STEVE AUSTIN:
Jim Chalmers, good morning to you.
JIM CHALMERS:
Good morning, Steve. Thanks for having me back on your show.
AUSTIN:
So, what do you expect the Reserve Bank will do today, Treasurer?
CHALMERS:
I don’t make predictions about the decisions they take independently, but I think you were right to point out a moment ago, and Maria in the news bulletin as well, that there isn’t really anybody who thinks that there’ll be a change in interest rates today in either direction. The last time rates moved were actually last Melbourne Cup Day. They went up about a year ago and they’ve been steady ever since. But there isn’t a credible economist or anyone in the market who thinks that there’ll be a change today.
AUSTIN:
Are we in a per capita recession in Australia?
CHALMERS:
The growth in the economy is really weak and it’s especially weak per person, which is that measure that you’re referring to. One of the things that is, I think, too often missed is it’s not uncommon for the per capita measure of growth to go backwards, it actually has happened a bunch of times under governments of both political persuasions. I think on average about one in every 3 quarters since this data began has gone backwards and so, yes, the economy is particularly weak. I take seriously the very generous feedback that Darren gave you a moment ago on the show and I know you’ve spoken to Darren before as well.
AUSTIN:
Yes.
CHALMERS:
And what his feedback reflects, I think, is the fact that growth in the economy is weak and a lot of people are under the pump, and we acknowledge that. Even as the official data for inflation has come down really substantially in really welcome and really encouraging and really heartening ways, we know that people are still doing it tough and that’s why our cost‑of‑living relief is so important, because we do more than just acknowledge the pressure that Darren is under and people like Darren, we’re actually doing something about it. We’re doing something about it in the most responsible way we can.
AUSTIN:
Inflation is still going up. It’s just that the rate of increase has slowed a bit. How is this acceptable?
CHALMERS:
Well, typically there is inflation in the economy, usually the Reserve Bank would like it to be somewhere between 2 and 3 per cent. So, inflation itself is an almost permanent feature of economies like ours, healthy economies like ours, but it has been too high for too long. When we came to office, it had a 6 in front of it, it’s now got a 2 in front of it. Inflation is 2.8 per cent, which is the first time that it’s been in that 2 to 3 per cent range since 2021. And so what that tells us is we’ve made really good progress when it comes to official inflation, but we know that people are still battling with bills.
People are working really hard to provide for their loved ones. I think Darren was a very good example of that and that’s why, if you look at all the things we’ve done the last couple of years, and interest rates started going up before the election, inflation was much higher and rising before the election, it’s much lower and falling now but what we’ve done is we found a way, at the same time as we’ve got the Budget in better nick, we found a way to give every taxpayer a tax cut, provide help with energy bills, cheaper early childhood education, cheaper medicines, rent assistance, getting wages moving again, and also cracking down on the supermarkets. So, we’re coming at this cost‑of‑living challenge from every conceivable and every responsible angle, because we know that people are doing it tough even as the national aggregate numbers are getting better and better.
AUSTIN:
Where is the evidence that those stage 3 tax cuts have worked? Leith van Onselen from Macro Business points out that on Friday, the household spending data from the ABS came out and it’s fallen. That suggests that stage 3 tax cuts have failed to stimulate consumer spending.
CHALMERS:
I think you have to consider what it would be like without those tax cuts. I respect the economic commentators like the ones that you run on your show but we know from some of the consumer confidence numbers, we know from some of the other data that those tax cuts which came in from the 1st of July are taking some of the edge off these cost‑of‑living pressures. Now, some people are saving them, some people are spending them, it depends on your personal circumstances, but if we hadn’t have made that change, and remember, our political opponents called for an election over it – they were furious that we wanted to give everyone a tax cut rather than just people on higher incomes – if we had gone down that path, people would be doing it much tougher and the same is true for energy bill rebates and all of the other cost‑of‑living relief that we are providing against the opposition of the Liberals and Nationals in Canberra. Things would be much, much tougher were it not for that cost‑of‑living relief that we’re providing and we’re not doing that cost‑of‑living relief instead of managing the Budget responsibly, we’re doing it as well as managing the Budget responsibly and that means we can afford to help people like Darren.
AUSTIN:
Hospitality and retail are being hammered, Jim. People in small business are not even making the minimum wage to a large extent, nearly 70 per cent, and 45 per cent at the last reckoning weren’t making a profit. Yet you keep raising wages or lifting wages. This means that to pay wages, small business needs to have a corresponding lift in business sales, which is extremely difficult to make happen. Do you agree that hospitality and retail is actually really in trouble in Australia today?
CHALMERS:
They’re under a lot of pressure and for some of the reasons that we’ve already talked about, and from time to time, I think from memory in your discussion with Darren just now or maybe in the preview for this interview, some people have said the economy’s running too hot. I think that would be news to people in the small business community who are under a lot of pressure. Now they are –
AUSTIN:
The RBA says the economy is running too hot, yet you keep pumping money into the economy to stimulate it. That looks like having one foot on the brake and one foot on the accelerator.
CHALMERS:
That’s not what they’re saying. In fact, Steve, I’m glad you asked me that because I get this put to me all the time and that’s not what they’re saying. In fact, the Governor of the Reserve Bank said that public spending is not the main game and she has made it clear on other occasions that the fact that we’ve delivered the first back‑to‑back surpluses in almost 2 decades is helping in the fight against inflation. And so, you need to be very careful not to pick up and run with the language of our opponents and some of the commentators with an ideological axe to grind. We are working in conjunction with the Reserve Bank to get on top of this inflation challenge. One of the reasons why we haven’t had a rate hike from one Melbourne Cup Day to the next is because we’re making a heap of progress on inflation and that’s because we’re working well together. We’ve got the same objective, we’ve got different responsibilities. My responsibility is to get on top of inflation, provide cost‑of‑living help, get the Budget in better nick, and on all 3 of those fronts we’re making some progress.
AUSTIN:
What will the federal government change today then if there is not a rate cut or a change to the cash rate today, Jim Chalmers, anything?
CHALMERS:
What will we change?
AUSTIN:
Yes. If there’s no change to the cash rate today by the RBA, which they keep, you know, they keep the current settings indicating they are concerned about inflation still.
CHALMERS:
Well, first of all, everybody expects that outcome –
AUSTIN:
Yes.
CHALMERS:
I think we’ve covered that a moment ago. That wouldn’t be a surprise to us or to any of your listeners if that was the outcome today. I don’t want to pre‑empt or prejudge that.
AUSTIN:
Sounds like you’re not going to change anything as a result.
CHALMERS:
Well, we’re already rolling out responsible cost‑of‑living help. We made a big announcement on the weekend which is about cost‑of‑living help for people carrying student debt which will make a meaningful difference to millions of Australians and that’s a good thing. And so we’ve got our own agenda which is about managing the Budget responsibly, finding room where we can to help people doing it tough and we’ve made some new announcements to that effect on the weekend.
AUSTIN:
Alright. I know I have to let you go in just a moment. A question’s come in, in relation to Queensland specifically. Would you be open or would the federal government be open to providing more funding to support venues for the Brisbane Olympic and Paralympic Games in 2032 in your home city, Brisbane?
CHALMERS:
Well, it sounds like that question’s come in from D Crisafulli from Brisbane City or something like that.
AUSTIN:
I’m not sure that I don’t know who it’s come from, but it’s been put to me, so they’ve asked me to put it to you. But it’s not, I think it might be from the newsroom, to be honest but anyway.
CHALMERS:
Understood. Look, we’ve already put $3.4 billion on the table and that’s because we’re enthusiastic investors in the Olympics. We think it’s going to be terrific, not just for southeast Queensland, but for the whole country, so we’ve made a big commitment already. That’s on the table. We know that this will be raised with us. I had a preliminary conversation with the new Treasurer, David Janetzki in Brisbane last week. We had a cup of coffee to get to know each other and to set out some of these issues. My colleagues Catherine King and Anika Wells are engaged with the state government but we’ve already got a big commitment on the table and we’re looking forward to playing our part in making the Olympic Games amazing.
AUSTIN:
All right, I know it’s pressed for time. I’m going to have to leave it there. Appreciate you coming on this morning Jim Chalmers, thank you.
CHALMERS:
Thanks very much, Steve.