Interview with Danica De Giorgio, First Edition, Sky News
DANICA DE GIORGIO:
Treasurer, thank you so much for joining us. Firstly, why did the Government go ahead with imposing a blanket testing requirement on Chinese travellers when the Chief Medical Officer Paul Kelly advised against it?
JIM CHALMERS:
Well, good morning, Danica and Happy New Year. We've taken this decision as a government from an abundance of caution. We recognise that a lot of countries around the world are putting in place similar steps as the one that we're putting in place – and so an abundance of caution. It's not an especially onerous requirement that people have a negative test when they come here from that part of the world. The chief medical officers, people we work with closely, we respect their advice. Of course, one of the points that they've been making is we need to do better when it comes to surveillance of people coming to the country. There is an element of uncertainty about the data coming out of China so for all of those reasons, we've taken this decision out of an abundance of caution consistent with what's happening around the world in other countries with which we compare ourselves.
DE GIORGIO:
Have you carried out any modelling of sorts about what impact China's outbreak would actually have in Australia had you not implemented this testing regime?
CHALMERS:
Obviously we weigh up a whole range of factors. Our concerns about the COVID wave in China are partly about travellers and that's why we've taken this step that we've taken, but also there will be broader economic consequences from this quite extraordinarily large wave of COVID in China which will put a lot of pressure on the Chinese workforce, on supply chains around the world and of course on our own economy. So for my part of the Cabinet in the economic portfolios, my main concern here is around the impact of COVID in China on the global economy and on the Australian economy and that's where most of my attention is focused.
DE GIORGIO:
Okay. You've labelled this outbreak as the biggest risk to economic growth this year. Which industries in Australia do you expect will be impacted by the outbreak?
CHALMERS:
First of all, I said it's one of the biggest risks. I think that there are 5 really main challenges to our economy coming at us from around the world and from around the country in 2023. China, obviously, is having this big wave of COVID. They're transitioning from COVID zero to a different way of managing the pandemic. And so that has obvious consequences for their economy and therefore, for our economy as well but that won't be the only pressure on the Australian economy. China's a big part of the story, the war in Ukraine pushing up energy prices, of course, prospects in the US, UK and Europe, the impact of interest rate rises determined by the independent Reserve Bank here in Australia will obviously have an impact, as will the ongoing threat of natural disasters, so I'm optimistic about the future but I'm realistic about prospects for the global economy and what that means for our own economy in 2023. We are doing our best not just to batten down the hatches, not just to build buffers against all of this international economic turbulence, but also working a way around the clock to build a better future for people as well.
DE GIORGIO:
A number of economists have told Sky News they believe it's going to take at least 6 months for the Australian economy to level out once again due to the cost-of-living pressures that we are seeing. Is that what your understanding is as well? Do you think it's going to take at least 6 months?
CHALMERS:
Certainly the Treasury's expectation is that the weakest time for our economy will be somewhere around the middle of this coming calendar year and that's because of a range of things – the global pressures that I've mentioned, the impact of interest rate rises which are felt immediately in mortgage repayments but take a little bit longer to flow through to the economy. So for all of those reasons, the Treasury here in Australia and the Reserve Bank expect our economy to slow up a bit throughout the course of 2023 because of global pressures, because of rising interest rates. And so our job as a government is to provide a bit of cost-of-living relief where we can in the most responsible way that doesn't add to inflation but also invest in our supply chains, invest in growth in our economy, invest in the future, and also manage the Budget in the most responsible way that we can. If we do all of those sorts of things. I'm optimistic we will get through what will be a difficult year in the global and domestic economy and get to the other side in a spirit of confidence that we've done what is necessary to get our people and our country and our economy through a difficult time.
DE GIORGIO:
Just finally, how do you expect the Reserve Bank to respond to China's COVID outbreak. Could rate hikes be paused because of this uncertainty?
CHALMERS:
Obviously the independent Reserve Bank will weigh up all of the considerations in the global economy and in our own economy. They will be monitoring closely the impact of the rate rises which began before the election and the impact that they are having on the economy as well. And so those will all be parts of their considerations. As the country's Treasurer, I don't pre-empt or second guess or predict what the independent Reserve Bank might do. The market expects another interest rate rise or two but there's a lot of uncertainty in the global economy for all the reasons that you and I have talked about this morning. And so, no doubt when the Reserve Bank meets again in February and subsequently they'll weigh all of these things up.
DE GIORGIO:
Treasurer Jim Chalmers, we'll leave it there. Thank you so much for joining us.
