PATRICIA KARVELAS:
Jim Chalmers is the Treasurer and he joins us this morning. Treasurer, welcome.
JIM CHALMERS:
Thanks very much, Patricia.
KARVELAS:
You’ve said that you think we can avoid a recession. Why?
CHALMERS:
Well, our expectation in the Treasury forecast is that the economy will continue to grow, but it is growing very slowly right now, barely grew in the first 3 months of the year. We expected it to be very weak and it was. And the point that we’ve made about the Budget is that in this context you get a lot of free advice, people say you should slash and burn in the Budget, you shouldn’t be providing cost‑of‑living relief, and what these National Accounts have proven really is that advice was horrendously wrong.
We got the Budget right because we’re repairing the budget, we’re fighting inflation but we’re doing that in a way that doesn’t smash an economy which is already weak.
KARVELAS:
Okay. And are you sure that hasn’t been a smashing of the economy?
CHALMERS:
Well, the economy’s slowed considerably, the primary reason for that is higher interest rates but some other reasons too – global economic uncertainty, the persistence of inflation even as it’s moderated from those high peaks a couple of years ago.
And so there’s no shortage of challenges in the economy, but I think what the Budget has shown is that we don’t just acknowledge those challenges in the economy, we’re acting on them, we’re providing cost‑of‑living relief across the board to help people through a difficult time, we’re getting the budget in much better nick than what we inherited from our predecessors and we’re doing all of this in a responsible and a methodical and a considered way which recognises that the economy is soft and people are doing it tough.
KARVELAS:
Household savings are really low now and lower than we thought. I think that’s the really interesting thing out of these numbers as well. Can you explain what that means for people’s households, if their savings are so low and they can’t draw down on them to keep up with the expenses of life, what risks does that have for households?
CHALMERS:
It is an interesting feature of the National Accounts – what we’ve seen in the last few quarters for a little while now is people are saving less and we all know why that is, people are under more pressure due to higher interest rates, the persistence of inflation and for other reasons. And so the savings rate was quite high a couple of years ago and it has come down considerably as people are under more pressure. That’s not especially surprising but what it means for people is that they’re saving less of their incomes, their incomes are rising but they’re saving less of it, and I think that is just one of a number of indicators in the budget that tell us that people are under pressure – we already knew that, that’s why we’re responding in the Budget, that’s why there’s a tax cut for every taxpayer and energy bill relief for every household and help with cheaper medicines and rent assistance and student debt and all of these ways that we’re providing cost‑of‑living help in recognition that people’s household budgets are under really substantial pressure.
KARVELAS:
Okay. If you’re wrong and there is a recession, would you step in to provide more assistance for households?
CHALMERS:
Well, first of all, the definition of a recession is a couple of quarters of negative growth and we haven’t had any quarters of negative growth – we’re unusual in the world in that regard. I think something like three-quarters of OECD economies have had a negative quarter, and we haven’t. And so we’re not contemplating that outcome here. The Treasury forecast, the Reserve Bank forecast and others expect our economy to continue to grow but we’re not waiting for the worst case scenario to help people and one of the defining features of the Budget – you and I have talked about this on a number of occasions – is that cost‑of‑living help.
A lot of people said don’t provide that help, a lot of people said slash and burn in the Budget, that was the wrong advice, that was the wrong commentary and we know that now because the economy is so soft and so we are already providing help to support people, most importantly, but that support will arrive at a time when the economy is soft and that’s important too.
KARVELAS:
One of the things that a lot of commentators are saying is that the economy barely has a pulse. Is that something that you agree with?
CHALMERS:
Yes, it barely grew in the first 3 months of the year. We expected it to be very weak and it was. The private sector economists all expected quite weak growth and that’s what we saw in the figures, so it wasn’t surprising but I think it’s important to acknowledge, I certainly acknowledge and have done for some time – the economy’s weak, the economy’s soft, and people are under pressure, and that’s why the Budget is carefully calibrated to respond to those pressures that people are under and our economy’s under.
KARVELAS:
So what’s going to happen when people receive the tax cuts which come into effect? Do you expect people to rush out and spend, and is there a risk there with inflation still sticky?
CHALMERS:
Oh, I don’t believe there’s a risk there. The tax cuts are already factored into the Reserve Bank’s thinking and the Treasury’s thinking in the forecasts provided by both of those institutions. Yes, some people will spend them, some people won’t but I think they’ll arrive at precisely the right time. They’re only a few weeks away now. The average tax cut’s about $36 a week and that will provide a bit more help for people who are under pressure at the same time as they’re getting energy bill relief and this other cost‑of‑living help as well. And so I think it’s well timed and well calibrated, carefully calibrated to deliver that cost‑of‑living relief in the most responsible way we can.
KARVELAS:
I’ve got a text message that I want to put to you from a listener who says, ‘domestic inflation is being caused by Coles and Woolies’ mega profits. Please ask Jim Chalmers if he believes it’s fair that young mortgage holders are paying for the 2 big supermarket firms to make record gains?’ Now of course if you look at the figures people are spending on essentials, is there merit in that argument?
CHALMERS:
Well, certainly food and groceries is one of the reasons why we’ve got this inflation challenge and we do understand there’s concern in the community reflected in that text message. We want to make sure that the supermarkets, the big supermarkets are giving a fair go to families and to farmers as well and that’s why we’ve got a number of things underway – we’re reviewing the Food and Grocery Code and we’ll have more to say about that quite soon to try and get that fair go for farmers and families, we’ve got a whole competition policy agenda, we’ve empowered groups like Choice – and I met with them yesterday about this – to provide the kind of information that makes it easier for people to shop around in the context of higher prices for food and groceries. So it’s a legitimate concern that people have.
KARVELAS:
And is it true?
CHALMERS:
It’s a legitimate concern that people have. We want to make sure they’re getting a fair go at the checkout. Every dollar matters in family budgets right now and so we want to make sure that the sector is as competitive as it can be, that the supermarkets are doing the right thing – that’s why we’ve empowered the ACCC and that’s why we’ve got these other agendas rolling out too.
KARVELAS:
Treasurer, Taylor Swift helped to keep the economy afloat this quarter. Do we need her back?
CHALMERS:
Well, she’s always welcome back and next time Taylor Swift comes to Australia she’d be very welcome in Brisbane. A lot of people in South East Queensland were dark that she didn’t go there.
KARVELAS:
No, no, no, not a Queensland line again. But honestly, you know the point I’m making.
CHALMERS:
Yeah, I do.
KARVELAS:
Yeah.
CHALMERS:
I do. It’s not the primary driver of the consumption figures in the National Accounts yesterday, but there was some one‑off spending; concerts and sporting events as well, but you were right a moment ago in your earlier question when you were talking about consumption dominated by essentials. One of the really stark features of the National Accounts which hasn’t got a lot of attention is that discretionary spending, spending that people don’t have to do, spending that people choose to do, only grew 0.1 per cent over a whole year, which is I think a pretty stark reminder of the pressures that people are under. Yes, there was some one‑off spending, yes, Taylor Swift was very popular when she was here and those concerts were incredibly well attended, but overwhelmingly the story of consumption in our economy is people focusing on the absolute essentials, and we saw that in the National Accounts too.
KARVELAS:
Given we’re having such a huge debate around immigration, I want you to level with people and be really, you know, truthful. Are immigrants the reason we’re not in recession?
CHALMERS:
When growth is only 0.1 per cent and before that not much higher in the quarter before it, there’s a whole range of factors in the absence of which growth would be weaker, not just that one, but a number of other contributions to growth. Absent that yesterday, the number would be weaker, the economy would be weaker, and so I don’t single that one out.
The Governor of the Reserve Bank actually yesterday in referring to this line of questioning said she didn’t think it was an especially helpful way to think about it. I know our political opponents and others might be focused on it.
Our job is to manage the migration system in the most responsible and considered way that we can. We’re getting migration down, net overseas migration will be half next year what it was last year, and the permanent program will be lower than what it was when Peter Dutton was the immigration minister, but we’re doing that in a considered and a methodical and a responsible way. It’s not the only reason why the economy grew a little bit in the March quarter, there are other factors at play too.
KARVELAS:
Just on another issue, Treasurer, before I say goodbye to you, there were some pretty fiery scenes in Question Time yesterday with the government and the Opposition teaming up, really criticising the Greens, and some would use the word attacking the Greens over their pro‑Palestinian stance. They say you’re using the minor party to distract from the government’s backing of Israel. Why have you teamed up with the Opposition to denounce the Greens like this?
CHALMERS:
Well, I think yesterday’s debate in the parliament springs from our responsibility to make sure that people are safe and secure in our communities and part of that, I think, is a really important obligation to try and calm the divisions and fears that people have in our society not try and stir them up or stoke them and we have a responsibility in that regard to correct misinformation and disinformation, not try and amplify it and I think unfortunately there has been too much of that. The Greens are certainly guilty of that but they’re not the only ones.
We want to bring the country together at a difficult time. We acknowledge people have got genuine and legitimate fears and there are divisions in our society right now and responsible political leadership provided by the Prime Minister is about recognising those fears and divisions and seeking to calm them rather than seeking to stir them up or stoke them for political advantage.
KARVELAS:
So you’re saying that the Greens are deliberately stirring up activity that is unacceptable?
CHALMERS:
Yes, I mean we’ve seen the Greens frankly make things up about the conflict there about –
KARVELAS:
Like what?
CHALMERS:
Well, the supply of Australian weapons to Israel, I mean that’s wrong. We saw them misrepresent a vote in the parliament not that long ago. And unfortunately they’re not the only ones doing that. At these sorts of times there will always be people who will try and –
KARVELAS:
Who are the other ones? Who are the other ones?
CHALMERS:
On social media and the like there will always be people who try and stoke division for their own purposes and try and stir things up. And the point that I’m making, I think the point that the Prime Minister made really effectively yesterday is that our job is to try and calm those divisions and fears in our societies, not amplify them, to correct misinformation and disinformation, not repeat it.
KARVELAS:
Is there any evidence that the protestors are Holocaust deniers like Peter Dutton said?
CHALMERS:
Oh, well, it’s not for me to fact check Peter Dutton’s speeches, I’m not aware of that.
KARVELAS:
He didn’t say all protestors, to be clear, but he did talk about Holocaust denial.
CHALMERS:
I’m not aware of that, I haven’t checked the political and historical views of every protestor, and my point and I’d say this even had yesterday’s events in the parliament not happened – our job is to try and calm this division, not stoke it. That’s certainly what the Prime Minister’s objective is, my objective, the government’s objective.
I think there are a lot of people of goodwill around the country, including people with a direct interest in this horrendous conflict in the Middle East who want to make sure that when we are expressing legitimate views, sometimes those views are not unanimous, they’re certainly not unanimous now, we’ve got a responsibility to do that in the most responsible way and that hasn’t always been a feature of the contributions made in the parliament and elsewhere.
KARVELAS:
Treasurer, thank you for your time.
CHALMERS:
Thanks very much, Patricia.