JIM CHALMERS:
Okay, thanks for coming out early. I’ve got a bit to get through this morning, beginning with my decision on ANZ’s acquisition of Suncorp.
Today, I announce that the ANZ acquisition of Suncorp Bank can proceed under strict and enforceable conditions. This decision comes after very careful consideration and much deliberation and consultation, and a long and thorough process.
This was an on‑balance call, but it was consistent with the advice that I received from Treasury and from the regulators as well.
It comes after nearly 2 years of scrutiny and input from industry, from the Finance Sector Union, the Queensland Government and other key stakeholders as well.
I received very clear advice from Treasury, taking into account views from APRA, ASIC, the ACCC and the Department of Home Affairs that it would not be in the national interest to prohibit this transaction.
I took very seriously the competition concerns raised initially by the ACCC, but the Australian Competition Tribunal ultimately concluded that the deal would not be likely to have the effect of substantially lessening competition in the sector.
I also took into consideration the unique features of this proposal, including the fact that Suncorp is one of the few remaining combined bank and insurance companies in Australia.
This decision that I’m taking today doesn’t prejudice or pre‑empt or predetermine any other proposals that I might be receiving into the future.
So, following this lengthy and robust process I have decided to approve this proposal, subject to strict and enforceable conditions from ANZ.
Now, the conditions that I am proposing and imposing on the transaction are all about ensuring access to vital banking services, particularly in the regions, and also making sure that employees aren’t left behind in this transaction.
So today we are announcing that the ANZ acquisition of Suncorp Bank can go ahead, but subject to strict and legally enforceable conditions.
So that’s the first thing that I wanted to cover today but there are a number of other issues out as well.
Today we’ll be releasing an update on this year’s budget position. This update will show that we are on track to deliver the first back‑to‑back surpluses in almost 2 decades. This is an important feature of our efforts to fight inflation in our economy.
Governor Bullock has made it very clear that the 2 surpluses that we are delivering are an important part of the fight against inflation. What we’ve done since we’ve come to office is we’ve turned 2 very big Liberal deficits into 2 Labor surpluses, and that’s really important in the fight against inflation, and you’ll see in the figures today that we are on track to deliver that second surplus that we forecast in the Budget earlier this year.
It’s important to remember that there’s still another month of figures to come in. The number that you will see today won’t be the final landing position. There’s still a lot of uncertainty in revenue and spending in the last month of the year, but it’s very clear that we are on track to deliver that second surplus. That’s an important part of the fight against inflation, as Governor Bullock has pointed out.
I’ll also be releasing today consultation papers on the production tax credits which are at the very core of our Future Made in Australia strategy in the Budget. Our Future Made in Australia strategy is all about incentivising private investment, not replacing it. It’s about investing and engaging, not protecting and retreating. And it’s all about ensuring that Australia can make the most of the vast economic and industrial opportunities which come from the global energy transformation to net‑zero.
And here, at Citi today at the A50 Forum, we’ll be talking about the big investment opportunities in Australia as we become an indispensable part of that global net‑zero transformation.
Today will be all about giving investors the clarity and the certainty that they need to invest in Australia with confidence. We can be an island of opportunity in a sea of uncertainty when it comes to the global economy, and that’s what today is all about.
Nothing could be more damaging to investor certainty when it comes to the global net‑zero transformation than to rip up our emissions reduction targets, as Mr Dutton proposes to do, or to go for the most divisive, the most costly and the energy opportunity which takes the longest, which is nuclear energy. But that’s what our opponents are proposing.
Now in addition to those production tax credit consultation papers, the ACCC will also be releasing today their analysis of the electricity market as well. What the ACCC will make very clear today is that our energy bill relief is helping to take some of the edge off higher energy prices. Whether it’s the ABS on Wednesday, or the ACCC today, they’ve both come to the same conclusion, which is that our energy bill relief is taking some of the edge off energy prices in our economy.
Electricity prices and inflation would be much higher were it not for our efforts, energy bill relief and the responsible way that we are managing the budget at the same time.
And why that matters is because we understand that inflation’s still the primary challenge in our economy and people are still under the pump. Our objective here is to fight inflation without smashing the economy and without making life harder for people.
And when you’re fighting inflation 2 things matter a great deal. First of all, managing the budget responsibly, turning those Liberal deficits into Labor surpluses.
Secondly, the way that we’ve designed our cost‑of‑living help to take the edge off inflation without adding the inflationary challenge in our economy.
Now the ABS and the ACCC have said that our approach is working to take some of the heat out of those price rises in electricity, in rent and elsewhere as well. And from Monday there will be substantial but responsible cost‑of‑living relief flowing to every Australian household and every Australian taxpayer.
From Monday there will be a tax cut for every taxpayer, energy bill relief for every single household, there will be cheaper medicines, a pay rise for people on awards, and an extra couple of weeks of paid parental leave as well.
This is how we provide responsible, meaningful and substantial cost‑of‑living relief. This is how you provide cost‑of‑living relief, not with more expensive nuclear reactors in 15 years’ time. You provide this cost‑of‑living relief by making it easier for people to earn more and to keep more of what they earn, and that’s our objective in the context of this broader fight against inflation.
So, with that happy to take some questions.
JOURNALIST:
Treasurer, are you, or how confident are you that Monday’s tax cuts and bill relief won’t increase the chances of a rate rise?
CHALMERS:
Well we’ve been very careful and very responsible in the way that we’ve designed our cost‑of‑living relief. The tax cuts which will flow to every taxpayer from Monday are within the same envelope that was already factored in, to the Reserve Bank and the Treasury’s forecasts.
We’ve also ensured that when it comes to energy bill relief and cheaper medicines and Commonwealth Rent Assistance, these are designed to put downward pressure not upward pressure on prices. And we know from the ABS on Wednesday, and we know from the ACCC today that that approach is working to take some of the edge off these higher prices.
If you take electricity for example. The ACCC is making it quite clear today that without the government’s energy rebates, median residential energy bills in the third quarter of 23 would have been 14 per cent higher across all of the regions combined. At what that demonstrates is we can provide this cost‑of‑living relief, it can be substantial and meaningful, and it can be responsible at the same time.
JOURNALIST:
When you speak of this downward pressure do you believe that these measures will reduce pressure on the RBA to deliver a rate hike?
CHALMERS:
I certainly – I don’t get into pre‑empting or predicting decisions taken independently by the Reserve Bank. My job is to focus on my part of the inflation fight and that’s what we’re doing.
You know, 2 surpluses are an important part of the fight and the way that we’ve designed this cost‑of‑living help as well. And because of those things, especially the design of our cost‑of‑living help, this is why Treasury is anticipating an earlier return to the inflation target band. That’s my focus. The Reserve Bank will take decisions about interest rates independently.
JOURNALIST:
Will you encourage taxpayers to be spending that money when the tax cuts come in?
CHALMERS:
Oh look I don’t give advice to people about their household budgets. What I am seeking to do is to provide substantial and meaningful and responsible cost‑of‑living relief from Monday.
You know, from Monday every taxpayer will get a tax cut, every household will get energy bill relief, everyone on awards will get a pay rise, and there’ll be cheaper medicines and more paid parental leave.
This is how we provide that cost‑of‑living relief in the most responsible way. A lot of people are under really substantial pressure. We do more than acknowledge that. We are responding to that in the Budget and people will see the fruits of that on Monday.
JOURNALIST:
Treasurer, you would have seen that the financial markets are basically betting about a 50/50 chance of a rate rise at the August meeting of the RBA, but the Deputy Governor said last night, and I think you heard him as well, saying it would be a mistake to use a single number to make a prediction about which way the rates will go. Do you have any comments about I guess the patience financial markets should be taking given there’s a lot more data to come out before the RBA meets?
CHALMERS:
Well, what I’d say about that, Peter, is that the Deputy Governor’s remarks last night were completely consistent with comments that the Governor has made in the past about taking into consideration a wide range of data and influences and factors when they come to their decisions independently.
And again, I’m not going to pre‑empt or predict that, I’m focused on my own job and the Governor and Deputy Governor can explain their thinking when it comes to their own decision‑making. But what Deputy Governor Hauser has said last night was consistent with the view that Governor Bullock has put on earlier occasions, which is they don’t look at any one specific number, they consider a whole range of factors; the trajectory of inflation, the labour market of course; broader growth in our economy, and we know that growth was very flat in the first 3 months of the year. They’ll take all of that into consideration and they’ll come to their view independently.
JOURNALIST:
Do you think these rate rises – sorry, the tax cuts next week will be swallowed up by the rate rises?
CHALMERS:
Well, first of all, I’m not going to pre‑empt a decision taken independently by the Reserve Bank. What I think these tax cuts will do on Monday is provide much needed relief to people who are doing it tough. 13.6 million Australians will get a tax cut from Monday. The average tax cut will be $36 a week.
And I’m very proud of the fact that those tax cuts will be flowing from Monday because we took a decision earlier in the year which involved an element of political risk, and we recast those tax cuts in the most responsible way to ensure that everyone got a tax cut, not just some people, and to ensure the emphasis was on people on middle incomes and lower incomes at same as everyone still gets a tax cut.
So, I think it’s really important that people receive that cost‑of‑living help from Monday, not just via the tax system but also via their energy bills and cheaper medicines and a pay rise for people on awards. All of these things are really important ways that we are responding to the cost‑of‑living pressures that people are under, without making this inflation challenge worse.
JOURNALIST:
Just on the ANZ/Suncorp acquisition, the concern for concerns is that is going to lead to less competition, why are you so sure that it’s not going to? What are the financial, sorry – what did the Australian Competition Tribunal say?
CHALMERS:
We obviously weighed up all of the considerations here, including considerations around competition. We took seriously the input from the ACCC and the decision of the Tribunal over quite a long period of time. And the position that we’re announcing today, the decision we’re making today is consistent with the outcome of the competition Tribunal. But it’s also consistent with the advice we received from Treasury and the regulators, and after a long period of consultation and discussion and consideration and deliberation.
You know, this is an on‑balance call, but I think it’s the right one because it recognises all of the issues at play here and it imposes some pretty strict enforceable conditions at the same time.
And so that’s the decision that we have arrived at. Having arrived at that decision we are communicating it publicly today and releasing in some detail the conditions that we are imposing on the transaction as well.
JOURNALIST:
Finally, financial services have been one of the biggest contributors to higher inflation in the last couple of years, insurance in particular. Given, as a colleague mentioned, there is going to be a reduction of competition, can you as Treasurer do anything else to step up competition in insurance, in banking, et cetera, so that the financial sector isn’t such a major contributor to inflation?
CHALMERS:
Yeah, let me make 3 quick points about that. I mean, first of all, the Tribunal concluded that the effect of this wouldn’t be to substantially lessen competition. That’s the first point.
The second point is there are unique features of this transaction, Suncorp being a bank and an insurance company at the same time. If this transaction proceeds along the lines that has been proposed, it will allow Suncorp to focus on the insurance part of their business, and there are no shortage of challenges in insurance, as you rightly identified in your question.
Thirdly, we are very focused on competition in our economy and competition in financial services. If you think about the work that we’ve commissioned when it comes to funding for smaller and medium sized banks, you think about the financial services grid that we’ve been talking about, the regulatory grid, you think about the broader changes in mergers and acquisitions and in other ways as well, we’re very focused on competition.
The Tribunal came to a view on competition in this case. We’ve heard that view and listened to it and responded to it. But in the context of a whole bunch of effort that is going into making our financial sector and our economy more broadly more competitive.
I’ll just take one more.
JOURNALIST:
Treasurer, Anthony McDonald, the Fin Review. I was just wondering why you thought it was a good idea that ANZ buys Suncorp?
CHALMERS:
Oh, well, I’ve outlined in the announcement that I’ve made today that I consider that the proposal going ahead is in the national interest for the reasons that we set out. And also, I think the conditions are very important here. We’ve thought about this for some time. We recognise the way the banking sector is changing. We recognise the unique nature of Suncorp being a bank and insurance company. We weighed all of that up and we think on balance this is in the national interest, subject to those conditions being enforced.
Thanks very much.