Sally Sara:
Well modelling from the federal Treasury suggests new US tariffs on steel and aluminium will only have a modest impact on the Australian economy. Federal Treasurer Jim Chalmers will use a speech today to argue that the tariffs are both senseless and wrong.
It comes as he prepares for his fourth Budget with the OECD revising down forecasts for global growth overnight. The federal Treasurer Jim Chalmers joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks very much, Sally.
Sara:
Before we get to the Budget, so there were shocking revelations about the childcare sector aired on Four Corners last night, allegations of child sexual abuse not being addressed by regulators and profit being put above the care of children, along with regulations not being enforced. This is all happening in a sector that’s heavily subsidised by taxpayers. What’s the government’s response?
Chalmers:
Some of those details in the Four Corners story were distressing, deeply concerning.
Most operators and services in the sector do the right thing. They’ve got our kids’ and their kids’ safety as their top priority, and we take that very seriously. But what we saw on Four Corners was incredibly distressing.
We work closely with state and territory governments. They’re responsible for the approval of providers and services and to make sure that those services comply with the National Quality Framework, and so we’ll keep working with them to make sure that our kids are safe in early childhood education.
It’s such an important part of our community, and we want to make sure that it’s up to scratch. Most services are up to scratch, but clearly from that Four Corners story there are some that are falling way, way short of any reasonable expectation, and that’s very distressing.
Sara:
The Four Corners report showed us that up to 47,000 children are currently in for‑profit facilities that don’t meet National Quality Standards. Rather than working with the states, does there need to be a reworking of the regulations, and more importantly, the way in which they are enforced?
Chalmers:
Clearly we need to do this better. The National Quality Framework is the overarching standard that applies to all of these services in all of the states and territories, and clearly that hasn’t been adhered to in these instances, and these services have fallen way, way short in very dangerous and distressing ways. So we will do more work with the states and territories to make sure that the National Quality Framework is adhered to.
Sara:
The federal government has looked to make the industry sustainable through subsidies. In your view, has that come at the expense of child safety?
Chalmers:
Again, it’s important to remember, and this is a message for thousands and thousands of wonderful educators in the early childhood system, overwhelmingly the providers in that sector are doing the right thing by our kids, some wonderful people work in the sector, we can’t lose sight of that.
Where services are falling short, of course we need to do more work with the states and territories to make sure that they’re up to scratch. In 2023, as I recall, the Early Childhood Education Minister, Anne Aly, working with Jason Clare commissioned the Australian Children’s Education and Care Quality Authority to review the National Quality Framework, and these revelations from Four Corners will obviously feed in to the implementation of the recommendations from that work.
Sara:
Treasurer, let’s move on to the Budget. In your speech today you’re highlighting Treasury estimates that the indirect impact of US steel and aluminium tariffs will be 0.1 per cent of GDP by the end of the decade. But how much worse could it be if the US imposes its next round of tariffs?
Chalmers:
It’s the right way to think about it, Sally, this is how the Treasury have modelled the impacts of these changes from the US Administration. The direct impacts are concerning but manageable. It’s the broader, indirect impacts that come from this serious escalation of trade tensions around the world, which is much more concerning to us.
This is a new world of uncertainty, and the pace of change in the world when it comes to rewriting the rules of global economic engagement has quickened since the new administration took office in the US.
Some of these developments, they’re not surprising, but they are seismic, and for Australia, we have a lot at stake as a trading country, and so what we need to do is, first of all, understand the impacts, direct and indirect, the indirect impacts are far more concerning. Our strategy in the Budget and in our economic plan is not to go for retaliation but to go for resilience, to make our economy more resilient at a time of very serious global economic uncertainty.
Sara:
Treasurer, the next round of tariffs could possibly hit Australia’s beef and pharmaceutical exports. What conversations are you having with your US counterpart, Scott Bessent, about that issue?
Chalmers:
As you know, I went to DC to speak directly to the new Secretary of the Treasury, Scott Bessent, also Kevin Hassett and others in the US about these tariffs being imposed and discussed in the US.
We’re engaging across a number of ministers in our government, the Ambassador, Kevin Rudd’s doing a good job engaging with American counterparts as well.
Obviously, the imposition of any additional tariffs would be very concerning. We’re not unique here, we’re not uniquely disadvantaged by the sorts of tariffs coming out of DC, but we deserve better as a long term partner and ally.
These sorts of tariffs are self‑defeating, they’ve self‑sabotaging, they’re a recipe for less growth and higher inflation, not just in the US but around the world.
That’s one of the reasons why the OECD overnight downgraded their expectations for growth, because of these trade barriers and this escalation of trade tensions.
It’s very concerning to us as a trade exposed country, and that’s why we engage where we can in the most meaningful way we can to put Australia’s case.
Sara:
The Financial Review is reporting that the tariffs could potentially be between 2 and 8 per cent for Australia rather than 25 per cent. Is that your expectation also?
Chalmers:
It remains to be seen. I’ve seen that story in the Financial Review, and obviously there’s a lot of discussion in both countries and around the world about what the next steps may look like in terms of trade policy out of the US.
The point that I’m trying to make today in this speech, when I talk about the major influences on the Budget, particularly these global influences, is what’s happening over in the US is obviously very important, but also what’s happening right around the world is introducing a new level of uncertainty, and in that context, despite all of that global economic uncertainty, the Australian economy is performing quite well, the Australian economy’s turned a corner.
We’ve got growth up now, inflation down, real wages growing, unemployment low, interest rates have started to come down, and that puts us in a better, more resilient position to deal with everything that’s coming at us from around the world.
Sara:
These OECD forecasts, it’s maintaining the forecast of 1.9 per cent GDP growth for this year, but for 2026 it’s revised down those forecasts from 2.5 to 1.8 per cent, and it’s giving some indications that while inflation will come down slightly next year, there may be a chance that it lingers for longer than expected. What do you think of those forecasts?
Chalmers:
Obviously the OECD is a very respected institution. We’ll provide our own forecasts in the Budget this time next week for growth and for inflation.
We’ve had some very heartening news on both of those fronts in recent times. Growth has rebounded solidly in the Australian economy, the private sector has started to take its rightful place as the key driver of growth in our economy, at the same time as we’ve got inflation down from higher than 6 per cent and rising when we came to office to now in the bottom half of the Reserve Bank’s target band.
We’ve made a lot of progress together as Australians. We don’t want to put that progress at risk. There’s a lot of global economic uncertainty right around the world, and that’s why this will be a responsible Budget. It will be all about making our economy more resilient in uncertain times. It will be about cost‑of‑living help and building Australia’s future and continuing to clean up the mess that we inherited a few years ago.
Sara:
Treasurer, on the CFMEU, the Opposition says Australia needs laws to tackle organised crime in the construction industry, and they say they’ll bring in legislation to parliament for such powers next week. What’s your response to that? Is it needed?
Chalmers:
We’ve got zero tolerance for criminal behaviour in the workplace, and that’s why we’ve referred these matters, as I understand it, to the Australian Federal Police. It’s why we appointed an Administrator of the CFMEU, because this criminal behaviour is completely and absolutely unacceptable to us.
We’ve taken these decisive steps because these are very serious allegations. There’s an important role for the police and there’s an important role for the Administrator in cleaning up this union.
Sara:
Is Labor too afraid of the CFMEU to put proper oversight in place, because clearly what’s there now and what’s been there in the past hasn’t stopped these practices?
Chalmers:
First of all, we’ve taken the most decisive action by putting the Administrator in charge. The alternative, which is to deregister the union, would just hand the union back to the worst criminal elements that used to run the show. That’s why the employers don’t want to see that happening. That’s why they support the decisive steps that we’ve taken to appoint the Administrator.
So the Administrator is cleaning up the union, the old arrangements which are in place under the former government obviously weren’t working to crack down on this kind of unacceptable criminal behaviour in the union. So we’ve taken the decisive steps, whether it’s at the law enforcement level or in terms of appointing the Administrator.
The Administrator is cleaning up the union, it’s a difficult job, because some of these issues are entrenched, but the Administrator’s doing their job, and they should be allowed to get on with it.
Sara:
Just finally, Treasurer, Peter Dutton is considering proposing a referendum to change the Constitution to allow the government to deport dual citizens convicted of serious crimes. What do you make of that idea?
Chalmers:
A couple of things about that. First of all, these are important issues, but he will do absolutely anything to avoid coming clean on his cuts or on any economic policies, and that’s what we see on an almost daily basis.
Last time he tried to impose these laws the High Court threw them out, and now he wants a referendum to fix his mistakes.
We’ve taken a different approach. We rewrote his broken laws to create a more robust system to keep our community safe. We’ve worked through it in a methodical, in a considered way. He, quite bizarrely, wants another referendum.
I don’t think this idea will last long, just like a lot of the other things that he said in an effort to try to avoid talking about the economy and his cuts.
Sara:
Treasurer, we’ll need to leave it there. Thank you for your time this morning.
Chalmers:
Appreciate it, Sally. All the best.
Sara:
That’s the federal Treasurer there, Jim Chalmers.