RACHEL PUPAZZONI:
The Treasurer wasn't sugar coating today's GDP numbers, acknowledging they're backward-looking and the bulk of the pain lies ahead. Jim Chalmers warns trying to bypass the global downturn to ensure Australia's economy continues to grow will be a challenge.
JIM CHALMERS:
This was a solid outcome in the circumstances. These National Accounts paint a picture of an economy which is relatively robust despite all of the challenges being thrown at it. But it is a backward-looking measure, it is about the September quarter. We have had a number of interest rate rises since then and some of the challenges in the global economy have intensified. And so these challenges are not behind us, they are ahead of us still when it comes to the global economy. And so that's why we are focused on making our budget more responsible, our economy more resilient to these international shocks and trying to fight this inflation which is still our number one challenge.
PUPAZZONI:
Is Australia at real risk of falling off what the Reserve Bank describes as a 'narrow path' and into recession next year?
CHALMERS:
That's not the Treasury's expectation. The Treasury's expectation in the Budget forecast I released a few weeks ago, is that the Australian economy will continue to grow but so will the global challenges to the economy. Obviously, some of our international counterparts are faring much worse than we are but we won't be immune from another global downturn. The global uncertainty is already having big implications for our own economy, particularly when it comes to the impact of the war in Ukraine on energy costs here in Australia. We don't currently expect the Australian economy to go backwards. We do expect some of our peers to be in that position. You can see the UK and Europe and potentially others in that position. We are relatively confident and optimistic about the future of the Australian economy but we do have to navigate some really tricky international conditions in the months ahead.
PUPAZZONI:
We had another hike from the Central Bank this week, more are likely on the way. This is really starting to hurt people. What do you say to those who are struggling with mortgage repayments, higher rent, businesses at risk of going under?
CHALMERS:
We understand that interest rate rises determined by the independent Reserve Bank do put extra pressure on household budgets, and particularly if you signed up to a mortgage when interest rates were especially low, particularly if you're coming off a fixed rate onto a variable rate. We do understand that that puts extra pressure on people. What we are doing is making our Budget as responsible as possible. That means providing cost-of living-relief in a way that doesn't add to the inflation problem, but makes medicines cheaper and early childhood education cheaper and gets wages moving again. And it's also why we are working with the regulators and the states and the impacted industries to see if we can take some of the sting out of these high energy prices which are a big part of our inflation challenge as well.
PUPAZZONI:
Treasurer, these National Accounts showed the biggest quarterly fall in the terms of trade since 2009. How vulnerable is Australia to a reversal of the current commodity price boom?
CHALMERS:
Look, I think that there were some specific factors feeding into that - changes in the composition of mining investment and a couple of other factors as well. Our position has been relatively robust in recent times and so we're not especially troubled by that development in the National Accounts. I think in the National Accounts the most troubling features are the measures of price pressures in our economy, which we've just been talking about. But there are some pleasing aspects too, wages one of them. Also one of the interesting developments in these National Accounts is the way that the household savings rate has come down and that has been feeding and fuelling some of the consumption when it comes to travel and services in particular. And so there are a range of moving parts here, we try not to overreact to any one number or another. In aggregate, these National Accounts are solid, they are robust, there are some pleasing aspects. But we need to recognise, as you did in your first question, that it's a backward-looking measure and a lot of the challenges in the global economy are ahead of us rather than behind us.
PUPAZZONI:
Consumers, households have all been struggling with high energy costs. Can they expect anything from the Budget in May that will help them?
CHALMERS:
We'd like to make some proposals before that, between now and Christmas, we've set ourselves that deadline. There are a couple of important discussions over the next couple of days where we will try and advance and progress an agreed policy here. But when the Budget rolls around in May, obviously we'll factor in all of the relevant economic developments. One of the reasons why the October Budget was so well supported by informed commentators and the ratings agencies is because it was designed for and defined by the times, the economy that we confront, inflation in particular. And so in May we'll take a similar approach, it will be responsible and restrained like it was in October. But if there are more steps that we need to take to deal with this unfolding global uncertainty, obviously we'll be prepared to consider that.
PUPAZZONI:
Treasurer, thanks for your time.
CHALMERS:
Appreciate your time Rachel, all the best.