PATRICIA KARVELAS:
Jim Chalmers is the Treasurer and he’s our guest. Treasurer, welcome back to Radio National Breakfast.
JIM CHALMERS:
Thanks Patricia, good morning.
KARVELAS:
The RBA says that the persistence of inflation suggests that risks to the upside remain. For people stressed about their mortgages, many of my listeners are very stressed about their mortgages, which indicates they won’t see a cut this year, right, to the interest rates?
CHALMERS:
Well as you know, Patricia, I don’t make predictions about the future movements in rates. Those are a matter for the independent Reserve Bank and its board. It’s not unusual for the Reserve Bank to keep its options open in these sorts of statements. The market has an expectation about the future movements in rates.
My job really is to focus on my part of this. I think one of the key takeouts from yesterday’s press conference is that we’ve got a similar job to do which is to get on top of this inflation which is persistent, but to do that in a way that doesn’t crunch the economy and that’s the narrow path that the Governor is referring to.
KARVELAS:
But the Governor is also worried that inflation is getting stuck, that it’s becoming a kind of new normal. Are you worried about that?
CHALMERS:
Well inflation’s come off really substantially since those peaks a couple of years ago. It’s more than halved since its peak, it’s almost half what it was at the time of the last election so we’ve made substantial progress on inflation. A couple of those recent monthly indicators which are a bit more volatile, a bit less predictable, a bit less reliable, they showed inflation more or less stable in the economy and there’s been a lot of commentary about that but in quarterly terms we’ve seen a really substantial moderation – that’s a good thing, but we need it to moderate further and faster. We’re prepared to do our bit in that with the responsible way that we’re managing the economy and rolling out cost‑of‑living relief to try and ease some of those cost‑of‑living pressures that you referred to in your first question.
KARVELAS:
Treasurer, I’m going to read from the statement, and it says, ‘Recent budget outcomes may also have an impact on demand, although federal and state energy rebates will temporarily reduce headline inflation.’ Do the states need to slow down their spending?
CHALMERS:
I think the states will make their own decisions. I’ve said on a number of occasions now I think it’s a good thing that the states are prepared to play a role in easing some of these cost‑of‑living pressures that people feel and we’ve all got to do it in the most responsible way that we can and I’m confident that we are, certainly from a Commonwealth point of view we are.
KARVELAS:
Is it the most responsible if the RBA is saying, as they are in their statement, that it may have an impact on demand?
CHALMERS:
Well I think it’s important to remember what the Governor said when the Governor was asked about that sentence in the statement in her press conference immediately following the decision being released. The Governor said that they didn’t discuss budgets specifically. She said that they didn’t think it was helpful to focus on it because over focusing on budgets doesn’t take into consideration all of the other things that are happening in the economy and I think that speaks to a really important point, which is that budgets aren’t the primary determinant of interest rate movements in our economy, there are a much broader range of considerations that the Governor and her board takes into account. Budgets can be helpful though. The Governor has said, for example, that our 2 surpluses in 2 years are playing a helpful role in the fight against inflation and we’ve designed our cost‑of‑living relief to take the edge off inflation rather than add to it. That’s important, but the budgets aren’t the sole and certainly aren’t the primary determinant of future movements in rates.
KARVELAS:
Do you think households need an interest rate cut this year?
CHALMERS:
Well, I’m obviously not going to get into that, that goes to the Governor’s job.
KARVELAS:
But you know what stress households are under. Do you think they need one?
CHALMERS:
I’m happy to come at that but I don’t want it to be seen as telling the Governor and her Board how to do its job. I think there’s an important role for an independent Reserve Bank in our system and that’s why I don’t engage specifically. But more broadly, yes, people are under substantial pressure in their household budgets, very substantial pressure and we’ve had these interest rate rises in the system, they are absolutely hammering consumption, particularly discretionary spending. We’ve seen it in savings rates and in other indicators. We saw that the economy barely grew in the March quarter of this year and so those interest rate rises that are already in the system are putting extreme pressure on people and they are already slowing the economy and the full impact of that most recent rate rise last year is still to be felt in the economy. So all of that is important. Interest rates are part of the pressure that people are under, that’s why we’re responding in the way that we are. Our strategy is to roll out cost‑of‑living relief in a responsible way, fight inflation and get the Budget in better nick, but to do that in a way that doesn’t smash the economy and which recognises that people are under pressure and the economy is already soft.
KARVELAS:
You’ve seen the opinion polls, are Australians marking you down for your management of the economy?
CHALMERS:
Oh look, I’m not going to pretend that we completely ignore those opinion polls when they’re printed but they’re not our primary focus. I’m focused on a whole different set of numbers –
KARVELAS:
Of course.
CHALMERS:
The inflation numbers obviously –
KARVELAS:
But it must bother you.
CHALMERS:
The growth numbers. I don’t dwell on it, Patricia. I don’t obsess over it, I don’t dwell on it, I’m focused on more important things – we understand people are under pressure, we don’t need opinion polls to tell us that, but more than understand and acknowledge the pressures that people are under, we’re responding to that, that’s why every taxpayer is getting a tax cut in a couple of weeks, every household is getting energy bill relief, we’re delivering cheaper medicines, help with rent, help with student debt, that’s because we know people are under pressure and we’re doing something about it.
KARVELAS:
Treasurer, today the Opposition will unveil its nuclear policy. Peter Dutton will announce nuclear reactors will be Commonwealth‑owned, according to the Australian newspaper, and operated similarly to Snowy Hydro and the NBN. That’s the model they’re going to go with. Given we do subsidise renewable energy, there are subsidies obviously across the economy, is it reasonable that if that’s the energy source they’re going to try and invest in that it would attract government subsidies?
CHALMERS:
Well Peter Dutton’s nuclear negativity is economic insanity, pure and simple. Nuclear takes longer, it costs more and it will squander Australia’s unique combination of advantages. It is the worst combination of economic and ideological stupidity. It is economically irrational, it is fiscally irresponsible and it means if it’s implemented Australia would fail to grab these vast economic and industrial opportunities in the net‑zero transformation in the most effective way.
And you talk about government ownership of nuclear reactors, yet only a couple of weeks ago the Shadow Treasurer was saying he would only support them on the basis that they were commercial. Now we know that they’re proposing for the government to run them so he’s obviously been rolled in quite a public and humiliating fashion here.
KARVELAS:
How has he been rolled?
CHALMERS:
Well because he said at the National Press Club that he thought that they had to be commercial, and now the Opposition seems to be saying that they need to be subsidised and owned by the Commonwealth. So, let’s hear Peter Dutton clear that up and let’s hear Angus Taylor clear that up.
But more broadly, more importantly, this is economic madness what’s being proposed. Nuclear energy takes much longer and costs much more and it squanders the fact that Australia has this unique combination of geographical, meteorological, geological, geographical opportunities –
KARVELAS:
But isn’t the reason –
CHALMERS:
– that they would waste on the altar of political differentiation.
KARVELAS:
Isn’t the reason that we are seeing some of the shifts in the opinion polls – and I know you say you’re not focused on them but, you know, rightly acknowledging that you do notice them, or you wouldn’t be a politician, it would be strange, wouldn’t it – that ultimately what they’re trying to do here is really respond to some community concern about the rollout of renewables. Do you accept that that community concern is real?
CHALMERS:
I think that the community overwhelming supports a renewable future for this country, because renewable energy is the cheapest form of new energy. We have this unbelievable opportunity for Australia to be an indispensable part of the global net‑zero transformation of energy. We have all of these advantages. We have the resources base, the skills base, we’re attractive as an investment destination. We have everything that you would need to become the primary beneficiaries of the global net‑zero transformation and in the interests of political differentiation and nuclear negativity Peter Dutton wants to squander all of that. And that, as I said before, is economic insanity, it’s fiscally irresponsible and it would squander the future of this country.
The country has a really bright future, it is overwhelming a renewable future. We have big industrial and economic opportunities which we would be mad to turn our back on and that’s what he’s proposing.
KARVELAS:
You are today going to announce community benefit principles at the centre of your Future Made in Australia Act. What kind of community benefit principles have to be in it?
CHALMERS:
We want to grab the opportunities of the energy transformation and the best way to do that is to attract more private capital into these big economic and industrial opportunities but we need to do that in a way that makes sure that investment flows in regions and local community and in a way that benefits workers and our employers.
So what we’re proposing today, what I’ll be talking about today, is how we enshrine in the Future Made in Australia Act community benefit principles which go to making sure that where we are providing public support, that local supply chains are strengthened, that we’re building good, secure, well‑paid jobs and workforces in local communities, and that we achieve our ambitions in a way that leads to strong returns but also stronger communities at the same time.
These community benefit principles are really important because they’re all about leveraging the maximum advantage for our people and our communities, our workers and our businesses right around Australia so that when this investment flows, and it will, that it is to the ultimate benefit of the people.
KARVELAS:
I have to ask you because there’s a big incident going on in St Kilda in Melbourne, Josh Burns MP has been, and he’s put out a statement, he says, ‘Last night my St Kilda office was damaged in a politically motivated attack.’ We understand the Federal Police are investigating and it’s all around obviously, well perhaps not obviously but just to be clear, Josh Burns is a Jewish MP, he’s on your side of politics. What’s your response to this latest attack?
CHALMERS:
Well, first of all, I feel for Josh and his staff and his local community. He is deeply engaged in his local community and I know that they’ll be hurting because unfortunately we’re seeing more and more of this violence and vandalism, including people’s electorate offices but not just that, and communities like Josh’s and other communities where there are strongly held views about this horrific conflict in the Middle East, they are being torn apart. It’s completely and utterly unacceptable, obviously, and I hope that Josh and his community is okay on what will be a really difficult day.
KARVELAS:
Thank you so much for joining us, Treasurer.
CHALMERS:
Thanks Patricia.