15 February 2024

Press conference, Canberra


Subjects: Prime Minister’s engagement, Labour Force results, passage of Labor’s cost-of-living tax cuts through the Lower House, competition, ASIC, tax scam


Well, three bits of news today. First of all, can I extend my congratulations to Anthony and Jodie on the news of their engagement – two great people in a wonderful loving relationship, and this is really the most joyous news for Anthony and for Jodie. These are two people who make each other really happy and we are really happy for them. So congratulations to Albo and to Jodie on the news of your engagement.

I wanted to talk about the Labour Force data that we just received a little while ago, and then also of course the tax cuts which have just passed the House of Representatives.

The unemployment rate ticked up to 4.1 per cent in January. This is consistent with the government's forecasts and expectations, and indeed, largely consistent with the expectations of most economists.

I wanted to put these numbers into perspective by saying that 4.1 per cent is still very low by historical standards. The five‑year average before COVID was about 5.5 per cent for the unemployment rate, we're now at 4.1. Six hundred and fifty thousand jobs have been created in the life of this government, and in that period since we were elected, we still have the fastest jobs growth compared to any major advanced economy.

So what we're seeing in these figures is that the labour market continues to soften in expected ways. We've seen in job ads, we've seen in the way that hours have come off that our labour market has been weakening, but it's been weakening from a really quite incredibly strong and resilient base.

In the 46 years now since these monthly records were first kept, there's only been one calendar year where every month of that calendar year's had unemployment south of four per cent; that was the year just finished. So we enter this period of economic uncertainty from a position of genuine strength, and the labour market is a big part of that story – 650,000 jobs created, the fastest wages growth in 15 years, two consecutive quarters of real wages growth. All of that tells us that even as the labour market softens in ways that we have anticipated, we do start from an especially strong base.

This is also the inevitable consequence of higher interest rates and persistent inflation and global economic uncertainty, because of the pressures that people are under, the pressures our economy is under, and indeed the global economy as well – those are largely the reasons for the tick up in the unemployment rate that we are seeing today.

This makes our three‑part economic strategy even more important. The three parts of our strategy are to ease the pressure on Australians, to get the budget in much better nick, and to lay the foundations for future growth, and the tax cuts that passed the Parliament today are a really important part of our Economic Reform Agenda.

The tax cuts that we passed today are a combination of relief and reform and responsibility – more relief for middle Australia, better reform for our economy and consistent with the responsible approach that we have taken to managing the budget and also managing the economy more broadly.

Australian workers are now one step closer to a bigger tax cut for more people to help with the cost of living. This is about ensuring that Australians can earn more and keep more of what they earn. The contrast in the Parliament couldn't be clearer between a Labor Party who wants to see people keep more of what they earn, and the Liberal and National Parties who want people to work longer for less.


I just had a question around the stage three tax cuts as to the timing of when you knew they were going to be changing their position on it, that the Treasury Secretary was saying that in your December 11 meeting with him when you were sharpening up what the cost‑of‑living relief might look like and he said that given that impacted millions of people, [indistinct] inflation, and he made – he outlined in broad terms that there were not going to be many opportunities to do that without looking at the tax system. So when did you realise that you were going to have to re‑engineer the tax system?
Not the tax system, the tax cuts.


Understood. The testimony that the Treasury Secretary gave is consistent with what I've said on the public record in the last couple of weeks as well. We sought publicly and privately – we indicated that we were in the market for more ideas when it came to easing cost‑of‑living pressures on more Australians.

We had all of the cost‑of‑living relief rolling out in a targeted way, and the view that we took was that we needed to find a way to provide broader cost‑of‑living help to more people, more impactful, without adding to the inflationary pressures in our economy. And so the meeting that the Treasury Secretary has described was his opportunity to convey to us, to indicate to us that he thought the best avenue for doing that was via the tax system.

Our position changed at the Cabinet meeting on 23 January – the Prime Minister runs an orderly and methodical Cabinet process, and that's when the government changed its view.

It became increasingly clear to us over the course of summer that the tax system, and particularly the stage three tax cuts, were the most effective way to provide more cost‑of‑living relief to more people without adding to inflation.


Treasurer, just on the jobs figures, since the middle of last year, the unemployment rate in New South Wales has gone from 2.9 to 5.1, and there's been a loss of 33,000 full‑time jobs, particularly amongst women. On the [indistinct] that suggests that the New South Wales economy is in a fair bit of trouble. Are you worried about the nation's largest economy reacting much worse than most people anticipated [indistinct] monetary policy?


Well, first of all, it's not uncommon for the composition of a slowing economy to look different in different parts of Australia. Certainly, those parts of Australia which are more exposed to mortgage pressures feel the pain disproportionately when interest rates go up. I think that's more or less self‑evident. And whether it's these numbers today or the national accounts or other indicators that you and I pore over, Shane, it is often a feature of this kind of data that when you dig into the detail of the data, you discover the way that people are faring differently in our economy.

And one of the motivations for our cost‑of‑living tax cuts and one of the reasons why we've provided relief right up and down the income scale is because we acknowledge that even people who might be on relatively high incomes, they still need a tax cut to deal with some of these pressures, and one of the most pressing issues that people are dealing with around the kitchen table is the changes to their mortgage repayments. Obviously in some parts of Australia that pressure is more acute than others.


Just back on the Treasury Secretary's evidence yesterday, he was asked about whether he's been giving you any advice on negative gearing, and he said he wouldn't go into detail, particularly if they are near a Cabinet process or part of a deliberate process, comments piquing interest of your opponents. Can you just clear up, is it part of a deliberate [indistinct] for Cabinet ‑


Well, first of all, those comments pique the interests of our opponents because they're desperate to talk about anything except for bigger tax cuts for more people to help with the cost of living.

The point that the Treasury Secretary was making, and I've heard him make it under governments of both political persuasions, is that Treasury Secretaries provide advice on all aspects of the tax system, all aspects of the economy, and it's not standard practice to go into the detail of that.

What we've tried to do with our changes to the stage three tax cuts is to provide more of an insight into how we arrived at that decision by releasing the Treasury advice. But apart from that, the standard constraints apply to the advice provided by Treasury Secretaries to Treasurers.


Just back on your answer to Patrick, I understand that you technically didn't make a decision until a decision was made. But do you think that people will actually understand that – isn't it tricky to say you weren't in the process of changing your position over the summer?


Well, clearly, work needed to be done to make a proposal to the Cabinet colleagues, and again, I think one of the defining features of Anthony's government is the considered and methodical way that we go about things, and how we engage the proper Cabinet processes.

It's on the public record now that the changes to stage three went to the Expenditure Review Committee on the Monday, the Cabinet on the Tuesday, the full Ministry on the Tuesday and the Party Room on the Wednesday, and obviously in the lead‑up to those decision‑making meetings, work needed to be done to frame up the proposal that I was putting before the colleagues for their consideration. That's just the normal process of government.


The Reserve Bank Governor this morning said before Estimates, she basically said that she believes that price gouging is happening. Just with the stage three tax cut changes, it's obviously about getting more money in people's pockets. Are you concerned that that money isn't going to go as far as it should because of price gouging, especially at the supermarkets?


Yes, I am worried that we don't have – we don't know enough about the pricing practices in our supermarkets and in other parts of the economy, and I am interested in finding ways to be more transparent about that, and for our supermarkets to be more competitive.

We want a fair go for farmers and families. That's why we've got a number of processes under way now, whether it's Craig Emerson's Food and Grocery Code Review, whether it's the ACCC and the powers that I have recently given the Chair of the ACCC to get to the bottom of this, and whether it's our Competition Review more broadly that I'll work closely with Andrew Leigh on.

All of these processes are about one thing, and that's about seeing if we can exert more competition in a part of the economy which Australian working people in particular are particularly sensitive to.

And so I saw the comments made by the Reserve Bank Governor this morning. I think there is an interest broadly, not just the Reserve Bank, not just the government, but in the community more broadly to get to the bottom of how these prices are arrived at so people aren't getting treated badly at the check‑out.


Just a direct follow‑up to that, if I may. Are you considering laws to break up the Woolworths and Coles duopoly?


I'm not interested in pre‑empting the important work of the ACCC Chair or Craig Emerson in this regard. We've indicated some areas we're interested in; more powers for the ACCC when it comes to transparency, we said we're interested in areas like mergers and acquisitions ‑


You know that's an issue, so you must be preparing for the findings that they'll bring.


I'm obviously preparing to hear what some terrific people are considering at the request of the government but I'm not going to pre‑empt specific outcomes like the one that you mentioned.


Treasurer, what steps have been taken to assure yourself that the issues that allowed the corporate regulator to fall into dysfunction under your predecessor have been adequately dealt with, and does it need to be easier to hold any statutory office holders accountable at some executive level?


We've made it really clear that we are interested in ensuring that all of our key economic institutions are the best version of themselves, and I think as you have written before, and I have said publicly before – our focus initially on the Reserve Bank, the Productivity Commission, the Future Fund – doesn't mean that we weren't interested in making sure that – whether it's ASIC or APRA or other key institutions, the ATO – we need to make sure that they are the best versions of themselves. Obviously some of that thinking goes on behind the scenes in the course of a government, but in terms of the specific issues that have popped up in recent times, I don't have much to add to that.


Just on unemployment, the RBA and Treasury are both sort of expecting about 4.25, 4.3 unemployment by the end of the year. But it's February, we're already at 4.1 per cent. Should Australians be bracing for potentially higher numbers than were previously expected?


I think these are largely consistent with the expectations of the Treasury, and as I understand it, the Reserve Bank and others. Nobody likes to see the unemployment rate tick up, but it's still very low by historic standards and it's consistent with an economy which is softening and we've made it clear now in a couple of budget updates that we expect the economy to slow in the course of 2024. That's what happens when you've got interest rate rises working their way through the system and when you've got persistent inflation and when you've got global economic uncertainty which is characterised, as you know, by concerns over China, and obviously two major conflicts as well. So for all of those reasons, we have expected for some time the labour market to soften as part of the economy slowing more broadly, and that's what we see in today's figures.


Treasurer, back to Katina and Pat's question on stage three cuts, Stephen Kennedy said to you on December 11, stage three is the obvious solution. You would know that if you were to go down that path, it would be a broken promise or a change of position, yet you give him the green light to keep doing that. So isn't it true that from that point onwards you are contemplating stage three, but you say that at the same time publicly to the Prime Minister and others that, we're not contemplating it?


I think the view that we put to you – and I think I put it to you repeatedly around that time – is that at that point, the government's position hadn't changed because the Cabinet hadn't changed our position. I think what unites Pat's question and your question and around that 11 December date that the Treasury has provided, is we made it very clear – the Prime Minister and I made it very clear publicly and privately – we wanted to deliver broader cost‑of‑living help, and it couldn't push up inflation. And what secretary Kennedy indicated at that meeting was if we wanted to do that, then the tax system was likely to be the best way to do that.

Over the summer, between around then and when the decision was taken by the Cabinet, the policy logic of what we proposed became more compelling. It became increasingly clear that we needed to provide more cost‑of‑living help without pushing up inflation, and so the policy logic of what we announced on 25 January was clear and compelling and reflected in the way that that advice from the Treasury Secretary became the recommendation that I took to the Cabinet colleagues.


The tax cuts passed in the lower house today. You're saying, and the unemployment figures are showing that the economy is slowing. They don't kick in for another 137 days. Are you concerned about what happens in those three and a half months?


Cost‑of‑living pressures are the government's primary concern, that's why we've rolled out tens of billions of dollars in cost‑of‑living help including help with electricity bills, cheaper early childhood education, cheaper medicines, income support, rent assistance.

The tax cuts are a really important part of our economic strategy and our efforts to ease cost‑of‑living pressures, but they're not the only part, and really since we came to office, certainly from the first budget in October of 2022, we've been rolling out assistance in a variety of ways, and that assistance is still rolling out in our economy.

We needed to make sure that we could legislate these changes to the stage three tax cuts in time for them to come in on the 1st of July. I don't know what your political assessment was of all of that, Charles, but if you look at the hyperventilating that the Liberals and Nationals did when we announced our change in position, today's humiliating capitulation by the Coalition was not always certain, and so we needed to make sure we gave ourselves enough runway to legislate these important changes.

And once we took the decision at the Cabinet on the 23rd, we thought it was important we announce it as soon as possible. The Prime Minister fronted up to the National Press Club to explain the change in position and why it was necessary.

We anticipated that we would need to legislate this in advance of 1st of July. We didn't necessarily assume, we weren't complacent about outcomes in the Parliament. Just because the support for these tax cuts was unanimous, if reluctant, in the House of Representatives today, that wasn't always assured.

So we needed to make sure we gave ourselves enough time to get these tax changes bedded down. Part of that was explaining why they were necessary, and part of that was ensuring that once we took the decision, we made it clear.


Treasurer, just something on what Chris Jordan said last night about the TikTok tax scam. He gave evidence last night that there had been an appetite for fraud engendered by all the stimulus that came out of COVID and that's why 57,000 people flooded into a scheme that fleeced Australians $2 billion. Do you agree that there is now – there is this appetite for fraud?


Well, I think we need to stamp out fraud wherever we can find it, whether it's in the tax system, in the payment system or elsewhere, and I saw the comments by Chris Jordan last night. I thank him for a long period of service and diligence. We need to be vigilant about this, whether it's scams in the private sector, fraud in the tax system, we need to make sure that we are vigilant. We especially need to make sure we are vigilant when big sums of money are going out the door.

Thanks very much.