Rafael Epstein:
Jim Chalmers joins you, he is the federal Treasurer. Good morning.
Jim Chalmers:
Good morning, Raf. How are you?
Epstein:
I’m okay. Thank you for joining us. When someone does go to the supermarket any time this year the same stuff is going to end up costing them more and more. Isn’t that your fault?
Chalmers:
Look, I think as I said over the course of the last couple of days, Raf, and probably for the last few years, I take responsibility for all parts of my job, including my part in the fight against inflation. We know that prices are higher than anyone would like but more than acknowledging that, we’re acting on that.
It’s the reason why we’re cutting taxes and making medicines cheaper and providing more bulk billing and student debt relief and all of that is because we understand that people are under pressure, whether it’s at the checkout or elsewhere. And we’re doing what we responsibly can to help at the same time as we get the budget in much better condition as well.
Epstein:
It’s not a glowing report card, though, is it? So, by the time you deliver your Budget in May you’ll have been there for 4 years. The economy is not going to grow as much this year as last year. My wage is not keeping up with prices. That is in many ways a verdict on your management of the economy, isn’t it?
Chalmers:
I take responsibility for all aspects of my job, as I said. And I try to share credit when the news is good, and I take responsibility when the news is difficult but I have to contest this gloomy picture that you’ve painted of the economy, Raf.
You have to look right across the board, and before I explain what I mean by that, consider that yesterday in the press conference that Michele Bullock gave after the rates decision, she pointed out – and I think it’s an important point – she said, and I’m quoting, ‘we’re actually in a really good position’. And what she means by that is we’ve got incredibly low unemployment – actually the lowest average unemployment of any government in the last 50 years – we’ve got business investment recovering strongly, we’ve got participation in the labour market near record highs, the debt is considerably lower than it was expected to be a few years ago.
And so, across the board we’ve got big advantages. We’ve seen some good developments, but we’ve also got these big challenges and inflation is a big challenge, productivity is a big challenge, global uncertainty is a big challenge and we’re focused on those 3 things as we put the Budget together.
Epstein:
If the economy does have those positive features, I’m curious why you didn’t do a press conference yesterday. Whenever the bank cut rates last year you did a press conference. When the bank raised rates yesterday you didn’t have a press conference. Why not?
Chalmers:
Raf, because it was during Question Time and instead of a press conference, we extended Question Time until about quarter to 4 and so that I could take as many questions as possible about this. It wasn’t possible for me to step out from Question Time and do a press conference. And then by the time Question Time finished, Michele Bullock, was giving a lengthy press conference – and it’s obviously not appropriate that the Governor and I stand up at the same time – but yesterday I think I probably did, I don’t know, 6 or 7 or 8 interviews yesterday.
Epstein:
Okay.
Chalmers:
I’m talking with you today. I think the idea that I’m not fronting up after some difficult news in the economy is a view that’s pretty hard to sustain.
Epstein:
Jim Chalmers is the federal Treasurer. That’s who you’re listening to. That’s an extra 45 minutes, I think, in parliament in Question Time. The number is 1300 222 774. That’s the number. Just one area of government spending, Treasurer, we had a chat before 9 about the massive increase in household batteries. Things like assistance for household batteries, a loan for an electric car, it’s not means tested. Like, that’s extra government money going into the economy for people who might not need it. Why? Why do that? Why not means test that stuff?
Chalmers:
Because there’s a bigger economic benefit that we’re going for here. And take the household batteries program, for example. It’s been incredibly successful – more than 200,000 Australians with our help installing home batteries to get their own bills down and to take pressure off the grid. And so, there are broader benefits beyond the household which installs those batteries.
But yes, because it’s been so successful it’s also been expensive, and that’s why we took steps in the mid‑year budget update to make that more sustainable, to still make sure that we’re supporting people making that decision, but making sure that we can afford it. There are good reasons to do that which go beyond the really important cost‑of‑living relief that each family installing those batteries can access.
Epstein:
Just a few questions that have been coming in on the text. I got this one from Jack in Essendon – ‘Raf, please ask the Treasurer what happens to the extra money that banks collect from mortgages. Are they taking from the poor and giving to the rich?’
Chalmers:
I’m not sure what Jack means by extra money. They fund their loans 2 ways – deposits and they access money markets. And when the Reserve Bank changes the cash rate it makes money more expensive. They make those decisions as commercial entities.
One of the things that we have seen is that when – like last year, for example, we had 3 interest rate cuts. Some people made the decision to continue to pay the higher amount on their mortgage and get a little bit ahead, others can’t afford to do that. People make their own decisions, and banks make those decisions too. We asked the banks to be responsible in the way that they pass on –
Epstein:
I guess Jack is asking if the banks make extra money out of a rate rise. Do you think they do?
Chalmers:
It depends on the cost of the money that they’re accessing to loan out, is the answer. I know that’s not a perfectly simple answer for Jack, but it depends on how much they pay to access the money in the first place. Obviously, our banks are profitable. They make profits as private entities –
Epstein:
Sure.
Chalmers:
– private businesses, and people will have a view about that from time to time. But that’s really the equation.
Epstein:
Another question here – ‘Please ask the Treasurer when will he increase the age pension? I personally shop looking for the food that the supermarkets discount because the expiry date is getting close.’ The age pension?
Chalmers:
Well, twice a year obviously it goes up with indexation. I’m not saying that that’s a decision that I take twice a year, I’m not trying to pretend that, but there’s a very deliberate reason why the pension is indexed, and that’s because it’s designed to try and keep up with these cost‑of‑living pressures. I know people on low and fixed incomes in particular are under pressure. The indexation is really important.
And not to be partisan about this, Raf, for a moment, but sometimes when our political opponents say that there’s too much spending in the budget, they include in the numbers that they use the indexation of the pension. Now, we’re big supporters of the indexation of the pension. It’s a really important way to make sure that the pension increases a couple of times a year. From time to time our opponents imply that they are not supportive of that indexation, but we are.
Epstein:
Jim Chalmers is the federal Treasurer. The phone number on what you’re hearing from him is 1300 222 774. There’s some other questions about what you might do that I want to get to. But just a final text question here, Treasurer – ‘the deal is worse for this generation of young Australians, especially those who want to start a family.’ Do you agree that the deal is worse for this generation of young Australians?
Chalmers:
I do. I think there is a real intergenerational problem in our economy and in our society more broadly and I spoke to the economist Joe Stiglitz about this in The Monthly published last week. This is something which is a real focus for me – the fact that we need to make sure as a government and as a country that the generations coming through don’t get a worse deal than the generations that they replace. This sense of intergenerational fairness is very near and dear to me.
And when I brought together that economic reform roundtable a few months ago, all those people around the Cabinet room, one of the really key directions which came out of that is this sense that we need to do better in intergenerational terms. We need to attract more investment, we need to make sure that our economy is more productive, we need to make sure that we lift living standards. But we also have to view all of those challenges through an intergenerational lens, and that’s what I do.
Epstein:
You also set the hares running in that interview with Joseph Stiglitz about capital gains tax discount. You essentially get a discount as an investor on the tax you pay when you sell a home. Do you want to change that?
Chalmers:
We haven’t changed our view on that. The best way to explain the situation there is we’ve got this Senate Committee which the Greens and the Liberals set up to look at capital gains. And so people rightly are expressing a view to that committee, and so pretty much every day for the last few weeks people have expressed a view about capital gains. I said to Joe and I’ve said on other occasions – I think I said this morning in media at Parliament House – obviously housing is one of the defining intergenerational issues but our focus in housing is on the supply side, which means we’re trying to build as many new homes as we can –
Epstein:
– I’m going to interrupt, Treasurer. You keep getting asked that, and you never rule it out.
Chalmers:
I gave a speech at the Press Club last year where I talked about this sense that governments are asked to rule things in and out. Obviously, there are things that governments wouldn’t contemplate, things like death taxes, for example, or changing the arrangements for the family home. But I think we should be capable, as the Senate Committee has provided for us, of having a discussion about the intergenerational issues in housing.
As I said, for this government, our focus is on building more homes for people to deal with this intergenerational issue and on the tax side, our focus is on cutting income taxes 2 more times and the standard deduction and fairer superannuation tax concessions and lifting the low income super offset and doing more work on multinational taxes so that they pay their fair share –
Epstein:
That’s a good argument, Treasurer. Do you think we’ve got – if you’re listening to the Treasurer of the country right now – do you think listeners have a right to know what the Treasurer thinks about changing the capital gains tax discount?
Chalmers:
Well, I’ve told you what I think. I think the best way to deal with the intergenerational issues in housing are supply, and the best way to deal with issues in the tax system are to continue to cut income taxes, to make superannuation fairer and to deal with multinational taxes.
Epstein:
You’ve been – you haven’t mentioned the other side of politics, the Coalition. I don’t really want to mention them. I do want to finish with this – One Nation’s numbers are rising significantly to places they haven’t been at since 1998 in the polls. Apart from dysfunction in the Coalition, why do you think more people are willing to say they would vote for One Nation?
Chalmers:
I think it reflects the disarray on the other side of politics.
Epstein:
Only that?
Chalmers:
It reflects the sense, I think, that the Liberal Party doesn’t really stand for anything anymore, they don’t have any economic credibility, which is a point that Peter Costello was making to Troy Bramston not that long ago. They went to the election with higher income taxes and bigger deficits and more debt, and so they’ve become less attractive to people. Obviously, the Liberals and the Nationals can’t get along, so all of these –
Epstein:
Inflation and immigration and right‑wing politics, they often run together, right? That’s something else pushing people towards One Nation, isn’t it?
Chalmers:
There’s a good chance of that, I think, but support for the government is broadly as it has been – it’s really a story of the splintering of the right‑wing parties. And where I think that really matters is because we’ve got 3 divisive parties now of the right.
And my view is when we’ve got these big economic challenges which occupy all of my time and all of my focus, a more divided community makes us less likely to be able to deal with those issues in our economy. That divisiveness, that division makes it harder to get on top of the very real and pressing issues that people are confronting in the economy.
And so, what we try and do as a government – and Anthony leads in this regard and all the way through our government – is to try and be considered and methodical, to work through the issues in a responsible way and to try and provide that steady and stable government while the right of politics is disintegrating.
Epstein:
We’ll see if those poll numbers endure. Thanks for joining us today.
Chalmers:
Thanks very much, Raf.
Epstein:
Jim Chalmers, the federal Treasurer.