Doorstop interview, Logan, Queensland
JIM CHALMERS:
I wanted to wish everybody marking the Lunar New Year, happy new year. There are a lot of celebrations going on around the country today. It's very kind of people who mark this occasion to share this culture with us. It's become a really important part of the Australian summer and so to everyone celebrating today, happy Lunar New Year.
Also I wanted to congratulate Chris Hipkins, the next Prime Minister of New Zealand. Chris Hipkins is obviously someone of immense experience and intellect and depth, and we are really looking forward to working with him when he takes the reins and names a new cabinet. I know the Prime Minister has already had a discussion with Chris Hipkins. I'm looking forward to working with his cabinet when it's sworn in. We've got a big trans‑Tasman agenda, the Albanese Government, the Ardern Government, soon the Hipkins Government - working very, very closely together. This is an incredibly important year for the Australia‑New Zealand relationship. This is the 40th anniversary of Closer Economic Relations between the two countries, which is the guiding arrangement which governs the economic relationship between two great friends. So looking forward to advancing the trans‑Tasman agenda with Chris Hipkins. He is obviously a really worthy successor to Prime Minister Ardern. Our countries are incredibly close. We are like family and we're looking forward to engaging with him and with his colleagues once he's sworn in a little bit later in the year.
This week we'll be getting some new inflation numbers for the economy to the end of last year. Obviously, we hope that inflation has now peaked and we see the peak in the December numbers that we get this week, but that remains to be seen whether or not inflation peaked in the December quarter or not. We will know later in the year but we do know already inflation is the defining challenge in our economy. It will be higher than we'd like for longer than we'd like, and that's why the Albanese Labor Government's economic plan is all about providing responsible cost‑of‑living relief and growing the economy the right way without adding to these inflationary pressures, which are doing such damage in our economy. We understand that these inflationary pressures are coming at people from around the world, but they are felt around the kitchen table. That's why we're doing what we're doing when it comes to cheaper medicine, cheaper early childhood education, getting wages moving again, and providing electricity bill relief for Australians doing it especially tough.
We are really heartened to see that the forecast wholesale electricity prices for the coming year that the forecast rises have been moderated by the decisive action that we took before Christmas to cap gas prices but also to provide that relief and to work with the states and territories to do that. We are really pleased and really heartened to see in these wholesale price forecasts for electricity that our intervention in the energy market is likely to take some of the sting, some of the edge off these forecasts price rises. We saw in some of the reporting over the last couple of weeks that some of the deals struck last year flowing through into retail arrangements now, those price rises are higher than we would like that's precisely why we acted in the way that we did. Energy is a bigger part of our inflation challenge in our economy. There have been other price pressures which have started to ease whether it's shipping costs or housing costs or some of the others - and that's obviously welcome. But we'll have an inflation problem in our economy for a little while yet. That's why our economic plan is cost‑of‑living relief in a responsible way and growing the economy without adding to these inflationary pressures so that over time when inflation moderates, and we're seeing the beginnings of wages growth already, then Australians who work hard can provide for their loved ones and ideally get ahead.
2023 is expected to be a difficult year in the global economy. The war in Ukraine causing havoc in energy markets; we've got the ongoing lingering effects of COVID on supply chains; we're obviously keeping a very close eye on the performance of the big advanced economies in the northern hemisphere in particular; natural disasters are an ever‑present threat to our economy; and interest rates around the world and here in Australia, when they go up, will have an impact on our economy as well. So most people expect 2023 will be a difficult year in the global economy, whether or not that plays out remains to be seen. We don't know yet whether the global economy will see downturn or disaster in the course of this year. There's a range of views amongst the economists and the institutions. Our policy is not just to cross our fingers and hope for the best. Our economic plan is about making the budget more responsible, our economy more resilient, and providing that cost‑of‑living relief where we can and growing the economy without adding to these inflationary pressures.
Now, there's a lot of commentary right now about the role that the Chinese economy will play in prospects for the global economy this year. Obviously, the Chinese economy has just gone through one of its weakest quarters in growth for some decades, and the COVID wave is putting extreme pressure on their labour force and on supply chains. And that has implications for us at the beginning of 2023. Most people expect the Chinese economy to recover and rebound relatively strongly and relatively quickly, but right now it's going through a difficult period because of this COVID wave. Our prospects here in Australia will be impacted by how quickly and how strongly the Chinese economy recovers, and the performance of the global economy more broadly. But we're focused where we can make a meaningful difference: growing the economy, funding our priorities, building in May on the foundation that we started to build in the October Budget. So the CPI inflation numbers this week will give us a good sense of how our economy finished the year, and what happened with those price pressures. We'll know before long, whether or not that was the peak or not. Our job remains the same: cost‑of‑living relief without adding to inflation, growing the economy the right way by investing in people, and making sure that as we confront some difficult global conditions that we are in the best possible position not just to weather the storm, but to grow strongly out of it. That's our focus and our priority.
JOURNALIST:
I appreciate you're still waiting for those updated figures but is it your view that inflation probably has peaked?
CHALMERS:
Certainly the Treasury's expectation in October was that the inflation peak will be around the end of last year. We'll know more about that, not just when we get this week's figures for December, but obviously when we get the March figures as well. Inflation is the primary defining challenge in our economy, it's our major focus. It was very heartening to see over the weekend that another ratings agency confirmed Australia's triple A credit rating. One of the reasons they gave for doing that is because the October Budget banked the big upward surge in revenue we got from higher commodity prices. It provided and started to build a much more sustainable budget - that's something that the ratings agencies have recognised. That's an important part of our job, to make sure where we are investing and we are spending, that we get a good economic dividend - whether that's cost‑of‑living relief or economic growth. The expectation was that inflation peaked in the December quarter, it remains to be seen whether it has. But inflation will be with us for longer than we'd like and so that's why the Government's priorities when it comes to dealing with this inflation challenge are unchanged.
JOURNALIST:
Treasurer, it's the Year of the Rabbit, which is considered lucky but it also indicates a focus on relationships, diplomacy and building bridges. Is that what this positivity is all about with China, rebuilding the bridge with them and getting those trade sanctions removed?
CHALMERS:
Overall, we are optimistic about the future of our economy and the future of our country but we need to be realistic as well about the global economic turbulence that most people expect through the course of 2023. The Chinese economy will obviously have a big impact on the performance of our own economy. We do expect it to rebound relatively strongly and relatively quickly but it's in a pretty weak position right now though. The last quarter of growth was the weakest for some decades apart from the pandemic and we've got those supply chain issues because of the COVID wave. So we need to be realistic about prospects for China, even at the same time as most people expect a relatively quick and relatively strong rebound. Now, we've said for some time that we want to see those trade restrictions lifted. There are tens of billions of dollars of value in Australian exports tied up in those trade restrictions, and our view is that we give ourselves the best chance to work through difficult issues like this if we engage. I pay tribute to Prime Minister Albanese and Ministers Wong and Marles and Farrell and others for engaging with Chinese counterparts in an attempt to stabilise the relationship. We want the region to be peaceful and prosperous, we want our exporters to take advantage of big markets like the Chinese market because it's good for jobs here in Australia. And so we want to see those trade restrictions lifted. Obviously, we follow the reporting and the speculation about if and when they might be lifted. Our job is to engage where we can, to disagree where we have to, and one of the highest priorities that we've put to our Chinese counterparts is to see those trade restrictions lifted.
JOURNALIST:
Do you have any idea when we'll see any tangible differences with that sort of stuff?
CHALMERS:
It remains to be seen. But clearly the efforts that the Prime Minister and his cabinet have put in have been worthwhile. We have said since before the election that we want to see a more stable relationship with China. Obviously our economic prospects are influenced heavily by the performance of the Chinese economy and our relationship with Chinese counterparts. We want to see those trade restrictions lifted. We're under no illusions about some of the difficulties and some of the complexities in this relationship, we've been upfront about that as well. But we give ourselves the best chance to work through these issues if we engage, and that's what we've been doing.
JOURNALIST:
Leading economists have warned that another two rate rises risks tipping the economy into recession. Is that your view that the RBA risks another recession if it continues with extra rate rises?
CHALMERS:
I don't give free advice to the independent Reserve Bank. The Reserve Bank has lifted interest rates since before the last election eight consecutive times. And obviously, the impact of those rate rises will be felt in our economy, we're seeing the leading edge of that already. And one of the things that we're keeping a close eye on through the course of 2023 is when people come off very low fixed rate mortgages on to variable rate mortgages. One of the things about these interest rate rises is that the impact is felt by a lot of people who have variable mortgages immediately but the impact on people on fixed rates, and the impact more broadly on the economy, takes a little while to flow through. The independent Reserve Bank will weigh up all of the domestic economic conditions and all of the global economic conditions and come to their decision. My job is to make sure that we're doing what we can to provide that cost‑of‑living relief and grow the economy the right way, without adding to this inflation challenge, which is still the primary challenge in our economy.
JOURNALIST:
Do you think Australia is at risk of going into recession this year?
CHALMERS:
That's not our expectation. Our expectation is that the Australian economy will continue to grow, but so will some of these challenges that we've been talking about today. The expectation in the Treasury forecasts in October were that the Australian economy will begin to soften a bit this year, and that is the inevitable likely consequence of higher interest rates and a slowing global economy. But their expectation isn't that Australia will go backwards. I'm optimistic about the prospects for our economy, the prospects for our country, but we've got to be realistic about the implications of what's happening around the world as well. Our budget and our plan is not about crossing our fingers and hoping for the best, it's about making the budget more responsible, the economy more resilient, and that's what our economic plan is all about.
JOURNALIST:
We're fast approaching the referendum on the Voice, the Liberal Party still hasn't declared its position. At what point should Peter Dutton do that?
CHALMERS:
The Voice is a massive opportunity for this country to move forward together in a spirit of unity and respect, and to improve the lives of First Nations people by giving them a greater say in the issues that affect their community. Peter Dutton has had multiple opportunities now to tell us whether he's still stuck in the past, or whether he supports the Uluru Statement from the Heart. This is as much a test for Peter Dutton as it is for anyone else in this community, who's being asked to make this choice. And Peter Dutton is not genuinely looking for more detail, he's looking for more division. And in that, I think he's a very similar kind of leader to Tony Abbott and Scott Morrison. No wonder they're talking about bringing Tony Abbott back, then they'd have the full set - three peas in a pod - Tony Abbott, Scott Morrison, Peter Dutton. They all practice this kind of divisive and destructive brand of politics. It says the surest way for them to succeed politically is to tear down these sorts of opportunities that Australia faces in 2023 and beyond. So I think as a country we've got a big chance here to move forward in that spirit of unity and respect and to do the right thing. This should be something determined by the people, not by the politicians. There is a lot of detail out there already from the working group, and there'll be more detail provided between now and the referendum later this year. But I think the Australian people have it within them to look beyond the divisive and destructive politics played by people like Peter Dutton and to see what see this for what it is - a big opportunity for Australia to move forward together, to give First Nations people a say in the issues that affect their communities, and to do that in a united and respectful way. I think there is an appetite in Australia to move forward in that direction, for those reasons. If there is an appetite for more detail, more detail will be provided, but there's a lot of detail out there already on this topic.
JOURNALIST:
Your colleague, Madeleine King, has called on big mining and gas companies to get behind the Voice. How important is it that big businesses share their thoughts on this referendum?
CHALMERS:
We want to try and get the whole country behind this referendum - a yes vote in this referendum. We've been incredibly heartened by the support of corporate Australia when it comes to the Voice, and we welcome and congratulate those business leaders who've already made their views known. We want every corner of Australia and every part of our economy to support and grab this opportunity to move forward together in that spirit of respect and unity that I keep referring to. And I think the resources sector in particular, when you consider the history of the resources sector, when you consider what a lot of companies are doing, to make sure that they employ and empower Aboriginal communities around Australia, there is a big chance for the resources industry to get behind this in a big way as well. We'd like them to do that. We welcome the support of corporate Australia. We want the whole country to get behind this. We don't want to miss this opportunity. We don't want to miss this opportunity to give First Nations people a greater say in the issues that affect their community. This is our big chance to do the right and respectful thing, and to move forward together in a spirit of unity. Thanks very much.
