THE HON JIM CHALMERS MP
THURSDAY, 8 SEPTEMBER 2022
SUBJECTS: Reserve Bank of Australia, interest rate rise, October Budget, cost-of-living relief
Joining us now on that note is Treasurer Jim Chalmers. Jim –
I’m reconsidering. I’m reconsidering, Ali.
I don’t know what’s happening on set here this morning, but anyway, buckle in. Hey, look, you scrubbed up all right for the pollies’ ball last night. Was it a late one?
I think one of us in that photo scrubbed up all right and it wasn’t me. It wasn’t that late. I’m one of those people who get away at a responsible hour and I’m grateful for that today.
Well, we’re very happy about that because you’re the man in charge of the numbers. Look, the latest growth figures – record retail spending in July. How is it that we’re still spending like drunken sailors?
Well, there are a few things going on in the economy. First of all, those numbers are a couple of months old and now they don’t take into account some of the interest rate rises that we’ve seen in more recent times, but what the numbers also showed is that we’re saving a bit less, which is part of the story and we’re also spending a bit more in that quarter because people were going out more, eating out more, they were more interacting with the services economy as well. And that’s a consequence of people getting their lives back into some sort of normality after COVID or that phase of COVID. So, there are a few things going on in those numbers. Pretty solid numbers but some concerning elements as well. Real wages still going backwards, for example, and that’s a big part of the story.
I think that’s a drum there, isn’t it, because it sort of feels like it’s a tale of two economies. You’ve got some who seem to be breezing through but others are really struggling. Here’s what a couple of Aussies had to say to us this morning.
It’s very hard. Like, I’ve got to pay $300 or $400 extra every month.
If the interest rate keeps rising up, of course, yeah, there’s a possibility we might lose the house.
It just makes it harder, doesn’t it, every month. You just feel like you’re wasting money because it’s going up every month.
Just to those people there, Jim, they’ll be listening very closely to your Budget next month. Any help for them?
There will be but it will be responsible cost-of-living help in areas like childcare, like medicines, like TAFE fees. There will be a tax cut for electric vehicles but most of all, what we really need to do in our economy is get wages moving again. Listening to those people that you just played, the key here is when interest rates go up, it does really tighten the screws on family budgets in areas where people can’t avoid paying some of these costs. And so, our job, I think, is to do what we can to get wages moving again. And a big part of the reason why people feel like no matter how hard they work they’re not getting ahead is not just interest rate rises but also the fact that inflation is much bigger right now than wages growth, and that means people are copping a real wage cut and we need to turn that around.
So no handouts for those who really need it? And I get it’s a tricky balance for you because, you know, you give too much and that has an impact on inflation.
Spot on, Ali. That is the challenge. We are working around‑the‑clock on this Budget which is to be handed down next month and one of the complexities that we’re dealing with is exactly as you’ve just described it. And I want to level with people about that. You want to be careful when you’re providing cost‑of‑living relief that it’s also got an economic benefit because you can actually provide cost‑of‑living relief that is counterproductive, that makes it harder for the independent Reserve Bank and we don’t want to see that. So that’s one of the issues we are trying to balance as we put this Budget together. There will be cost‑of‑living relief but it will be responsible and it will have an economic dividend as well so that it doesn’t add to these inflationary pressures and force the Reserve Bank’s hand even more.
Are tax cuts responsible?
The tax cuts won’t come in for a couple of years. I think the right and responsible thing to do in the interim is to focus on that cost‑of‑living relief that we’ve just been talking about but also invest in areas like clean energy, and skills, and the NBN, and all of these other ways that we can get the economy growing in a much better fashion without adding these inflationary pressures.
One of the reasons why people’s prices are going up, and I think your viewers know this in the supermarket when they go into the aisles and it says, “we’ve got issues in our supply chains”. And what that means is there’s lots of ways that get goods to market that we need to invest in making more efficient. If we do that, we can take some of this pressure off inflation as well.
You’ve also got a near trillion‑dollar debt to deal with so, I mean, there’s going to have to be something that comes in that Budget next month. But just on a slightly lighter note, how much did the game of tennis with Albo go for last night?
I’m not sure; I haven’t checked actually. If your viewers don’t know, there’s an auction which is about raising money for charity. I’m sure that there were enthusiastic bidders to play tennis with Albo, but I’m not sure how much he raised.
I think there was cricket with Dutton too. You really did leave early. That’s how responsible you are. Nice to see you this morning, Treasurer. Thank you.
Good to see you, Ali.