JIM CHALMERS:
Our hearts go out to all of the families of the crew and passengers of the Yeti Airlines flight which crashed in Nepal. Our thoughts are with the people of Nepal as well. There was, as you know, an Australian on board and DFAT is providing consular support to the family. I'm not in a position to provide you with any more details beyond that, but as they become available obviously they will be provided to you.
There's also been more heavy weather over the weekend and communities around the country continue to be impacted. It's still a difficult situation in the Kimberley, and still the aftermath in South Australia. Of course, we're working with state governments to provide assistance where that's necessary, but also today there are a number of communities, particularly across north-western Queensland, being impacted and isolated by flooding. The Bureau is saying that there is going to be a heap of rain dumped on the state of Queensland today. That means dangerous and potentially life-threatening flash flooding is possible. And so the warnings and the advice as always is if your community is affected, please keep across the updates as they are provided. Please follow all of the advice from the authorities. Please don't try and drive through floodwaters - if it's flooded, forget it. Please look after yourselves and look out for one another. As always, Australians are there for each other when these natural disasters hit, and the Albanese Government will be there for people as well.
Just as there's heavy weather here in Australia, there's obviously heavy weather as well when it comes to the expectations for the global economy in 2023. We start 2023 with the right mix of optimism about our economy and the future, but realism about the global economic conditions that we will confront throughout the course of the year. We are optimistic about the future of our economy and the future of our country but we are realistic that there will be a number of economic challenges coming at us from around the world in the months ahead. That, as we've talked about before, will be impacted heavily by the war in Ukraine, by China's transition out of COVID zero, out of the turbulence and uncertainty that we're seeing in some of the world's major economies particularly in the northern hemisphere, the trajectory and impact of rising interest rates here in Australia and around the world, as well as the economic consequences of these natural disasters that we have been talking about.
So I think the best summary of the situation that we confront, as we begin 2023 is this: we've got a lot coming at us, but we've got a lot going for us. We've got a lot coming at us from around the world, but we've got a lot going for us here in Australia and in the Australian economy.
One of the things that we do have going for us is that we've got more and more Australians finding a job. In fact, in terms of jobs growth, this is the strongest start for a new government in terms of jobs growth on record. Since these records were first kept in the '60s, this is the strongest first six months of jobs growth data of any government here in Australia that we have on record. 234,000 more Australians found a job between May and November last year. That jobs growth of 1.7 per cent is the fastest over that equivalent period of any new government on record. The three top governments for jobs growth in their first six months were the Albanese Government, the Rudd Government and the Hawke Government.
This jobs growth beats the record of new governments before it, and it also beats the jobs growth that we are seeing from the world's major advanced economies as well - and that's by some margin. But I think the most pleasing aspect of these jobs growth numbers is the context and the conditions that they were created in. As the global economy has been slowing, our jobs growth in Australia has been accelerating. Even as global conditions deteriorated in the back half of last year, even as our challenges grew, more and more jobs were created here in Australia and we should be proud of that.
We know that these headwinds will only grow stronger this year. We expect jobs growth to come off this pace a bit in the months ahead and we won't be immune from a global slowdown. But having more Australians in work is one of the best defences we've got against these major global economic challenges - that and stronger wages as well. We are also starting to see the beginnings of strong and sustainable wages growth in our economy, and that's very welcome and very pleasing too.
This is a strong start when you consider all of the challenges that we've got before us, but it's just the start. We do have plenty going for us but we also have a lot coming at us. We inherited stagnant wages and we're working to get them moving again. We inherited that broken energy market and we're working to repair and renovate it for the modern world. We inherited a skills crisis which we've begun investing in to try and start to turn that around. And we inherited that Budget which is heaving with debt, and the Budget in October was the foundations of repairing that over time.
I think Australians know a couple of things. They know that 2023 around the world will be difficult but they also know that as we approach these challenges, we start from a position of relative strength compared to the rest of the world. They also know that they have a government which is prepared to meet and beat these challenges, and jobs growth and wages growth is a demonstration that our first budget and our economic plan more broadly is working.
JOURNALIST:
Ninety per cent of chief executives anticipate having staffing shortages this year. Could I please ask is a bigger increase in the permanent migration cap the answer to that? And secondly, ABS arrivals data is showing that net migration is likely to be much bigger than the 235,000 that Treasury projects. Does that show that Australia is relying too much on a temporary workforce that people visiting which Labor criticised in opposition.
CHALMERS:
A couple of things about that, Paul. We've got serious skills shortages and labour shortages in our economy, and they are acting as a handbrake on our economy. I speak to employers right around Australia, and many of them would like to employ more people if they could find people with the right mix of skills and abilities. And one of the reasons why the October Budget and the Jobs Summit had such a big focus on these workforce shortages is because they are holding the economy back. Our economy is not growing as fast as it could because we've got these workforce shortages, which haven't been a recent phenomenon, they've been hanging around for some time. They are a function of a lack of investment in skills and training and universities over a much longer period. Now a challenge of this magnitude requires us to act on multiple fronts at once. Migration is part of the story. But it's not the whole story. It should never be a substitute for what we need to do to train Australians for local opportunities, to make it easier via cheaper child care for more parents, and particularly more mums who want to work more and earn more to do so. And we also need to try and crack the cycles of entrenched disadvantage in communities like the one that I represent, which prevents people from grabbing the opportunities that are there when unemployment is low, and the economy is growing. So we have been acting on all of those fronts simultaneously. And we will continue to do so.
Just one final point on Paul's question so that I'm answering it. His question about the 235,000 assumed in the Budget. We will obviously update that in the usual way, as we get towards the May Budget. I think it is a reasonable assumption that the number that's printed in the Budget for that year may be higher than 235,000. We won't have the final advice on that for some time. We'll update it in the usual way but I think the assumption that you're working from is a reasonable one.
JOURNALIST:
Just on cost of living, last week you talked about the cost-of-living relief that will be in the Budget with electricity bills and higher wages and so on but you also said if there are additional measures you can afford, you'll consider them. Is one of those things that you're considering any kind of change to JobSeeker and that particular income support payment ahead of the Budget?
CHALMERS:
First of all, a key bit of cost-of-living relief in the May Budget will be that electricity bill relief that I'm working with my state colleagues and counterparts on at the moment. We've been working over the summer, over Christmas, to try and bed down the details of that. And we expect and hope that that electricity bill relief will be meaningful. We think that the biggest pressure as we confront the first half of 2023 and beyond into the rest of the year will be energy prices. We've acted decisively to intervene in the market to take some of the sting out of these energy price increases but a key part of that, a key part of what Prime Minister Albanese was able to agree with the premiers and chief ministers was bill relief. That will be in the May Budget and I'm working on that right now.
Beyond that, as you foreshadowed in your question, clearly we will do what we can when we can when it's responsible and sensible and affordable to provide cost-of-living relief. None of these proposals, which are put to us and which we listen to respectfully, come without a hefty price tag and my job is to try and make it all add up in the context of a trillion dollars of debt and all of those other budget pressures. We've already had a meeting of the committee, which we put together as part of the negotiations around the industrial relations changes, under Jenny Macklin's leadership with a heap of great people, experts and advocates. That group has already met once when it comes to the adequacy and otherwise of social security payments, they will report to us at some point. As a Labor Government, you would always like to do more but we have to weigh that up against the fiscal and economic realities as well. And that's the job that will do between now and May.
JOURNALIST:
Treasurer, given China's reopening in recent months, are you expecting to upgrade your economic forecasts going forward?
CHALMERS:
Not the current expectation - haven't had a new set of economic forecasts, in total, a comprehensive set since the October Budget and whatever the Treasury provides will be a combination of what's happening in China, what's happening in the global economy more broadly. I think most of the commentary from the IMF and the World Bank, if anything, has gotten more pessimistic rather than more optimistic and so that will be factored in as well. But in the usual way, we'll update the forecasts between now and the May Budget. There is a lot of uncertainty. Forecasting is a difficult task at the best of times but especially at times like this. China will be a big part of the story, but there'll be other moving parts as well.
JOURNALIST:
You've referenced that you expected the rate of jobs growth to slow or ease. Do you expect we will get to a number with a four in front it, and when might that occur?
CHALMERS:
The Budget expects unemployment to hit around four and a half per cent which is obviously around a percentage point higher than now but still quite low by historical standards. And if that number needs to be updated in the May Budget, we'll update it. Unemployment right now in the middle threes is an extraordinary achievement for Australia. And as I said before, we are particularly pleased and proud that jobs growth in the first six months of the Albanese Labor Government was stronger than any comparable period for any previous government on record. We want to see strong jobs growth, we want to see strong and sustainable wages growth along with it and we need to deal with these skills shortages in our economy and we're acting on all three of those fronts simultaneously.
JOURNALIST:
Treasurer, on those skills shortages, one of the ways the Government's trying to get more people back into work is with cheaper child care. The new figures out this morning show New South Wales is roughly 17,000 child care workers short, 10,000 child care workers short in Victoria. What's the point of something like a cheaper child care subsidy or a graded child care subsidy for families if they can't get their children into centres in the first place? And what more can the Government do to increase those worker numbers?
CHALMERS:
Well, we need to train more workers in the care economy and more broadly as well. It's been clear for some time that we've got skills shortages in our economy acting as a handbrake on achieving our economic objectives. The care economy is going to be a huge employer in this country whether it is early childhood education, aged care, disability care, right across the care economy we need to train more workers - we understand that. Care economy workers are a big focus of our free TAFE places and our other investments in skills and training. Our child care policy comes in in the middle of the year, it will be a game-changer when it does. And in order for Australian families to benefit completely from the changes that we're proposing and the billions of dollars that we are investing is to make sure that we've got the workforce. And so that's why we're investing in training and skills as well.
JOURNALIST:
We've seen a pull-back in natural gas prices and futures because of a benign European winter. Can you just give us a bit of an update on how that influences both your thinking for the budget and also for your support package? And then just as a quick secondary, if I may, do you agree with the characterisation of a broad based land tax is a "forever tax" and worse than stamp duty?
CHALMERS:
First of all on global energy prices, they've been incredibly volatile, and mostly volatile in the wrong direction and occasionally volatile in the right direction. But most of the analysts expect that turmoil in global energy markets as a consequence of the war in Ukraine will be with us for some time and that will have implications for prices and that of course flows through to our own budget assumptions, our assumptions that inform our policy, and also commodity prices, which are a key part of our considerations in the budget, as well.
When it comes to state taxes, whether it be on housing or land more broadly, we've said really for some time that we don't intend to take potshots at state governments or to second guess some of the efforts that they're putting in to change their own tax bases. We do actually recognise in a collaborative way that state governments and the Commonwealth Government have got big pressures on our budgets and different states and territories will take different decisions about how to improve that. There is a very willing contest happening in New South Wales. I think you know who I want to prevail in the election in New South Wales in March. And I think housing policy and to some extent tax policy will play a role in that. I've got my own work to do and to focus on.
JOURNALIST:
Your Government said that it's looking to scale back superannuation concessions for wealthy Australians at some point in the future. Is one of the measures on the cards, lowering the $250,000 income thresholds so more high income earners pay that extra 15 per cent surcharge on their contributions?
CHALMERS:
I'm not sure that we've put it exactly as have. But clearly, more broadly beyond superannuation, we've made it clear that some combination into the future of spending restraint the likes of which we saw in October, combined with tax changes where they are responsible, again, we saw some of those in October - if there's a sensible combination of those things to help repair the budget over time, then we're prepared to consider them. But we haven't said in the way that you put it that we intend to definitely go down that path, but we have made the point more broadly, that if there are sensible suggestions made to us about how we repair the budget, how we make more inroads into this trillion dollars of debt that we inherited, then obviously we're prepared to consider it.
JOURNALIST:
Treasurer, you're consulting with the gas industry on a mandatory code of conduct that could force suppliers to supply the market at a reasonable price. There's been recent claims of supply disruption from producers and from retailers in the gas market on the back of previous government intervention. So have you seen anything in recent weeks from the industry that would make you reconsider or alter the reasonable price clause that you're looking to mandate on them?
CHALMERS:
Obviously, our consultation on the ongoing reasonable price mechanism concludes in February so we've still got a bit of time to do that consultation to make sure that we get that ongoing regime right. When it comes to the last few weeks, we appreciate the challenges that some companies have faced to negotiate new gas agreements over the Christmas holidays. We expect the gas producers to act promptly to implement the temporary price cap and the ACCC is closely monitoring the behaviour of the gas producers to make sure that they are consistent with their obligations under that temporary price cap and under the ADGSM as well. Under the Heads of Agreement, those gas companies have committed to offering an extra 157 petajoules of supply to the east coast market in 2023 - that's almost three times the forecast shortfall. And the gas price cap is expected to put downward pressure on the forecast price increases as these changes flow through to retail supply contracts, reducing those average price increases over time. Now, I know from some of the commentary today that there is an appetite for some more information about how the ACCC will go about monitoring the implementation of the price cap. The ACCC as I understand it will be providing some additional guidance in the course of the next day or two and we expect that to be helpful to producers and purchases in the market as this temporary price cap gets implemented.
JOURNALIST:
Is the Government considering tax incentives to increase the number of businesses donating food to charities and if not, is it considering any other measures to assist the charities who say they can't keep up with demand?
CHALMERS:
I really welcome these suggestions which have been put out there. I've spent time with Foodbank in the last, I think couple of months. A lot of these charities are doing really quite extraordinary work in our community, and I commend them for the work that they do. The situation is that already a lot of these charities can - and businesses who donate to these charities - can access tax breaks, as I understand it, some of the costs of transport, for example, are eligible for tax breaks. But as always we will continue to listen to the charity sector, the Foodbank and others. They put these ideas to us in good faith. They're doing amazing work in the community and we will listen to them when they put these ideas forward. There are some tax breaks that exist already. A lot of businesses are doing the right thing by Australians in communities right around the country working with Foodbank and others and we intend to be a willing partner in one way or another as they go about that important work.
JOURNALIST:
Treasurer, some economists say that the flip side of a tight labour market is that it can also drive interest rate rises, they also say that an eighth consecutive interest rate rise looks like it's on the cards next month. What's your message to Australians who are already doing it so tough?
CHALMERS:
We understand that Australians are doing it tough, and that our economy has an inflation problem. And we don't have an inflation problem because wages are growing too fast, we have an inflation problem because of a war in Ukraine, supply chain pressures from COVID, and a decade of economic mismanagement, which has made us more vulnerable to these international shocks. So we understand that these pressures are coming at people from around the world, but they're felt around the kitchen table. And one of the best ways that we can address these cost-of-living pressures, so long as we go about it in a sustainable and responsible way, is to get that wages growth which has been missing for too long - over a decade of deliberate wage stagnation and wage suppression. And so we will do what we can to provide responsible cost-of-living relief, electricity bills, cheaper early childhood education, a pay rise for aged care workers, these will all be in the Budget in May. And if there are other steps that we can consider and that we can afford, then obviously we'll contemplate that as well. But wages growth is a really big part of the story when it comes to cost-of-living relief. We're really pleased to see the beginnings of that wages growth that has been missing for too long. Somehow our predecessors had jobs growth without decent wages growth, and what we want to see is decent wages growth, decent jobs growth, dealing with these skills and labour shortages, so that Australians who work hard can provide for their loved ones and get ahead.
JOURNALIST:
Back on gas, if customers can't get new or affordable contracts, aren't you going to be forced to reconsider the price cap? And can we confirm you're 100 per cent committed to the cap for 12 months? Or would you re-look at it, as you deem it necessary?
CHALMERS:
The price cap already has a review mechanism in it, six months into the operation of the cap. So we did that quite deliberately because we wanted an opportunity to make sure it was working as we intended, and to make sure that it was appropriate. And so we've made that clear from the beginning, we've been upfront about that, that there will be a review as the price cap is implemented. And as I said before, there's a really important role for the ACCC here, to monitor its operation. And clearly, in addition to that monitoring role, we will consult the ACCC and others in industry as the price cap rolls out, and as it has its intended impact on prices.
JOURNALIST:
Thanks Treasurer, could you step us through the timeline for delivering that electricity bill relief a bit further. Where are negotiations at with the states, and when will those savings actually arrive for households?
CHALMERS:
We've been working right over the Christmas break with the states and territories. As you know, from the agreement struck by the Prime Minister with the premiers and chief ministers, is that it is unlikely to be exactly the same amount in every jurisdiction because it requires some element of state effort and the price impacts of these energy price increases will be felt differently in different parts of Australia. And so we are putting together the jigsaw when it comes to this one and a half billion dollars of Commonwealth money, to make sure that we get the benefits flowing to households and small businesses in a way that it's intended, in a way that takes some of the edge off these forecast price increases. So we're still talking to the states and territories, there will be meetings over the course of January and February, there's a National Cabinet meeting before long as well. And it will be included in its hopefully final form, in the May Budget. You can't do these things overnight when there's an element of complexity, there's an element of implementation challenges. But we've made it very clear that we intend to provide electricity bill relief this year to Australians doing it tough, it will be in the May Budget and it will be implemented as soon as possible after that.
JOURNALIST:
Thanks Treasurer, the Opposition today has said that the price caps for gas has sent the wrong message to the market - instead of driving down prices, it's pushing it up because retailers aren't able to secure contracts, so it's having the wrong effect and it should be scrapped. What do you say to that?
CHALMERS:
It doesn't come as a big surprise, does it? The architects of a decade of energy policy chaos, who have made us more vulnerable to these international shocks that we're seeing right now, have absolutely no credibility when it comes to these issues. And the fact that they took the main architect of all of this energy policy chaos and made him the Shadow Treasurer, when it's one of the biggest challenges in our economy, and it's caused by his failures over a longer period of time, I think is disappointing, but not especially surprising. It has been known to everyone who's focused on this issue, that the decisive action that we took by bringing the Parliament back late last year, implementing this price cap, the ongoing reasonable pricing regime, in addition to the electricity bill relief that we've been talking about. This is the product of a heap of work, it will take some implementing, it will take the ACCC playing a prominent role, and they will. But the Coalition would like nothing to be done about higher energy prices, they're prepared to leave Australian households and small businesses, industries swinging in the breeze, when it comes to these higher energy prices. We take a different approach to them on wages, on energy prices, and that is if there's something that we can responsibly and sensibly do, then we'll do it. And obviously, this is no small thing what we're doing, we've never pretended otherwise - there is a temporary price cap, there is an ongoing regime, there is relief for households and small businesses. The alternative put forward by the Coalition is to do absolutely nothing, and to leave whole industries and communities to fend for themselves, and that's not our approach.
JOURNALIST:
With Ukraine, is the Government considering providing any more weapons to Ukraine, given that we've seen the British Government supply tanks to the Ukraine. There's a pattern of escalation here in terms of the potency of the weapons that Western governments are giving Ukraine. Is Australia willing to consider giving tanks to the Ukraine, perhaps?
CHALMERS:
We're already providing a lot of support to Ukraine, and like most of the world, we are incredibly impressed and inspired by the courage and the commitment shown by the Ukrainian people in resisting this heinous act of aggression. And we will always keep under review the kind of support that we provide Ukraine. I don't have an update for you on any further assistance that we may or may not be contemplating, but we have been providing a substantial amount of assistance. We do that proudly, we do that in solidarity with the people of a country which has shown the most remarkable courage and commitment and resilience. We salute them and we support them when we can. Thanks very much.