Peter Fegan:
Well, the cash rate has officially been cut, it’s down 25 basis points, and it’s what economists had predicted. The new cash rate is now 4.1 per cent. But should we be popping the champagne just yet? Economists say no, it’s too early. But look, at the end of the day households, particularly those with mortgages, will save money. And joining me now on the line to break it all down is the Federal Treasurer, Jim Chalmers. Treasurer, a very good morning to you.
Jim Chalmers:
Good morning to you, Pete, how are you travelling?
Fegan:
I’m very well, my friend. Are you popping the champagne?
Chalmers:
No, no. It was a very welcome decision by the Reserve Bank yesterday. It means that millions of Australians will get the rate relief that they need and deserve after all this progress that we’ve made together on inflation, but we know that the cost‑of‑living pressures are still there and they haven’t all of a sudden disappeared overnight, but this rate cut will help a lot of people.
Fegan:
Yeah, it will. I mean at the end of the day you’re looking at maybe $1,000 a month per house $1,000 a year on average for some households. But I think the question that a lot of people have been asking me all week, Treasurer, before this rate cut, was what about the other things in their lives? I mean you’ve got health insurance is quite expensive as well, fuel’s still up, you know, your major supermarkets haven’t done anything to their prices, and what about renters as well? I mean do you suspect that if I’m an investor I’m going to drop the price of my rent?
Chalmers:
A few things about that, Pete. I mean first of all, we do recognise that these cost‑of‑living pressures are broader than mortgages. Mortgages are a big part of the story, but not the only part of the story.
That’s why we’re rolling out tax cuts for every taxpayer, energy bill relief for every household, we’re making medicines cheaper, cheaper early childhood education, we’re providing rent assistance, Fee Free TAFE, getting wages moving again. These are all of the ways that we are helping people with the cost of living in a meaningful way, but also in a responsible way, because we recognise that people have been under pressure for some time.
Now when it comes to renters, we know that renters have been under pressure as well, that’s why the rent assistance is being rolled out, it’s why we’re trying to build more homes so that people have more options, and it’s also why we’re providing all of this other cost‑of‑living help in the way that we are.
Fegan:
But that’s all great, Treasurer, but I’m talking about today, the now, as we stand, as we head into another election, people are really, really struggling, and I know you’re saying we’re building homes, but we’ve failed to meet targets, and that’s on the state level as well, and that was the former Coalition government as well didn’t build enough supply. Yes, I know that there is a no to foreign investors. I mean that’s great, that’s a move that both the Coalition and the federal government will back. But I’m talking about right now, today, you know, there are people that are seriously, seriously struggling, and it looks like there is no end to it.
Chalmers:
More than acknowledge that, Pete, we’re doing something about it in all of the ways that I’ve just run through.
There will be an election before long, and when people go to the polling booths, the choice they’ll have to make is between a Labor government under Anthony Albanese, who’s been helping with the cost of living, getting inflation down, getting wages up, keeping unemployment low, and now seeing interest rates start to come down as well, or a Coalition led by Peter Dutton.
Now Peter Dutton didn’t support any of that cost‑of‑living help that I just ran through, none of it. And that means if he had his way Australians would be thousands of dollars worse off, and they’d be worse off still if he wins, because we know that Coalition governments come after wages, we know that he went after Medicare when he was the Health Minister, we know that his nuclear reactors will push energy prices up not down. This is at play in the election. The cost‑of‑living help that we’ve been providing, versus the opposition that Peter Dutton has been providing.
Fegan:
Treasurer, how does renewable energy pump the price down? If nuclear’s going up, what’s renewable doing?
Chalmers:
Renewable energy is the cheapest form of new energy. All of the objective observers understand that.
We know that there’s got to be a mix, we know that gas has a role to play in the energy transformation, but increasingly our energy will be provided from renewable sources because it’s cleaner and cheaper,
What the nuclear reactors would do, first of all you couldn’t build them for a long time down the track, they’d only supply a small sliver of the energy that we need, but most importantly for your listeners, nuclear energy is the most expensive form of new energy and so will push prices up, not down.
Fegan:
All right. Let’s look into the future, and I don’t think it’s going to be easy for any government, Treasurer, and I don’t envy the position you’re in, because look, you know, if we look at it, the great thing is we’re got a very low unemployment rate here, 4 per cent. But the flip side of that is how are we going to handle wage claims; how are we going to handle wage rises in this country? It’s going to be very, very difficult.
Chalmers:
You’re right that unemployment’s really low. That makes us a bit unusual around the world that we’ve inflation and interest rates coming down at the same time as we’ve got incredibly low unemployment, and wages, including real wages are growing again after they were going backwards when we came to office.
What we’ll see later today, actually, at 10.30 Brisbane time, we’ll see some of those new wages numbers come out, and what they will show is another quarter of annual real wages growth in our economy, that means wages outstripping inflation, which is a very good thing.
But we understand that we need those wage increases to be sustainable, we need them to be responsible, but for too long in our economy wages were deliberately suppressed, and we’ve tried to turn that around.
We’re seeing real wages growth in our economy not as an accident, but as a deliberate part of our economic strategy.
That’s because we think one of the best ways that we can help people with the cost of living is to make sure that they’re earning more and keeping more of what they earn, so real wages are growing again, the tax cuts are being provided to every taxpayer so that people have more money in their pockets.
Fegan:
And you had a pretty constructive phone call with the banks yesterday, I understand, Treasurer?
Chalmers:
The first 4 phone calls I made after the interest rate decision was announced yesterday was to the CEOs of the major banks, and I don’t take any credit for the fact that they all moved very quickly to pass on the benefits of this rate cut, because they were already of that mind, and so I’m not taking credit for it. But I rang the 4 CEOs, I told them how important it was that it be passed through in full, they understood that, and they all announced more or less immediately that they would do that, and that’s a good thing. Because this rate relief is something that Australians desperately need and deserve. It reflects the progress that we’ve made on inflation today. It doesn’t mean the cost‑of‑living pressures have all of a sudden disappeared, but it will help.
Fegan:
I put out a call to my listeners this morning, Treasurer, to ask you some questions. I’ve got a tonne of feedback, I can’t get through all of it, but just some of the questions I would like to ask you, this is from real Aussies that are listening to us this morning: ‘Hi Peter, I’m wondering why there is no regulations around banks being required to pass on the rate cuts?’ That’s one, Treasurer, but there’s one that was more interesting here that says, ‘This rate cut is going to do nothing for me because I own a small business and then I’m going to have pay more on income tax’. What would you say to small business owners that are in that same predicament?
Chalmers:
I’m not sure why they’d have to pay more income tax, I’d need to know more about what they mean there, but broadly on interest rates and the economy, including conditions for small businesses, one of the reasons that rate cuts are so important is because they support growth in the economy, they mean people have a little bit more money to spend in their wonderful small businesses of South East Queensland and around the country, and is that is a good development.
Now when it comes to small businesses, as I’ve acknowledged on a number of occasions, I know that conditions are difficult, but that’s why we’re supporting small businesses with energy bill relief, with the instant asset write‑off to help them invest in the kit that they need to succeed. These are all the ways that we’re supporting small business, but an interest rate cut is good for the economy broadly, and that means it’s good for small business.
Fegan:
There is a call for you, Treasurer, to raise the JobSeeker and Youth Allowance, and it currently sits at around that $45 to $56 mark, anywhere between that average. There are calls to raise it to $82. Treasurer, yes or no, will JobSeeker under a Labor government be lifted?
Chalmers:
We’ve already lifted it, we lifted it in a permanent way I think in the second budget that we delivered, but I do understand, Pete, that there are always calls to increase these working age payments. I do understand that. We’ve had that increase in addition to all of the indexation that we have seen.
I listen very respectfully when people put that view to us. We have to weigh that up against all of the other pressures and priorities in the budget, and from budget to budget, we try to do the best we can for people.
Fegan:
So it’s not a definite, because you’ve got to be careful with spending.
Chalmers:
That’s right. We’ve provided cost‑of‑living help in a whole range of different ways, but we’ve always tried to do it responsibly, because those 2 surpluses that we delivered, paying down the Liberal debt, getting the budget in better nick, that hasn’t been an end in itself, it’s how we’ve been able to make room for some of these cost‑of‑living measures, including that one that we’re talking about now.
The defining feature of our government has been responsible economic management. We’re pleased to see the fruits of that in lower inflation, higher wages, low unemployment and now interest rates coming down, and responsible economic management will continue to be the defining feature as we go forward.
Fegan:
It’s 24 and a half after 7. My guest this morning is the Treasurer, Jim Chalmers. Treasurer, I’d like to ask you this: Michelle Bullock says that the RBA will next meet on April 1, that’s April Fool’s Day. Are we fools for thinking that we may get another cut, do you think?
Chalmers:
I don’t like to make predictions about future movements in interest rates, and that’s because I respect the independence of the Reserve Bank. I don’t want to make predictions or pre‑empt the deliberations in the last of March and the first day of April, which you’re right to say is the next time that they meet.
If you look at the comments made by the Governor yesterday, it’s not unusual for Central Bank Governors to choose their words carefully, to be pretty cautious about flagging future movements in interest rates, and that’s what we saw yesterday.
The Governor really said a couple of important things yesterday. Overall, the thing that she said which I found a lot of affinity with is she said she is optimistic about the future of the economy, but alive to the risks, particularly the global risks. That’s the first point, there’s a lot of global economic uncertainty. And the second point in the Reserve Bank statement yesterday is that we’ve made a lot of progress together as Australians when it comes to inflation.
Inflation was multiples of what it is now and rising when we came to office. It’s come down very substantially, and the progress we’ve made on inflation is actually a bit quicker than was expected, and so that’s a good thing. We need to be vigilant. We’re not complacent about inflation, but we are getting on top of it, and that’s why we got that rate cut yesterday.
Fegan:
I’ve got to be very, very quick here, Treasurer, last one; I’ve got a text here from Anthony from Kirribilli that says, ‘Can you ask the Treasurer if he’s free on Saturday the 12th of April?’ Does that mean there’s an election? Well, you’re not answering it?
Chalmers:
I’ve had that question in about 15 different ways today. That’s probably the most creative way I’ve had it. Look, the PM will decide the election date. I’m working towards a Budget towards the end of March, and we’ll be ready to go whenever he calls it, and the choice will be really clear.
Peter Dutton didn’t want this rate cut yesterday. He thinks the best way for him to move in to the Lodge is for people to be under even more pressure, that’s why he made the case against a rate cut last week, it’s why he didn’t support the cost‑of‑living help.
These will be issues in the election, whenever it is. Labor, rolling out cost‑of‑living help, getting on top of inflation, keeping unemployment low, building Australia’s future, or the alternative, which is Peter Dutton and the Coalition who will make people worse off and take the country backwards. Whenever the election is, that will be the choice.
Fegan:
Good on you Treasurer. We’ll chat to you before then.
Chalmers:
Thanks for your time, Pete. Have a great day.