TOM CONNELL:
The latest move in that area is in the area of mergers with a speech and announcement today by the Treasurer, Jim Chalmers, who joins me now live. Treasurer, appreciate your time today on another busy one for you. You've opted to broaden the definition. The ACCC actually wanted companies, though, to have to prove a merger would not reduce competition. So they wanted the reverse of the onus of proof. Why did you not go down that path?
JIM CHALMERS:
First of all, their position evolved, as did other participants in the consultation, evolved over time. The ACCC put out a statement really enthusiastically welcoming these reforms that I'm announcing today and that's because we went through it in a considered and methodical and consultative way and the outcome of all of that consultation is that all of the major players in this discussion, more or less coalesced around broad support for the announcement that we are making today.
This is the biggest change to our merger laws in something like 50 years, it recognises that our economy is not competitive enough. We are addressing that in a range of ways in terms of competition policy and mergers is a really big part of the story, and that's why we've got this announcement today and we've worked closely with the ACCC in hammering out the details.
CONNELL:
Given you've spoken about how much this is hurting the economy, can you give an example of a merger that was bad for competition in the economy, that this change would have prevented?
CHALMERS:
What I try to do as Treasurer, Tom, is not second guess decisions taken by earlier regulators, or in this case, earlier treasurers and predecessors of mine. It's not my job to go through the entrails of old decisions. My job is to get the mergers regime right for the future and that's what this is all about. What it recognises is we've got this voluntary system. It's a bit hit and miss at the moment. We don't know if the hundreds of mergers that are being examined are the right ones, the most concerning ones. And so what this will do, it will streamline the process for mergers that don't trouble us, but it will mean a stronger, more robust regime for those mergers which risk either lessening competition substantially or entrenching or expanding market power.
In doing that, we recognise that a lot of mergers are good mergers, where they get economies of scale or more take up of technology or more employment. Mergers can be a force for good in our economy, but there is a minority that concern us and until we put these changes in place, we don't have the confidence that the right mergers are being examined in the most robust way.
CONNELL:
So I guess that's the key part, at least, being examined. Let me put this example to you. Petstock was able to slowly buy 41 additional shops across the country. By the time another deal was trying to go through the ACCC actually said ‘wow, we didn't realise the concentration Petstock had’. Would these changes mean that this sort of below‑the‑radar or gradual acquisition would have at least been picked up and monitored and the ACCC could have had a view on Petstock if the same thing happened again?
CHALMERS:
Well, let me put it this way, Tom, those sorts of instances are a really key motivation for the changes that we are announcing today because what we want to do is we want to look at mergers that have the potential to substantially lessen competition, but over time that might have a creeping impact. So what we want to do is to strengthen the ACCC's hand when it comes to looking at troubling mergers like that. We're obviously aware of that case that you have identified, as is the ACCC. It was part of the conversation, and those sorts of cases are the sorts of reasons why we're making these really substantial economic reforms public today.
CONNELL:
Alright, I sense ‘sorts of cases’ is as close as we'll get to examples. I'll take that as one – as an indication that essentially is one. Looking ahead to the Budget: so rent inflation is still really high, one of the biggest drivers of inflation and a huge cost‑of‑living measure. But you did, in the last budget, increase rent assistance by the most for 30 years. So does that mean you're sort of one and done on rent assistance or is something in that area on the table again?
CHALMERS:
First of all, there's nothing one and done about it. That was a permanent increase to Commonwealth Rent Assistance. We're very proud of the change that we made in the last budget, that is permanent, it is sustained and it's ongoing. And the reason that we know that it's taking some of the sting out of these unacceptable high rents that people are paying around the country is in the most recent inflation data rents went up around 7.5 per cent from memory, still much too high, but without our actions, it would have been more than 9 per cent.
So what that teaches us, what that tells us, that ABS data, is that the change we announced in the last budget was an important one. It's taken some of the edge out of these higher rents, but we know that people are still under pressure. That's why we need to build more homes, it's why we've got the target to build way more homes for more Australians over the next five years.
When it comes to decisions about any additional cost‑of‑living help in addition to a tax cut for every taxpayer, which will be the centrepiece of the cost‑of‑living help in the next budget, we've still got a few weeks to go in terms of making decisions for the Budget. We've said if we can afford to do a little bit more cost‑of‑living help, of course, that we will consider that and that is one of the proposals that people put to us.
CONNELL:
Yes, but is that one still right for assistance because it meets that criteria of doing the opposite? It doesn't increase inflation or take away from it and it's an area where people are really struggling?
CHALMERS:
Well, first of all, you're right, whether it's the rent assistance, the early childhood education fee relief, whether it's the energy rebates, what the Australian Bureau of Stats has said is that we took something like half a click off the CPI last year and that's really encouraging, and as you intimate in your question, those are the sorts of things that we're looking at: how can we provide cost‑of‑living relief in a way that puts downward pressure on inflation rather than makes the inflation challenge worse. We have found a few ways to do that in earlier budgets. We do have these big tax cuts coming for every taxpayer to help with the cost of living and we will come to a view on some of these other suggestions in the next few weeks.
CONNELL:
Okay. Going a bit broader then, pre‑COVID, the spending level of the Australian Government was around 24 per cent of GDP. It now sits well above 26 per cent and that's through future years. Is that a new level you're comfortable with or is there an overall ambition to drive that back down towards 24 per cent?
CHALMERS:
I don't think it's that simple, Tom. The quantity of spending in the Budget obviously matters a great deal but also the quality of spending and what we've tried to do is to clean up the budget that we inherited from our predecessors so there's less debt and less debt interest payments – and delivering the first surplus in 15 years at our first attempt was an important part of cleaning up the mess that we inherited.
There is a lot of spending in the Budget, but we're trying to make sure that that is productive spending and in the Budget that Katy Gallagher and I hand down in a little under five weeks, there will be investment, there will be new investment and our job is to make sure we get value for money ‑
CONNELL:
So the clean up's done then?
CHALMERS:
No, the task of cleaning up the budget is always ongoing. It's not the task of one budget or another. But what every budget needs to do is it needs to factor in the prevailing economic conditions. That was really the secret to the success of the first 2, which were primarily almost exclusively, but not quite, focused on inflation. The balance of risks are a bit different this time around and that will impact on our choices.
CONNELL:
Just wanted to ask you about Penny Wong. She's opened the door to recognise a Palestinian State before a two‑state solution. There are caveats on it, of course. Is that something, though, you support, that prospect of doing that?
CHALMERS:
I do, and I was there at the Australian National University when Penny Wong delivered what were characteristically considered and thoughtful comments about this. Something needs to change in that part of the world and if we want to build a pathway out of this endless cycle of violence and bloodshed then a two‑state solution is a good place to focus our efforts and that's what the international community is doing.
There is a discussion in the international community, including amongst our friends in the world, about whether or not recognition will help build momentum towards a two‑state solution which will deliver what we all want in that part of the world, which is peace for the people who live on either side of that horrific conflict.
CONNELL:
And just to clarify in case I've misunderstood you, the debate will happen, and you will actually support that when that debate comes up, that you would say yes, let's offer recognition, albeit with the caveats including Hamas can have no role in Gaza and in future governance?
CHALMERS:
I support the thoughtful contribution that Penny Wong made, which is to say that if we are interested in peace and we want to get out of this cycle of violence, then an enduring two‑state solution, which delivers peace on both sides of this horrendous conflict, is a very good place for us to focus our efforts. And that would be good for Israel as well and it would help ensure that we keep Hamas out of the future governance of Palestine.
CONNELL:
Got to leave it there. Treasurer Jim Chalmers, appreciate your time today. Thank you.
CHALMERS:
Thanks for your time, Tom.