Sally Sara:
Treasurer, welcome back to Radio National Breakfast.
Jim Chalmers:
Thanks very much, Sally. Nice to see you again.
Sara:
Good to see you. We’ve now seen a third interest rate cut this year. How do you reflect on the timing of this latest cut? Should the RBA have gone last time?
Chalmers:
I think, as you know, Sally, there are good reasons why treasurers don’t second guess decisions taken independently by the Reserve Bank. And let’s not skip lightly over the good news here. A third interest rate cut in the space of 6 months is a very, very welcome decision because it puts more money in the pockets of millions of Australians. It’s very welcome relief because it helps people with the cost of living.
But it also gives us the confidence that we are on the right track getting inflation down, getting real wages up, keeping employment low, and now interest rates coming down for the third time as well. That is all good progress, and it puts us in good stead now to deal with the global uncertainty which surrounds us and the big economic challenges which confront us.
Sara:
Are you now comfortable that this period of inflation has passed or do global trade ructions still mean that there’s a degree of risk there, in your view?
Chalmers:
I think broadly in the global economy risk abounds. And when it comes to inflation we’ve got it way down from north of 6 per cent and rising when we came to office, it’s now in headline terms, 2.1 per cent. So, that is quite remarkable progress. And that progress is reflected in the decision that the Reserve Bank took yesterday. But we are always vigilant, we are never complacent about developments in the global economy. There is more than the usual amount of churn and change right now. It’s unpredictable, it’s volatile, it’s uncertain. And that’s why one of our key goals is to make our economy more resilient. We will do that by making it more productive over time.
Sara:
The RBA has significantly lowered its forecast for future productivity growth. What does that mean ahead of the Economic Roundtable next week?
Chalmers:
I think it sharpens the focus on productivity, which from my point of view is a welcome thing. Because the nation has had a productivity challenge for a couple of decades now, not just a couple of years. It is a global challenge. Almost all of the countries with which we compare ourselves has a version of this productivity challenge. And so, it’s the main focus for us over the medium term and the longer term. We’ve got a big agenda on productivity and the economy more broadly, which we are focused primarily on delivering.
But the Economic Reform Roundtable is about including people in our considerations of what happens next. We all understand, even before the Reserve Bank revised its forecast, that we’ve got a productivity challenge in our economy. I’ve been pretty blunt and upfront about that. I’ve put it at the very core of the government’s economic agenda for good reason.
Sara:
The Shadow Treasurer, Ted O’Brien, has claimed the Reserve Bank doesn’t support the government’s management of the economy. What’s your response to those remarks?
Chalmers:
It’s ridiculous, frankly. And we didn’t think that the Opposition could do worse than Angus Taylor as Shadow Treasurer but Ted O’ Brien is proving to have even less credibility than Angus did. And I think what explains Ted’s commentary yesterday is really that he’s disappointed that rates were cut again for the third time in 6 months. They desperately want interest rates to be higher for political reasons. They said in the election campaign that if Labor was re‑elected that interest rates would go up. They’ve come down multiple times since the election and that is a reflection of the progress that Australians have made together on inflation.
And these characters, whether it’s the Shadow Treasurer or his colleagues, they’re always trying to talk our economy down and when they talk our economy down, they talk our people down. Our people have been through a very difficult period in the economy. They deserve a share in the credit when it comes to inflation coming down considerably. Later today we’ll see what’s happened with real wages, but real wages have been growing. We’ve kept unemployment low. These are all good things. And any Shadow Treasurer with even an ounce of credibility would acknowledge that yesterday’s rate cut was good news for millions of Australians who need and deserve this relief.
Sara:
Is it not the job of the Opposition to be critical when it feels the time is right and to hold the government to account, particularly over the economy? Because these figures are showing, you’re into your second term now, productivity growth isn’t steaming ahead.
Chalmers:
A couple of things about that. I mean, they are not my focus. You asked me a couple of questions about our political opponents. I haven’t been focused on them. I do want them to participate in the national economic debate. They need to do that in a credible way. They’ve shown no ability or willingness to do that so far. The worst decade for productivity growth in the last 50 or 60 years was the Coalition decade. So, they don’t come to this with clean hands.
We have acknowledged, I think, in a very upfront way we’ve got a productivity challenge in our economy. We’ve got an agenda to deal with it and we’re bringing people together to grapple with the next steps when it comes to making our economy more productive. It would be better if the Coalition played a constructive role in that. Unfortunately, they’re showing signs that they haven’t learned a thing from last term or from the last election.
Sara:
You’re listening to Radio National Breakfast and my guest this morning is the Treasurer, Jim Chalmers. Treasurer, last week the Prime Minister suggested that reform advocates should lower their expectations about far‑reaching changes, saying that this roundtable was not more than that. Are you and the Prime Minister in lockstep about what this roundtable will ultimately achieve?
Chalmers:
Completely. And the point that the Prime Minister made last week is the same point that I have made, which is that this Economic Reform Roundtable is not to make decisions, it’s to inform the government’s decisions. And that’s the point that we have made all along. He’s been in the media this morning. I think he was talking to Sabra earlier this morning. We are aligned. We have an ambitious agenda that we’re focused on delivering and this Economic Reform Roundtable is a good opportunity to shake the tree for more ideas in our economy.
And the people who criticise this process, they appear to be saying that we should consult less with the business community or the union movement or the community more broadly, experts and economists. I think it has been a very worthwhile thing that we are shaking the tree for ideas and the Prime Minister, and I are aligned in the way we go about that.
Sara:
Treasurer, on a separate issue, Australia is now on the path to recognise Palestinian statehood. What’s the principle that is guiding the government’s decision here?
Chalmers:
For me, everyone comes to this with their own emphases, but for me personally it’s about making sure that Palestinian and Israeli families can raise their kids in peace. And for too long that hasn’t been the reality on the ground in Gaza. And so, what we’re trying to do here is contribute to this very welcome international momentum and progress towards recognition as an important step towards a two‑state solution. The status quo for too long now has meant too many kids are dying.
And I think anyone who sees what’s happening in the Middle East and has seen what’s happening in the Middle East over a long period of time needs to recognise that things need to change. And so, this is our contribution to that international momentum, that international progress, which is very welcome from my point of view, because we need to find a way out of this endless cycle of violence. Too many little kids have been sacrificed already to this conflict. And so, we need to change the way that we approach the region and that’s what we’re doing.
Sara:
You were saying that this situation has been going on for too long. Why is Australia acting now? It’s been 77 years that the Palestinians have been waiting for this. Why now?
Chalmers:
I think there’s that international momentum which matters to us. We’re working in concert with –
Sara:
– so, we follow.
Chalmers:
No, we’re working in concert. We’re making an important contribution to that momentum. But I think clearly around the world there is a mood for change in this area. You see it in the French, you see it in the Canadians, the UK and others. And we are part of that effort. And I think the world is increasingly recognising that recognition as a step towards a two‑state solution is the best way out of this endless cycle of violence. And we are part of that.
And I really wanted to commend the Foreign Minister, the Prime Minister and others and their colleagues and counterparts around the world for this progress that we are making. Something needs to change. And we can do that in a way that excludes and isolates Hamas. We can do that in a way that keeps up the pressure on releasing the hostages after the atrocities of October 7 and that’s what we’re working towards collectively with our friends around the world.
Sara:
Last year, Labor lost one of its own over this issue. Senator Fatima Payman resigned from the party over Palestinian statehood. Was she right?
Chalmers:
I always think that whether it’s Senator Payman or others, we’re better off working for change within the party rather than sitting outside the party. I think we all made our views clear at that time –
Sara:
– was her view on Palestine right at that time?
Chalmers:
She doesn’t have an identical view to the government on this still. And this government works through issues in a considered, consultative and methodical way. And that’s why we’ve made this announcement that we made earlier in the week. I haven’t spoken to Senator Payman about it or heard any public commentary from her. No doubt there’s been some. But we work through these issues in our own way, in our own time. And that’s what’s seen the progress delivered this week.
Sara:
So, just to be clear, on the issue of Palestinian statehood, have the principles guiding the federal government, guiding Australia, have they changed?
Chalmers:
The principle is the same, which is that we need to find a way out of this cycle of violence. The principle is the same. The moral basis for this progress is the same, which is making sure that families can raise their kids in peace.
And so those have been constants, really, since Minister Wong made those comments about recognition being part of a pathway to 2 states rather than an outcome of a two‑state decision. I think really our view has been evolving, and the international community’s view has been evolving as well. And that’s why we’ve seen the progress made this week.
Sara:
Treasurer, times against us. We will let you finish that coffee. Thank you very much.
Chalmers:
I appreciate it, Sally. All the best.