is absolutely meaningless to people ‑ why are we so much lower than in the United States? What are we doing that is so wrong?
CHALMERS:
I think there's a range of reasons for it, but primarily we haven't done as good a job as we need to in terms of some of those areas I just identified. We've got this massive opportunity when it comes to technological change, we've got this massive opportunity when it comes to cleaner and cheaper, more reliable, and increasingly renewable energy, we've got this big chance as our economy becomes increasingly dominated by services, particularly in the care economy. And so we've got these big shifts in our economy, these big trends and transitions, and we haven't taken full advantage of that. And that's why so much of our economic plan is about making sure not just that we respond to these pressures in our economy in kind of a defensive way but that we actually maximise and modernise our economy to take advantage of them. And that's why what I've been talking about is turning these headwinds that the Productivity Commission has identified and making that tailwinds ‑ that's how we see this opportunity. But I think you're right, that when Australians hear about productivity, and they see headlines about working longer for less and all of the rest of the warnings that the Productivity Commission have in this report that they're releasing today, I do understand that it makes people worried and that's not our intention. Our intention is to say, this is what might happen in our economy if we don't do some of the things that we're doing right across the board but particularly, when it comes to investing in people, in energy and in technology.
KARVELAS:
You're planning an overhaul of the Productivity Commission and this has been really your approach on a couple of key institutions, obviously the RBA is the most well‑known one that matters to people a whole lot. You've said the body has been used as an ideological parking lot. What do you mean by that and do you want to just make it a parking lot for your ideology next?
CHALMERS:
No, of course not. In the broad, I think you're right to identify that I think we've got these great economic institutions, but they shouldn't be beyond us thinking about how do we modernise them and how do we make them relevant as our economy changes, and our society changes and our circumstances change, which is really what we're talking about when it comes to the Productivity Commission. It was set up 25 years ago. It has played a role in economic reform over those two and a half decades but I think we could be getting more out of it. I think that this is a good opportunity to be thinking about how do we maintain its independence, how do we maintain a focus on productivity, but how do we broaden and modernize its role. So that's taking advantage of data, for example, and thinking about different ways to measure productivity in our economy, how do we make sure that it's got the right guidance, the right structures, so that we can rely on it more heavily. Some people think we should abolish it, some people think we should leave it completely as it is. I have neither of those views, I think we can make it even better.
KARVELAS:
Will you formalise a review into it, making it better? I mean, you have done that with the RBA. What might that look like?
CHALMERS:
It won't be like the RBA Review. I thought the RBA review was important that we got 3 external reviewers in for that task. But we have already begun via the Treasury, a review process. The Treasury is already consulting with a number of people who've got a view about the future of the Productivity Commission, people who've been involved in it in the past, and people who've got a view on its future. And so that's already happening. That's been happening since I flagged this earlier in the year that we should have a look at the PC and see if we can make it better. And so there are a number of people around Australia who've already been consulted, and there'll be more work to do on that front. I hope to say more about it later in the year.
KARVELAS:
Okay, so there'll be an announcement in terms of changes you'll make by the end of the year?
CHALMERS:
We'll see what the consultation process delivers and obviously I'll consider all of that but my intention is to say more about it by the end of the year.
KARVELAS:
Okay, let's move to a couple of other issues and of course financial markets, banks, the Reserve Bank, there's a lot of nerves at the moment. And let's start with one issue and then move to another. We're going to start with Latitude. Consumer finance provider Latitude Financial believes that identification documents of 328,000 customers were stolen, including the driver's license details of up to 100,000 customers. What interventions and support is the federal government providing to protect those affected?
CHALMERS:
What we learned earlier in the life of the government, when we were relying on the processes we inherited to deal with Optus and Medibank was that we needed to do a better job coordinating government responses to these sorts of issues. We know that some of these identities were compromised and we have stepped up the government processes behind the scenes to work through the issues. The Department of Home Affairs is coordinating that and you'll hear more from us in due course.
KARVELAS:
Okay. We haven't heard much from Chief Executive Ahmed Fahour. Should he be more actively involved, speaking publicly about this? When the other crises happen that you identified, we saw the bosses out there, what's happening?
CHALMERS:
I think there is a hunger for information and people are obviously concerned when we have these kinds of data breaches, and there's a hunger for information, and I understand that. From our point of view, the most important thing is that we are engaged with companies which are affected when these sorts of issues come up, that we're coordinating across government, and providing the information that we can when we can, and as I said before, that will happen via Home Affairs and its Minister Clare O'Neil.
KARVELAS:
The global banking market has been on alert this week after the collapse of Silicon Valley Bank and the bailout of Credit Suisse overnight. How safe is Australia's banking sector? What's your assessment?
CHALMERS:
Our banking system is really well capitalised. It's got a really strong liquidity position, it's well regulated, and we are well placed in Australia to withstand some of the volatility and vulnerability and uncertainty that we're seeing elsewhere in the world, in banking systems ‑ whether it's in Europe or in North America. Again, this is something that we are monitoring very closely ‑ and whether it's Silicon Valley Bank, and the steps taken by the American authorities, whether it's Credit Suisse and the steps taken by the regulators, and the loans provided by the central bank ‑ we're monitoring it very, very closely. I convened a meeting on Monday of APRA, ASIC, the Reserve Bank, the Treasury, my colleague Stephen Jones, and also Ed Husic, given Silicon Valley Bank has got a high preponderance of tech customers. And ever since then, I've been getting briefed twice a day on developments here. Credit Suisse has got some long‑standing issues that it has been working through and I think some of the concerns around Credit Suisse have been eased by the fact that they've accessed that Swiss central bank facility. And Silicon Valley Bank, the US authorities have stepped in and guaranteed the deposits and that's had a bit of a calming effect, but I think still ‑
KARVELAS:
We're not out of the woods?
CHALMERS:
There's still a lot of uncertainty and a lot of vulnerability and volatility. There is a lot of concern. But in the Australian context, the advice that I've received repeatedly through the course of the week as our regulators stay on top of developments is that Australian banks are well regulated, well capitalised, and we are well placed.
KARVELAS:
And how do you view that bailout that Credit Suisse received, was that a key and important moment? It's also being criticised that here is a bank, as you say, making some pretty fundamental mistakes just being bailed out?
CHALMERS:
Well, it's accessing a Swiss central bank facility, a loan facility of the Swiss central bank. And I think people would rather see that happen than not happen. Similarly, in the US with Silicon Valley Bank, steps were taken there to kind of calm the nerves of the markets there, and I think overwhelmingly, those kinds of steps have been welcomed. There are long standing issues in Credit Suisse, as I said. Silicon Valley Bank was particularly exposed to rate rises, their position was not up to scratch when it came to rising interest rates. And so there are different circumstances playing out but it is feeding into some uncertainty, and some concern in global markets. But from an Australian point of view, it's important that your listeners understand the regulators are monitoring it very, very closely. We're well regulated, well capitalised and well placed.
KARVELAS:
This morning, the US State Department approved the possible sale of $1.3 billion worth of Tomahawk cruise missiles to Australia as part of the AUKUS partnership. Is that an additional cost to that $368 billion price tag, or is that part of the same deal?
CHALMERS:
Well, to the extent that we've made it clear that we want to upgrade our capabilities working with our allies, then obviously it's consistent with that but in terms of that specific part of the discussion with the Americans, I'll leave that to Richard Marles to update people in due course.
KARVELAS:
There are growing Labor voices against your AUKUS deal. Peter Garrett and a little earlier on our program Doug Cameron have backed parts of Paul Keating's criticism of the deal. Do you accept that the policy is not supported by the Labor rank and file?
CHALMERS:
I think that's a difficult proposition to test, first of all, but if the point that people are making and that you're making in your question is that there are a range of views about a big policy decision like this, then I think that is self‑evident. But we've made the right call here, we've made it for the right, contemporary reasons. It's a big investment in our national security but also in our national economy and we don't expect unanimity when it comes to a big, important call like this.
KARVELAS:
But they're saying this is a huge departure actually from Labor positioning on these issues. Do you accept that philosophically this is actually quite a big departure?
CHALMERS:
I think there have been important times in our history that we've worked closely with our international partners to invest in our national security and it’s certainly not a big departure from the position that we took 18 months ago, in fact it gives life to the decision that we took in Opposition, we do see this as a crucial investment in our national security and in our national economy, it'll have benefits right around the country for our people and as I said before, it's the right decision taken for the right reasons and it won't be unanimously supported. We understand that.
KARVELAS:
Paul Keating is a Labor giant, when he speaks people listen, and he says this is a bad deal for our country. Doesn't it worry you?
CHALMERS:
He's had a longstanding view about this. The things that he said at the press club earlier in the week, he has said some of those things before including at the Press Club last year, so he has a longstanding view about it. He's certainly earned the right to express that view but I don't share it and the government doesn't share it and he's particularly wrong I think when it comes to my colleagues. My colleagues are outstanding people doing an absolutely terrific job.
KARVELAS:
So they haven't drunk the Kool‑Aid of the national security apparatus?
CHALMERS:
Of course not. Of course not. Our job as a government is to work methodically through the issues as we understand them, to deal with them in a methodical and responsible way and to come up with the right decisions for the right contemporary reasons. And that's what we've done.
KARVELAS:
Okay. Your PhD was on Paul Keating. Do you need to revise your PhD or do another chapter or something? What can you tell us about what's happening here? He is a Labor statesman. It is a big deal for him to criticise your key defence and foreign affairs policy.
CHALMERS:
Well, I mean, that's self‑evident that when Paul Keating speaks it has an impact on the national political debate but that doesn't mean that we have to share his view necessarily. As I said before, I think he's particularly wrong about my colleagues and the views that he's expressed are longstanding views, these are views that –
KARVELAS:
Should we listen to him anymore though? Should we listen to him anymore?
CHALMERS:
Well, for me personally, Paul Keating is someone who is important to me. My friendship with Paul means a lot to me but that doesn't mean that I have to agree with him in every instance and I don't agree with him in this instance.
KARVELAS:
Will you keep your relationship with him and keep taking advice from him and talking to him?
CHALMERS:
Of course, I'll keep talking to him and I don't think I'll be the only one but I've made it really clear this morning and on other occasions that I don't agree with his view here and the government doesn't agree either and I think in particular, when it comes to his assessment of Richard and Penny and Anthony, I don't agree with that at all. You're asking me about my relationship with Paul Keating, I'm being up‑front with you and saying that it matters a great deal to me, it does. And I talk to him about the economy very frequently, sometimes multiple times a week. I talked to him about superannuation and other issues, and I'll continue to do that.
KARVELAS:
Treasurer many thanks.
CHALMERS:
Thanks, Patricia.