JIM CHALMERS:
Thanks for coming here to Toowoomba. I want to say a few things about the interest rate decision today but I’m conscious that the Reserve Bank Governor is up very shortly in Sydney so I’ll be relatively brief.
The Reserve Bank board today agreed to leave interest rates on hold. There are no surprises in this decision and no surprises in the statement released by the board. This was the expected outcome.
When the board next meets it will be a year since interest rates went up.
Interest rates haven’t gone up for the best part of a year, and this reflects the progress that we’ve made when it comes to getting inflation down. When we came to office inflation was 6.1 per cent. It’s now half of its peak a couple of years ago. Our policies are helping in the fight against inflation.
When we came to office inflation was high and rising and interest rates were rising. Inflation has been coming down quite substantially over the course of the last couple of years and we haven’t had an interest rate rise for the best part of a year now.
The Governor and the Reserve Bank board have noted today the very substantial progress that Australia has made when it comes to getting on top of this inflation challenge. When it comes to the Reserve Bank and the government, we have the same objective of getting on top of inflation without ignoring the risks to growth in our economy.
We’ve seen growth in our economy has been quite weak. We’ve seen consumption has been weak. Discretionary spending has been going backwards. All of this indicates that rate rises already in the system are combining with international uncertainty and persistent inflation to slow our economy quite substantially, and we saw that in the most recent National Accounts. The government remains primarily focused on the fight against inflation, but is not ignoring those risks to growth at the same time.
We have the same objective as the Reserve Bank when it comes to the fight against inflation. We’ve made welcome and encouraging progress, and we’ll learn more about that tomorrow when the monthly inflation data is released. Whether that monthly inflation data is in the low 3s or the high 2s, it will show that inflation has halved since we came to office. That’s a good thing. We are making welcome and encouraging progress in the fight against inflation, and the fact that rates haven’t gone up for the best part of a year now is an indicator of that.
Happy to take a couple of questions.
JOURNALIST:
Treasurer, the RBA’s statement today talks about temporary migration propping up consumer spending, in particular, students. Are you worried that the government’s cap on students might stymie growth further?
CHALMERS:
Our changes to foreign students are all about recognising the huge contribution that education makes to our economy but making sure that we are managing that growth. What we’ve seen in the most recent net overseas migration numbers is that net overseas migration has come off since it peaked in 2023. It has been coming down since then. Some of the pressure that’s still there when it comes to net overseas migration is not about extra arrivals, it’s about fewer departures.
We’ve got a sensible, methodical, considered way to manage net overseas migration down. It has started coming down. Our changes kicked in from the middle of this year and the data doesn’t yet capture that.
When it comes to spending in the economy, the last National Accounts showed that consumption is very weak in our economy and discretionary spending has gone backwards quite substantially. That is an indication that the combination of global uncertainty, persistent inflation and higher interest rates are slowing our economy quite considerably.
The fact that interest rates haven’t gone up for the best part of a year is an indication that we have been making welcome and encouraging progress in the fight against inflation. It’s still higher than we’d like, but it is definitely trending downwards, and we’ll learn more about that tomorrow.
JOURNALIST:
You’ve said they’re smashing the economy. So are you disappointed that they’re not coming down?
CHALMERS:
I don’t pre‑empt and I don’t second guess decisions taken by the independent Reserve Bank. I’ve made that very clear repeatedly.
I’ve made a factual statement that the interest rate rises which are already in the system, combined with some of these other factors, are slowing our economy quite dramatically. We saw that in the most recent National Accounts. But these decisions are taken independently by the Reserve Bank.
My efforts have been about trying to make the Bank more independent, not less independent. I respect and cherish its independence. They’ve taken this decision today, and the Governor will have an opportunity, a welcome opportunity, to talk about that very shortly this afternoon.
JOURNALIST:
Not everyone agrees that the Bank should be as independent as it is. Do you have a response?
CHALMERS:
On the Reserve Bank reforms, the Coalition and the Greens are indistinguishable when it comes to economic irresponsibility. We’ve seen that once again when it comes to their whacky behaviour in the Senate. The Coalition and the Greens are as one when it comes to doing the wrong thing about the independent Reserve Bank.
Both the Coalition and the Greens, the way that they’ve teamed up in the Senate means that our efforts for the time being to reform the Reserve Bank, there is a barrier to that. We’ve been upfront about that. It’s been clear from the beginning that there is a risk that the parties to the left and to the right of us will play politics with the Reserve Bank. We don’t intend to do that. They have both dramatically changed their position to avoid doing the right thing when it comes to these Reserve Bank reforms.
Whether it’s the Coalition or the Greens, they both made their views known. Where we could accommodate those views we did. They both dramatically changed their position to avoid doing the right thing when it comes to these Reserve Bank reforms.
JOURNALIST:
Treasurer, how close do you think you are to getting inflation down?
CHALMERS:
Inflation’s been coming down really quite considerably since its peak a couple of years ago. We shouldn’t forget that when we came to office inflation was 6.1 per cent and rising. It now in quarterly terms has a 3 in front of it and we’ll learn the new monthly figure tomorrow when we get the monthly data. The expectation there, whether it’s the high 2s or the low 3s, shows that inflation has halved since we came to office. That’s good progress, but we know that there’s still pressure on inflation and we know that people are still doing it tough.
This is why our cost‑of‑living relief is so important. Our policies are helping, not hurting the fight against inflation. We’ve turned 2 big Liberal deficits into 2 big Labor surpluses. The Reserve Bank Governor has said that our surpluses are helping in the fight against inflation, and we’ve designed our cost‑of‑living relief to help take some of the edge off these price pressures in our economy rather than make them worse.
There’s nothing artificial about helping people with their electricity bills or making early childhood education cheaper or medicines cheaper or a tax cut for every taxpayer or energy bill relief for every household, getting wages moving again.
We’re doing all of this in the most responsible way we can. Our primary focus is on the fight against inflation, but we can’t ignore those risks to growth.
I’ll take one more question, then we’re good.
JOURNALIST:
I just have a question about Woolies and Coles. Should they both sack their CEOs over this pricing saga?
CHALMERS:
I need to be careful not to pre‑empt the legal and other processes that have been put in train by the ACCC. But I will say this: Woolies and Coles shouldn’t be taking their customers for mugs.
This is precisely why we’ve empowered the ACCC, why we want to make the grocery code mandatory, compulsory, not voluntary. It’s why we’re making sure that farmers and families get a fair go from the supermarkets.
We don’t want to see ordinary Australians, families and pensioners, being taken for a ride by the big supermarkets. This is precisely why we’ve empowered the ACCC and why we’re taking other steps as well to make sure that farmers and families get a fair go when it comes to the supermarkets in this country.
Thanks very much.