VIRGINIA TRIOLI, HOST:
Jim Chalmers is the federal Treasurer and the Labor MP for Rankin. Treasurer, good morning.
JIM CHALMERS, TREASURER:
Good morning, Virginia.
TRIOLI:
50,000 Victorians a day are using Foodbank here to get groceries and more than half of them actually have jobs. They're working families that just can't afford to put food on the table. So what can your government do for them right now?
CHALMERS:
I think that we are at risk of the broader Australian community forgetting that even as some people have a buffer against rising interest rates, even as some people have been able to save for these rainy days that we're seeing now, there's a lot of Australians who haven't been able to do that. That's why we fought so hard, for example, for a decent minimum wage rise. You rightly point out that there are people in this country who are working and still can't make ends meet. The most important thing we can do on that front, and one of our first priorities of the new government, was to make sure that people on low wages got a decent pay rise.
TRIOLI:
That pay rise has gone through then for people on low wages, but what broadly can you do? Are there any measures that you're considering that you can put in place right now that might be an immediate comfort to families who are right on the edge?
CHALMERS:
I think that's the most important thing that we can do, particularly for those working families who find themselves in that position. Beyond that, there are no real quick fixes. There was some relief in the last Budget, which we supported, to get some money out the door to people on fixed payments, for example, and to provide some other kinds of relief. But we've had to be up‑front with people about the pretty severe Budget constraints that we've inherited, unfortunately, which means that we can't do everything that we would like to do. We also need to weigh up any spending that we might be contemplating against these inflation pressures that are serious in the economy already, but most likely about to get worse before they get better next year.
TRIOLI:
So you're sort of stuck. You're stuck between perhaps wanting to help families financially, but if you do that puts greater pressure on inflation and just escalates the problem. Are you saying that there's nothing at the moment, short‑term, that you can do for Australian families, short of us waiting for some sort of miracle in the October Budget?
CHALMERS:
I wouldn't put it like that. We're playing the cards we've been dealt. A lot of these problems weren't caused by us, but we take responsibility for working around the clock to deal with them. We've been up‑front with people. There's no switch that we can kind of flick to make all of these challenges go away ‑ whether it's inflation, whether it's falling real wages, whether it's a trillion dollars of debt in the Budget ‑ there's nothing you can do in six weeks, which will make all of that go away. So our responsibility...
TRIOLI:
Sorry to jump in, but I think it's probably time we start doing this Treasurer. At a certain point ‑ and I think that point is right now ‑ that line is going to start to wear thin. That these are the cards we've been dealt, we didn't bring about this situation, and on and on. Everyone's going to turn to you and say ‑ yeah, you wanted the job, you got the job, now you have to do it.
CHALMERS:
I understand that Virginia and I accept that responsibility. The point I was about to make, is that our job is to do what we responsibly can in the context of all of those constraints to do a couple of things. First of all, to provide genuine, sustainable, responsible cost‑of‑living relief. Our priorities there are in areas like childcare and medicines and we've made that clear. Our priority is to grow the economy and grow wages in a way that doesn't add to these inflationary pressures. That's why the Budget will be all about implementing an economic plan, which includes things like investment in skills, it includes investment in cleaner and cheaper energy, it includes more affordable childcare, a future made in Australia. Because one of the really important points that Phil Lowe made in his statement yesterday when the independent Reserve Bank increased interest rates again was he said that a lot of these challenges in inflation have come from overseas but some haven't. So my way of thinking is, if you're the Treasurer in a new government, you need to focus on the things that you can influence. The constraints we have in our economy have been building for the best part of a decade. Skills shortages, for example. Supply chains which are weak because we're not adding enough value here in Australia. Those are the sorts of things that are central to our economic plan and they'll be central to the Budget in October.
TRIOLI:
The Treasurer is with you, Jim Chalmers, this morning. You said that inflation is going to get worse before it gets better, what's your modelling showing about how much worse it's going to get?
CHALMERS:
It will be significantly higher than that 5.1 per cent number we saw for the March quarter.
TRIOLI:
Have you got modelling that goes very much higher than that?
CHALMERS:
We are in the process of updating our forecasts and what I'd like to do is to update the Australian people through the Parliament in the first week that Parliament's back, which is at the end of this month. I'll provide a pretty comprehensive update of our expectations for inflation but also for growth in the economy and some of the other key indicators, as well as the big pressures on the Budget, including some of that more diabolical weather and natural disasters and flooding that we're seeing in New South Wales which will have an impact on inflation because it will have an impact on suppliers of fruit and veg but also an impact on the Budget. What I'd like to do, only in a few weeks now when the Parliament comes back for the first time, in the very first week of the new Parliament, is to update all of our expectations and forecasts for the economy, but also for the Budget.
TRIOLI:
But when it comes to inflation, the phrase you're using right now is considerably higher?
CHALMERS:
Yes, it will be considerably higher than the last number that we got for the March quarter. The Reserve Bank has made that clear as well and it will get higher before it starts to ease. That's the other important thing, Virginia, for your listeners to understand. It is going to be an incredibly difficult period for people. They should brace themselves for high and rising inflation and more rising interest rates, unfortunately, but things will get better. It's the strong expectation of the Reserve Bank, they said yesterday that inflation will moderate next year, it will come back down to more normal levels. That will obviously be a big release to people. Our job as the Government is to make sure that as we emerge from this period that we've done what we can ‑ whether it's skills or some of the other areas we've talked about ‑ to make sure that we can grow the economy without adding to that inflation.
TRIOLI:
You've said that Australians have to brace themselves for things to even get worse before some expected easing next year. The Opposition's calling urgently for an economic plan to be released by you to deal with this cluster of cost‑of‑living pressures. Would you release one, perhaps ahead of that October Budget?
CHALMERS:
We have an Economic Plan. We have an Economic Plan which is more relevant and more necessary now than when we announced it before the election. Some of those policy areas that I've run through a couple of times in this conversation are absolutely pressing. It's because we anticipated some of these pressures ‑ inflation and the rest of it ‑ has gotten worse than anybody anticipated at the start of the year but the policies that are central to our Economic Plan are more important now than ever. The Opposition's criticism seems to be that having created this mess for the best part of a decade, we've been in office now for six weeks and we haven't cleaned it all up yet. I think that comes at another substantial hit to their credibility. We're working around the clock to clean up the mess. We enthusiastically embrace that responsibility. They are kidding themselves and the Australian people if they think we can clean up a decade of mess in six weeks.
TRIOLI:
Just a couple of quick questions because I know you have to move on. How much worse are prices for fruit and vegetables going to get with these new floods in New South Wales?
CHALMERS:
We're getting a handle on that. The National Farmers’ Federation made it clear yesterday, I think. Because some of these areas that are underwater are absolutely crucial food producing areas, then we will have some shortages in some of the key fruit and veg, for example, in the supermarket aisles. Every Australian understands that we already had skyrocketing prices for a lot of those essentials that people have to buy week to week. We'll try and get a handle on that once we get a better sense of the economic impact of these floods in addition to the human and emotional costs which is most important. We'll get a handle on that. I'm hoping as well, as part of that update I was talking about before, I'm hoping to be able to talk about some of the impacts of the floods as well.
TRIOLI:
To finish where we began, with Foodbank. It just seems inevitable then that many, many more of us are going to be relying on charities in order to get through the next few months. Perhaps, that's where financial support from the Government needs to go now?
CHALMERS:
I think it is one of the cruel realities of this inflation challenge that it's hitting hardest the parts of the family budget that people can't avoid ‑ whether it's groceries, electricity, petrol, some of the other essentials of life. Our responsibility, as I've said a couple of times, is to ease the pressure where we responsibly can in some of those areas I've identified but also make sure that we make our Budget and our economy as resilient as the Australian people. We've had a wasted decade of missed opportunities which has made us too vulnerable to these kinds of economic shocks. Our job is to build the resilience of Australians and their Budget and their economy so that we can deal with these kinds of shocks as they emerge.
TRIOLI:
Quickly and finally, I accept that the Prime Minister is overseas on legitimate and important business but how tricky does it make your job when he's not here and when he's not here so often?
CHALMERS:
It doesn't make it tricky at all. I'm in constant contact with Anthony Albanese. I spoke to him yesterday, no doubt I'll speak to him again today. The difference between our government and its predecessor is it's not a one man show. We work as a team. We work very effectively, very closely, as a team. Having to clean up some of these relationships around the world hasn't prevented us from advancing things like hospital funding for the COVID pressures, it hasn't prevented us from arguing for a minimum wage rise, it hasn't prevented us from doing some of the important work in the Budget that Katy Gallagher and I have been embarking on. We are capable of doing both things at once, I think we've demonstrated that already. We'd rather not have to repair some of these relationships around the world that have been run down, but, again, that's one of the cards that we've been dealt. So, we do that at the same time as we do important work here at home.
TRIOLI:
Good to talk to you, Treasurer. Thanks for your time.
CHALMERS:
Thanks very much, Virginia.