Sabra Lane:
Jim Chalmers, you’ve welcomed the Reserve Bank’s decision, but you acknowledged yesterday it doesn’t mean the job is finished on cost‑of‑living pressures. What more can you do?
Jim Chalmers:
Good morning, Sabra. Well, this is really good news that the Reserve Bank’s cut interest rates now for the second time in 3 months. It’s very welcome relief for millions of Australians with a mortgage but we know that there’s still a lot of uncertainty in the global economy. We know that people are still under pressure and that’s why the cost‑of‑living relief that we’re rolling out, including the coming tax cuts are so important. It’s why it’s so important that we’ve got wages growing again and it’s why it’s particularly important that we’ve made some very substantial and now sustained progress in the fight against inflation.
Lane:
What more can you do, though?
Chalmers:
We’ve got the tax cuts rolling out in this term of the parliament, we’ve got the energy bill rebates, and so those will be some additional help that people will get with the cost of living over the course of the next year or two, so that’s additional to what is already being provided. But really the main game here is to continue to put that downward pressure on inflation, to continue to get wages to grow, to continue to keep unemployment low because that combination of things is what’s given the Reserve Bank the confidence to cut interest rates again yesterday for the second time in 3 months.
Lane:
The bank says that there is a great deal of global uncertainty because of the US tariff policy. The credit rating agency, Moody’s, has downgraded the US credit rating. What do you think it will take for Mr Trump to realise that this tariff policy isn’t making America great?
Chalmers:
Well, there is certainly a lot of concern about the American economy and what these escalating trade tensions mean for the world and we’re better placed and better prepared than most countries to deal with this, but we’ve got a lot of skin in the game too because we’re very trade-exposed. And so we’ve made the point repeatedly that these tariffs are a bad idea. They do risk higher inflation in the world and slower growth in the world and in the United States as well and I think some of the commentary from the economists and others that we’re seeing about the US, and certainly the commentary around the Moody’s decision to downgrade the US reflects those concerns that I think most people around the world share.
Lane:
The Reserve Bank board discussed the idea of being more transparent around interest rate decisions and possibly publishing the vote results for policy decisions and giving all board members a chance every year to discuss its deliberations. The head of the bank, Michele Bullock, said she was communicating with you about that.
Chalmers:
Yes.
Lane:
What’s the result?
Chalmers:
Well, we’ll make that clear before long. What happens with this statement on the conduct of monetary policy is, I write to the Reserve Bank Board, they discuss it, and they come back to me and so it would be no surprise to your listeners that we’re working out the best way to implement the recommendations of the Reserve Bank review. We’ve had some good discussions about that, the Board would have discussed it yesterday and we’ll exchange letters and when we do that, I’ll make it public.
Lane:
More transparency, would that be a good thing in boosting trust that everyday Australians might have with the bank?
Chalmers:
Yes, and that’s consistent with some of the other changes that have been made. For example, I think it’s a wonderful development that Governor Bullock makes herself available after each meeting of the Reserve Bank Board, now the Monetary Policy Board. She did that again yesterday and I think that’s a very good thing. It does give Australians an insight into the thinking of the Board and the various issues that they’re grappling with, in addition to the statement that they put out. And so some of these discussions we’re having about how they report those decisions and how the Reserve Bank Board members interact with the community more broadly, I think they are of a piece with some of the really good progress that the Governor has made in terms of transparency.
Lane:
The government’s independent adviser on housing says you’re going to fall short by 22 per cent on meeting the 5‑year target of building 1.2 million homes. It says more people will be forced to rent, with a greater reliance on what it says are ‘suboptimal’ types of shelter like parks, hotels and emergency shelters and a portion – it will grow the homeless population. That’s your policy. What can you do to reverse that shortfall?
Chalmers:
We don’t have enough homes and that’s why housing is such a big focus in our budgets, and it will be a huge focus in this second term of the government because we need to build more homes more quickly. You can’t build homes overnight, but we’ve shown a willingness, we’ve found room for $43 billion of investment in all kinds of –
Lane:
Sure but – sorry, the adviser is saying that on your own policy, though, you’re falling way short.
Chalmers:
We need to build more homes than what is currently projected. It’s also worth remembering that in that report our housing adviser actually revised up the number of homes that they expect to see. We do have this ambitious target, it will be difficult to meet but not impossible, but everybody needs to do their bit, the Commonwealth is doing its bit.
Lane:
It’s a political truism that good government requires a strong opposition. Given the current state of the conservative parties, will Labor demonstrate humility or rub it in?
Chalmers:
The former. We’ve made it really clear – I think I said yesterday – that the mess that the Coalition parties are in is not our focus. Our focus is on continuing to provide the stable, methodical, considered, responsible government, particularly when it comes to economic leadership, which has seen inflation come down and wages go up and unemployment low and now interest rates cut for the second time in 3 months. These are the sorts of things which occupy our thinking – building more homes, rolling out renewable energy, making our economy more productive over time – that’s our focus, not the shambles on the other side.
Lane:
Treasurer, thanks for joining AM this morning.
Chalmers:
Appreciate it, Sabra. All the best.
Lane:
Federal Treasurer Jim Chalmers.