JIM CHALMERS MP
SHADOW TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
TELEVISION INTERVIEW
ABC AFTERNOON BRIEFING
WEDNESDAY, 2 MARCH 2022
SUBJECTS: National Accounts; Costs of living skyrocketing while real wages are going backwards; South East Queensland and Northern New South Wales floods; Petrol prices were going up before Russia crossed the border into Ukraine; Labor’s policies to get wages moving.
GREG JENNETT, HOST: Jim Chalmers, welcome to Afternoon Briefing. Happy Birthday. Let me start by asking this Australian economy seems to be the gift that just keeps on giving, what's not to celebrate about 3.4% growth in that December quarter?
JIM CHALMERS, SHADOW TREASURER: Obviously, we want and expect the economy to recover strongly. It's coming off quite a low base in that end of last year, where we had the big downturn in the September quarter. Every economist expected there to be a sizable bounce-back. We welcome that, we expected that, it is in some ways inevitable that that happened. But the numbers that we've seen today are from last year and a lot has happened since then of course, we had the big stuff-up over the rapid tests, we had the grocery shortages, now we've got the war in Ukraine, we've had the floods in South East Queensland and into New South Wales. Obviously, we want the economy to recover strongly, but these figures that we're talking about today are from some time ago and a lot’s happened since.
JENNETT: Alright, I'll get to the war and the floods in just a moment. Even leaving those aside and just dealing with Omicron, what do you think would have happened in the months through the latter part of December, through Christmas, and into January? You say, what, we've slipped backwards have we?
CHALMERS: I'm not making that projection or that prediction, Greg. What I'm saying is we had the massive downturn in September - one of the biggest in the world. We had the expected recovery that we found out about today in the December quarter. Since then, we had the summer from hell, the beginning of January was horrific for a lot of families. We had the rapid tests debacle, the grocery shortages, and some of the other more recent challenges that you want to get to in a minute. Even in these figures from the December quarter, they still had three defining features - skyrocketing costs of living, productivity went backwards again, and business investment went backwards again.
There was always going to be a recovery of sorts, some kind of bounce-back in the economy after that September quarter. But there's still a lot of uncertainty in the economy, so we can't be complacent about it. We've also heard - probably half a dozen times from the Treasurer - that things were about to come good and then because of some mismanagement of the pandemic, then that recovery was cruelled. So we don't want to see that again, we want the recovery to be strong and enduring. It remains to be seen whether that's the case, the Government takes credit for the recovery but doesn't take responsibility for securing it.
JENNETT: Alright, just on wages and employment though. Embedded in these numbers today were what I suppose you might regard as encouraging figures on employee compensation – that is wages trends, and of course unemployment is forecast to go even lower. So if you're looking for signs of underlying strength, they're kind of pointing in the right direction, aren't they?
CHALMERS: Obviously, we want the unemployment rate to be as low as possible and we want to get wages growing again, but what we're seeing in wages doesn't make up for the fact that real wages are going backwards in this country. In the last couple of weeks we've had an inflation number at about 3.5% and a wages growth number of 2.3%, so there's a sizeable difference between those two and that's how we know that real wages are going backwards. Even if there was a modest improvement in these figures released today, it doesn't make up all of the lost ground from a decade of stagnant wages growth, which has come as a consequence of a government attacking job security, attacking penalty rates, saying that stagnant wages were a deliberate design feature of their policies. We want to see wages growing again, they won't without a government that cares deeply about whether working families who are working hard can actually get ahead. Right now, too many are falling behind because the costs of living are going through the roof, real wages are going backwards, and people are falling behind.
JENNETT: Alright, well look, you're a Queenslander, and you've seen flooding there and thereabouts before. Listening to the Treasurer today, he drew comparisons with 2011 and seemed to be looking on the glass-half-full side of the equation. What's your own expectation about just how much damage has been inflicted and what that will do to growth in the quarter we're currently living in?
CHALMERS: Clearly, there'll be an impact on the economy, it remains to be seen how big that impact will be. The floodwaters haven't even completely receded yet. I'm on the Brisbane River here. In my own community in Logan, we had a peak overnight. The Bureau of Meteorology tells us that there are more storms on their way - if you can believe it - and so we need to be vigilant, and aware, and alive to the ongoing threat.
JENNETT: But it's going to be a drag on the economy, right, nationally? When you factor in agriculture and damage bills?
CHALMERS: Of course there'll be an impact on the economy, it'll drag on the economy to some extent. We don't yet know the full impact, and the rebuild will be compromised in some ways by the fact that it's hard to get building materials, and it's hard to get skilled workers at the moment, so that will have an impact as well. There's a lot of damage done to the economy, how big that damage is remains to be seen.
JENNETT: Then we've got all the offshore influences. Probably record fuel prices heading our way, if they haven't already arrived. And also this question, that seems to arise today, Josh Frydenberg telling us that there are about eight billion, several billion dollars worth of Australian Government bonds held by the Russian Government. What's your view on those, should Australia, under the circumstances, welsh on those bonds and all the obligations that go with it? Perhaps not pay the interest? Would there be grounds for doing that as a form of sanction?
CHALMERS: I'm not sure about that Greg, that specific step that you're describing there. I'd be happy to have a conversation with the Treasurer about it to understand the advice that he's receiving, but I think more broadly we should be looking for ways to tighten the screws on the Russian economy and on Vladimir Putin himself.
JENNETT: What’s left that hasn't been tightened down already?
CHALMERS: There are always further steps that can be taken. So far there's been multiple steps taken on the economic sanctions front as well as supplying funding for lethal aid and other measures around cybersecurity. I think we should always be alert for, and on the watch for, other opportunities to tighten the screws on the Russian economy. Whether that way that you're describing now or some other way, there needs to be economic consequences for this act of aggression. Some welcome steps have been taken by our government and by the global community acting in concert, if there are further steps that could be taken responsibly, then we should be looking at them.
JENNETT: I should point out tearing up bonds was not a Josh Frydenberg suggestion, it was just one that I am putting to you. And just finally Jim Chalmers on fuel prices. Agreed that Australia is literally a price-taker here, there's very little pushback, very little influence, that can be brought to bear on those in the next month or so?
CHALMERS: Obviously, what's happening in Ukraine will have put upward pressure on energy prices and fuel prices, but here in Australia we had petrol at almost $2 a litre even before the Russians crossed the border into Ukraine, so there are broader issues at play. The responsibility for governments is to ease cost of living pressures across the board. In our case, we've got policies to get wages growing again, to deal with childcare costs and energy costs. We'll have more to say about some of the other cost of living pressures between now and the election.
JENNETT: Alright Jim Chalmers, try and stay dry there in Brisbane as those storm clouds gather once again. We'll talk to you again soon on Afternoon Briefing.
CHALMERS: Appreciate it Greg, thanks very much.
ENDS
