PATRICIA KARVELAS:
For two months in a row now inflation figures have slightly fallen. But for many, the cost of living is getting harder and harder still. The inflation rate was down from 7.4 per cent to 6.8 per cent last month and with the RBA to meet again next week, there are hopes they may pause on rates. Jim Chalmers is the Treasurer and joins me now. Treasurer, welcome back to Breakfast.
JIM CHALMERS:
Thanks, Patricia. How are you?
KARVELAS:
Good. We know last month the RBA was considering pausing further rate rises. Is this latest inflation data enough to convince them, do you think?
CHALMERS:
Well I think you're right to say that the Reserve Bank Board and the Governor have themselves said that they're getting closer to contemplating a pause. Obviously, that's not something that I make predictions about or second guess the independent decisions taken by the Reserve Bank. But clearly, they will factor in everything that's happened in our economy since the last time they met.
Yesterday, we did see inflation moderating even further, still unacceptably high, but moderating from its peak at the end of last year. We had a relatively flat retail sales figure during the week and there's a whole lot of global uncertainty that people are working their way through as well. So they'll weigh all of that up, they'll weigh that up against the inflation challenge that we still have in the economy, they'll weigh that up with the fact that people are under the pump in this country as they deal with these cost‑of‑living pressures, even as they moderate.
KARVELAS:
They are under the pump. Despite the slowing of inflation, the price of essentials is still astronomical ‑ bread and cereal are up more than 12 per cent, dairy products up 14 per cent, electricity is up 17 per cent. How can people continue to live like that and see their mortgages potentially go up as well?
CHALMERS:
There's absolutely no question that those price pressures that you just ran through are putting the family budget under pressure more broadly, we recognise that, that's why so much of what we do in our economic plan is about trying to take some of the edge off these cost‑of‑living pressures ‑ whether it's medicines, whether it's early childhood education, there will be some help with electricity bills in the May Budget. We're trying to get wages moving again so that people who work can provide for their loved ones, all of these things together are designed to try and take some of the edge off these cost‑of‑living pressures but we recognise that they are there. Even as inflation moderates in welcome ways, we do know that people are still under pressure and that's why the primary focus of our economic plan is still this inflation challenge in our economy.
KARVELAS:
Well, you're currently devising the Budget. In fact, I suspect you're absolutely knee deep in constructing the Budget. You talk about more cost‑of‑living help when it comes to electricity prices. Treasurer, given those figures I just read out which are staggering and people are living with those every day making very hard choices, will there be more support for them in the Budget?
CHALMERS:
We have said throughout that when we can afford to provide a bit more help for people, then we will look to do that. And we haven't nailed down all of the decisions for the Budget in May, you're right to say that this is really the intense period of decision making. For example, I've now received the report from Jenny Macklin, the Economic Inclusion Advisory Committee, Katy Gallagher has received the first part of the report from Sam Mostyn and the Women's Economic Equality Taskforce. And so we have a range of issues to consider as we put this Budget together. Cost‑of‑living relief is the priority and we need to provide that where we can in the most responsible and affordable way consistent with the Budget constraints that we've got as well.
KARVELAS:
Well, you've already gone to something I wanted to raise with you. We already know some of the recommendations in those reports. I'm going to go to one of them which is that single mothers should not be forced onto the unemployment benefit which is a lower payment when their youngest child turns eight. Is that something that's in the mix for this Budget?
CHALMERS:
Well, it's certainly something that is being raised with us including in those two reports that I just mentioned and so that's something that we are considering. We're working through both of those reports in a methodical way. We haven't taken any decisions about it but we do try and recognise the specific pressures on particular groups in our society, we do try and do the right thing by them. But again, subject to those constraints in the Budget, I think people do recognise broadly that we can't do absolutely everything that we would like to do in one hit.
KARVELAS:
I think people do ‑ I don't mean to be rude and interrupt ‑ but yes, people do I think recognise that, they know. But I just want to get a sense from you about the priority on this particular issue. Are you see signalling to our listeners don't expect it now? Is that what you're saying? Or is it under active consideration for this Budget?
CHALMERS:
What I'm saying to your listeners is we know that there is an issue there. We've received a couple of reports which point to this particular issue and what we do in the normal course of events and what we are doing now is working through those recommendations in a methodical way. But I'm trying to also speak directly to your listeners about the pressures on the Budget. There are a range of things that we would like to do, a lot of things that we would like to do and we can't do everything at once. We need to work out what the highest priorities are and that's the process that we're engaged in now.
KARVELAS:
The ACTU says they're calling for a wage rise of seven per cent. Do you think that's the right rate?
CHALMERS:
We'll make our own submission to the minimum wage review. The unions make a submission, we make a submission, the various business groups. And the government's submission won't mention a specific number like the unions do but our submission will be consistent with our values and our policies and our objectives and one of our highest priorities is to get wages moving again in meaningful and sustainable ways and I think it's common sense to prioritise the lowest paid as you go about that.
Some people want to pretend that we've got an inflation problem in our economy because the lowest paid Australians are getting paid too much and that is obviously absolute rubbish ‑ we've got an inflation problem because of a war in Ukraine combined with neglected supply chains over a wasted decade which has made us more vulnerable to some of these price shocks. So we don't have high inflation because low paid workers are being paid too much. We have said consistently since before the election and certainly after the election as well that we don't want to see the lowest paid workers in our economy go backwards. So -
KARVELAS:
Going backwards would mean that the minimum wage rises by less than seven per cent. So you think it should be about seven per cent then?
CHALMERS:
We'll make our submission public when we submit it.
KARVELAS:
Which is tomorrow, so you know what's in it. Just give me a sense, do you think it should keep up with inflation for minimum wage workers?
CHALMERS:
We've been clear for a long time that we don't want to see the lowest paid workers go backwards.
KARVELAS:
So that means keeping up with inflation, obviously.
CHALMERS:
Our submission will be consistent with that. We don't see the inflation rate on the day that we make our submission to be some sort of automatic mechanism and the Fair Work Commission weighs up all of the economic conditions but we've been really clear, I think we've been incredibly clear ‑ we want to get wages moving again, it's common sense to begin with the lowest paid workers and our submission will reflect the fact that we don't want to see people who are on the lowest incomes in this country fall further behind.
KARVELAS:
The ACTU says it should be for awards as well, that it goes up. Do you agree with that rationale or do you think that keeping up with inflation, essentially, or not going backwards as you put it should be all just about people on the minimum wage?
CHALMERS:
Well again, they make a submission and obviously the Fair Work Commission should consider the ACTU's submission as they should consider all of the submissions that we make. Our submission is different, people will see that before long and Tony Burke will speak more about it in due course.
KARVELAS:
He will. We spoke to him yesterday, in fact, on that. Now tomorrow you'll be receiving the findings of the review into the Reserve Bank. You've been in contact with the panel already and you've already made a change to the board appointments process. What other changes can we expect and will you make it publicly available after tomorrow?
CHALMERS:
I will make it available in April. My commitment is to receive it tomorrow and to release it with some of our initial views between then and the Budget so I'd like to put it out in April and people can go through it and see what they think about it. It is about the structures, the processes and the objectives of the Reserve Bank. I think people do understand how critically important the decisions taken by the independent Reserve Bank are and so we need to give the RBA the best possible basis to make those decisions and one of the things that we've tried to do throughout is we see this as a bipartisan opportunity. We see this as an opportunity for some bipartisanship and what I've done is made sure that the panel hasn't just kept me up to speed with their thinking and across their thinking but also the Opposition and also the crossbench as well. And I've got my differences with Angus Taylor, but I do want to say that he has been engaging with this Reserve Bank Review panel in good faith and I appreciate that because ideally, we would come at the recommendations when they're available in a bipartisan way ‑ this should be beyond politics, it should be about the best Reserve Bank that we can possibly have for our country, no matter who's in government.
KARVELAS:
That's really interesting, Treasurer, what do you mean by bipartisanship? How much agreement does there have to be? Why is it so important for the bank's longevity as an institution people trust and respect?
CHALMERS:
We want to build the respect and reputation of the Reserve Bank. Over a long period of time, the Reserve Bank has been held in high esteem, particularly globally. But over a long period of time, people of distinction have served the bank and we want to build it up, we want to make it the best version of itself. And some of the recommendations that will be in the Reserve Bank Review will require legislative change if we go down that path. And so what I would like to see is ‑ and I reached out to Angus and to the Coalition ‑ because when we see these recommendations, when they're out there publicly, if there are some that require a change to the Act that we're keen on progressing, then ideally, we would do that in a bipartisan way because I'm not just trying to make the Reserve Bank better, more robust to improve its structures and processes and objectives for the next few years, ideally, we'd make a meaningful change that lasts and the best way to do that is to get some bipartisanship.
KARVELAS:
So if, for instance, the Opposition was opposed to the idea of having a workers' representative, the ACTU on the board or something, would you listen to that and not go forward with changes that you thought were too contentious?
CHALMERS:
I certainly intend to engage with the Opposition and with the crossbench and with the community more broadly. This review panel has done a heap of work. The consultation task in this has been really quite remarkable and I'm very grateful to the panel for that as well. My job when these recommendations are received and when they're made public is to see where we can find some common ground and I'd like to try and do that, genuinely like to try and do that and that means listening respectfully to views that are put to us about the recommendations. I don't want to pre‑empt the recommendations. Obviously, we want to make sure the board is as representative as possible, we want to make sure that we're doing all those things that you and I have talked about before and the best way to do that in my view is to try and take this outside of the day‑to‑day political contest and see what we can achieve together.
KARVELAS:
Treasurer when are you going to make a decision or an announcement about the RBA Governor's future?
CHALMERS:
Closer to the middle of the year. In the normal course of events, an appointment that comes up in September would be considered closer to the middle of the year. I'll obviously consult with my Cabinet colleagues, with the Prime Minister, with the economic team and more broadly as well. But we've said, I think said for the first time perhaps on your program, that we would take into consideration the Reserve Bank review first. We would release it with an initial view, we would consult widely on that aspect of it and we turn our minds to the appointment towards the middle of the year.
KARVELAS:
Treasurer, thanks for coming on the show.
CHALMERS:
Appreciate it, Patricia. All the best.