Interview with Ali Moore, ABC Melbourne Mornings
ALI MOORE:
Federal Treasurer Jim Chalmers joins you now. Jim Chalmers, good morning.
JIM CHALMERS:
Good morning Ali, happy New Year.
MOORE:
Happy new year to you too. A very short holiday for you, you’ve got a lot on your plate.
CHALMERS:
We've got a big agenda in 2023. I did get the opportunity to have a bit of a break thanks to my colleague Katy Gallagher who minded the shop for me but back into it, raring to go, it's going to be a big year for the economy and for the Government and for most importantly, the country.
MOORE:
Let's start with those new testing requirements for China. You'd be well aware of the reporting this morning around the comments of the Chief Medical Officer Paul Kelly. He actually gave an interview on Friday - his official advice was I think, published on Saturday - but he said there was no need to introduce COVID testing on arrivals from China. In fact, they would be disproportionate to the risk. Then on Sunday, the Health Minister announced they would be introduced. So was it a political decision? Who recommended this abundance of caution?
CHALMERS:
I don't think it was Ali. I think you're right though, that it was about caution. We decided as a Government that we wanted to err on the side of caution here and put these arrangements in place. They're not especially onerous requirements for people travelling from that part of the world. And what we're doing is consistent with or in step with what a lot of other countries are doing - the US, Japan, India, South Korea, Malaysia, Italy, Spain, England, and France are all doing a version of this. We take the CMO advice very seriously, we work closely with all the chief medical officers, they've all made some version of the point that we need to make sure we've got the right surveillance in place. There is a degree of scepticism that we've got a good handle on the data in China. And so for all of those reasons we took this decision. As always, we're trying to take the right decisions in the interests of the Australian people, weighing up all the considerations and all the advice.
MOORE:
Do you acknowledge, though, that this was not the advice of the Chief Medical Officer?
CHALMERS:
I think it's pretty clear from what's been published, that the CMO in making the point that we need to get our surveillance efforts up, was not proposing this exact course of action. But we've been pretty clear that we take decisions that we think are in the best interest of the country, again, out of an abundance of caution, again, consistent with what a lot of other countries are doing. We take the medical advice seriously, we take the advice of all the chief medical officers seriously and work closely with them. At the end of the day, we've got to take a decision and that's what we've done.
MOORE:
So what do you think the tests will achieve? Because I haven't been able to find anyone who's going to say that if there is a new variant, you'll be able to keep it out. So what's the ultimate aim of these tests?
CHALMERS:
We just want to make sure that when people come to Australia, they've got a negative test. We've already got a big enough challenge here managing COVID without unnecessarily exposing ourselves to part of the world that's got an extraordinarily large wave right now. So our motivations and our objectives are pretty clear. And also, to make a broader point Ali, as this COVID pandemic has evolved over the life now of two federal governments, the job of government is to try and make sure that our arrangements evolve with it, always trying to strike the right balance and that's what we're trying to do here. And again, it's not especially onerous, it's consistent with what's happening around the world. And we're erring on the side of caution.
MOORE:
Are we going to do the same with America, given there is a new Omicron strain circulating in the US?
CHALMERS:
We will always make our decisions based on the best information available to us. But that's not something that we're proposing, contemplating right now. The wave out of China is really quite an extraordinarily large wave. I think people understand that and I think your listeners understand that. And that does put the travelling population at risk. It also, of course, has implications for the economy more broadly - the Chinese economy, the global economy, and therefore the Australian economy. So for all of these reasons, we've put these arrangements in place. The Health Minister has released a whole bunch of information and fact sheets on the Commonwealth Health website this morning if people want to check out how they comply with these arrangements. As I understand it, they're in English and in other languages, so people can see what their obligations are.
MOORE:
There is a lot of detail about what sort of tests and what sort of level of supervision of those tests will be required. But just one more question on that, if people do come from China and then they test positive on arrival, will they have to go into quarantine?
CHALMERS:
I'm pretty sure that's made clear in the fact sheets. There is a 4 page fact sheet that I'm looking at right now on the Health website Ali, which explains what happens for travellers and what their obligations are. And so I'd encourage people to read that rather than me give them that advice.
MOORE:
It's a no though, isn't it? You don't have to go into mandatory quarantine? No one else does if they test positive here.
CHALMERS:
Under the relevant part of the fact sheet, it says that mandatory quarantine on arrival to Australia won't be reintroduced. And if there's more clarification about what people do if they test positive in transit, then we'll provide that information through the health department.
MOORE:
Can we look at those supply chain stresses that you've talked about, that are coming from that current COVID outbreak in China? And you've warned just how potentially significant they could be, where do you see those constraints having the most impact?
CHALMERS:
I think they have the capacity to impact supply chains across the board. Our economy and the Chinese economy is incredibly intertwined, as your listeners would understand and appreciate, particularly when it comes to manufactured goods, but in other ways as well. And so one of the big things we are monitoring, one of the big influences on our economy in 2023, will be how China manages the transition from their COVID zero policy to something different. How they manage this wave, which still has a little way to run yet - that will flow through and have consequences for us because the Chinese workforce will be affected. That means supply chains will be affected, and our economy will be as well. But that's not the only thing we're monitoring in the economy and 2023. We're optimistic about the future but we're realistic about expectations for the global economy in the coming year. China's a big part of it, the war in Ukraine is a big part of it. The big advanced economies have all got inflation problems, and higher interest rates - the US, UK, Europe, all got a version of that. The impact of interest rates here in Australia from the independent Reserve Bank and the impact of natural disasters, those 5 things will be probably the key determinants of how our economy fares in 2023.
MOORE:
You always make the point that it's an independent Reserve Bank. I note that you put that descriptor in when you refer to the Reserve Bank, but are you along the lines of a lot of economists, certainly at the moment, that there'll be another 2 interest rate rises, and then we're likely to have a pause? I know you don't advise the Reserve Bank in any way, but from your own personal experience, would that be the best tip?
CHALMERS:
I take their independence seriously. That's why I describe them that way, accurately. And it's why I don't get into predicting what the future movements might look like. The market has a range of views about whether or not there'll be a pause in interest rate hikes, or whether there'll be another one or two in the course of 2023. For me, in my job, the big thing that we're monitoring is the impact of these interest rate rises. People will know that when interest rates go up, you feel the impact immediately in your mortgage repayment. But the impact on the economy takes a little bit longer to flow through, including for people who go from those low fixed rate mortgages on to higher variable rate mortgages, which a lot of people will do in 2023. So those are the kinds of things that we're watching, we take the independence of the Reserve Bank really seriously. We don't second guess or pre-empt or predict what decisions they might take, I've got my own job to do.
MOORE:
You're listening to Jim Chalmers, the Federal Treasurer. The Population Statement that's due on Friday, Treasurer, and that you've flagged - we do have very significant changing demographics in this country. How do you get more people to have more babies? Or are we comfortable relying on migration?
CHALMERS:
Two parts of that question. First of all -
MOORE:
Probably outside your remit to a certain extent -
CHALMERS:
Not entirely, but let me deal with them in reverse order. First of all, migration is really important to our country, to our economy, to our society. And so what we need to do is make sure it's never a substitute for training people or making it easier for people to work more if they want to, because we've got this ageing population, we need the workforce that can support it, and the taxpayer base that can support it - so that's really important. Migration is important, but it's not the only thing, it's not a substitute. But when it comes to encouraging people to have more kids, the fertility rate has come back a bit in the last little while, but it's still only about one and two thirds. And so we would like it to be higher and the most important thing that we can do and the most important thing that we are doing, is we're making it cheaper and easier for people to access childcare and early childhood education. Because that's a big part of the decision about whether or not people have kids or have more kids, is whether or not they can afford to balance work and family after the kids arrive. And so we want to make it cheaper and easier for people to work more if they want to, particularly new parents. That's why childcare is going to be cheaper this year from the first of July - that has important benefits for families, for household budgets, but also for the economy in the context of a society which is ageing.
MOORE:
Why not make childcare tax deductible?
CHALMERS:
When we decided our policy on early childhood education, we had a range of options. And we think the best way to do it is to make it cheaper, in the way that we've proposed almost $5 billion in Commonwealth investment in the Budget I handed down in October. We think that's the best way to make it easier and cheaper for people to access the system. I know from my own peer group, I've got young kids myself, I know that one of the big things that people weigh up when they're talking about starting a family or making their family bigger is whether they can afford to balance all the various financial and other considerations once the kids arrive. And so we want to make it easier, that's what we're doing. That was the biggest new initiative in the Budget I handed down in October - it's that important.
MOORE:
Why is tax deductibility so off the table? What's on the nose about it?
CHALMERS:
It's not really that, Ali, it's just we think we found a better way to do it. And we think we found the best way to go about it. Obviously, as the budget circumstances change and permit into the future, we weigh up all of these sorts of considerations. But we've had that proposed to us, we listen respectfully when people put ideas to us, as the Government, but we think we found the best way to do it and the most responsible and meaningful way to do it. And I think it's going to be a game-changer for parents. I think it's going to make a real difference when it comes in this year.
MOORE:
Another issue that will come to a head in 2023 is the success or otherwise of the cap on prices in the energy sector. Are you confident that it is going to mean a big reduction for people and it'll make it more affordable? And are you also confident the projects in the pipeline are not going to get pulled despite the rhetoric from the industry?
CHALMERS:
A few things about that, certainly the advice that we've received is that the combination of the Commonwealth price cap on gas, the state price cap on coal, and the household assistance that we'll be providing in conjunction with the states and territories, that will make a difference. Prices will continue to rise, but we will take some of the sting out of those price rises. The war in Ukraine is causing havoc on global energy markets, that's having implications for us and our job. Our objective is to take some of the sting out of those price rises with these policies, and we're confident that they will make a meaningful difference. When it comes to new investment, we've thought very carefully about how we implement the temporary cap. And we're still consulting on how we implement the ongoing, responsible pricing regime. We're listening again, respectfully to all of the different players and interests here but our overriding objective is to look after households, small businesses, manufacturers and other industries, to ensure that they're getting the energy that they need at reasonable prices. None of these decisions are easy, there's a level of complexity with all of it. But we're doing our best to work through it in the national economic interest.
MOORE:
And against that backdrop of trying to help individuals and small businesses and other businesses, the responsible pricing mechanism which you just made the point you're still talking to people about, is it up for debate? Or is it set in concrete?
CHALMERS:
We're engaging and consulting genuinely and meaningfully on it. We said in December that we would take until February to do that. We gave - particularly the energy companies, the gas companies - a couple of months to go through what we were looking at, and have those discussions. I've had a number of discussions with the companies as have others, as has the Treasury, to make sure that we're listening to what people think. We're determined to try and do the right thing but we're also willing to engage and consult. And that's the process we're engaged in right now.
MOORE:
So it could change. I understand you haven't come to a conclusion yet, but it could change?
CHALMERS:
Our objectives are clear but if there are better ways to do it, or there are issues that we haven't considered, then obviously we'll consider those. People put them on the table already. In the course of that final sitting day in Canberra, where we brought the Parliament back to pass the enabling legislation, we had conversations in the lead up to that that led to amendments to the legislation. That's normal, any decent government listens and takes into consideration issues that people raise - that's what we do. So that will be the approach that we take to it. Our objectives are pretty clear. We need an ongoing regime here and we're consulting until February on the best way to implement one.
MOORE:
Jim Chalmers, thank you very much for coming on Mornings this morning.
CHALMERS:
Appreciate it Ali, all the best.
