Peter Stefanovic:
Thank you. Well, the Prime Minister will swear in his new team this morning, which features some familiar faces and some new ones as well. One of those maintaining his role is the federal Treasurer Jim Chalmers who joins us live from Canberra now. Treasurer, congratulations on your re‑election. Thank you for your time this morning.
So you’ll be sworn in, then you do your morning stretches; you’re off and running. What’s the first thing you want in the kit bag in term?
Jim Chalmers:
Good morning, Pete. We’ve been off and running really, more or less since the day after the election. I think I got my first briefing from the Treasury Secretary at 6:45 am on the Sunday after the election. And that’s because a big focus for us is managing all of this global economic uncertainty that you and Tom just ran through a moment ago, not just on markets, but in the global economy more broadly.
We’ve been working hard since the election was resolved a couple of Saturdays ago. I’m looking forward to getting sworn in today, and I’m particularly grateful to the PM for this opportunity, but also for the chance to work with some really terrific people who will be sworn in to the Treasury portfolio today.
Stefanovic:
Yeah.
Chalmers:
Clare O’Neil, Anne Aly, Daniel Mulino, Andrew Leigh, a lot of intellectual horsepower in those colleagues, a lot of energy, enthusiasm and talent, and so I’m looking forward to working with them.
Stefanovic:
Okay. What’s the one thing, the first thing that you want to achieve this term?
Chalmers:
We’ve got a number of priorities – first of all managing that uncertainty, also we’ve got a major focus on productivity, we need to make our economy more productive over time. I think in the most specific sense we’ve got to build more homes.
I’ll work closely with Clare O’Neil to make sure that the billions of dollars that we’re investing as part of our broad and ambitious housing policy builds more homes in our communities right around Australia. So that’s a top priority as well.
Stefanovic:
Okay. Business leaders, they’re not letting you settle in, Treasurer. Some are already miffed that you’d need 2 more terms to boost productivity. Is that timeframe a worst case scenario for you or are you just trying to give some wriggle room?
Chalmers:
A couple of things about that. I don’t think anyone’s surprised to read in The Australian that Chris Corrigan has a different view on productivity to the Labor government.
I’ve had some really terrific engagement with major business leaders in the last week or 2 about our focus on productivity. Overwhelmingly people want to work with us on it.
The point that I’ve made is that productivity is a challenge which has been a feature of our economy for some decades, and it will take more than a couple of years to turn around. I think that’s just a realistic way of being upfront with people, that we can make our economy productive. It’s not one of those areas where you can just flick a switch and all of a sudden the economy is as productive as with want it to be. The problem’s been there for a couple of decades, the worst decade for productivity growth was the decade to 2020, the worst decade in the last half century or more.
We’ve got a lot of work to do and that will take time, and I think that’s understood in the business community, and I’m going to work closely with business, with unions, with the community more broadly to do what we can this term to make our economy more productive over time.
Stefanovic:
Okay. Will you still go after unrealised gains in $3 million plus super accounts?
Chalmers:
We haven’t changed our policy on that. I know that that’s been a focus of some of the commentary since the election. I don’t think it’s particularly newsworthy that we haven’t changed our policy on that. We’ve made it clear that it’s a very modest change, it only affects 0.5 per cent of people with balances over $3 million.
It’s still concessional tax treatment, just a little bit less concessiona. And it’s an important way that we fund some of our other priorities – including strengthening Medicare or providing income tax cuts, helping with the cost‑of‑living and building more homes. It’s an important part of our budget, we haven’t changed our approach to it. We know that there are elements of the media that are very focused on it, but we haven’t made a change there.
Stefanovic:
Well, I mean it’s just the idea of taxing something that hasn’t happened yet, which I think is a legitimate concern. But recent modelling by AMP found it’s not just retirees with over $3 million super, in the long run more and more Gen Z workers will be affected if it’s not indexed. Is that your calculation?
Chalmers:
A couple of things about that. First of all, on unrealised gains, there are other parts of the superannuation system where that is calculated, that’s a common misunderstanding which is repeated too frequently. And the second point about the long run, 30 or 40 years away, that assumes that there are never any changes to the threshold.
There are a number of areas in our tax system where thresholds aren’t indexed, where they are changed from time to time by governments, and I would expect that to be the case again.
It would be a strange assumption to assume that in the next 30 or 40 years nobody ever changes the threshold. That doesn’t happen in other parts of the tax system, and it wouldn’t happen in this part of the tax system over a period that long.
Stefanovic:
You just mentioned that you got some key appointments now in your brains trust, if you like. You’ve got, you know, Dan Mulino, Andrew Charlton as well is another one. How collaborative do you expect those economic discussions to be now?
Chalmers:
Perfectly collaborative, and ‘brains trust’ is a good way to describe them. I’m surrounded by brainiacs in the Treasury portfolio team, and I’m really excited about that.
Mulino is an absolute gun, Andrew Leigh – experience, intellectual horsepower, Clare O’Neil similarly, Anne Aly is going to bring a real dynamism to the small business portfolio. We get to work closely with Katy Gallagher and with the Cabinet more broadly, and I couldn’t be happier with the team that Anthony has appointed, and I’m going to work really closely with them.
I’ve already met with Dan Mulino, I’ve already met with Andrew Leigh, I’ve had discussions with a number of colleagues, and we’re looking forward to getting cracking.
Stefanovic:
But if they were to say to you, ‘Hey, Treasurer, taxing unrealised gains, there’s going to be a lot of blow‑back here, people are worried about the long‑term’, would you change course on that, or would you still plough ahead?
Chalmers:
I think I’ve answered this question already, Pete, you’ve come back to it for a second dig, but I’ve explained to you why we’re doing it.
Stefanovic:
No, but I’m just wondering if there’s more consternation behind the scenes, you know, would you change course at all in terms of that collaborative approach?
Chalmers:
It’s not something that you should anticipate, it’s not something that we’re considering or planning, for all of the reasons I ran through comprehensively a moment ago when you asked me the first time.
Stefanovic:
All right. US and China have paused their trade war for now, Treasurer. What’s your reaction to that, and what hope does that give you in terms of a reprieve for us?
Chalmers:
It’s a really welcome development, and I think the whole world is hopeful that this augurs well for the resolution of this effectively trade war between the 2 biggest economies in the world.
But we have to be realistic about it as well – there’s still a lot of unpredictability, a lot of volatility and a lot of uncertainty in the global economy. This is not resolved, it’s been paused, in welcome ways, and you can see that the markets have reacted to that as Tom ran through with you a moment ago.
These are welcome developments, they are good developments, but the situation is not resolved yet, and if you think about the concerns that we have for the impact of trade wars on the Australian economy, we are especially exposed to a trade war between the US and China. If you look at the analysis that we have done really the biggest part of our concern is the impact on the Chinese economy flowing through to our own economy. So we welcome these developments.
Stefanovic:
Okay.
Chalmers:
These are good developments, but we need to temper our expectations because there are a lot of issues still unresolved.
Stefanovic:
All right. Just a final one here, I know we’re squeezed for time, but – and this is not your problem – but the Libs’ leadership is up today in a couple of hours’ time. Have you got a thought on that this morning?
Chalmers:
Look, I haven’t given it a lot of thought – I think the 2 people that are up for election today shows that the Liberals haven’t learned a thing from the debacle which was their election campaign.
Whoever wins the battle of the duds today, the Liberal Party will still be the party of lower wages, higher income taxes and nuclear reactors. And Sussan Ley and Angus Taylor, they should be asking their colleagues for forgiveness, not for their votes.
You know, these 2 are 2 of the 3 people most responsible for the Liberal Party’s failure at the election, failure over the last 3 years to come up with anything that resembles a credible, coherent –
Stefanovic:
Okay.
Chalmers:
– economic policy, and so I find it bizarre that the Liberal Party members are being asked to choose between 2 of the worst performers in the Opposition over the last 3 years.
Stefanovic:
All right. Treasurer, I know we’re squeezed for time but thank you for your time this morning as always. We’ll chat again soon.