THE HON JIM CHALMERS MP
TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
TELEVISION INTERVIEW
ABC NEWS BREAKFAST
THURSDAY, 2 JUNE 2022
SUBJECTS: Economic Challenges; Energy Prices; Interest Rates
LISA MILLAR, HOST: Let’s bring in the Treasurer Jim Chalmers from Canberra. Good morning, welcome to News Breakfast.
JIM CHALMERS, TREASURER: Thanks very much, Lisa.
MILLAR: Jim – Treasurer, that’s tough listening, isn’t it? Hearing those Australians with so many concerns about what’s ahead?
CHALMERS: I think that that was the perfect encapsulation of the economic challenges that we face collectively. We’ve got high and rising inflation feeding through into rising interest rates. We’ve got falling real wages and our capacity to deal with that is constrained a bit by the fact that there’s more than a trillion dollars of debt in the budget that we’ve inherited. So I say to those Australians: thank you for your candour. The new government in Canberra shares your view of the big challenges in the economy, and the hard work to address them has already begun.
MILLAR: One of the industry insiders from the energy area says that this is the biggest crisis facing Australia in 50 years -- the biggest energy crisis. Is that what we’re looking at?
CHALMERS: We’ve tried to be upfront about that, Lisa. We’ve got spiking gas prices, spiking prices again for liquid fuels and spiking prices for electricity. The combination of that inflicts a lot of pain on our employers and also on households right around the country. So we’ve tried to be upfront about that. I’ve already spoken this morning with the Energy Minister Chris Bowen, and we’ll be engaging with the Resources Minister as well, Madeleine King, and also with industry to closely monitor these developments in energy markets and to consider a range of options. But I know that the manufacturers have been out there already talking – recommending steps that the government might take. My message to them is the same as to the whole country: we want to work with you and engage with you. The challenges that we confront are serious challenges in our economy, and we will only meet these challenges if we work together. That’s what we intend to do.
MILLAR: So how close are you to sort of using the levers that government can use – the domestic gas security mechanism, keeping supplies back for domestic use, putting a limit on exports, putting a limit on price increases? Are you inclined to do that?
CHALMERS: Well, first of all, the Energy Market Operator has already imposed a price cap at the request of New South Wales earlier in the week, and so that step has been taken. I don’t want to pre-empt any of the discussions and deliberations that we might have with industry and with the relevant ministers, but certainly we understand the gravity of this situation. We need to be upfront about our capacity just to fix this situation with one measure or another. There are some international issues at play of course. There are some domestic issues around the energy market. But above all what we’re seeing now are the costs and consequences of almost a decade now of energy policy chaos at the federal level. That’s why our Powering Australia plan is so important. So we get some certainty back into the system; so that we improve transmission; so that we get cheaper and cleaner energy into the system as well. And that will take some time.
MILLAR: Could we just look at the economic data that came out yesterday. There were points of brightness about it, wasn’t there? The fact that there was consumer spending seemed to be on hotels, cafes, restaurants. Does that indicate to you that there is a bit of confidence? What’s going on?
CHALMERS: Well, it certainly indicates - particularly in those parts of the economy that had been locked-down - that we got some of the expected recovery there. I went out of my way yesterday when I was commenting on those figures to point to the fact that we do have strong demand in the economy. We do have a tight labour market. But we also have high and rising inflation. We also have really substantial issues with wages falling, as those interviews that you played a moment ago demonstrate. We do have more than a trillion dollars of debt anticipated in the Budget. So, in recognising that we have some strengths, we also need to be upfront with people. We can’t kind of tiptoe around these economic challenges and pretend everything is okay, because it’s not. There are big, serious challenges in our economy. Inflation at the moment is the pointy end of that and what it means for real wages. So what we intend to do, and what I have done ever since I’ve been sworn in as Treasurer, is to be blunt about these challenges. Upfront about these challenges and recognise the strengths that we have in Australia that we are grateful for. We can have a bright future in this economy, but only if we navigate these tricky conditions that we’ve inherited from the former Government, including now some substantial uncertainty around the world. If we do that right, if we work together, we can get through this difficult period. But we will only do that first by acknowledging these issues and working hard to address them.
MILLAR: And some are suggesting that now the time is right for the RBA’s Phil Lowe to actually go harder and faster with interest rate rises next week, possibly 40 basis points. What’s that going to do?
CHALMERS: Well, I’m not going to get into the habit of giving free advice to the independent Reserve Bank. I think publicly they’ve said that interest rate rise that we got during the election campaign won’t be an isolated one. I think Australian families and businesses are bracing for higher interest rates. At some point they will be bite. Some Australians have a buffer in their home loans but many don’t, particularly people who are living week to week and fortnight to fortnight, pay cheque to pay cheque. So this is another substantial challenge. This trajectory of rising interest rates will have an impact on people’s household budget and we can’t lightly dismiss that either.
MILLAR: Jim Chalmers, good to have you on the program this morning.
CHALMERS: Thanks so much, Lisa. All the best.
ENDS
