SARAH FERGUSON:
Treasurer, welcome to the program.
JIM CHALMERS:
Thanks very much, Sarah.
FERGUSON:
What is values‑based capitalism that you're writing about in this essay and how is it different to what we have now?
CHALMERS:
My essay is all about how we strengthen our economy and strengthen our institutions in a way that strengthens our society and strengthens our democracy. And it differs from the approach taken over the last decade or so because I think for the best part of a decade we've been pretending as a country that we have to choose between our economic objectives and our social objectives and in the process, we haven't done a great job of satisfying either set of objectives. And so what this tries to do is to say that we would be much better off if we had the public sector and the private sector working together in the service of our national economic goals in a way that modernises our economy and modernises our institutions and strengthens our democracy, so that we can rebuild faith that our approach to the economy brings with it a whole range of other benefits too.
FERGUSON:
Can you give me just some specifics about how that would work in relation to a particular policy?
CHALMERS:
In the essay the areas that I identify, which I think will be really the defining challenges in our economic policy for the rest of the decade - how do we get cleaner and cheaper energy into the system, how do we teach and train our people so that technology works in their favour and not against them, and how do we get investment and capital flowing into the areas that we know will strengthen our economy and make it more productive, but most importantly, create more opportunities for more people in more parts of Australia. And so where that matters most is obviously in energy policy, but also the way we approach skills and training, the way that we bring investors around the table to deal with challenges like in housing, like in data and digital, some of these other areas where we know that we have these massive opportunities.
The reason I've come at it in the way that I have is I think the 2020s will be a defining decade in the story of our country and we have an opportunity here to neatly line up our values, our priorities and our objectives, not just in our economy, but in our society. For too long those values and objectives have been in collision with each other rather than in alignment with each other and I want to change that.
FERGUSON:
Your critics are saying that you are throwing out the Hawke/Keating legacy. Are you planning to run as they allege a command style economy?
CHALMERS:
I mean, of course, that's complete rubbish. It is absolute rubbish. I'm here because of the example set by the Hawke/Keating period. It's one of the main reasons why I got involved in politics in the first place and I see what I'm trying to do as in concert with the motivating spirit of the Hawke/Keating period, not in conflict with it.
FERGUSON:
Paul Keating has jumped to your defence today. Did you run these ideas past him before publication?
CHALMERS:
We've been talking about these ideas for some time and he is a key influence on my thinking. He is someone whose friendship and advice I really cherish.
FERGUSON:
Just talking about the context in which you're trying to have this debate, and particularly in relation to inflation, do you see signs that the inflation rate is stabilising?
CHALMERS:
We expect the inflation rate peaked in December. But 2022 was obviously an incredibly difficult year for inflation, and for the cost‑of‑living pressures that we understand are coming at us from around the world, but they're being felt around the kitchen table. And so that number in the high sevens at the end of last year, obviously means that our defining challenge in the near term in the economy - certainly the Government's highest priority when it comes to our economic plan - is dealing with this inflation challenge, because people are under a lot of pressure. That's why the big motivating force behind the October Budget and it will be the case again in the May Budget is providing cost‑of‑living relief to people doing it tough in a way that doesn't add to these inflationary pressures.
FERGUSON:
But is this pain that people are going through still a necessary evil to tackle inflation?
CHALMERS:
When you've got inflation as high as it has been in our economy throughout the course of last year, obviously the independent Reserve Bank takes steps to deal with that. And higher interest rates unfortunately, for mortgagees particularly, but more broadly as well, are the way that they go about that task - that's happening right around the world. It's one of the reasons why there's a period of uncertainty in the global economy and the same in our own economy. We are obviously very concerned about people coming off fixed rates onto much higher variable rates, that will be a key pressure and a key concern in 2023. The Reserve Bank will take its decisions independently, our job is to provide that relief where we can do it in a responsible and affordable way. It's about getting wages moving again in a sustainable way as well, and that's our focus.
FERGUSON:
Going back to your essay, one of the articles in response to it in the Financial Review, they say that a major source of the ideas in the essay comes from the Italian economist Mariana Mazzucato, who you quote in the essay. She's a former adviser to leftist British leader Jeremy Corbyn, how influential was she for you?
CHALMERS:
I think like a lot of people around the world, I read her work in the same way that I take inspiration and advice from a whole range of sources. There are a lot of people writing on these sorts of topics right now - Martin Wolf who writes in the FT-
FERGUSON:
What is it about Mazzucato that appealed to you?
CHALMERS:
I think that there's something in this idea of co‑investment. I think that there is an opportunity for us to work out if we want cleaner and cheaper energy, and we want to use technology more effectively, we want a more modern industrial base, is to work out what positive role can the public sector play in that, and what positive role can the private sector play in that. And that's why some of the sort of hyperventilating about the essay, I think, is based on a version of the essay that people have unnecessarily caricatured. What can people genuinely argue against when it comes to better designed and better informed markets, a more prominent role for business in achieving our social objectives, more collaboration and cooperation between governments and investors, a more modern industrial base ‑ I would have thought that these sorts of arguments are relatively non‑controversial. My essay is born out of contemporary necessity, not outdated ideology, and I think that's the mistake that the critics are making.
FERGUSON:
You talk about how countries move on from big crises. Now in the pandemic even a conservative Coalition government made the biggest investment ever in the Australian economy. Does that mean that you think this is a unique moment to remake the relationship between business and government?
CHALMERS:
I think this is our big chance. I genuinely believe, having gone through three crises in a decade and a half, we've got a big challenge and a big chance ahead of us. I'm optimistic about what we can do working together with investors and the business community. There is a much bigger appetite for this agenda that I lay out in the essay then you would glean from some of the coverage of it. People are looking for value and they're measuring value in much broader terms than they might have traditionally. Yes, we want a profitable, powerful, job‑creating and wealth‑creating private sector - that is absolutely fundamental to our economy. But we need to find our way to get that, at the same time as we solve some of these other intractable social challenges that hold our country back. I think we have a window here to modernise our economy and our society and our democracy simultaneously. And we should have the capacity to think big about it even though there will inevitably be in all of this engagement the fair share of critics.
FERGUSON:
We like big ideas at 7.30. We'll hold you to the consequences of its success. Thank you very much for your time.
CHALMERS:
Thanks, Sarah.