Sabra Lane:
Dr Chalmers, welcome to AM.
Jim Chalmers:
Thanks very much, Sabra.
Lane:
Before we get onto the economy, the discovery of the caravan with explosives in Sydney with anti‑Jewish paraphernalia – has the National Security Committee of Cabinet met to discuss this and the recent antisemitic attacks?
Chalmers:
We’ll have an opportunity today to be briefed further on this matter. These are obviously really disturbing reports, unsettling reports. There’s a lot of fear in Jewish communities in Australia, and that fear is not always unfounded when we see these sorts of reports.
We know from the joint counter‑terrorism teams that they consider this to have been a potential mass casualty event. The threat’s already been contained, arrests have already been made. But this is exactly why we’ve set up the special operations, because these kinds of threats exist. There is no place obviously for this kind of violence or antisemitism in our society, and we’ll have an opportunity to be briefed further today.
Lane:
Have you been briefed, though, since this caravan was discovered about 11 days ago?
Chalmers:
Not me personally, only in a preliminary way in the course of the developments being made public yesterday, but I’m sure that the other colleagues have been privy to more information than me.
Lane:
All right. To the economy, at what point will you declare the fight against inflation won?
Chalmers:
I thought yesterday’s numbers were really encouraging, because they show that we’ve made this very substantial and now quite sustained progress in the fight against inflation across all of the ways that we measure inflation.
But the reason we’re not getting carried away by that is because we know that cost‑of‑living pressures haven’t disappeared, but they have eased considerably again in these new numbers, and that’s a very welcome and encouraging thing.
Lane:
Sure. But when will we know it’s won; it’s won and done, move on?
Chalmers:
We need ongoing vigilance, and we are getting on top of this inflation challenge, but we haven’t yet kind of won the battle. Getting headline inflation into the lower half of the Reserve Bank’s target band is a very good thing. Getting underlying inflation down into the low 3s, similarly a good thing. We’ve now got lower inflation than most of the major advanced economies.
All of those things are welcome developments, but as I said yesterday, it’s not mission accomplished on inflation even though we’ve made all this progress, and that’s because we know that people are still under pressure and that’s why our cost‑of‑living help’s so important.
Lane:
The previous dogma has been unemployment had to rise before the Reserve Bank would entertain cutting interest rates. Now, we don’t want to bore listeners with talk of NAIRU, the non‑accelerating rate of unemployment, but Australia’s appearance in recent years shows that doesn’t have to be the way for people to lose their jobs, for interest rates to fall.
Chalmers:
Australians are on the cusp of achieving something pretty remarkable together. And that is, if you look around the world, a lot of countries have had to pay for the kind of progress that we’re making on inflation with much higher unemployment. And what we’ve been able to do here in Australia is get inflation down and wages up and keep unemployment low – and that’s not the usual economic orthodoxy, and that’s not what we’re seeing in every part of the developed world.
And so I think Australians together can be proud of that. We’ve actually got the lowest average unemployment rates of any government in the last 50 years at the same time as we’ve made that very substantial and sustained progress in the fight against inflation. When we came to office inflation was higher than 6 per cent and rising, it’s now got a 2 in front of it and falling, and that’s a very good thing.
Lane:
Some economists are forecasting the Reserve Bank might cut rates in February and again on April 1. If that happens, are you hoping that voters will change their view about Labor as the current polling shows they’re looking towards the Coalition as we approach the election?
Chalmers:
I think one of the things you would have noticed, Sabra, is that I try not to attach political commentary to decisions that the Reserve Bank will take independently. I try and focus on my job, which is the economy – getting inflation down and wages up and unemployment low. Those are the 3 things that I’m most focused on, and I genuinely believe that if you make the right calls in the economy for the right reasons, and we have been doing that, then the politics will take care of themselves.
Lane:
People at the moment say that they’re still really doing it tough, and if you look at the recent polling there is a trend, and it’s not your friend.
Chalmers:
I totally understand that people are still under pressure, and I’ve been very careful yesterday and today talking with you to acknowledge that people are still doing it tough. These cost‑of‑living pressures haven’t disappeared, but they are easing, they’re actually easing faster than was expected and was forecast.
But that doesn’t mean that the cost‑of‑living pressures have all of a sudden disappeared, we acknowledge that. More than acknowledge that, we’ve been responding to these cost‑of‑living pressures with cost‑of‑living help that our political opponents didn’t support, and that means if Peter Dutton had had his way Australians would be thousands of dollars worse off, and they’ll be worse off still if he wins the election.
Lane:
In 2007 when Kevin Rudd won government for Labor, he said this sort of reckless spending must stop. This year Labor’s already committed billions in spending. We’re not even into February yet. Paying off debt and returning to surpluses don’t matter anymore?
Chalmers:
I mean hang on a minute, Sabra. We’re the only government in the last couple of decades to deliver 2 surpluses. We’ve engineered the best, biggest nominal turnaround in the budget, a $200 billion improvement in the budget, we’ve got the Liberal debt down, we’re paying less interest on that, and that’s because of our responsible economic management.
The Reserve Bank Governor has herself acknowledged our 2 surpluses are helping in the fight against inflation. And that’s because we’ve been very careful that as we’ve rolled out this cost‑of‑living help, we’ve done it in the most responsible way and we’ve done it at the same time as we’ve cleaned up some of the mess that our predecessors made of the budget.
Lane:
Jim Chalmers, thanks for talking to AM this morning.
Chalmers:
Appreciate your time, Sabra, thank you.