RAFAEL EPSTEIN:
Jim Chalmers is the federal Treasurer, good morning.
JIM CHALMERS:
Good morning, Raf. Thanks for having me on your show.
EPSTEIN:
We’ve been talking about that COVID report. Do you think that’s right – that there’s an erosion of trust?
CHALMERS:
I do. I think that’s one of the key conclusions of that COVID report. I think there’s a sense of alienation. Even though governments did their best to make the right decisions for the right reasons, I think there has been an element of alienation and a decline in trust. We see it in all kinds of different ways.
Our responsibility as leaders now, in the broad, is to make sure that we are upfront about where governments can do better. And I think that’s what this report is all about.
In the specific when it comes to COVID, I think the Centre for Disease Control is really all about trying to make sure we’ve got a really good evidence base to make these sorts of decisions, because there will be another pandemic in the future.
EPSTEIN:
Do you think people trust you less because of COVID?
CHALMERS:
I think broadly, yes. There’s a sense in the community really – we’ve had 3 big shocks in the last 15 years. We had the global financial crisis, we had a pandemic, and we had the global inflation shock which followed that. In different ways all 3 of those shocks had a bit of an alienating effect and we’ve seen a decline in trust in political leaders and political institutions, and it’s something that we take responsibility for trying to turn around.
EPSTEIN:
I guess this goes to trust – I don’t know if the government thinks it’s important or not – but flight upgrades. The Prime Minister hasn’t answered a specific question yet. He’s been accused of directly calling Alan Joyce to get Qantas upgrades. He hasn’t directly said if he did or did not do that. Do you think he should answer that?
CHALMERS:
I think he’s answered heaps of questions about it on multiple occasions over the best part of –
EPSTEIN:
He hasn’t answered that question.
CHALMERS:
I haven’t pored over all of the transcripts.
EPSTEIN:
I know.
CHALMERS:
That’s your job. That’s what the good people of Melbourne pay you to do, Raf, I haven’t done that. But I do know he’s answered a heap of questions about it. What really matters here is that these things are declared in the appropriate way, and my understanding is that he has.
EPSTEIN:
Five years ago, Scott Morrison was in trouble. The media were accusing him of having a relationship with someone who ran a travel agency. You got up in parliament and said, ‘This is a glimpse into an alternative universe where all of the mates at the top end of town, the alternative universe where you want to book a 3:30 flight out of Perth all you have to do is ring up the CEO of an ASX listed company.’ Is he trying to evade the sort of scrutiny that you applied to Scott Morrison?
CHALMERS:
No, the difference is as I recall it – and it’s a little while ago, but as I recall it – that was the Hello World controversy and that was partly about government contracts, and it was partly about Liberal Party donors. And so there was an element of taxpayer investment and involvement in that. And so, I –
EPSTEIN:
That’s different, but ringing up people to get a flight, that’s the same.
CHALMERS:
I’m not sure if the PM’s done that. He’s been asked about that. I understand people have got an interest in this stuff, but he’s been asked a lot of times. He’s answered a heap of questions. And to be really upfront with you, Raf, face‑to‑face here in the studio in Melbourne – my focus is on the inflation number later on, the COVID report yesterday, I was in DC meeting with G20 colleagues and counterparts. I haven’t been exclusively focused on this.
EPSTEIN:
I do want to get on to inflation, but we have an especially difficult problem with illegal tobacco in this state and the arson attacks that are sparked by that. You are taking in dramatically less money than you expected to. So the budget numbers project how much tobacco revenue, it’s a lot lower than you thought. Is it time to lower the tobacco tax?
CHALMERS:
I don’t think so but I do acknowledge that part of the lower tax take for tobacco, part of it is more people giving up, which is a good thing.
EPSTEIN:
Sure.
CHALMERS:
Part of it is people evading the tax, which is a bad thing. I know that the Victorian Government is taking steps to try to address that. We’re obviously monitoring those steps that they’re taking very closely. I think there is a problem here.
EPSTEIN:
It’s a bipartisan question – you’re not the only government. Every government raises tobacco tax. Can I – I just want to play you a little thing from Victoria Police.
CHALMERS:
Okay.
EPSTEIN:
The police officer who heads our Lunar Taskforce – so they look at organised crime and arson attacks – here’s Graham Banks, he’s just pointing out something that’s obvious. They can’t police their way out of this. Just have a listen.
[Excerpt]
GRAHAM BANKS:
Ultimately, I don’t think this is going to be a policing solution; it’s so engrained. It’s a bit like saying we can stop illicit drugs now.
EPSTEIN:
Can you get the fires under control, do you think?
GRAHAM BANKS:
I don’t think you can do that until that industry no longer has the shops.
[End of excerpt]
EPSTEIN:
Have successive governments contributed to the problem?
CHALMERS:
I’m not sure about that. But governments need to take responsibility for addressing it.
I’m being upfront with you and your listeners in saying that I do acknowledge there’s an issue here. We want more people giving it away, and more people are giving it away, that’s a good thing. Ideally at some future point, somebody in my job is not collecting tobacco excise because people aren’t smoking anymore, not because –
EPSTEIN:
But that’s not real world, right? That’s not real world?
CHALMERS:
At some point it’s conceivable. It won’t be soon. And one of the reasons why the tax take is down is because people are finding ways around it, I acknowledge that.
But the solution here isn’t to cut taxes for smokes – we’d have to increase taxes somewhere else. Policing is part of it, and I know that the clip we just heard said that policing isn’t all of it, that’s probably right as well. I was in a corner store in my own community a few weeks ago and the guy who runs the corner store was telling me about how many fewer smokes they were selling and people were getting around it by –
EPSTEIN:
Because he doesn’t sell the illegal ones?
CHALMERS:
Yes and I know there’s an organised crime element to it which is what the Victorian Government is acknowledging too, so we need all shoulders to the wheel, but I don’t think cutting tax on tobacco is the way to get the outcome that we seek.
EPSTEIN:
We get an inflation number every month that is not as focused on as the one we get today, which is – people pay a lot more attention to it. I’ll skip why. When am I going to start feeling like – you keep on saying inflation is getting better, it’s moderating. When’s it going to feel like that?
CHALMERS:
So you don’t want a long disposition on the difference between the quarterly number and the monthly number, I hear you.
EPSTEIN:
You can answer the question however you like.
CHALMERS:
People are still under pressure. Even as the official inflation numbers are coming down really substantially, people are still under pressure. We acknowledge that, more than that, we’re responding to that in all the different ways we’re providing cost‑of‑living help. And so, people are still under pressure. But what we have seen and what we expect to see in a couple of hours’ time is inflation has come down even more. And remember, only a little over 2 years ago when we came to office, inflation had a 6 in front of it, today it will either be in the low threes or the high twos. And so, inflation –
EPSTEIN:
Do you think it will be in the high twos?
CHALMERS:
I don’t like to have a punt on those sorts of thing, Raf. We’ll know soon enough – less than 2 hours away. But it will be either side of 3 and that shows that inflation has halved on our watch. That’s a good thing. Inflation has come down really substantially but we say that knowing that people are still under pressure, and that’s why our cost‑of‑living help is so important.
EPSTEIN:
You mention that a lot. You didn’t mention the change to stage 3, so I give you points for not running out a list.
CHALMERS:
Thanks.
EPSTEIN:
You have said in the last few days, ‘Look, don’t expect much next year.’ Is that – in the Budget next year, that’s still scheduled to go ahead. Is that your way of saying you’ve given most of the inflation help in the life of this government?
CHALMERS:
It’s my way of saying that there is substantial cost‑of‑living help already rolling out that we’ve already budgeted for that people are receiving right now, but it’s also me indicating to your listeners and to the country that we will always do what we can to help with the cost of living, but we need to do that in the most responsible way we can which recognises the constraints in the budget –
EPSTEIN:
So, most of it is over?
CHALMERS:
We are still working on the Budget for March, obviously, and the mid‑year update.
People should expect in the future what they’ve had in the past, which is a sense that we’ll help where we can, but we’ve got to try to do that in the most responsible way.
The election, for example, from our point of view, from our side, won’t be a free‑for‑all of public spending. Everything we do will be with an eye to what’s responsible and affordable and what can make a meaningful difference to people’s lives, acknowledging that they’re doing it tough.
EPSTEIN:
Do you think that one of the problems is you don’t actually know how to talk to people about what you are doing? Does the government have a problem selling its own message?
CHALMERS:
Personally, I think I can always do better. And –
EPSTEIN:
That can be a dodge, though, because everything –
CHALMERS:
Why?
EPSTEIN:
I mean, I could also be healthier and fitter and nicer.
CHALMERS:
You could be nicer, Raf. But you get that a lot?
EPSTEIN:
I do. Like, genuine question: I get the sense that the government is frustrated –
CHALMERS:
But why is that a dodge? Why is that a dodge?
EPSTEIN:
Well, I want you to give me your own judgement on whether or not the government’s failed to get across what it is doing.
CHALMERS:
I don’t think we’ve failed, but I genuinely think – and I mean this personally – others can make assessments about their own communication – sometimes I think I could be clearer. I could explain why we’ve come to a decision better. I think we can do that and I think anyone who thinks that they can’t communicate more clearly is kidding themselves.
Australia has been through a really rough period, really 15 years but the last few years with this inflation as persistent as it has been – certainly higher and more persistent than we’d like it to be – the onus is on someone in my job to explain to people why that’s happening, what we’re doing about it. I’ve tried to do that, sometimes I feel like I’m doing that, but we can always do better.
EPSTEIN:
Are we going to get back to a place where people aren’t going to be shocked by their supermarket price or the cost of their mortgage? Is that actually foreseeable, or is inflation, some form of inflation, here to stay?
CHALMERS:
There’s always inflation in our economy. Very, very rare that we have deflation. Some countries, China recently –
EPSTEIN:
Last decade was noticeably different to this decade.
CHALMERS:
Yes. Usually a healthy range of inflation is in the Reserve Bank’s target band, which is 2 to 3 per cent. We might get there today, we might not, but the direction of travel is certainly very positive, getting back into the more normal range.
I think I said this earlier and I appreciate the chance to say it again – even as the official inflation data comes off really considerably in very welcome and encouraging ways, we still know that people are under pressure and that’s why the cost‑of‑living help that we’ve been talking about is so important.
Even if we got today – we won’t – but even if we got today a 2 and a half per cent inflation figure for the September quarter, we wouldn’t see the fight against inflation as over necessarily. It requires our ongoing attention and diligence, and that’s what it’s getting.
EPSTEIN:
What do you hope to do between now and the next election? Because we started this interview on trust. I did ask you one question that I will say I don’t think I got a complete answer on – this is about the PM and Qantas, but I don’t want to re‑prosecute that. What do you want to achieve between now and the next election, given that that’s the background to our conversation?
CHALMERS:
I want to get inflation down further. That’s really been the main thing I’ve been focused on for 2 and a bit years now, turning that inflation with a 6 in front of it to ideally get it down to have a 2 in front of it. That’s the main priority.
But in terms of the bigger, longer-term opportunities, I am absolutely obsessed with building more homes. We’ve got a horrendous housing shortage, as you know.
EPSTEIN:
Very difficult.
CHALMERS:
Difficult, but that doesn’t mean we throw our hands up in the air and give it away.
So housing, working with Clare O’Neil, a fine Victorian, to build more homes. Huge priority. And the energy transformation, working with colleagues to make sure that we grab the immense economic and industrial opportunities that come from net zero. So those are the bigger, medium‑term and longer‑term focuses that I have. But in the near term, inflation.
EPSTEIN:
Thank you for coming in.
CHALMERS:
Thanks very much, Raf.
EPSTEIN:
The federal Treasurer is Jim Chalmers.