Sarah Ferguson:
Treasurer, welcome to 730.
Jim Chalmers:
Thanks very much, Sarah.
Ferguson:
Have you done everything you can now to convince the Reserve Bank to start cutting interest rates?
Chalmers:
We’ve certainly been doing everything we can to get inflation down and wages up and keep unemployment low and roll out cost‑of‑living help at the same time as we get the budget in much better condition. Those are my responsibilities. I’ll leave the decisions taken by the independent Reserve Bank to them.
Ferguson:
But no matter what you’ve been able to do, is it just a fact now that the fate of your government is in the hands of the Reserve Bank?
Chalmers:
Well that’s a political analysis, and I’ll leave that for others. What I’ve tried to do is to maintain my focus and the government’s focus on the fight against inflation. And in that regard, today’s numbers are incredibly encouraging.
We are making substantial and sustained progress in the fight against inflation on all of these measurable fronts. To have headline inflation in the bottom half of the Reserve Bank’s target band, to have underlying inflation in the low threes, these outcomes are better than expected, they are better than forecast. They’re very encouraging.
But we know that it’s not mission accomplished on inflation. Even with this very welcome and encouraging progress, we know that the cost‑of‑living pressures haven’t disappeared, but they have eased substantially and that’s been a deliberate part of our economic strategy.
Ferguson:
You’ve acknowledged there are people still people suffering under extreme cost‑of‑living pressures. Is this turnaround enough to counter voter anger at the 10 per cent increase in consumer prices since you came to office?
Chalmers:
Well you asked me about progress since we’ve come to office. Don’t forget inflation was higher than 6 per cent and rising fast when we came to office. Interest rates were already rising and real wages, incomes, living standards were falling fast when we came to office.
And so we’ve understood throughout that people have got a lot of ground to make up in their household budgets. That’s why we have been focused on the cost of living. While our political opponents have tried to drag us into all kinds of conflict and culture wars, we’ve maintained our focus. And one of the things that we can all be proud of as Australians is we’ve made this progress on inflation at the same time as we’ve maintained the lowest average unemployment rate of any government in the last 50 years.
Ferguson:
At the same time I want to stay with that increase in consumer prices. Since you came to office at 10 per cent, you are aware through polling and through being in the community how much anger there is about the increase in those prices. Where you stand now looking towards an election, have you done enough to counter that anger?
Chalmers:
I think I’ve made it clear that more than acknowledge the pressure that people have been under for the last few years, more than acknowledge that, we’ve actually acted to respond to that and help people address these cost‑of‑living pressures in all of the ways that you and I have talked about on a number of occasions.
Tax cuts, energy bill relief, cheaper early childhood education, cheaper medicines, student debt relief, fee‑free TAFE, all of these sorts of things are about helping people with the cost of living.
And you ask me about the election contest, I think this is a really important point, Sarah, and it’s this: if Peter Dutton had had his way, these same Australians would have been thousands of dollars worse off because he opposed our cost‑of‑living help. And they’ll be worse off still if he wins the election because they want lower wages, he came after Medicare when he was the Health Minister, they’ll push up electricity prices with this nuclear insanity.
And so, yes, we understand people are under pressure. We’ve been working around the clock now for 2 and a half years to help alleviate some of that pressure. We’re making good progress when it comes to the national aggregate numbers, we know that that doesn’t always translate into how people are feeling and faring in the economy, but we remind them that they would be worse off under our political opponents and they’ll be worse off still if Peter Dutton and the Coalition win the election.
Ferguson:
Peter Dutton claims that it is increases in government spending that may prevent the Reserve Bank from lowering rates. Is that going to be the narrative that sticks if the Reserve Bank doesn’t change the rate next month?
Chalmers:
I think it’s important to remind Peter Dutton and all of your viewers, Sarah, that the Reserve Bank Governor herself has said that public spending isn’t the main game and that the 2 surpluses that Katy Gallagher and I have delivered on behalf of the government is helping and has been helping the fight against inflation, not hurting it.
We have turned the budget around. This is the biggest positive, nominal turnaround in the budget that has ever occurred, a $200 billion improvement, those 2 surpluses, getting the Liberal debt down, paying less interest on that debt, that is part of the story for why we’ve seen this moderation in inflation at the same time as we’ve maintained growth in the economy and kept unemployment low.
Our political opponents will always try and dismiss and diminish that achievement because they want inflation higher, because it serves their political purposes.
Ferguson:
The good news from Deloitte’s report that’s out today is they’re predicting a series of rate cuts before the end of the year, taking the cash rate down to 2.85, obviously creating big savings for mortgage holders. How do you prevent a new Coalition government from reaping the benefit of that relief?
Chalmers:
I try not to see these things in political terms, Sarah.
I try to focus on the main game here, which is the economy and more than that, how people are faring in the economy, that’s why unemployment –
Ferguson:
– but you have to see things in political terms as well, don’t you?
Chalmers:
You need to as part of your job as a very respected political analyst. But I try and focus on the economy.
I think if you get the economic decisions right, if you make the right calls for the right reasons, and we have, then the politics will take care of themselves.
I’m not going to attach political analysis to future decisions taken independently by the Reserve Bank. I respect them too much to do that.
Ferguson:
I want to talk to you about another of Peter Dutton’s initiatives, and that’s come through in a Resolve poll today that shows his promised 2 year temporary ban on foreign investors buying existing homes in Australia is favoured by 69 per cent of voters. Are you courting public backlash by continuing to reject that idea?
Chalmers:
I don’t think so. We’ve already dramatically increased the fees for foreign purchases, and it’s not the biggest part of the challenge.
We’ve got this huge agenda on housing. I was with Clare O’Neil, the Housing Minister, here in Melbourne today, speaking about social housing, for example, $32 billion of investment. And so what Peter Dutton is talking about –
Ferguson:
– what we’re talking about is a policy that’s received overwhelming endorsement from Australian voters, particularly in marginal electorates. So, is it time to rethink your opposition to this policy rather than risk it becoming a vote decider for the Coalition?
Chalmers:
A couple of things about that. First of all, we’ve already taken some steps and some actions here, particularly when it comes to fees, and we’ve got a bigger agenda on housing.
But we always keep these sorts of policies under review. We always try to make the right decisions for the right reasons in the housing market and in the economy more broadly, we’ve already taken steps here –
Ferguson:
– so might you revisit that decision, that idea from Peter Dutton, for a temporary ban on foreign investors?
Chalmers:
That’s not something that we are announcing. It’s not something that is part of our agenda. We’ve got a much bigger agenda. His agenda is about cuts to housing and in using this as some kind of a distraction from that.
We’ve got a huge investment in housing. We’ve taken big steps in this area. If there are further steps that are necessary, of course we would consider them. But it’s not the main game as far as we’re concerned.
Ferguson:
Why do you call it a distraction when it’s a measure to help people buy homes more cheaply?
Chalmers:
I would describe it as a distraction when Peter Dutton talks about it, because what he doesn’t want people to know is that they’ve said there’s $350 billion too much spending in the economy and within that, are some of our very important investments in housing. They’re at risk if he wins the election.
He doesn’t want people to focus on that. He’s taken a very anti‑housing position in the parliament, including in the Senate. He’s tried to prevent our investments in housing. He talks about this as a distraction from that.
We obviously, from time to time, we revisit our policies to make sure that they are the best combination of policies to build more homes, which is what we desperately need in this country. That’s our main focus.
We have taken some action on foreign investors. If more action is necessary at some future point, we’ll consider it.
Ferguson:
Let me just put the question to you in these terms. Why does the government support allowing foreign investors to inflate the housing market when so many young Australians are struggling to buy a home?
Chalmers:
A couple of points about that. First of all, it’s a very, very tiny sliver of the housing market.
As I’ve said a couple of times now, Sarah, we’ve taken some action already when it comes to fees and cracking down and making sure that people are complying with the strict arrangements.
The second point that I would make is that the foreign investment regime is as we found it. We haven’t made it easier for foreign investors to buy housing. We’ve actually made it harder via the fees system and by cracking down.
The third point I’ll make again, which I’ve made on a couple of occasions now, is it’s not the main game, but if there’s more that needs to be done, we’ll consider it at some future point.
Ferguson:
Treasurer, thank you very much indeed for joining us.
Chalmers:
Much appreciated, Sarah. All the best.