Peter Stefanovic:
Joining us live now is the Treasurer, Jim Chalmers. Treasurer, good morning to you, thank you for your time. So on average roughly 100 bucks comes off about $1,500 a month that punters have had to endure from all of those rate rises. It’s good but it’s a snip. So has the damage already been done?
Jim Chalmers:
Morning, Pete. As we’ve been talking about over the course of the last day or so, it’s a good thing that interest rates have started to come down. They were rising, inflation and interest rates were rising when we came to office, and now both of those things are falling, and that’s a good thing.
We don’t pretend that all of the cost‑of‑living pressures that people are confronting all of a sudden disappear overnight, but this interest rate cut will help people. It will take some of the edge off these mortgage costs which have been such a big part of the pressures that people are under.
So a very welcome outcome for millions of Australians. It is the rate relief that Australians need and deserve. We know that we need to keep focused on the cost of living, and we will be, because those cost‑of‑living pressures haven’t disappeared, despite this welcome news yesterday.
Stefanovic:
The Governor poured cold water though on more immediate relief. Has your record spending denied further cuts?
Chalmers:
Of course not. The Governor has pointed out on other occasions that public spending is not the main game. If anything, the 2 surpluses that the government has delivered have been helping in the fight against inflation.
Now when it comes to the Governor’s commentary yesterday, it’s not unusual for central bank Governors to choose their words carefully, to not make predictions about future interest rate cuts, to be cautious about that; all of that is not unusual, and I don’t make predictions about future movements in rates either.
But I think we should recognise that the fact that the Reserve Bank Governor and the Board saw it fit to cut interest rates yesterday is a reflection that we’ve made a lot of progress together on inflation as Australians. And as the Governor said yesterday, that progress on inflation has been quicker than anticipated, and that’s why we saw the very welcome rate cut yesterday.
Stefanovic:
So is what you’re saying now is that it’s not as bad as it seems following on from what Michele Bullock was saying?
Chalmers:
That’s not the point that I’m making. The point that I’m making is that if you look at the Governor’s statement, the Governor makes it clear that progress on inflation has been faster than expected. The reason we saw this rate cut yesterday is because inflation has come down very substantially, and in a sustained way.
When we came to office inflation was higher than 6 per cent and rising, it’s now in the bottom half of the Reserve Bank’s target band, and that has meant that the Reserve Bank has been able to cut interest rates.
The Governor said in her statement yesterday that there is increasing confidence that we can get inflation under control. That’s why there was a rate cut.
Now there’s a lot of other commentary around, I understand that, people want to know what happens next. That’s a perfectly understandable thing. But the rate cut yesterday is because together as Australians we’ve made a lot of progress on inflation. We’ve got inflation down, wages up, we’ve kept unemployment low and now interest rates are coming down too.
Stefanovic:
So just as you get some good news, you get some bad news as well, because the RBA has pointed to our living standards not returning to pre‑2022 levels until 2031. That’s blown out by 2 years, which sounds depressing. Is that a pretty sad indictment of where we really are?
Chalmers:
First of all, as the Reserve Bank Governor herself said, representing a view that I share, we’re optimistic about the future of the country, but we’re alive to the risks, particularly the global risks.
When it comes to living standards, don’t forget living standards were falling much, much faster when we came to office. And what we’ve been able to do, by giving the tax cuts, getting wages growing again, getting inflation down, is we’ve seen a recovery in living standards.
Now we know people have got a lot of ground to make up in their household budgets, that’s why we’re providing this cost‑of‑living relief, that’s why we’re getting wages growing again.
And we’ll get a really important reminder of that later today, Pete, when the wages data is released, and what that is expected to show is another quarter of annual real wages growth in our economy. Real wages were falling when we came to office, they’re growing now, quarter after quarter after quarter. And that’s one of the best ways that we can arrest this challenge that we’ve had with living standards for some years now.
Stefanovic:
That’s interesting you bring that up, because Ms Bullock mentioned yesterday that wage growth needs to stall, but you want wage growth up. So how do you reconcile those competing interests?
Chalmers:
I wouldn’t put it exactly the way that you have, Pete. What the Reserve Bank wants to see is wages growth which is sustainable in our economy, and that’s what we want to see as well. And what we’ve seen in recent quarters is real wages are growing again, and they were falling when we came to office. That’s a good thing that we’ve turned that around.
Now the Reserve Bank Governor and the government want to make sure that at the same time as we get wages growing, at the same time as we get inflation down and keep unemployment low, that we need to be chipping away at this productivity challenge that we have in our economy, and we’re doing that as well.
Stefanovic:
So with this good news, Treasurer, are you inclined, alongside the Prime Minister, of course, to pull the trigger on an earlier election now to capitalise?
Chalmers:
That’s a matter for the Prime Minister. Either way there will be an election at some point in the next 3 months, so an election is more or less imminent regardless.
My job is to obsess over the numbers in the economy and not over the election date. We are busily putting together a Budget for the end of March. If and when the Prime Minister decides to go to an election, we’ll be ready.
Stefanovic:
Okay. So when you mentioned that cost of living is still very much your focus, if you are still planning on a Budget, how does the RBA and these numbers yesterday and the numbers today, how does that affect your Budget? Will more energy relief be extended?
Chalmers:
We keep cost‑of‑living relief under more or less constant review. What we’ve shown in the first 3 Budgets is we’ve been able to provide a lot of cost‑of‑living relief but in quite a responsible way, the tax cuts, energy bill relief, early childhood, cheaper medicines, rent assistance, getting wages moving again, fee‑free TAFE, all of these things are about responsible cost‑of‑living relief. They’ve been a feature of the first 3 Budgets, and if we can afford to do more in a fourth Budget, of course we’ll consider that.
Stefanovic:
Okay. I’m battling against the magpies and the cockatoos this morning bright and early, Treasurer. But I just want to –
Chalmers:
It’s a rowdy mob here at Underwood Park.
Stefanovic:
Everyone’s very excited. I just want to ask you – I know this is a story in Queensland, a big one, and as a proud Queenslander yourself, your opinion matters. Victoria Park or a Gabba rebuild?
Chalmers:
Let’s see what the review says. One of the things that we’ve said from a Commonwealth point of view is we’re prepared to kick in $2.5 billion into the Brisbane Arena, which will be the swimming venue. So that’s our commitment. We know there’s a lot of interest in the question of the future of the stadiums for the Olympics. The state government’s got a review underway; we hope that they consult us on that before they release, and when they release that independent review. But we’ve already got a couple of billion dollars’ worth of skin in the game. We want to build an amazing swimming venue, and that’s our focus.
Stefanovic:
You must have a preference though; preference for a big stadium – nice big shiny new stadium – that would be nice, wouldn’t it?
Chalmers:
I try not to weigh into it. Catherine King, my colleague and Anika Wells as well they’re very interested in it, as am I, but I’m not going to put a view to you. I’m a Lang Park guy, Pete, but that doesn’t really work for the round stadium that we need for the Olympics.
Stefanovic:
Doesn’t. All right, Treasurer, Jim Chalmers, thank you so much for your time.