22 May 2023

Interview with Patricia Karvelas, RN Breakfast, ABC

Note

Subjects: jobs and wages growth under Labor, inflation, Albanese government’s first 12 months in office, cost-of-living relief, housing, tax policy, ‘Buy Now, Pay Later’ regulation, government contracts, PwC

PATRICIA KARVELAS:

Jim Chalmers is the Treasurer, and he joins you now. Welcome back to the program.

JIM CHALMERS:

Thanks very much, Patricia.

KARVELAS:

More than 330,000 have found work in the last year, but unemployment is predicted to increase over the next year as inflation remains high, and the RBA looks likely to keep lifting rates. How will people be protected given that trajectory?

CHALMERS:

I think one of the most consistent things about the first 12 months in office has been the way that we have put people front and centre when it comes to our responsible economic management. One of the starkest examples of that is the fact that we've got the strongest jobs growth for the first year of a government on record, stronger than any major advanced economy. We've got the fastest wages growth for more than a decade and that puts us in good stead for the uncertain period ahead. A lot of global uncertainty and some issues in our own economy that we are very cognisant of, principally these cost‑of‑living pressures. So what we did in the Budget a couple of weeks ago now was to provide a bit of cost‑of‑living relief, but also to show that when it comes to getting wages moving again, we have seen the welcome beginnings of that. And that will help us as the economy gets a bit softer in the next 12 to 18 months.

KARVELAS:

When will Australians get a real wage rise, though? Yes, you're right wages growth has been strong, but with inflation that much higher, it's not very meaningful, isn't it?

CHALMERS:

Well, inflation is unacceptably high, as we've said probably every time you and I have spoken. Inflation was high when government changed hands and interest rates had already begun to rise. And what we've been doing for the last 12 months, is to try and take some of the edge off these cost‑of‑living pressures without adding to inflation. And that's principally what the second Budget that we handed down a couple of weeks ago was all about. So when it comes to real wages, inflation is moderating, it's higher than we'd like for longer than we'd like but it is moderating. We are seeing the welcome beginnings of some decent wages growth after a decade of deliberate suppression and stagnation. And that means the Budget forecasts real wages growth at the beginning of next year, rather than the middle of next year, which was the old forecast.

KARVELAS:

Let's talk about housing. You're in deep negotiations with the Greens over the Housing Australia Future Fund Bill. They're not playing ball, what are you prepared to offer to ensure this passes?

CHALMERS:

Well, it's time for an end to the ambit claims and the political games that are being played in the Senate over housing. We want to build more social and affordable homes, including for women and kids fleeing violence, and the Greens and the Coalition are teaming up to prevent that legislation from passing. And what we've tried to do ever since we first introduced the Housing Australia Future Fund Bill, is we've tried to engage and negotiate in good faith. And if you look at the issues that were raised by the crossbench, in the first instance, we have made further commitments in the Budget when it comes to the cap for community housing providers. We have put renters rights on the National Cabinet agenda. We've increased rent assistance in the last Budget, the biggest increase for 30 years, new funding for indigenous housing, extended homelessness funding. We've made commitments on access and design, and the definition of affordable housing, really, on a whole range of areas. What Julie Collins, the Housing Minister and the Prime Minister have been able to do, is to sit down in a spirit of respect and engagement. We have put a number of other things on the table to try and get this passed. And I think the question for the Greens really is - do they want to build more social and affordable housing, or do they not? Because there's an opportunity here to do that, they should vote for it.

KARVELAS:

There is a question for you too, though, not just for the Greens - the Government will amend the legislation to index the $500 million cap to inflation, that's something that independent Senator David Pocock pushed for. But that only happens from 2029‑30. Are you prepared to bring that indexation forward?

CHALMERS:

Well, I'm not going to sort of get in the way of the negotiations that Julie Collins and the Prime Minister have with the crossbenchers in the Senate. I guess the point that I'm making, and you've just identified one of those changes that we have agreed to, is that we've been really reasonable about this. We just want to build more social and affordable housing, there's an opportunity to do that. We want to see an end to the political games in the Senate and get this passed. We understand some people in the Senate want us to build less housing, some people want us to build even more - here's an opportunity to build 30,000 homes, including thousands of homes for women and children -

KARVELAS:

Why not index it earlier than 2029‑30?

CHALMERS:

Well, again, Patricia, I'm not part of the negotiations with the crossbenchers in the Senate -

KARVELAS:

But is that something you're prepared to look at? You're the Treasurer, so they have to come back to you - I know that. So you're ultimately in the negotiations, even if you're not in the meeting every time. Are you prepared to put that on the table?

CHALMERS:

I think we've gone a substantial way to address some of the issues that the crossbench have raised, and it's time for them to vote for it.

KARVELAS:

So, you're not prepared to move on that?

CHALMERS:

Well, I don't pre-empt any of the conversations that happen from now, Patricia, and I don't get in the way of my colleagues like Julie Collins who is doing a terrific job engaging with the Senate crossbench. We'll do what we can, we've already gone a long way to address some of the issues that have been raised, in the right spirit, frankly, by the crossbench. It's time now to pass this legislation to build these homes for the people that need them.

KARVELAS:

There's going to be a Labor Party conference later this year, and some of your colleagues want to discuss issues like negative gearing. The Prime Minister was not enthusiastic about changing negative gearing, but is it worth having a discussion? And are you prepared to have a discussion about capital gains tax concessions?

CHALMERS:

No, that's not on my agenda. Patricia. It'd be pretty strange, frankly, if we had a conference of the Labor Party where people didn't bring a whole range of views to the to the table, but I've got the Prime Minister's view on this. We've got a big broad ambitious housing agenda that goes beyond the Housing Australia Future Fund. We've increased Commonwealth Rent Assistance, we've lift the cap for community housing providers, I've got the Housing Accord, where I'm bringing the industry together with all levels of government, and super and big investors, to try and build more social and affordable housing. We've got new tax breaks in the Budget a couple of weeks ago, which is all about build to rent properties, more affordable, near where the jobs and opportunities are being created. And so we've got a big housing agenda, but it doesn't include those issues that have been raised in the papers the last week or so.

KARVELAS:

Okay, well, the Greens say they want to be the party for renters. If you're not prepared to look at those sorts of things, are you a party for renters?

CHALMERS:

Of course we are. We're the party that just handed down the biggest increase to Commonwealth Rent Assistance in 30 years. We are the party that poured renters rights on the National Cabinet agenda via the Prime Minister -

KARVELAS:

It's a pretty tiny increase and renters can't keep up with paying their rents every week, we know that.

CHALMERS:

And that's precisely why we've just given the biggest increase in rent assistance for 30 years. It's precisely why I've got these new tax breaks in the Budget, to try and build more affordable build to rent properties. And as well, we've got a broad and ambitious housing agenda, which includes the Housing Australia Future Fund, which should pass the Senate.

KARVELAS:

A couple of other issues I want to talk about - the Government is going to bring Buy Now Pay Later services under the Credit Act, what will happen to people with existing accounts who don't qualify for the service under responsible lending regulations? Will providers be forced to stop offering them credit?

CHALMERS:

Well, obviously, there'll be the appropriate kind of transitional arrangements as we legislate this important bit of regulation. But really, this is about recognising that Buy Now Pay Later has become really popular, something like seven million accounts. It's got a legitimate role to play but there is the potential for harm and that harm falls disproportionately, so it's time to legislate and regulate Buy Now Pay Later. We've done a heap of consultation already, there'll be more to come. But if you make it a regulated credit product under the Credit Act, we can better manage some of the risks that people are aware of. There'll be appropriate transition arrangements. We want people who can afford to participate in Buy Now Pay Later to be able to access it, but there needs to be the right rules and regulations around it.

KARVELAS:

A Centre for Public Integrity study has found the big four consulting firms - PwC, Deloitte, EY and KPMG - have secured contracts with the Government valued at over $1.4 billion just this year, and they've increased by 400 per cent over a decade. Is that an appropriate use of public money? Should those contracts be reviewed?

CHALMERS:

We don't think the balance has been right over the course of the last decade. I think Katy Gallagher and I, over some years now, have made it clear that we think it is troubling - the explosion, particularly of labour hire and contracting - at the same time as we've seen a hollowing out of the public service itself. And so we do need to rebalance it, that's what we're doing. We're taking steps to wind back some of this spending when it comes to external consultants and trying to rebuild the public service at the same time. So it's been something that we have spoken about before now, something that we are acting on. There will always be a role for external expert advice but we think the balance has been wrong and we want to rebalance it.

KARVELAS:

Should Treasury refer PwC's conduct to the Australian Federal Police? Don't you need to send a message about their conduct, that kind of conduct?

CHALMERS:

I'll have more to say about PwC and the Treasury. We've already taken some steps to change the way the Tax Practitioners Board operates. I think the PwC experience has been deeply, deeply troubling. And we've already taken some steps, but we will be taking further steps -

KARVELAS:

Can you give me an indication of what you are looking to do?

CHALMERS:

I'm not prepared to do that yet, Patricia. And there's good reason for that. I'm not deliberately trying to be evasive but we've taken some steps, there will be more steps to take, I'm working on them almost literally right now, and I'll have more to say about it in due course.

KARVELAS:

Okay, and could it involve the banning of PwC until we see stronger action from them?

CHALMERS:

Again, I don't want to detail it now. And I think you'll understand why, because there are a range of issues at play here. But there will be, I will have more to say about how we crack down on this behaviour, which is inexcusable, frankly, particularly when you consider that corporate Australia for the right reasons, wants to be consulted on changes that impact them, and I want to do that too. That's really part of the character of this Government, is consultation. But in order to do that, you've got to be able to trust the process. That trust is broken down here, we need to fix it. We've taken some steps already and there'll be more steps as well.

KARVELAS:

Just a question on your growing bills that are hitting the budget - the United Workers Union which represents childcare workers is looking to increase their pay by 25 per cent through multi‑employer bargaining. If they do, will the Government be able to afford to pay it? Will you foot the bill?

CHALMERS:

Well, that process hasn't run through yet, so it doesn't make a lot of sense to start writing cheques for a process that isn't underway or hasn't concluded -

KARVELAS:

But you did write cheques to aged care, so it would be similar wouldn't it?

CHALMERS:

But different kind of system. And one of the motivations for multi‑employer bargaining which we put in place a few months ago, was because we are concerned that the big workforces in the care economy, the workforce is often dominated by women, have been underpaid. And multi‑employer bargaining is designed to try and rectify that. So there is a process for early childhood educators to go through, no doubt they and their union will go through that process. And if there's any government response, which is necessary, obviously, we'll contemplate that at the time.

KARVELAS:

Treasurer, thanks for joining us.

CHALMERS:

Thanks, Patricia.