Interview with Cathie Schnitzerling, ABC Radio Mornings

CATHIE SCHNITZERLING:

Australia's population is smaller and older than originally forecast due to the COVID pandemic. Our economic growth is pinned to overseas migration to keep the population up, and international students to help provide the taxpayer base to support our government services like aged care, defence, the NDIS, just to name a few. They're some of the findings of the Federal Government's 2022 Population Statement which was released today. With growing global competition for migrants as other nations also find themselves with population deficits, is relying on migration to boost our economy sustainable? Federal Treasurer Dr Jim Chalmers joins me to discuss strategies to address the findings of the latest Population Statement. Welcome, Treasurer.

JIM CHALMERS:

Thanks very much, Cathie. It's nice to hear you on the radio. And I'm relieved you're not asking me about that Prince Harry book, that sounds like a lot.

SCHNITZERLING:

Look, you've got enough on your plate, I think without Prince Harry. Were there any surprises for you in the 2022 population report?

CHALMERS:

Not sure about surprises, Cathie, but I find it fascinating. The report that the Centre for Population will release today is a fascinating insight into how our population is expected to change and grow and evolve. And that's obviously crucially important to our society, but also to our economy. And so a lot of the numbers which are in there reveal some pretty interesting insights. So for example, the impact of COVID had the biggest consequences for population growth in more than 100 years and so that gives you a sense of the magnitude of the impact of COVID. It had an impact on fertility, on migration, obviously, and it means - as you rightly said in your introduction - that our population is growing a bit more slowly than we anticipated a few years ago and we're getting older than we anticipated a few years ago. We knew that we had this challenge with the ageing of our population but COVID has made that a little bit more difficult, not insurmountable, of course - a lot of countries are dealing with a similar set of challenges.

SCHNITZERLING:

The number of people 65 and over has doubled in the past 70 years and the stats, also in the report and from demographers point out that there, are fewer people of working and taxpaying age to support them, that just keeps going down. How as a government, can you deal with that?

CHALMERS:

Well, there's a few things that we're doing here. The most important way for your listeners to think about it and understand it is when you've got a population which is getting a bit older, and as a good government you want to provide the services and the pensions and the health care and the payments to support people when they're a bit older, then you need to make sure that you've got the right kind of workforce to support that. And not just in the sense of you need to have enough taxpayers to support the investment in those areas - that is important - but also to make sure you've got the right kind of workforce to support the way that our population is changing. And so what we're doing, and what we'll do more of, frankly, is building that workforce. You can do that a bunch of different ways. Cheaper early childhood education is a big part of the story because it means more and more new parents and particularly mums can work more and earn more if they want to. That's good for our workforce. There's a lot we are doing and can do in skills and training to make sure that we've got the right kind of workers that we need as the economy changes into the future. And migration is an important part of the story as well but it's not a substitute for those two other things. Migration has obviously made an enormous positive contribution to our country and to our society and it will continue to make a great contribution but we need to make sure that the settings are right and responsible. My colleague, Clare O'Neil is working on a review of our migration settings but we've also got to make sure that we don't see migration as a substitute for those other things that we're doing.

SCHNITZERLING:

Well, global competition for migrants - and I take your point that it's more than just migrants, you've got those other domestic policies that you can put into place - but other countries are also facing similar problems to us and they've got declining populations, and they want to attract migrants as well. What is it that's being considered in that migration review that's going to make Australia an attractive destination to the type of migrants that we want to come to this country to help support the economy?

CHALMERS:

My terrific colleague, Clare O'Neil, is doing the bulk of the work here but because it has such important consequences for the economy, then we're obviously feeding in as well from my portfolio. And the way that I look at it is that we've got a few different things going on at once. At one level, there is this big, global scramble for talent after the last couple of years of COVID and we've got a lot of advantages there - we're good at attracting talent to our country, for obvious reasons, it's a wonderful place to live and so that's part of it. We've also got to make sure that when it comes to skilled workers that we're not just doing it the lazy way and just bringing people in without much consideration or much thought, we've got to train people for opportunities, but there is a role for skilled migration as well to supplement that.

SCHNITZERLING:

What about unskilled migration? I know that agricultural workers rely on unskilled migrants, hospitality - so will those settings be looked at as well. We need truck drivers, we need hairdressers, there's shortages of cooks.

CHALMERS:

That's right, Cathie and that's the third area. A lot of those areas you mentioned then are areas of skills shortages. We've got massive skills shortages in our economy right now and that's holding our economy back, so there's that. But at the unskilled level - whether it's farms, whether it's other lower skilled work - we've got to make sure that we're doing the right thing by employers looking for workers, but also by the workers themselves. We've got to make sure that people aren't being exploited. That hasn't always been the case, overwhelmingly people do the right thing but sometimes people do the wrong thing and so that's an important part of our thinking as well. But if you go right across those three areas - the global scramble for talent, skilled workers, unskilled workers that we don't want to be exploited - there's a lot that we can do here to make sure that as we come out of COVID that we learn the lessons of the period pre-COVID and during COVID. Migration has got a crucial role to play in our country and in our economy, we recognise that and support that but we've got to make sure we're acting on all of these fronts simultaneously.

SCHNITZERLING:

Now just as important as attracting migrants, whether they're skilled or they're unskilled, do you want to attract people to come to this country who have young families who are going to contribute to the culture and the economy?

CHALMERS:

We do care about that because when your population is getting a bit older and it throws up all of the challenges that you and I have been talking about this morning, then the age profile matters, it matters to us because we want to make sure not just that we have the workforce to support an ageing population, but also that we've got lots of diversity and we've got a country which is continually replenishing itself and renewing itself - whether that be people having, ideally slightly bigger families or whether it's migration, there is a really important role to play there. And good communities are communities that have an element of vibrance and renewal and so all of that matters greatly to us and it's part of our thinking.

SCHNITZERLING:

We'll talk about fertility in a few moments. International students are responsible for big bounces in population in many states around Australia. How important are they to boosting the economy and more importantly, how long do they stay?

CHALMERS:

There are a couple of important things about that. Absolutely crucial to our economy - one of our biggest export markets is education and I know the Education Minister Jason Clare and the Trade Minister Don Farrell and others recognise that.

SCHNITZERLING:

Is it our second or first biggest?

CHALMERS:

From memory, I think it's third or fourth but I'd have to check that - certainly way up there, right at the top of the list. And so that's important and what we learned during COVID was just how reliant a lot of our universities were on that income as well. A lot of the unis are trying to work out how do they have a more sustainable and resilient model as well. But subject to all of that, we want people studying here and one of the things that came up in the Jobs and Skills Summit that the Prime Minister and I hosted in Canberra in September was how do we make sure that when we are educating great people from around the world, how do we provide more opportunities for them to make a contribution after they graduate if they want to and if we've got the right kind of robust settings and regulations in place to make sure people aren't abusing that? So I know when I talk to Clare O'Neil's review team and her migration review, this is one of the things that I'm very, very focused on because ideally, we'd find a way that people we educate from around the world who get these great degrees from some of the world's best universities, that they can make an ongoing contribution. If that's possible and if we can do that in a responsible way, we should.

SCHNITZERLING:

This is ABC Radio where it's 19 minutes past 10, 19 minutes past nine if you're listening in Queensland. My name is Cathie Schnitzerling and I'm speaking to the Treasurer Dr Jim Chalmers. You mentioned the Jobs Summit last year and I believe a White Paper is in the works but what directions came from that to help build productivity in terms of not looking to migration, but how do we build the base of the workforce here?

CHALMERS:

Yes I think it's a combination of what the economists call workforce participation, but which is really about - if people want to work or they want to work more and earn more, how do we make it easier for them to do that? So cheaper childcare, I think, really is a game-changer on that front. And we're investing a number of billions of dollars in that. I know from my peer group, people with little kids, one of the big decisions that people confront when they're thinking about how much they work is what that means for the family finances when you introduce childcare into the mix. And so I think that's a really, really big part of it. The Jobs and Skills Summit focused on that a lot, particularly what it means for the economic participation of women - an area where we need to do much, much better. So there's that. The Jobs and Skills Summit obviously talked a lot about training but we need to make sure when we've got these big skill shortages -

SCHNITZERLING:

Tradies.

CHALMERS:

- that we've got the tradies that we need, we've got the skilled workers that we need, because you talk to business right around Australia and employers right around Australia and in almost every case, they would love to employ more, they can't find people with the right skills. So we've got to make sure the skills mix keeps up. And also migration - migration was a big part of the Jobs and Skills Summit discussion and typically, with something as contentious as migration, there's a whole range of views. We welcome that as we tease out the best way to move forward but I think there is broadly and generally a recognition of the contribution migration makes to our economy and our society, and the important ongoing contribution it's going to need to make as our population gets a bit older.

SCHNITZERLING:

Often we hear from callers when we're talking about the subject of work that many retirees would love to work more, but they're limited because they'll lose part of their pension. New Zealand has a pay as you go tax rate for seniors on a pension, but they can still go back to work and that's another tax source for the government. Is that one of the things that might be under consideration in the White Paper?

CHALMERS:

Yes and we're trialling a measure right now which says that you can earn about 4000 more dollars before your pension is impacted. We did do a lot of discussion with some of the peak seniors groups and others, some of the employer groups like the chambers of commerce about how to do this. And so right now, you can work a bit before you lose your pension and what we've said is you can work a bit more and earn a bit more and we're going to see if that makes a difference over the course of this year and if it does, obviously, we'd consider extending it, but we know that there is, in lots of cases, an appetite for older people who might have retired to maybe go back and do a day or two. And one of the big anxieties there has been getting thrown off the pension. So we've tried to take a step there and also the other thing which worries people - and I understand this anxiety - is in the system as it used to be, if you breached that and you lost your pension, then you had to go through the whole process to get back on when you stopped working.

SCHNITZERLING:

And that's more than tiresome.

CHALMERS:

It really is, it really is - we help a lot of people in our electorate offices to do that process. And so what we've tried to do is make it so you stay in the system, you don't get thrown off and then hopefully that will make it a bit easier for people, particularly older people.

SCHNITZERLING:

If we can turn briefly to fertility because I'd like to talk to you about Medicare as well and we've only got a few more minutes. In 2020, Australia's fertility rate dropped to an all time low of 1.5 [INAUDIBLE] It had a big boost in the 2000s with the Howard Government's baby bonus encouraging people to have more children - one for mum, one for dad, one for the country. Is that something that the Federal Government would reintroduce?

CHALMERS:

We're not looking to do that. A couple of things about that - I will do something unusual on your program and say something nice about someone from the other side of politics.

SCHNITZERLING:

Thank you.

CHALMERS:

I think Peter Costello did a really good job of putting these issues on the agenda. And the intergenerational report which he started and which I'm hoping to renew and make meaningful again in the course of this year, really did get to this challenge. Obviously, the fertility rate has a big impact on our population growth, so I think he did a good job putting that on the agenda. Now, he had very different budget circumstances where he could give new parents five grand or whatever it was at the time. He had hundreds of billions of dollars rolling into the budget and he was able to do that. Now, the times for us are very different but that doesn't mean that we're doing nothing in this area. Really you're choosing between something like that, or something like what we're doing with early childhood education, and again, not to bang on about childcare over and over again, but that really is, I think, the most important thing that we can do to help people make the decision to have more than 1.66 kids.

SCHNITZERLING:

Briefly before we go, doctors and state premiers say the Medicare system is broken. And to an extent, the Health Minister has agreed with that. What's the Federal Government intending to do to fix it?

CHALMERS:

Well, we've already got some steps in the works that we took to the election about trying to take some of the pressure off Medicare, trying to strengthen Medicare. We built the thing, we designed it, we're proud of it. We'll always do what we can to invest in that. But we know, certainly the Health Minister Mark Butler and the Prime Minister know there's a lot of pressure on our health system right now and one of the big things that we've done - we've only been in office for eight months - but multiple billions of dollars of new investment in the health system to try and take some of these pressures off because we do recognise that the system can be under strain, and that Medicare shouldn't be part of the problem, it should be part of the solution. So whatever we can do to strengthen it, we'll try and do.

SCHNITZERLING:

Treasurer, thank you very much for your time this morning on ABC Radio.

CHALMERS:

Appreciate it Cathie, all the best.