JIM CHALMERS MP
MEMBER FOR RANKIN
TUESDAY, 3 MAY 2022
SUBJECTS: RBA interest rates decision; Labor’s Economic Plan; Federal election; Anthony Albanese’s campaign launch speech; Labor Party processes.
JIM CHALMERS, SHADOW TREASURER: After almost a decade of this Liberal-National Government all we're left with is skyrocketing inflation, rising interest rates, falling consumer confidence and falling real wages.
Scott Morrison's economic credibility was already tattered and now it is completely shredded.
This interest rate decision today will have a big impact on the household budgets of millions of Australians. The impact of this increase - I've spoken before about a new loan on a fixed rate, $595,000 average new loan, could be up to something like $124 a month - but for most people on a standard rate, the impact for $400,000 loan is about $51 a month. A $500,000 loan is about $63 a month. For a $600,000 loan about $76 a month. So you can see the impact that that will have on people who are already doing it tough.
This is a full blown cost of living crisis on Scott Morrison's watch and now interest rate rises are about to be part of the pain. Now, this Prime Minister has an excuse for everything and a plan for nothing. When things are going well in the economy he takes all of the credit, and when times are tough in the economy he takes none of the responsibility.
He was speaking today about a shield. The only shield that Scott Morrison is interested in is to shield himself from the blame and to shield himself from people who are doing it tough.
Now, he asked in his press conference earlier today, what would Labor not have him do? Labor wouldn't have had him waste $20 billion of JobKeeper for businesses that were already profitable and didn't need it. Labor wouldn't have had him waste $5.5 billion on submarines that'll never be built. A billion dollars on publicly funded political advertising to tell everyone how good he's going. We wouldn't have wasted $660 million on car parks, many of them that wouldn't be built, a 10th of that money for car parks in the Treasurer's own electorate.
If only you could pay your mortgage with Scott Morrison's excuses.
Now, this is a very serious development in the economy. There hasn't been an interest rate rise for almost 12 years now since towards the end of 2010. We are responsible and reasonable about the causes of this interest rate rise and we know that there's more to come; we know that there are things that governments can do; and there are things that real leaders take responsibility for, which matter in the context of high inflation, rising interest rates, plummeting consumer confidence and falling real wages.
If you look at the Governor's statement today, three things stand out. First of all, the Governor points out that, increasingly, domestic capacity constraints are playing a role in the inflation that we're seeing in this country. Secondly, he says that they expect inflation will climb even higher over the coming months. And thirdly, they expect the economy to only grow 2 per cent next year, well below average, well below trend. Very anaemic rates of growth, nowhere near what Australia needs if we are to prosper in the years and decades ahead.
Those points are important, and they're important because this election is a contest between a Labor Party with a plan for a stronger economy and a better future versus a Liberal Party promising nothing but three more years of the same falling real wages, the same skyrocketing cost of living and the same pressure on families, which is making it harder and harder for them to get ahead. Our economic plan is all about growing the economy without adding to inflationary pressures; it's about easing the cost of living; it's about getting real wages growing again; and it's about having something to show for a budget which is absolutely heaving with a trillion dollars in Liberal and National debt. Those are the choices in this election.
This is a tough day for Australians. This is another aspect of Scott Morrison's triple whammy in his cost of living crisis, falling real wages, rising interest rates and inflation spiralling out of control.
JOURNALIST: Dr Chalmers, you were Chief of Staff to the Treasurer in 2010 when interest rates went to 2.75%. Can I read what Wayne Swan said then he says: ‘I think families and businesses understand that rates can't stay at emergency levels forever. He went on to predict there would be an opposition scare campaign, that scare campaign should be seen for what it is’. Now you literally would have written or approved those lines. What's different now to what we were seeing then?
CHALMERS: We've been responsible and reasonable about the causes of this interest rate rise. I've been talking about this for some time now and you should judge me by my words, as the Shadow Treasurer. The issue that we have with Scott Morrison, is not that he doesn't take responsibility for every aspect of this, it's that he takes responsibility for none of this whatsoever. When things are going well, he's in front of the camera claiming all the credit, when times are tough, he takes none of the responsibility. Now, that's the issue here. The Prime Minister in November last year, standing in front of all of you people, started this big scare campaign about petrol prices and interest rates. Today, Scott Morrison's lies and scare campaigns have blown up in his face.
JOURNALIST: You say that Scott Morrison at least, therefore, is partly responsible for this rate rise, doesn't that mean that Labor Government, if you were to win would be at least partly responsible for future rate rises?
CHALMERS: There are things that governments can do which can influence how much inflation there is in the economy, how much real wages growth there is in the economy. That's why the economic plan that Katy Gallagher and I released last week is all about growing the economy without adding to inflation, and easing these costs of living pressures, getting real wages moving. Those are the things that governments can take responsibility for. Now, Scott Morrison will try and wash his hands of this outcome today. We are reasonable and responsible about the causes of today's decision, but as the Reserve Bank Governor has himself said in the statement released today, domestic capacity constraints are playing a role here. We do have an outlook of even higher inflation and lower economic growth. What the difference between the Government and Labor under Anthony Albanese is, is we will do what we can to grow the economy the right way. The Government has washed their hands of this. They see this exclusively as a political challenge. I heard Scott Morrison say yesterday that he wasn't focused on the politics of this. Scott Morrison saying not he's not focused on the politics is like Homer Simpson saying he's not focused on the donuts. It is complete and utter rubbish.
JOURNALIST: You said you won’t add to inflationary pressures. Doesn’t subsidising childcare increase, raising the subsidy, does that not increase inflationary pressure?
CHALMERS: No, it doesn't. Because you're making the workforce bigger and you're dealing with some of these capacity constraints. One of the big capacity constraints in our economy right now. as you would appreciate, is the availability of labour and particularly skilled labour and our childcare policy is an economic reform, designed for exactly this circumstance to make it easier for people to work more and to earn more, at the same time as easing their cost of living pressures.
JOURNALIST: As you noted, the RBA expects to continue to raise interest rates and they think that that inflation will spike at 6 per cent. If Labor wins, what will you do to try and keep inflation low?
CHALMERS: There's a range of things that we can do. First of all, it's about increasing the capacity of the economy. It's about training people for skills shortages, that's why we've got our policy for fee-free TAFE. It's about a bigger, more productive workforce, that's why we've got our policy on childcare. It's about investing in the digital economy, the care economy, advanced manufacturing, creating secure, well paid jobs and growing the economy the right way. That's what governments who take these challenges seriously are on about. The Government has a plan to get them through the election, doesn't have a plan to get people through difficult times and it doesn't have a plan for a better future, and that's the difference.
JOURNALIST: Some of those measures you've talked about there seemed like more structural longer term things. Can any of those take any effect in time to stave off what the Reserve Bank is saying, i.e. interest rate rises are coming in not too distant future. Are these coming ones already baked in?
CHALMERS: We'd be playing the cards that we’re dealt, and we will be doing the best we can as an incoming government, if we're successful on the 21st of May, to do what we meaningfully can as soon as we can. Some of our policies are designed to begin to address some of these pressures right away. Some of them will take a bit longer, but we don't have Scott Morrison's approach to this, which is to throw his hands in the air and pretend that he hasn't been in government for most of the last decade. We will take responsibility for growing the economy the right way, trying to deal with the defining challenges in the economy, which are inflation, real wages, today consumer confidence and people have got rising interest rates as well. Jacob.
JOURNALIST: You say there are things governments can do so, talking about a potential Labor Government. Is it time for fiscal policy now to be recalibrated to deal with the reality of inflation. And why should voters trust Labor can do this, given you're the party that wanted to hand out $300 for vaccines? It sort of implies you still have the instinct to hand out cash.
CHALMERS: What we need to see in the budget is we need to flick the switch to quality investments. You know, what matters for inflation is not just the level of spending in the Commonwealth Budget, but also the quality of that spending. And so where we have proposed additional investments in areas like TAFE, areas like child care, or a future made in Australia, that investment is designed to increase the capacity of the economy and to deal with these inflationary pressures. It is not a simple binary choice between more spending and less spending, the most important choice when it comes to inflation is what is the economic dividend that you're going to get from that increased investment from a government point of view? And all of these questions here, which I think are the right questions, if I may say so, because the challenge that a new government would inherit, indeed, whoever wins the election, will wake up on the 22nd of May in the context of rising inflation, rising interest rates, falling real wages, and a growth outlook which is pitiful by Australia's historical standards. The difference is, how can we invest Commonwealth money wisely to get an economic dividend from that investment, and what matters there is not just the level of spending, but whether you compare our investments in TAFE and childcare and a Future Made in Australia, versus tens of billions of dollars sprayed around and wasted and rorted by the most wasteful government since Federation.
JOURNALIST: The Climate Council has predicted that up to 500,000 homes will be uninsurable by 2035. That's obviously a real pressure on top of interest rates increasing. What can Labor offer those people. And in terms of your housing policy will Labor be looking to locations before people are approved for assistance?
CHALMERS: Can you just repeat the second part of the question to me please?
JOURNALIST: If a house in an area is uninsurable, will you be looking at those locations to stop assisting people?
CHALMERS: I see. Well, the most important thing is to have a meaningful climate change policy, and we do. Our policy is broadly supported around Australia, because it takes this challenge seriously. If you think about the thing that unites our economic challenges, our foreign policy challenges which are more acute now than they were two or three weeks ago, our climate change challenges, it's the fact that the Government has dropped the ball in each of these areas. That does have implications for insurers and for insurance and for premiums, and we've said that for some time. My colleague, Matt Thistlethwaite, has been in this cart for a long time talking about the relationship between insurance and climate change risks. The whole world is looking very seriously, the regulators around the world, the international community, they see this as a pressing risk. But because Morrison and Frydenberg sit around working out how they play the political angles from one six o'clock news to the next night’s six o'clock news, then all of these big challenges are being neglected and that's a big difference. One of the reasons I was so proud of Anthony Albanese, sitting in the front row in Perth listening to Albo’s speech on Sunday, is because at last Australians can have a government, which takes the climate change challenges seriously, the economic challenges seriously, the foreign policy challenges seriously as well, and that's the difference.
JOURNALIST: Part of the reason that we've seen this interest rate increase is because of the massive stimulus spending during the pandemic. Are you saying that spending was a mistake now that we've had this result?
CHALMERS: I'm saying there's been a lot of waste in that spending during the pandemic, we've been saying that for some time, including before now. Some of it was obviously necessary. A lot of it, we supported. But there has been wasteful spending, which has been uncovered by others, independent observers, including $20 billion of JobKeeper that wasn't needed for companies that were already profitable, at the same time as other businesses who genuinely needed it missed out. There's no objective observer who thinks spending $5.5 billion on submarines when we won't even build a canoe out of that money, is not obviously wasteful spending. A billion dollars on advertising, $660 million, I think, on car park rorts, $100 million dollars on sports rorts. I heard the Prime Minister earlier today say ‘oh, what would we have done differently?’ Well, we've got a few thoughts on what you could have done differently if you were seriously protecting and cherishing taxpayer money and not spraying it all around in this, kind of, free for all. There are key differences between us.
JOURNALIST: Inflation is going to 6%, it's not going to back to 3% until mid-2024 and to the RBA it seems entrenched. Australia really has a bit of an inflation problem now and you say your spending is productive, It's going to increase productivity over time. But isn't it inevitable that the spending that you're promising in this campaign, and the government on their side of things, that is going to fuel more demand and inflationary pressures in the short term just as inflation is really peaking?
CHALMERS: I think that cost of living relief will play a role there but it's important to help families keep up with the situation as they as they find it now. You know, this is a full blown cost of living crisis. There's no point beating around the bush about it. The Budget said that inflation would get to four and a quarter percent by the middle of the year. It's already 5.1%. I was in Perth on the weekend, in the city of Perth, it's 7.6%. This is a crisis. And families were already finding it hard enough to get ahead now they're finding it that much harder. So the cost of living relief is there for a reason. Beyond that, judge our alternative plans or judge our plan versus their no plan on its capacity to grow the economy the right way. And the right way to grow the economy is in a low inflationary way which recognises that the big challenge we've got are these capacity constraints that Reserve Bank Governor mentioned today.
JOURNALIST: I think you said as recently as this morning that everything's going up except wages. The RBA said as part of its decision today that wages growth is picking up. Are you right? Or are they right?
CHALMERS: If we had a dollar for every time people were predicting wages were about to go up we could pay off public debt. I hope that wages are about to pick up in a sustainable, responsible way. Certainly, we've got skill shortages, we've got some of the elements that typically lead to some modest wage rises. But what really matters is real wages. The last wages data we got was 2.3%. The last inflation data we got was 5.1%. You can see the hole that Australian working families are in. And so what matters, wages matter a great deal, the inflation number matters a great deal but the real wages calculation of those two numbers matters, in my view, the most. Australians are finding it harder and harder to get ahead during Scott Morrison's cost of living crisis and it got even harder today.
JOURNALIST: Labor's obviously ahead in the polls at the moment, you're looking like you're in a pretty reasonable position. However, if the Coalition win and you lose May 21, should Labor Party rank and file members have a vote in a ballot for the next leader of the Labor Party.
CHALMERS: I'm working my butt off to make that decision completely irrelevant. Thanks very much.