Sarah Ferguson:
Treasurer, welcome to 7.30.
Jim Chalmers:
Thanks very much, Sarah.
Ferguson:
This is unquestionably a big moment, the Governor said today the decision to cut the cash rate was not a laid down misère. How much were you sweating the decision?
Chalmers:
I see it as welcome relief for millions of Australians. I see it as the rate relief that people needed and deserved, after all of the progress that Australians have made together in the fight against inflation. Obviously, like a lot of Australians, I was interested to hear the outcome this afternoon. I think it’s a good outcome for millions of people but we know that the cost‑of‑living pressures are still there. It won’t solve every challenge that we’ve got in our economy or in household budgets, but it will help and that’s a good thing.
Ferguson:
You would accept, however, that this is an intensely political moment at the same time. Does this cut set you up for a swift campaign focused on your management of inflation, the root cause of the cost‑of‑living crisis?
Chalmers:
First of all, I do acknowledge that there’s a lot of political commentary around the decision but what I’ve tried to do is not add to that. I think the facts of the matter are that under this Labor government, we’ve been able to get inflation down, wages up, keep unemployment low, and now we’ve got interest rates coming down as well. Those are the facts of the matter. They will be part of the story that we tell Australians when we ask them to make an important choice later this year between a government which has been focused on the cost of living, is getting inflation down, is building Australia’s future, versus an alternative under Peter Dutton which would make people worse off and take Australia backwards. We have made a lot of progress together as Australians over the course of the last couple of years, but it has been difficult as well and that’s why the government has maintained this focus on cost of living and inflation. It’s why we’ve made so much progress and it’s why we’ve seen this outcome today from the Reserve Bank.
Ferguson:
Have you have spoken to the Prime Minister since the announcement?
Chalmers:
No, we’ve had an exchange but I haven’t spoken to him yet. Obviously, I’ll have the opportunity to do that before long. The first calls I made after this decision was made public was actually the CEOs of the 4 major banks. I wanted to make sure that there would be a speedy pass through of the full benefit of this interest rate cut. I don’t take any credit for the fact that the 4 banks have all indicated that they will pass it on in full. They were already considering things along those lines. But those were the calls that I made after the decision was made public.
Ferguson:
The Governor warned against relying on any predictions for a series of cuts. She described the market expectations that have suggested that as unrealistic, pretty clear term from her. If this is the only cut in the near or foreseeable future, does that make a strong argument for an election before the next RBA meeting in April?
Chalmers:
First of all, I think it’s a very good thing that Governor Bullock makes herself available after these decisions to talk the Australian people through the decision that has been taken. Central bank governors are a cautious lot –
Ferguson:
– Now you’re starting – excuse me – you’re just starting the answer to a question an awfully long way from where the question was, so maybe we could come back to that. Does this strengthen the case for the election before the next RBA meeting, because it’s unlikely we’ll get a series of cuts?
Chalmers:
You asked me about the Reserve Bank Governor’s commentary, I was responding to that. When it comes to the election timing, that’s a matter for the Prime Minister. We’re working towards a Budget on the 25th of March. As I said before, I try not to apply a political lens to the decision that’s been taken today. My job in the government is to obsess over the numbers in the economy, not to obsess over numbers in the opinion polls or election dates, and the like. Our focus was on the cost of living before this decision, it will be on the cost of living after this decision, no matter when the election is.
Ferguson:
Does this single measure on inflation do you think do enough in the voters’ minds to offset the collapse in their living standards?
Chalmers:
I think that remains to be seen, to be frank about it. I think we have acknowledged throughout that it’s been an especially difficult period for Australians. We saw inflation much higher and rising when we came to office, living standards and real wages were falling when we came to office. And we’ve been working very hard to try and turn that around. It’s been a good thing that real wages are growing again. Living standards, disposable incomes are growing again. The tax cuts are part of the story, getting wages moving again, all of those things are important. But we recognise that the pressures on household budgets are very substantial, even with all of this progress that we’ve made together as a country and even with this decision taken today by the Reserve Bank. That’s why our focus will continue to be on rolling out our cost‑of‑living help, in managing the budget in the most responsible way that we can. We’re not getting carried away by this decision today. It will help, it won’t solve every challenge in our economy or in household budgets, and that’s why the hard work of managing our economy and our budget responsibly continues.
Ferguson:
Can we reasonably assume you won’t now be delivering a Budget before the election?
Chalmers:
I wouldn’t make that assumption. We’re still working towards that Budget towards the end of March. We’re in the Cabinet suite right now speaking to you, Sarah, I’ve spent the bulk of the last day and a half in the Cabinet suite putting together the Budget with my Expenditure Review Committee colleagues, including the Finance Minister, Katy Gallagher. We’re working towards that. We acknowledge that the timing of the election is up to the Prime Minister, in consultation with his senior colleagues, but our expectation and our work that we’re doing right now is to prepare a Budget for the end of March.
Ferguson:
The Governor today talked about the need for productivity in Australia to lift. McKinsey’s described Australia’s productivity recently as being so bad it’s a national emergency and it’s not a unique view. How much responsibility does the Albanese government bear for its failure to power productivity growth?
Chalmers:
First of all, we take responsibility for doing what we can to turn around what has been decades of poor productivity. The weakest decade for productivity was the decade to 2020 in the last 60 years when it comes to productivity growth. You can’t just turn 2 decades of weak productivity growth around in 2 years. But we have been working – when it comes to skills and education, when it comes to the energy transformation, how we adapt and adopt technology, competition policy, all of these ways that we try and turn this around but it will take some time. I think that that commentary that the Reserve Bank made today about productivity is a view that we share, not the only view that they put today that we share. We also share the view that there is a lot of uncertainty in the global economy right now. I think the Reserve Bank Governor said that she’s optimistic about the economy but alive to the risks, including when it comes to things like productivity. So we share that view, productivity is an ongoing challenge in our economy, we’re working to turn it around but we won’t be able to turn it around immediately because it’s been an entrenched problem that has existed for some decades.
Ferguson:
You’ve been in politics for most of your adult life, and so have many of your fellow Labor Ministers. You all had high hopes when you won government, how would you justify it to yourselves if you lose after one term?
Chalmers:
I’m obviously not going to get into that sort of hypothetical and it’s not about us. It’s about the outcomes that we can deliver for the Australian people. And I go back to what Australians have achieved while we’ve been in office. It’s unusual around the world to see inflation down, wages up, unemployment very low and interest rates being cut but that’s the combination that we’ve seen here in Australia. We don’t take all the credit for that. The credit for that belongs to the Australian people, who have been through and are going through very difficult times. But we have made a lot of progress together. We have tried to take the right economic decisions for the right economic reasons, and I believe if you do that the politics will take care of themselves.
Ferguson
If only that were the case. Treasurer, thank you very much, indeed, for joining us.
Chalmers:
Thank you, Sarah.