ABC AM 04/05/22

04 May 2022

SUBJECTS: RBA interest rates decision; Labor’s Powering Australia plan; Federal election.



SUBJECTS: RBA interest rates decision; Labor’s Powering Australia plan; Federal election.


SABRA LANE, HOST: Whoever wins the election will have to deal with a challenging economy. Last week when inflation reached a 20 year high we spoke with the Treasurer Josh Frydenberg. This week after the first interest rate rise in 11 years my guest is the Shadow Treasurer Jim Chalmers. Good morning and welcome.

JIM CHALMERS, SHADOW TREASURER: Thanks for having me back, Sabra.

LANE: The Reserve Bank's flagging more rate rises to a more normal setting like two and a half per cent. If Labor wins, what will you tell Australians who have to keep paying more on their mortgages?

CHALMERS: You're right that the Reserve Bank Governor has said that this won't be the only interest rate rise, the trajectory that we're on now means that there will be more interest rate rises. One of the truly troubling numbers that the Reserve Bank released yesterday was that they said that inflation, which is already far too high, will get even higher at the same time as economic growth will weaken next year. So you're right that whoever is the Treasurer after the election later this month will inherit a very challenging set of circumstances. This is a full-blown cost of living crisis - we've got inflation skyrocketing out of control, we've got falling real wages and now this interest rate rise will be part of the pain.

LANE: Yes. And the question was if you win you'll be Treasurer, what will you tell Australians who have to keep paying more rates probably every month for the rest of the year?

CHALMERS: We've been realistic and responsible about our commentary about the Reserve Bank, they themselves have flagged that interest rates will go up further. That's the trajectory that they are already on. What I would tell the Australian people is that our economic plan is all about growing the economy without adding unnecessarily to these inflationary pressures. It's about giving genuine long-term cost of living relief, not just to get through an election. It's about getting real wages moving again. And it's about trying to have something to show in economic terms for this Budget, which is absolutely heaving with a trillion dollars in Liberal Party debt. Those are the objectives of our economic plan that we've already released in the course of this campaign. These challenges have been building for some time - in terms of real wages falling, those challenges have been there for quite a long time. We're realistic about how quickly we can turn them around. The difference between us and the Government is we have a plan to do it, they don't have a plan, if they do their plan isn't working.

LANE: Let's talk about your plan. You've just talked about the need for wages to be high, you've talked about that for a long time. How quickly could Labor get wages moving? Can you give our listeners some benchmarks as to what success would look like?

CHALMERS: Success would be getting real wages growing faster than they are now under the Liberals.

LANE: By when?

CHALMERS: We would begin the task right away, and our progress would be determined partly by the economic conditions that we inherit. We'll get another wages number in a couple of weeks, which will give us a bit of an update on progress. But the key here is that diabolical combination right now between inflation - which is out of control, higher than 5% - wages growth is just a bit over 2% at the moment. Our policies, whether it's training people to grab higher wage opportunities, whether it's child care reform to make it easier for people to earn more if they want to, whether it's investing in secure well-paid jobs in areas like advanced manufacturing, we've got a plan to get real wages growing again. As you know Sabra when you've asked me this question before, we are reluctant to put numbers on it. But the difference is we have a plan to get real wages growing, the other mob have spent a decade now undermining wages and job security. That's the difference.

LANE: Let's talk more about your policy though. So you're not prepared to say success is when wage increases match or better inflation? And by when, within a year, within two years?

CHALMERS: Success is doing better than the Government. Their record on real wages growth has been shameful and we need to do better than that. The key to doing better than that is having a plan which is what we released in the course of the last week or so to get real wages moving again. The Treasury will update their forecasts in the usual way if there's a change of government. There is a much greater chance of wages growth under Labor, with a policy which encourages that, then there is under the Liberals and Nationals which have spent a decade going after wages and working conditions.

LANE: You talk about inflation, the bank has flagged that it could go to 6%.


LANE: You've said if Labor's elected, there are things that governments can do to influence that. Tell our listeners the one big thing you could do this year to curb the cost of living rises.

CHALMERS: There's cost of living relief in the Budget right now and that runs out during the course of the year. What we've said is after that you need to plan for things like child care, which is our policy that comes in next year. We've got policies around TAFE and training to train people for high wage opportunities, which will have an impact on the cost of living. Cleaner and cheaper energy will get their bills down. There are a range of things that governments can do if they begin by caring about this full-blown cost of living crisis. We've got a set of responsible policies - we're not over promising about their impact - but they will make a meaningful difference to this cost of living crisis that Australians are getting absolutely punished by on Scott Morrison's watch.

LANE: And the Reserve Bank's predicting economic growth of just 2% next year. Can you nominate the most significant thing Labor could do if you win to boost that?

CHALMERS: We've got a modelled policy for cleaner and cheaper energy, which will boost investment in our economy and create hundreds of thousands of jobs and get power prices down.

LANE: And that would that would happen this year?

CHALMERS: It'll be in our first Budget, our various Powering Australia plan components have different start dates over the next couple of years. The most meaningful thing that we can do to grow the economy, in my view, is to get cleaner and cheaper energy into the system. That's not the only thing - TAFE plays a role, child care reform, investing in advanced manufacturing and the care economy, boosting our digital infrastructure - all of these things are crucial to get the economy growing. That 2% number that the Reserve Bank Governor was talking about yesterday is anaemic growth next year. What that shows is the biggest risk at this election is more of the same from the Government, which will deliver low wage growth, low economic growth, and families will fall further and further behind.

LANE: Jim Chalmers, we're out of time. Thanks for joining us.

CHALMERS: Appreciate it, Sabra.