Raushaan Seychell:
Today, again, we’re up in Brisbane with a very special guest, the Treasurer, Jim Chalmers. Jim, thank you for joining.
Jim Chalmers:
Thanks, mate. You’re always welcome here in Brisbane.
Seychell:
Thank you. Yeah, I think last time we finished by calling you Super Nintendo Chalmers. And, yeah – but no, it’s obviously we’ve come –
Chalmers:
That wasn’t the worst thing I got called in Budget week.
Seychell:
Look, honestly. Yeah, I mean, comrade Jim, there was the communist manifesto. Are you still writing that one up? That was an intense headline. Honestly, some of the backlash I saw was extraordinary. And I think we’re kind of here to talk about a bit of the follow‑up from the Budget. It’s been 3 months since the Budget’s been released. Probably one of the more contentious and, dare I say it, ambitious budgets for at least a Labor government of recent memory. What’s changed in your mind? What are the really big things that you’ve noticed in terms of not necessarily the perception but from what people have told you, from the impact on the economy, from, like, housing as well? That was a very big thing.
Chalmers:
Yeah, well, a couple of things about that. I mean, first of all, the big reaction didn’t really surprise us because I think at any point in the history of this country when you’re trying to make a meaningful change then there are people who are very supportive of that and there are people who are very not. I mean, that’s just the reality of politics. It’s not a reason not to do difficult things. So none of that is especially surprising.
I think, if anything, since May the case for some of the things that we are doing has strengthened rather than weakened. The fuel security package obviously more important now in the context of the war dragging out. The cost‑of‑living package more important now in the context of this persistent inflation challenge that’s coming at us from around the world. The productivity package more important when you think about the intergenerational report and some of the pressures on our economy. The budget repair package in the context of borrowing costs going up.
But I think most sort of controversially, the tax package is more important now. If you look at some of those intergenerational issues that are in the intergenerational report that we put out – and housing really is the defining intergenerational challenge – then the case for what we’re doing there I think is more important. And it boils down to a pretty simple motivation there which is to try and make the housing market fairer for first‑home buyers and particularly for young people who have been locked out for too long.
Seychell:
Yeah, and I think it’s interesting you bring that up, because, I mean, the changes don’t really come into effect until next year. And I think as well, you know, the reforms, we’ve seen a bit of a slight correction in house prices, and that’s starting to happen. But there is a bit of a disconnect I’ve noticed between, well, what people sort of – or what, you know, maybe the media or what, you know, some people may want with regards to housing – going up basically in value, but then also how does it become cheaper?
I guess, how do you see, well, I guess, reconciling those 2 things? Because it’s almost like people want housing to go both up and down at the same time. And I’m sort of sitting here, like, how can you get affordability when people want both contradictory things to be true?
Chalmers:
Yeah. I think some really interesting numbers have just come out. And what they show is that even though housing has continued to come off a bit, prices have continued to come off a bit really since the start of the year, since before the Budget, not just after the Budget. Even with all of that, we’re still talking about house prices which are currently at the level they were at towards the end of last year, around November of last year. So over that almost a year period house price growth has been flat. It’s come off in the last 6 or so months.
And so what that tells us is that even when prices have come off a bit. And they’ve come off, I think in the last 2 decades they’ve come off I think on 7 different occasions, even though we’ve had this amazing price growth, huge price growth. There have been 7 times in the last couple of decades where house prices have come down.
Seychell:
Yeah, yeah.
Chalmers:
And people don’t – I don’t think people really remember that. In fact, there was a very substantial drop in house prices between 2017 and ’19.
Seychell:
Yeah. Yeah, yeah.
Chalmers:
Yeah. And that’s because what we’re seeing now and what we saw then was obviously a combination of factors – interest rates going up has had a big dampening effect on the housing market.
Seychell:
Of course, yeah.
Chalmers:
Of course it has. And broader economic conditions. And so the changes we made in the Budget are not the only factor playing out in the housing market. We know this because house prices started to come off before the Budget.
Seychell:
Yeah, and, I mean, this is something I think as well that I know a lot of people my age are very concerned about with regards to rent. Obviously interest rates do have an impact on rents and how much people are paying and how much they can afford to pay into their rent as well. But a big thing that we saw a lot in social media was a lot of landlords, especially landlords owning a lot of properties, passing on increased rents to tenants in light of the reforms that you made to capital gains tax. Despite the changes, again, not really being implemented for a little bit now as well.
It’s sort of like the whole thing of, well, is there a reason that they’re actually doing that. I guess, does the government sort of intend to and especially with regards to Treasury, I guess, crack down on landlords that are perhaps trying to raise rents? You know, yes, it’s in light of the changes, but the changes don’t come into effect yet, and it’s put pressure on tenants.
Chalmers:
Well, more than that – I mean, they shouldn’t be opportunistic in the context of, you know, for people who are currently negatively gearing, people who own those properties already and renting them out, they can continue to negatively gear them. Not everybody likes that, but that’s an important part of our policy. And so there is no justification for people who’ve had those properties for a while blaming the government for jacking up rents unnecessarily. They shouldn’t be opportunistic about it.
And from time to time governments do look at ways to make sure that we’re keeping landlords up to the mark and doing the right thing by people. We don’t want to see them misusing their powerful position in the rental market.
The best way to put some downward pressure on rent is to build a heap more homes, and that’s still overwhelmingly our primary focus, to build more homes. Even just this month I announced some new social homes for kids at risk of homelessness and for families fleeing domestic violence. That’s part of our effort. But we’re investing $47 billion in building more homes in all kinds of different ways. And that’s because that’s the best way to put downward pressure on rent over time.
Seychell:
You did mention the Iran war dragging out as well. And I think a lot of people would see that as yet putting on hold a lot of maybe more ambitious economic reforms, being maybe a little bit more, you know, defensive in trying to help people with the cost of living, I guess. What sort of things and what areas of the economy that maybe you were hoping to reform or make progress on have maybe been something you’ve had to put on hold and be, like, okay, we have to wait until this finishes up, until an agreement is reached between the US and Iran.
Chalmers:
Well, there hasn’t been a lot of that because we see the developments happening around the world, the pressure coming from the war in the Middle East, what’s happening with borrowing costs around the world, inflation around the world, a lot of that is a reason to reform rather than a reason not to reform. For some of the points I made earlier about a lot of the reforms we’re making are more important in the context of this war dragging out.
So we found a way to help with the cost of living, tax cuts are a big part of that, bulk billing a big part of that, wages, making the housing market fairer for first‑home buyers. All of that is recognising the pressures that people are under. Those pressures are turbocharged by some global developments, unwelcome global developments. I mean, let’s be frank about it, for young people and for Australians more broadly the war in the Middle East has been disastrous from a cost‑of‑living point of view.
Seychell:
Yeah.
Chalmers:
Disastrous. No point beating around the bush. And from an economic point of view it can’t end soon enough. But while it is ongoing, while it’s dragging out, people are under more pressure than they would be otherwise, and that’s why our cost‑of‑living help is so important.
Seychell:
Just before we finish up as well, obviously taxing resources, still a very big contentious issue. Obviously a lot of discourse online about the petroleum resource rent tax as well as taxing of, like, gas exports, all those sorts of things. You know, things that I often get a lot of feedback on in my comments as well where people do want to see a little bit more about that.
Chalmers:
Yeah, I noticed that in your comments.
Seychell:
Yeah, exactly right. And, you know, a lot of creators that we know are obviously very supportive of reform around resource taxation as well. So, I guess, my sort of question on that is: there obviously is a little bit of a – I don’t want to a disconnect – but there is a difference in what, say, your government is delivering versus maybe what, like, you know, some people would say online and maybe in the public as well. How do you get that balance right between, obviously it is a real thing that people want, but at the same time obviously you’re the one seeing the books and, you know, you’re the one talking to a lot of the companies and you’re trying to get that balance right. How do you see getting that balance right?
Chalmers:
Yeah, I think that’s a good way to come at it. We are always trying to strike the right balance. And, a couple of years ago I made a change to the PRRT, the offshore gas tax regime, and I do acknowledge that a lot of people, including a lot of people who follow you closely, would like us to go much further. But we did make some changes. And because of those changes the new numbers that we got this month actually showed that the PRRT take is up quite substantially.
Seychell:
Okay, yeah. Interesting. I actually didn’t know that.
Chalmers:
They only just came out.
Seychell:
Okay.
Chalmers:
Literally just came out. And what they showed was we were collecting one and a half a couple of years ago, now more like $1.9 billion. And, again, I acknowledge some people would like us to collect much more. Some people would like us to collect less. And so the tax take has gone up. And instead of 11 entities paying the PRRT, it’s now more like 21. So we’ve made some progress.
Seychell:
Yeah, wow. Okay.
Chalmers:
Yeah. Not as much progress as your followers would like us to see. That’s acknowledged. But we have made some progress.
Seychell:
Yeah, yeah.
Chalmers:
And also, when it comes to, I think the kind of way that you put the question to me – because we are trying to balance that against a whole bunch of other considerations, including, how we think about our international relationships, because we’re trying to secure diesel and liquid fuels at the same time as we’re exporting gas. We’ve also got this big piece of work on right now which is about gas reservation, which is actually a big, complex piece of work which is taking a lot of our time and focus as well. And so those are our priorities. We made some changes to the PRRT. We are seeing some of the benefits of that, but we acknowledge that some people would like us to go further.
Seychell:
I’ve always been of the opinion that, like, government can be a little bit harder than, I guess, just doing it. But, as well at the same time, you know, there is, you know, people who do sort of want to demand a little bit more. And then, yeah, obviously there is the pressure of the war, fuel pressures as well. So, like, I think, I guess, I can understand that being a concern. So, yeah, no, it is obviously a very complex issue and it does factor in several international factors as well. So, yeah, it does make sense as, I guess, frustrating for some people as it may be.
Chalmers:
Well, the thing that I appreciate about the work that you do on this podcast and why I’m really happy to be back on it is because you can give people a sense of what we’re grappling with. There are a series of trade‑offs in governing and balances that you need to strike. There’s a lot of complexity. But if you look across the budget, you look across the government, we’re trying to do the right thing by people, especially by young people. I can’t remember a budget that had young people more front and centre than the one that we just handed down. And so we’re doing the best that we can for people, but we appreciate the way that you help people understand some of the complexity that sits behind these decisions.
Seychell:
Yeah, thank you. I think, yeah, it’s one of those things where it’s just, again, you’re dealing with, you know, everyday decisions that will affect millions of people and also, like, very, very serious consequences come of what you do. So, yeah, I think that’s the sort of main thing we want to do, is be, like, you know, you can demand more but at the same time it is a very complicated thing. So it’s just, you know, make sure that, you know, we’re communicating it right, make sure people understand that. But, yeah, thank you very much for jumping on today. Absolute pleasure. And, yeah, hopefully we’ll chat to you soon.
Chalmers:
That would be good. Thanks, mate.
Seychell:
Amazing. Thank you.