ABC News - Cost Of Living Special 27/04/22

27 April 2022

SUBJECTS: Triple whammy hitting Australians – interest rate rises in the near future, skyrocketing costs of living and falling real wages; Inflation; Labor’s Economic Plan.







SUBJECTS: Triple whammy hitting Australians – interest rate rises in the near future, skyrocketing costs of living and falling real wages; Inflation; Labor’s Economic Plan.


ROS CHILDS, HOST: Jim Chalmers, what's your response to today's CPI number?

JIM CHALMERS, SHADOW TREASURER: This number just shows that everything in Australia is going up except for people's wages. Ordinary Australians are getting absolutely smashed by the worst combination of skyrocketing costs of living, falling real wages, and now interest rate rises are about to be part of the pain as well.

CHILDS: So you must have been surely rubbing your hands with glee when the inflation numbers came out today. It's great for your campaign, isn't it?

CHALMERS: I really don't see it that way, Ros. This is a diabolical combination for too many people. As we come out of this pandemic and the economy is recovering in some welcome ways, we've got these defining challenges now where people can't get ahead, they can't even keep up, because that inflation number today of more than 5% - that's the worst inflation outcome since the GST was introduced more than 20 years ago. When you combine that with wages which have been stagnant for the best part of a decade, real wages which are falling right now and falling further, then you can see why people feel like they're under so much pressure. You asked me about the politics of it. I think the key distinction here is we've released today an economic plan, which is about dealing with inflation and getting real wages moving again, and dealing with this legacy of not enough to show for a trillion dollars in debt. The Government's got a plan for some short-term cost of living relief, but really all that's designed to do is to take some of these big challenges from one side of an election and put it on the other side of an election. They've got a plan to get past May 21, but they don't have a plan for the future, and that's the difference.

CHILDS: So how would you reduce inflation and raise wages if you were elected in May?

CHALMERS: The key is - and this is really central to our economic plan that we released today - is we need to grow the economy strongly without adding to these inflationary pressures, we need to build the capacity of the economy. That's why today we were talking about a workforce which is bigger, where there's more participation. We do that via our child care policies, which also bring down the cost of living. We need to obviously create a bigger pool of skilled workers, that's why we've got fee-free TAFE and other initiatives like that. We need cleaner and cheaper energy to make our economy more productive and more competitive and get costs down, get that investment flowing. We need to invest in the digital economy, things like modernising the NBN. We need to invest in the care economy and other important sectors like advanced manufacturing. That's how we get the economy growing the right way without adding to those inflationary pressures. When it comes to wages, clearly, making it easier for people to work more and earn more with cheaper child care is part of the story. Training people to qualify for higher wage opportunities is a big part of it. Supporting wage cases in the care economy is a big part of it. Regulating the gig economy and making sure we turn this insecure work into more secure work. These are the sorts of ways that we'll get wages growing again.

CHILDS: This all sounds expensive though. Jim Chalmers. When the Budget was handed down last month you accused the Treasurer, Josh Frydenberg, of spraying money to save the government, you said. But isn't that exactly what you're proposing?

CHALMERS: No, of course not Ros. There's a very important distinction between the way that the Government has mismanaged the Budget for the best part of a decade now - spraying around all this money on waste and rorts and mismanagement, a Budget corrupted by the government's incompetence, and particularly the Prime Minister's mistakes - versus trying to invest in the drivers of low inflation growth which gets wages growing again. If you think about some of the commitments that we've made, they are a fraction of what the Government has wasted and rorted. You think about that five and a half billion dollars the Government wasted on a submarine program that won't ever produce a single submarine, our commitments are smaller than that. You think about all the money wasted on JobKeeper for companies that were already profitable. What we've said today - and Katy Gallagher deserves a heap of the credit for this, our Shadow Finance Minister - is we've said how do we recognise that we'd be inheriting a trillion dollars in debt with not enough to show for it. You can't turn that around quickly or easily, but you need to begin. The way that we've said that we would begin to do that is to trim spending on expensive contractors and consultants and outsourcing in the public service, take some responsible measured, conservative steps on the multinational tax front, and also have an audit of all this waste and all of these rorts that we've seen uncovered over the best part of a decade.

CHILDS: So you're blaming the Government for the high CPI number, but a big component of that is fuel of course, which has gone up 11% over the quarter with most of that rise happening because of the war in Ukraine, something the Government has had no real control over. How do you respond to that?

CHALMERS: The inflationary pressures in our economy were building well before the war in Ukraine. The energy price story out of Ukraine is obviously part of what we're dealing with but it's not the whole story, nowhere near it. These pressures were building for some time and real wages have been falling for some time as well. The point that we make about the Government is they want to take credit for an unemployment rate falling in welcome ways, but they don't want to take responsibility for a trillion dollars in debt that they doubled even before the pandemic. They don't want to take responsibility for real wages falling, even though they've said that that's a deliberate design feature of their economic policy. So what we've said today in releasing our Economic Plan and our Budget Strategy as part of that, is that we will take responsibility for trying to grow the economy the right way, get wages growing again, and start to deal with this legacy of debt, so that we're funding commitments which actually have a meaningful economic dividend. That's what's been missing. There's not a plan from the Government for the economy beyond the election. We have a plan, we released it today, and that is all about dealing with these defining challenges of inflation, real wages, and no economic dividend from all the debt.

CHILDS: So if you are elected, when could people expect to see the strain on their hip pocket begin to ease, what real changes to their budget will they see?

CHALMERS: First of all, we supported the cost of living relief that's in the Budget, that's the near term piece of the puzzle. But over the medium term, we've got policies in at least three areas that will make a big difference. First of all, our Powering Australia plan will get energy costs down. Cleaner and cheaper energy - increasingly, renewable energy  is cheaper energy - when it comes to new sources, do that will be part of the story. We've got a relatively significant commitment to making child care cheaper, which will take some of that cost of living pressure, particularly off parents in the economy and make it easier for them to work more and earn more as well. And we've got that strategy to get real wages growing again. The combination of those three things - power prices, child care prices, and real wages - those plans are meaningful, long term, sustainable plans, that will exist after the Government's cash relief runs out.

CHILDS: And how long will that take?

CHALMERS: When it comes to the modelled savings on power bills, we're talking about the middle of this decade, $275 a year. When we're talking about child care, we're talking about next year. When we're talking about real wages, we need to get those real wages moving as soon as possible and our policies give us the opportunity to do that. Think about it in a couple of stages. There's cost of living relief - bipartisan, in the system right now. But what's missing from the Government - which isn't missing from our policy offering - is some of the longer term enduring ways to take the pressure, particularly off working families but also Australians more broadly, who are being hit by this triple whammy. Interest rate rises before long, skyrocketing costs of living and falling real wages.

CHILDS: People are struggling now though, Jim Chalmers. What you're proposing, we won't see the results for years.

CHALMERS: No, we've supported the near term cost of living relief. You mentioned some of the issues before around petrol for example, we supported the relief there. We've supported the cash payments which have gone out the door. But we've said there needs to be something after that and we've provided a plan for after that.

CHILDS: Jim Chalmers, thank you.

CHALMERS:  Thanks for your time, Ros.