SHARRI MARKSON:
Jim Chalmers, great to be with you.
JIM CHALMERS:
Thanks, Sharri.
MARKSON:
Philip Lowe has no idea what he's doing, does he, Treasurer?
CHALMERS:
I wouldn't say that. I mean the governor's got a really difficult job to do, and he's got to try and get on top of this inflation challenge without crunching our economy, so that is a difficult task. He does that independently from me. I've got my own job to do, and that's what I'm focused on.
MARKSON:
How can Australians though have any confidence in him, given his abysmal track record?
CHALMERS:
Again, I mean we've got to recognise that the governor's got a difficult job to do. He doesn't do it on his own; he's got a board as well, of course. But they do that job, and they take those jobs independently, and the reason why I don't share your view is because treasurers, whether they are Labor or Liberal, there's a good tradition - I think a useful one - of recognising and cherishing and acknowledging the Reserve Bank Governor's independence. He's got a difficult job to do and he's doing it. My job is to make sure that we're not making it even harder for them.
MARKSON:
You can recognise his independence and still acknowledge that he has let Australians down; he's misled Australians?
CHALMERS:
Obviously the Governor of the Reserve Bank is not beyond criticism, and he has said, himself, in taking on some of the views that have been put about him, not just in recent weeks, but in recent months and years, he is capable of explaining the decisions that he's taken and not taken. I'm not going to take shots at him.
MARKSON:
Australians made decisions about their life savings based on his advice that they would be safe, that there wouldn't be a rate rise until 2024, instead we've had 9 consecutive rate rises. People in your own electorate of Logan are feeling the pinch the most, along with many other Australians. Why should he stay in this role, and shouldn't he be held to account?
CHALMERS:
I think he's had the opportunity, multiple opportunities for some time now to explain the advice that he provided, and he's been doing that. Even last week he appeared before a couple of parliamentary inquiries. My job is not to second‑guess the things that he said, it's not to inject myself into those decisions that are taken independently.
MARKSON:
But you understand the pain of Australians? People who now risk losing their homes, whose businesses are in danger of shutting down.
CHALMERS:
I do. And when interest rates go up, as they started going up before the election and continued afterwards, that does put extra pressure on people with a mortgage in particular, and it does have implications for our economy more broadly as well. And I do understand that people are angry about these cost-of-living pressures that people are under; it does make life harder. And that's why my job, my focus, the primary focus of the Albanese government is to try and get on top of this inflation challenge in our economy; it's the defining challenge in that economy and it's our major focus.
MARKSON:
You're holding an RBA review at the moment. Will part of that review be looking to hold the RBA Governor and the RBA Board accountable when they tell Australians one thing and Australians make life saving decisions on it, decisions about their life savings based on that advice, and then that advice changes?
CHALMERS:
Yes, so I'll get the RBA review report at the end of March, and it's important to remember what it is and what it isn't. It isn't about one person, or one decision or one set of decisions, it's about making sure we get the processes and the structure and the objectives of the Reserve Bank right, and part of that is to make sure that the right accountability structures are in place, that when the Reserve Bank Board makes a decision, that they communicate that decision effectively, and they are accountable for that decision as an independent organisation.
And so I've met with the Reserve Bank Panel a few times now; we've had some good conversations. They've also met with the Opposition, the crossbench and others, they've done a heap of consultation, and I know that one of their focuses is, how do we make sure that when a decision is taken, it's communicated effectively, and also that people who take that decision are accountable for it.
MARKSON:
How do you see an accountability structure? How would you in the future hold the RBA Board and the governor accountable?
CHALMERS:
Well, let's see what the Review Panel say when they hand me the report on 31 March. I'm looking forward to receiving it, and I'm going to respond to it, at least initially between then and the Budget in May, and I hope that people engage with it.
But one of the issues that they are grappling with is how do we make sure, not just the governor, but the board that takes this decision, first of all, how do they make the right decisions based on the right objectives and information and processes, but also how are they accountable for that decision? That will be an important consideration of the Review Panel. I don't want to pre‑empt what they might hand me at the end of March. I think it will be a really good report that I get. It's a top‑shelf panel, absolutely terrific people, engaging right across the political spectrum, so I'm looking forward to engaging with their final recommendations.
MARKSON:
But just to be very clear, you do want the RBA Board and the governor to be held accountable for the advice they give Australians?
CHALMERS:
Yes, of course, all parts of the economic decision‑making architecture in this country, whether it's the Treasurer, the government, the independent governor and his board, of course they should be accountable for the decisions that they take. They should be asked to explain them clearly so that people can make decisions based on that information. That is one of the things the panel's looking at.
MARKSON:
The Greens leader, Adam Bandt in an interview with David Speers yesterday suggested that you should look at overriding interest rate hikes. Is that something you'd consider?
CHALMERS:
I saw that interview between Adam Bandt and David Speers. It's actually Nick McKim, the Treasury spokesman for the Greens, that said that I should override the decision. Adam Bandt was given multiple opportunities to agree with Nick McKim and couldn't bring himself to do it, so I'm not ‑
MARKSON:
He said you should look at it.
CHALMERS:
Yes, I thought that there were some weasel words from Adam Bandt in that interview with David Speers.
MARKSON:
That's not something you'd be considering?
CHALMERS:
No, it's not something that we're considering. We think the independence of the Reserve Bank is really important feature in a system under governments of both political persuasions, and I won't be taking economic advice from the Greens.
MARKSON:
Yes. Looking at what's within your responsibility and your realm now for addressing inflation, you've outlined a three‑point plan: relief, repair and restraint. Your upcoming May Budget, how tough is that going to be?
CHALMERS:
I think it will be difficult, because we need to recognise that any investments we make have to have an economic dividend, and they can't make this inflation problem even worse, so we will provide some responsible cost-of-living relief without pushing up inflation.
MARKSON:
Just looking at the restraint part of it.
CHALMERS:
Yes, what we showed in October is it's possible to invest in growing the economy and fixing our supply chains and providing cost-of-living relief, whether it's early childhood education, cheaper medicines or in other ways, you can do that in a responsible way. And so what we started in October, we'll continue in May. There will be the best balance struck between that cost-of-living relief, repairing our economy and growing it the right way, and showing that restraint which has been so important, and the governor, Phil Lowe, said in the Parliament last week that that has been an important part of not adding to the inflation challenge in our economy.
MARKSON:
Your October Budget though did have a net spending increase. Will your May Budget be contractionary?
CHALMERS:
It's important to remember the size of the spend in the Budget does matter, but what also matters is what you're spending it on, the quality of it, and whether you get an economic dividend.
MARKSON:
So there will be another net spending increase in May, or are you looking at decreasing spending?
CHALMERS:
Well, the Budget is not finished yet; in the middle of February, we haven't finished the May Budget yet, but what we showed in October is you can show restraint. What we did in October was we banked almost all of the upward revision in revenue which came from better prices for our commodities. We did that at the same time as we invested in cheaper childcare and some of these other things which are important for the economy. The size of the spend matters, but also what really matters is the quality and whether it will grow our economy without adding to inflation.
MARKSON:
But given inflation has increased since the October Budget, will you be looking at having a net decrease in spending in your May Budget? Is that something that you're working towards?
CHALMERS:
Well, we haven't finalised the objectives of the Budget in May, apart from saying it will be that combination of things that you were kind enough to mention a moment ago, relief and repair and restraint - they will be the guiding principles, but we have to strike the right balance here. I mean the peak of inflation is hopefully now behind us. We expect that inflation peaked in the December quarter, we expect the economy to slow as a culmination of these global pressures and higher interest rates, so we need to balance that as well.
MARKSON:
Are you prepared to be an unpopular Treasurer in order to bring down inflation?
CHALMERS:
Of course I am. I mean already we've had to say ‑ I know there's some spending proposals from around the country that in normal times, without these kinds of fiscal constraints, that we would like to do. But governing is about making decisions. They're not always going to be popular obviously, but we need to work out what we can afford, what's most important, how we sequence some of our other priorities, and that's what we're doing.
MARKSON:
The stage three tax cuts, they take effect from 2024 to the tune of at least $254 billion, it will be higher than that. Are you reconsidering the timing of these stage three tax cuts, given the level of inflation?
CHALMERS:
No, we haven't changed our position on the stage three tax cuts, and even were we to do that, it wouldn't have an impact on this inflation that we've got right now, which is hanging around higher than we'd like for longer than we'd like, even though the peak is behind us.
Those stage three tax cuts, as you rightly say, don't come in for more than 12 months now. We've got an economic plan which is all about relief and repair and restraint, and we haven't changed our position on those tax cuts.
MARKSON:
I know you haven't changed your position yet, I also know government speak. Is this something you might consider, because while the peak of inflation is expected to be this year, it's not going to get back to that 2 to 3 per cent target until 2025 at least. So is this something you are looking at?
CHALMERS:
It's not something we're considering. We sit down with the Expenditure Review Committee and work through all of our options for the May Budget, and this isn't on the list.
MARKSON:
Isn't it dangerous to be injecting at least $254 billion into the economy given where inflation is?
CHALMERS:
We don't know precisely where inflation will be when these tax cuts kick in. We've got our forecasts and we've got our expectations. They are difficult to arrive at even in the most certain times, and so obviously, there's an element of uncertainty there. But we haven't changed our position, it's not something we're working out for this Budget.
MARKSON:
It's my first day back from maternity leave today. You've got 3 young children. People don't often ask dads about work‑life balance. How hard is it for you each week to leave your 3 kids and your family at home, as Treasurer, to go to Canberra, and travel the country?
CHALMERS:
First of all, I mean, welcome back to your brand new show on weekdays, and congratulations.
MARKSON:
Thank you, Treasurer.
CHALMERS:
And when it comes to managing work and family, I think everyone's in a similar kind of position; everyone's trying to balance it. Everyone's worried about whether they're being a good mum or a good dad. I don't think I'm the only one who worries about that when they're getting on a plane or something like that. I think about it every single day, whether or not I can be better at being a better dad. But we try and strike the right balance. I'm very fortunate at home; I've got 3 wonderful kids, and Laura is terrific. Mum helps out, and Laura's family helps out when they can, and we do the best we can.
MARKSON:
Thank you so much for your time, Treasurer, I really appreciate it.
CHALMERS:
Thanks, Sharon.