Interview with Andrew Clennell, Sunday Agenda, Sky News

ANDREW CLENNELL:

Treasurer, this Sunday morning, I'm going to start by playing you this clip of former Labor cabinet minister and Sky contributor Stephen Conroy during the week where he gave his opinion on the Intergenerational Report.

STEPHEN CONROY:

This report is one of the most meaningless documents I think that can be produced. When the Liberals first invented it and produced it, everyone said `this is just them trying to beef up numbers so that they know they can cut services into the future because they won't increase taxes'. Now Labor produces it and everyone goes, `Oh, well, we're not going to cut services, they're going to put up taxes.' Treasurer, you are a joke for agreeing to produce this.

And Treasurer, I have Jane Hume in a few minutes. I'm sure she will say you're going to put up taxes. What do you say to what Stephen Conroy had to say there?

JIM CHALMERS:

It's not the first time Stephen has had a strong view about something. I don't share it. I think the Intergenerational Report is a really important opportunity. I didn't take shots at the concept when Peter Costello introduced it nor when Josh Frydenberg brought down the last one. I think it is a really important chance to focus the nation's mind on the future at the same time as we deal with the challenges in the here and now. I heard your introduction a moment ago, and you pulled out some of the warning signs, some of the challenges that we need to confront together into the future, and they're important. But I'm optimistic about the future. I am optimistic about the future, but we can't be complacent about it, we've got a big chance in this country to make the big trends and transitions in our economy and our society work for us and not against us. And that's what the IGR is all about. That's why I don't share Stephen's view.

CLENNELL:

Okay, you've given us the problems, not necessarily the solution. Are you building up to a big reform item ahead of the next election? Or is it steady as she goes, and every time you make an incremental tax change, you can point to this and the strains on the budget, or like I said, at the top of the show, is this preparing the groundwork to attempt to force the state governments to assist you in terms of solutions?

CHALMERS:

No, it's not primarily about that, Andrew, you know that we do have a bunch of agreements coming up, that's self-evident. That's public information that we've got to come to a concluded view with the states and territories about how we fund the services and the programs that Australians need and deserve into the future. And we have shown a willingness from Prime Minister Albanese all the way down to work with states and territories, not against them, and that will be our approach going forward as well. The reform task is always ongoing in this country and one of the reasons why we haven't made enough progress on these big challenges laid bare in the Intergenerational Report is because we've had this wasted decade of missed opportunities, and Australians are paying a price for that now. So we have a big, broad ambitious reform agenda. I don't agree with your characterisation a moment ago. What I went out of my way to do at the National Press Club, and at every opportunity I've been given to talk to about this Intergenerational Report is to talk about the concrete steps that we are taking to make our industrial base broader and deeper, to invest in the kind of workforce that we need into the future, particularly in the care and support economy, the substantial progress we're making and have made when it comes to budget repair, getting the budget in much better nick to face the uncertainties of the future. We are acting across all of these fronts and that's because we take our responsibilities in the here and now seriously, and we take our responsibilities to future generations seriously as well.

CLENNELL:

All right, it just seems to me so many of the problems in Australia on housing, on energy, they do largely lie at the feet of the state. So unless state governments want to reform, aren't we a little bit cooked in terms of reform?

CHALMERS:

We need to be partners in reform with the states and territories and with local governments and with the community more broadly, the business community, the trade union movement. And I think if there's one defining characteristic of Prime Minister Albanese, it’s he's always searching for common ground, and that applies to the National Cabinet process as well. And so ideally, we can get the country focused on these big opportunities of the future, we can roll out this substantial reform agenda that we already have underway, and if there are more opportunities to work even more closely with the states and territories on some of these issues, then that's a good thing as well.

CLENNELL:

How confident are you that you can get state governments to pick up more slack when it comes to disability - as the architect of the NDIS, Bruce Bonyhady, suggested this week - and is it worth considering means testing the NDIS?

CHALMERS:

Bruce Bonyhady obviously is a towering figure in the world of the NDIS and he's working closely with Lisa and with Bill Shorten to deliver a report, I think towards the end of October from memory, and that will be an important part of the process - that won't be the end of the process, that will be all about what steps we need to continue to take into the future. But I pay tribute to Bill Shorten here. He's already made a substantial amount of progress, working closely with the sector, to make sure that we can improve the NDIS into the future. And our motivation here is to make sure that every dollar gets to the people for whom the scheme was designed, we want better outcomes for participants in the scheme. That's what it's all about. That's our overriding objective here. Now, when it comes to the states and territories, I think it is self-evident, you see it in the pages of the Intergenerational Report, that the Commonwealth share of the NDIS grows over time. And that means that the states and territories share has been shrinking and will continue to shrink into the future. It's one of the stunning conclusions from the Intergenerational Report. So the NDIS, costs tens of billions of dollars, the Commonwealth's share of that goes up over time, and so much of our effort, Bill Shorten’s, but the cabinet more broadly, is how do we make sure we get maximum value for money for a scheme, which is very important, which we value, which is here to stay, but which has costs growing.

CLENNELL:

What about means testing?

CHALMERS:

That's not something that I've been contemplating. We've got this review process underway and Bill Shorten has indicated some other directions, I'm not aware of any work that's going on, on that front. But my job primarily is to work closely with Bill, work closely with the other colleagues to make sure that this scheme can be as good as it can be, and part of that is making sure that we can afford it.

CLENNELL:

All right, the Chinese economy does seem to be probably your number one concern at the moment, how concerned are you about it and what it could do to the Australian economy?

CHALMERS:

I share the pretty substantial concerns that people have voiced about the Chinese economy. It is concerning to see the weakness, the softness in recent weeks and months in the Chinese economy, because it has obvious implications for us, here in Australia. In China, they're dealing with slowing growth, they've got deflation, there are concerns in their property sector, and to some extent in their banking sector, their exports have slowed as well. And so a lot of people around the world, a lot of economists, a lot of partners around the world are watching developments in China very closely, as I am. We still expect in the Treasury forecasts released at the Budget for the Australian economy to continue to grow, but that growth will be substantially weaker. And the two biggest challenges, I think, to that growth outlook is what's happening in China is a big part of that story, but also the lag impact of all of those interest rate rises in the system. And so what we'll get this week, we'll get an indication of some retail trade figures, I think tomorrow. We'll get a monthly inflation gauge on Wednesday. These monthly readings are notoriously volatile, they bounce around, they can surprise you in either direction, but the overall direction of travel is pretty clear. Our economy is weakening as a consequence of what's happening in the world and what's happened with interest rates, at the same time as inflation is moderating. We'll learn a little bit more about that this week, we won't get too carried away about those monthly numbers because they can bounce around but the trajectory is pretty clear. And our concerns for China in particular are something that we're monitoring very closely.

CLENNELL:

Could China lead us into recession?

CHALMERS:

Oh, that's not a conclusion that I've reached. We've got these Treasury forecasts as I say that expect the Australian economy to continue to grow, but some of these challenges are growing as well and China is one of them, so our expectation is that the Australian economy continues to grow, but slowly, but a big risk to the outlook to be upfront with your viewers, Andrew - what's happening in China and also the way that these interest rate rises are biting in our economy here at home.

CLENNELL:

The former Treasury boss Ken Henry, a man you'd be well familiar with from your time with Wayne Swan said the other day; "it's the young people who are going to be the workers of the future, people who are weighed down with HECs debt, who are going to have to repay a mountain of public debt, who are dealing with the consequences of climate change, who are facing diminishing prospects of ever being able to afford a home of their own, these poor buggers are also going to be the ones who are facing ever increasing average rates of income tax." What do you have to say to the poor buggers?

CHALMERS:

Well, first of all, I take Ken's intervention seriously - someone I've got a lot of respect for and if you pull apart all of those different parts of the paraphrasing you just did then, we are acting on those fronts. We're acting on climate change, we are acting on housing supply and housing affordability, there are legislated tax cuts coming into the system next year - the middle of next year. So really across all of those fronts that Ken was right to point to, frankly, they are some of the challenges that younger people do face in particular over the course of the next 40 years or so and we take those challenges seriously, and that's why we're acting on them.

CLENNELL:

All right, Treasurer. Well, speaking of those young people, I just want to play our viewers now you getting a bit emotional during the week at the Press Club about your own kids. Have a listen.

CHALMERS (AT NATIONAL PRESS CLUB ON THURSDAY):

When you spend as much time as we all do away from kids and families, dragging our arses around airports at 4.30 in the morning getting the first flight and cursing the alarm when it goes off at quarter to four or whatever it is - the thing that justifies it in our minds is the idea that being away from your kids, at least you're trying to create something that you can give to them a bit proud of - I think that's how people think about it in their own lives and that's how I think about the country. If we spend our time and all of the sacrifices that you all make trying to build something that at least we can be proud to give to them, then that will make it worth it.

CLENNELL:

So Treasurer, from what I've been told by several people including pollsters, your personal approval tests very well at the moment. People seem to like you, they seem to accept the clear, concise messages that you come across with but when I interview you, you're just so disciplined. That was an example I think more of the real Jim Chalmers. Is it time to open the shoulders a bit more in terms of what sort of Treasurer you want to be and what legacy you want to leave?

CHALMERS:

Andrew, I've tried to be really upfront and frank with you and in other opportunities really for as long as I can remember but especially since I've been the Treasurer and the point that I was trying to make at the Press Club is that all of this work that we do - I don't really just mean me - but all of this work that we do together needs to be worth something, it needs to be worth it and that means creating the kind of country that we can be proud to hand to our kids, that's really the intergenerational responsibility that we have - that's what wraps all of this up. We are capable as a country of dealing with the here and now, these cost-of-living pressures which are the government's number one priority at the same time as we work out how do we build something that we can be really proud of and that's not about one Treasurer or another, it's not about one person or another, it's about this opportunity that we have. We've sort of won this lottery - we've been born in arguably the best country on Earth and we've got this opportunity not just to recognise the things that are coming at us from around the world and into the future, but to work out how do we make the most of it and I think that answer that I gave at the Press Club about that little pilot light of purpose that we all need to have and if we don't have it, we shouldn't be in this line of work, that's really the point that I was making.

CLENNELL:

But is the Prime Minister less reformist than you are?

CHALMERS:

No, I don't think that for one second, Andrew. We are engaged together - the PM and I, the whole Cabinet, the whole government and I like to think most of the country - we're engaged in this big reform effort on climate change and energy, on industry policy, getting the budget in better nick, investing in our people so that we can have a more productive economy which lifts living standards and lifts wages. We've only been here for 15 months, Andrew, and you can run through a very long list of the reforms that we already have under way and there's more to come and the Prime Minister and I are absolutely in lockstep in that reform project and we understand that we've got a lot to do to live up to our intergenerational responsibilities and again, that's what the IGR is all about, that's what the government's all about.

CLENNELL:

Just a couple of quick things I want to ask you about because I know we're nearly out of time, but the economy is slowing, wages appear to be rising okay. Why do we need this suite of IR reforms you're about to introduce next week which are on a union wish list really but perhaps are going to put more pressure on business in a declining economic environment?

CHALMERS:

Well, I think we've been saying really since before the election and certainly after it as well, that we need to do more to make sure that people can have secure jobs and decent pay and we have made some progress when it comes to wages growth and we've flagged before the election some of these additional steps that we're taking right now. We understand that industrial relations can be contentious and we don't pretend for one second that there's always a unanimous view about the sorts of changes and reforms that we want to make in the economy, but we flagged them, we're prepared to be consultative about them and we want to progress this on behalf of the Australian workforce which went for the best part of a decade living under a policy of deliberate wage suppression and stagnation from our predecessors, we take a different view. We want wages growth to be strong, we want it to be sustainable and responsible and one of the ways that we do that is to make work more secure.

CLENNELL:

Just finally, when it comes to housing affordability, I wonder how much of a disconnect there is between your experience and the experience of Australians in Sydney and Melbourne. The suburb you grew up in, you're still in Logan, in Brisbane, you can get a house there for about 450,000 right? In parts of Western Sydney now, out of Western Sydney, it's a million dollars minimum for a house. Do young people in Sydney in particular, maybe Melbourne just have to accept they're going to rent - that home ownership is beyond them now?

CHALMERS:

I don't think we should be defeatist about it. One of the reasons why we're pouring billions of dollars into more housing supply, one of the reasons why we're working so closely with the states and territories, one of the reasons why we're working with them to deliver this Help to Buy scheme that I spoke to you about at our National Conference not that long ago - this is all about building more homes, it's all about making it easier and cheaper - whether it's renters or housing affordability if people want to get into the housing market, we do understand that different parts of the country are under different pressures and one of the things I talked about at the Press Club is we need to get beyond just thinking about aggregates in our economy, we need to recognise that different parts of Australia are under different kinds of pressures. We'll be in WA - the Cabinet - in the course of the next couple of days and we recognise the pressures in WA are different to the pressures here in Logan City and that's why we need to make sure that our whole program, a hell of a reform program, all of our policies and in our economic plan recognises those different pressures.

CLENNELL:

Treasurer Jim Chalmers, thanks so much for your time this morning.

CHALMERS:

Appreciate it Andrew. All the best.