SARAH FERGUSON, HOST:
Treasurer, Welcome to 7.30.
JIM CHALMERS, TREASURER:
Thanks very much Sarah.
FERGUSON:
No government in a generation has faced this level of inflation. Do you simply have to trust the Reserve Bank not to push the Australian people to the brink?
CHALMERS:
The independent Reserve Bank will make their decisions. Our focus as a government is firstly not making things harder for the Reserve Bank to do its job, but also to focus on where we can actually make a meaningful difference. And for me, the obvious place to start is on the supply side of the economy.
FERGUSON:
Explain what that means to people who don't have economics in their background.
CHALMERS:
Well, when people go to the supermarket, often when something they're looking for is not on the shelf, it says on there, we're having problems with our supply chain. And that means there's a labour shortage, there's an issue with transport, there's an issue with some part of that good getting to you, which has become clogged up. And during COVID that was especially the case, but in the aftermath of the worst of COVID the same has been true. And so what we're focused on are things like training more people for these skills shortages; childcare, making sure people if they want to make that choice to work more and earn more, they can; cleaner and cheaper, more reliable energy; investing in advanced manufacturing and the care economy. All of these things will make a meaningful difference, not overnight admittedly, but they will make a meaningful difference.
FERGUSON:
I want to come back to the timing for that. We'll just park productivity gains and come back because they are indeed not immediate. Right now, you've all but confirmed that you're going to remove the fuel excise relief and the pandemic payments when they expire. Is it putting it too mildly to say that Australians are going to have to tighten their belts much more in the coming months?
CHALMERS:
Well, I think they already are. I think a lot of Australians that I speak to are trying to substitute one part of the household budget for another. And when interest rates go up, that obviously becomes that much harder. And what I've tried to do not just about the petrol excise but more broadly, every minute that I've been the Treasurer of this country is to take people into my confidence - that's what I did today by releasing those updated forecasts - so that people know the sorts of pressures that we're dealing with in the economy and in the budget. And of course, we would like to extend some of this cost‑of‑living relief for as long as we can -
FERGUSON:
But you're not going to?
CHALMERS:
No, because we need to be serious about -
FERGUSON:
Just to be clear, that is a confirmation on the fuel excise? It's going to go?
CHALMERS:
Well, I've said repeatedly for some time now that your viewers shouldn't expect us to continue that. It cost some billions of dollars even to extend it by six months and the budget can't afford that.
FERGUSON:
Australians are already paying, as you just described, a very high price for circumstances that are way outside of their control, including in the Ukraine and China. So what's going to happen to Australian households if the rest of the world goes into recession?
CHALMERS:
Obviously we will feel the impact here. And the forecasts I released today were really about saying that when interest rates are rising and the global situation is deteriorating, obviously that will slow our own economy here at home. And Australians will feel the consequences of that. Now, some of that is out of our control: Russia, Ukraine, China, we've got fears around the American economy as well, and more broadly about the global economy. But we're also seeing the costs and consequences of a wasted decade. Some of these issues have been around for a long time.
FERGUSON:
Let's talk about the people who will suffer the most in this immediate term. The Australian Council of Social Service says the impact for people living in poverty is crushing. It's a big word and it's something you understand, very particularly from your own electorate. Can you offer any relief for that nearly 1 million Australians living on $46 a day?
CHALMERS:
Well, when it comes to JobSeeker, we've been upfront about that as well. We don't have room in the budget to fund even things that we would really like to do for people who are doing it especially tough. And so we've got to work out where we can responsibly make the most difference. We are making medicines cheaper for people, we are making childcare cheaper for people, because if there's more that we can do for people who are doing it especially tough, of course, we will consider that. Not just right now but in subsequent budgets. We are the Labor Party. We want to do the right thing by vulnerable Australians but we need to be upfront about the budget constraints that restrain us from that.
FERGUSON:
Let's talk about wages. You're fudging on the timing of when we're going to see wages grow.
CHALMERS:
I wouldn’t quite describe it that way.
FERGUSON:
Well, let's say you're being very imprecise. You know, is the reality of this situation rather that you can't let wages grow too fast until you've tamed inflation?
CHALMERS:
A few important things about that quickly. I mean, we don't have inflation because wages have grown too fast. Wages have been growing too slowly -
FERGUSON:
But the question is: can you afford to let them rise before that inflation is brought down?
CHALMERS:
We can. What we want to see is strong sustainable wages growth, and in time when inflation moderates and we get that wages growth that's been absent for the best part of the decade, then we'll get real wages growth. And we expect that to happen in 2023‑24. But I'm cautious about it because wages forecasts have been wrong in the past and so I don't want to give people false hope. But our strong expectation from the Treasury is we'll see real wages growth this term. That relies on not just getting wages growing again, which is one of the objectives of our economic policy, but also seeing that inflation moderate from that very high peak we'll see later this year.
FERGUSON:
You're talking about wages growth in a couple of years. Is there anything that you can do now? Leave the people on higher wages to fend for themselves to a degree but in the meantime, for those people at the bottom of the wages ladder, is there anything you can do for them right now?
CHALMERS:
Well, one of the things I'm proudest of is the very first thing I took to the Albanese Labor Cabinet was my submission to the Fair Work Commission with Tony Burke to get that wage rise for the lowest paid in Australia.
FERGUSON:
And it's being eaten up by inflation right now, isn't it?
CHALMERS:
Well, absent a Labor Government, there wouldn't have been a national government arguing for that outcome. And I was pleased with the outcome that we got there. We will also be supporting wage cases in the care economy for aged care workers, for example. And so that is something that we can meaningfully do. Training people for opportunities, making it easier for people to go back to work, creating more secure, well‑paid jobs - all of this is how we get wages moving again.
FERGUSON:
But not yet. For example, with the childcare, as I understand that's not coming through until the middle of next year. Can you bring that date forward?
CHALMERS:
You could do that but that would come with a pretty hefty price tag. And again, we have to weigh up all of our priorities. So our immediate priority: a wage rise for low income earners. Tick. We've got some other responsible cost‑of‑living relief coming down. But again, I mean, there's lots of things we would love to do as a Labor Government but one of the things that we're very conscious of is we've inherited that trillion dollars of Liberal debt, we can't do everything that we would like to -
FERGUSON:
I just have to say about that: it's a very large debt but you were in the opposition when very large portions of that - or I should say a significant amount of money - was waved through in the face of an enormous crisis with a pandemic, but you were part of saying yes to that.
CHALMERS:
We tried to be constructive about it but it is, I think, a fact now that a lot of that money was wasted. And we've uncovered in the course of the last couple of years a shocking amount of rorts and waste the budget, which is one of the reasons why we've got that trillion dollars in debt and nowhere near enough to show for it. And the important thing about this, as interest rates go up, every dollar that the government before us borrowed to fund rorts and waste is now more expensive for us to service.
FERGUSON:
You just use the term sustained wage growth. Now we know that this is a broader question, but let's keep it tight. But you know that you can't, you will not be able to achieve sustained wage growth unless you make significant reform to the economy, significant reform in productivity, which has been so low for so long: business investment and number of hours worked. So what are you going to do to change that picture?
CHALMERS:
We're going to reform the energy market: cleaner, cheaper, more reliable energy. We're going to reform childcare to make it easier for people to work more and earn more. We're going to reform skills in this country so that we're dealing with areas where there are serious skill shortages holding the economy back. And one of the reasons we're having this Jobs and Skills Summit in a few weeks now here in Canberra is because we want to bring people together around these big national challenges. That will be a point of the Summit, but also a point of the Albanese Labor Government to bring people together after a decade of division, to recognize we've all got skin in the game here. If we get sustainable wage rises, we get productivity growth, we get the economy growing in the right way then we can all succeed together, in the absence of that mindset, [which] has been very damaging to this country for a long time.
FERGUSON:
I notice the words tax reform don't appear in your in your statement today. Is it just politically too difficult and too painful for you and your government to tackle tax reform?
CHALMERS:
The first bill I introduced into the parliament was a tax reform to make electric vehicles cheaper -
FERGUSON:
It's at the small end of a very large problem.
CHALMERS:
When it comes to tax reform to help repair the budget, we've said our priority is multinational taxes.
FERGUSON:
Let's talk about the budget. You said today: our government must make the hard decisions necessary for responsible budget repair. Does that mean reconsidering some of your election commitments?
CHALMERS:
No, I think our election commitments are actually more important now given the pressures that we anticipated have become a bigger challenge for the economy. And so they're more crucial than ever that we implement some of those policies and reforms that we've been talking about in this interview. And so people can expect that the priorities that they endorsed at the May election will be budgeted for in the Budget in October.
FERGUSON:
Staying with the Budget, is it the best hope for you and your budget and future budgets in fact that iron ore, gas and coal continue to provide record revenues for Australia.
CHALMERS:
Well they are big earners for Australia. There's no use pretending otherwise and for as long as there's global appetite for our commodities then we will sell into those global markets. One of the reasons why the budget has been propped up in recent times is because we've been getting really strong prices for our commodities on global markets and that's important to our economy.
FERGUSON:
Is that why the Prime Minister is pushing back so hard against Greens' demands for a moratorium on new exports?
CHALMERS:
I think the Prime Minister's position is just common sense. You know, if you flick the switch and turned off those vital exports then that would have a big economic impact. And so what we're talking about is introducing more cleaner and cheaper and more reliable energy into the system in a way that recognizes the economic benefits of doing that without abandoning our traditional strengths, and bringing people along with us. That's our task when it comes to reforming energy. And I think the Prime Minister was just reflecting a common sense view about that.
FERGUSON:
It looks like there's going to be a real challenge aligning your climate and budget goals but we'll leave that for another day. Thank you very much indeed for joining us.
CHALMERS:
Thank you Sarah.