JIM CHALMERS:
First of all, I wanted to say something about Jack Davey.
Our hearts absolutely break for the little soul lost in that terrible accident at Auburn South, in the eastern suburbs of Melbourne. The sadness that must be associated with the loss of his life is just unspeakable, and so our hearts go out to Jack’s family, his school friends, the teachers, and the staff at Auburn South.
This is an unspeakable tragedy, a horrible, horrific accident. To think that Jack Davey went to school yesterday and didn’t come home, I think fills everybody’s hearts with sadness and we’re thinking about everyone who knew him today.
I’m here primarily to talk about the new inflation numbers which have just come out. These new numbers show that inflation is at its lowest in almost 4 years.
Inflation at 2.8 per cent is the lowest in almost 4 years.
We are making welcome and encouraging progress in the fight against inflation, but we know that Australians are still doing it tough. We are coming at this inflation challenge from every conceivable and every responsible angle, and our efforts are making a difference, and we can see that in today’s new data.
Underlying inflation is its lowest in almost 3 years. Underlying inflation is now half its peak, its lowest in almost 3 years. Trimmed mean inflation was 3.5 per cent over the year to September quarter 2024, that’s down from 4.0 per cent revised over the year to the June quarter, so underlying inflation has come down considerably in addition to headline inflation coming down considerably.
Headline inflation is now back in the Reserve Bank’s target band for the first time since 2021. When we came to office, inflation was much higher and rising, now it is substantially lower and falling. Inflation was 6.1 per cent at the time of the election and it’s now 2.8 per cent.
We also got monthly data today, and monthly inflation was 2.1 per cent in the year to September 2024, that’s down from 2.7 per cent in August and it’s around a third now of the 6.1 per cent that we saw at the time of the election. This is the lowest monthly inflation in more than 3 years. So inflation overall is now much less than half of what we inherited and it’s around a third of its peak.
Our policies, including our energy rebates, are making a meaningful difference, but they don’t explain all of the moderation in today’s figures.
We can see it in the fact that underlying inflation came off substantially, not just headline inflation. Headline inflation was 0.2 per cent in the quarter, that is the lowest quarterly result in more than 4 years and that is less than a tenth of the 2.1 per cent in the quarter just before the election.
Today’s numbers show that we are on track for a soft landing in our economy. We are confident but not complacent about the substantial progress that we are making as a country.
Inflation is back in the band. Our back‑to‑back surpluses are helping, and we are rolling out responsible cost‑of‑living help which is making a meaningful difference. The data released today shows that our policies took half of a percentage point off annual inflation in the quarter.
So in summary, what we’re seeing here today – headline inflation down, underlying inflation down, non‑tradeable inflation down, monthly inflation down – these numbers show that we are making very welcome, encouraging, and heartening progress in the fight against inflation, but we know that Australians are still doing it tough and that’s why this fight against inflation is not over yet. But we are making really substantial progress, and it will remain the focus, getting on top of inflation without ignoring risks to growth in our economy. Happy to take some questions.
JOURNALIST:
Dan Ziffer from the ABC. The RBA’s preferred method of looking at inflation is still above the band; the markets haven’t priced in a cut really until well into next year. Does that mean that you don’t get reward for all the effort that you’ve talked about?
CHALMERS:
Well, I think our efforts are being recognised in the fact that headline and underlying inflation has come off considerably in these new numbers. And while it’s true that headline inflation is lower than underlying inflation, underlying inflation came off half a percentage point in one quarter, which is a very substantial drop in underlying inflation.
Now, I know that our political opponents will pretend, wrongly, falsely, deliberately, that this is only about energy rebates. Our energy rebates are helping, and we’re pleased with that, but underlying inflation’s come off substantially as well and that shows that broader underlying pressures in our economy are easing considerably as well.
JOURNALIST:
So is this pressure on the RBA to look at cutting rates?
CHALMERS:
I don’t give free advice to the independent Reserve Bank, or pre‑empt or predict future movements in rates. I haven’t done that before, and I won’t be doing that today. My job, which I’m focused on, which I take responsibility for, is to make sure that our policies are helping in the fight against inflation, and we know from today’s numbers that they definitely are. The Reserve Bank Governor has made it clear herself that our 2 surpluses are helping in the fight against inflation. We know from these numbers today that our cost‑of‑living policies are helping in the fight against inflation as well.
JOURNALIST:
Do you think the monthly inflation figure will further slow down in the coming months?
CHALMERS:
Well, the monthly number can be more volatile than the quarterly figure. We focus more on the quarterly figure than the monthly figure for that reason. The monthly figure can bounce around a bit more than the others, but that is really quite an extraordinary outcome for the month. To have monthly inflation around 2 per cent is a pretty extraordinary outcome.
Again, if you look across the board, there will always be people, our political opponents and others, other commentators, who always try to find an anti‑government angle in data when it comes out, but when you look across the board – headline inflation down, underlying inflation down, non‑tradeable inflation down, which is what my opponent calls homegrown, and monthly inflation down, all of them down considerably, and it shows we’re making really good progress.
JOURNALIST:
How can you say that we’re back in the band when underlying quarter inflation is 3.5 per cent?
CHALMERS:
Well, the target band is a 2 to 3 per cent headline inflation rate, we’re at 2.8. I have acknowledged in other answers that the underlying rate is 3.5, but that’s half a percentage point lower than it was in the quarter before. That’s really quite substantial progress when it comes to underlying inflation. And what we learn from today’s figures is that the government’s policies are helping take the edge off headline inflation, but underlying inflation’s come off substantially as well – that’s a good thing. We’ve actually seen underlying inflation moderate for some time now every quarter and that’s really welcome and it’s really encouraging. We recognise that people are still under pressure. We don’t pretend that the fight against inflation has already been won, but we are making really considerable progress and that’s welcome.
JOURNALIST:
How confident are you to keep it in that band?
CHALMERS:
All of our efforts are directed towards fighting inflation without ignoring the risks to growth, and the balances that we’ve struck in our first 3 budgets have been all about a primary focus on inflation, but recognising we want to maintain the gains that we’ve made in the labour market and we want to make sure that our economy continues to grow, so that will be our approach going forward.
It’s not unusual for inflation data, particularly monthly data, to bounce around. What we’ve seen in other countries is that inflation doesn’t always moderate in a perfectly straight line. In fact, in the US, their core inflation has gone up, not down in the most recent data, and so we know from that it can zig and zag a bit on the way down but the direction of travel is very heartening here, particularly the underlying number, I think, has come down 6 or 7 quarters consecutively. I can check that. But what that shows is we’ve made a lot of progress in the two‑and‑a‑bit years that we’ve been in office.
If you take a step back for a moment and consider this data in relation to all of the other numbers that we get about the economy, any objective observer would acknowledge that inflation is more than halved on our watch, real wages are growing again, we’ve created a million jobs for the first time in a parliamentary term in the history of this country, every taxpayer’s getting a tax cut, we’ve knocked out 2 surpluses, avoided $150 billion in debt, and that’s meant $80 billion less in debt interest. So we have made really good progress, but we understand and acknowledge that people are still under pressure and that’s why inflation and the cost of living is still the number one focus of this government.
JOURNALIST:
What about the other areas like insurance where things just haven’t gone down? Is there anything the government could do to ease the pressure?
CHALMERS:
Yeah, that’s a great question. We are always looking for ways to address the pressures in the insurance market that have made insurance really one of the perennial pressures in these inflation figures. So you’re right, Annika, to identify that inflation is an ongoing concern, as is rent, even though rent inflation is much lower than it would have been were it not for our rent assistance changes, and these numbers are before most of that rent assistance came in. But the perennial challenges remain – insurance, they remain, rents, and these quarterly figures we’re seeing a lot when it comes to things like travel, so there are still elements of stickier inflation, but overall, the story’s very positive.
JOURNALIST:
You think there should still be consumer restraint, though, as we’re still, you know, on your measure, we may be in the band, on the others we’re not, and state governments are still spending a lot of money at the moment, and consumers certainly aren’t?
CHALMERS:
I think state governments in different ways have tried to help their people deal with these cost‑of‑living pressures and I’ve not been critical of that. The people that we jointly represent need our help. From our point of view, we’ve tried to ensure that that cost‑of‑living help is meaningful and it’s substantial, but it’s also responsible. Responsible in the context of the budget and responsible in the context of the fight against inflation, and what we see in these numbers is that our cost‑of‑living policies are putting a downward pressure on inflation and that’s a good thing. And our 2 surpluses, as the Reserve Bank Governor has pointed out before, are also helping in the fight against inflation. So there’s a real premium on responsible economic management. We’re seeing the fruits of that in these encouraging inflation figures today.
JOURNALIST:
Yesterday’s COVID report put a real scope around the scale of the construction effort that was hampered for a period and then the kind of catch‑up we’ve had since. With that catch‑up kind of baked in, is there a chance at the RBA’s decision to try to achieve something that it can’t achieve given that we have an elevated level of activity to catch up for a period where things did not occur?
CHALMERS:
First of all, again, the independent Reserve Bank will weigh up all kinds of considerations, the construction market, these inflation figures, what’s happening in the jobs market, what’s happening around world, there’s an element of uncertainty. I’ve been talking a lot about it lately, and so they will weigh up all of those considerations.
But I think the COVID report was a really useful piece of independent analysis. It was scathing about HomeBuilder because of the pressures that it created in the housing market, which are making it harder now for us to build the homes that we need in this country. It was scathing about elements of JobKeeper, and it was also scathing about early access to super. And I know in the reaction to the report being released yesterday that there has been a lot of welcome debate and conversation about that report.
I want to make it really clear – when we were in Opposition, we did our best to be as constructive as we could be and as supportive as we could be, but we also said at the time, repeatedly, that the more money that was wasted on JobKeeper for businesses that didn’t need assistance, meant less money could go to those aviation workers or those university workers or people in the care economy, or tourism, who still needed help and one of the really key conclusions from an economic point of view of that COVID report, is that big mistakes were made in the decision making and those mistakes were costly, and they were inflationary.
Now we recognise a big substantial fiscal response was warranted and a lot of these decisions were being taken on the fly, but it’s now very clear that a part of the inflation challenge that we inherited from our predecessors goes back to their inability to properly target some of this support and also the last Budget before government changed hands.
JOURNALIST:
Just on another matter, if Anthony Albanese sought or accepted upgrades for private travel, he’d be in breach of his own ministerial code of conduct and also if he was Transport Minister in breach of the Rudd‑Gillard ministerial code of conduct. Isn’t that unethical conduct?
CHALMERS:
I don’t believe so. I think the Prime Minister has gone out of his way on multiple occasions this week to answer questions about this issue. I don’t have anything to add to the answers that he has given.
My focus, as you’d expect, has been on these inflation numbers, it’s been on releasing the COVID report, it’s been engaging with my colleagues and counterparts in the G20. I know that there’s a level of interest in this, but he has answered a heap of questions about these issues, and my focus is on other things.
JOURNALIST:
Why isn’t he in the media today? Is he in witness protection?
CHALMERS:
He’s done a number of interviews this week and Sunday certainly, I think yesterday from memory, so he’s made himself available, as he often does, to answer these sorts of questions. That’s appropriate. It’s also appropriate that I focus on my job, which is the fight against inflation, learning the lessons from COVID – particularly from an economic point of view, engaging with counterparts around the world at a really uncertain time.
Thanks very much.
JOURNALIST:
Can we just ask a final question, if I can, just on what you touched on the start about what happened out at Hawthorn yesterday?
CHALMERS:
Yes.
JOURNALIST:
Is there any discussions at federal level about extending help to that family from the PM?
CHALMERS:
Not yet. We’ve just learned the identity of the young boy whose life was taken so early and we know how much that community is hurting, that school community is hurting. A horrendous, horrible accident, and we will work through the usual processes, primarily the state government, but we will work through the usual processes to respond and make sure that kids can be as safe as they can be in communities like this one.
I’ve got little kids – I can only imagine what it was like to drop Jack off to school and not pick him up. Primarily, the focus is on people wrapping their arms around Jack’s family, making sure that his friends are okay – some of them are still in hospital, as I understand it, making sure that the trauma of this incident is well managed at the school. So I say again to his family, to his friends, his teachers, the staff at the school, the people in that community in the eastern suburbs of this great city, our hearts are breaking for them. I can only imagine how horrible it is. I will take this last one and then I will go.
JOURNALIST:
Do you still have confidence in Brereton leading the NACC given the inspector’s findings today?
CHALMERS:
I’ve obviously seen the reports from that development today, and as I understand it, the National Anti‑Corruption Commission will now remake the decision on the Robodebt referrals.
Look, the Albanese Labor government legislated an independent anti‑corruption commission with strong oversight and today’s report, I think, shows that that oversight is working. They’ve taken this decision. Obviously we will examine it and if we have more to say at some future point I’m happy to say it then.
JOURNALIST:
Would you say it’s failed its first major hurdle?
CHALMERS:
I’m not prepared to go any further than that. We established this body with strong oversight for this reason and we’re seeing that the oversight is working and if we have more to say about that, we are more likely to say that via my terrific colleague, the Attorney‑General.
Thanks so much, everyone.