Interview with David Koch, Sunrise, Channel 7
DAVID KOCH:
Workers are finally getting more in their pay packets. Wages are up one per cent in the most recent quarter, it puts up wage growth for the year at 3.1 per cent, which is well ahead of the five year average of 2.2 per cent. And look at the industries where the pay went up the most, retail trade up 2.4 per cent, cleaning and gardening 2.1 per cent, hair and beauty two per cent, after lagging behind since 2009. Lower skilled workers are now enjoying the fastest increase in pay compared to the most highly skilled workers. For more I'm joined by Treasurer Jim Chalmers - Treasurer, good news, you're sort of taking credit for the result, what have you done to turn this wage escalation around?
JIM CHALMERS:
Good morning Kochie. Look, one of the big reasons why low skilled and low paid workers are among the biggest beneficiaries of this wages growth that we're beginning to see in our economy, is because of that minimum wage increase that we supported enthusiastically last year. But in addition to that, we're obviously making changes to industrial relations, we're making changes when it comes to the pay of aged care workers, all of these things will be important over time as well. But if you take a step back for a moment, Kochie, and you think about the year ahead, we've got a lot coming at us from around the world but we've got a lot going for us as well. We've got low unemployment, we've also got the beginnings of wages growth here, and we're getting good prices for our exports on global markets. So I'm optimistic about the year ahead, we've got to be realistic about what's happening in the global economy. But one of the things I'm most pleased about and proudest of over the course of the first eight months or so of this Albanese Labor Government is we've had that decade of wage stagnation, now we're seeing the beginnings of wages growth, and that's a good thing when people are under cost‑of‑living pressure.
KOCH:
Let's go through a couple of those issues and the wages growth - you say it's the beginning - how long will it continue? And what do you expect it to peak at over the next year or so, can we expect more fast wage growth?
CHALMERS:
We expect our wages growth to pick up a bit more, we'll update those forecasts in the May Budget. There's a lot of unpredictability, as you'd imagine with the global economy as it is.
KOCH:
What's your gut feel, though?
CHALMERS:
Ideally, we would get this kind of strong, sustainable wages growth a bit higher than it is now but conscious of all the other pressures in the economy, we want to get real wages moving again, we've still got an issue there because inflation is growing faster than wages growth at the moment, and we don't expect that real wages growth till 2024. But we've made a really good start here and I think the job, as you would understand having watched this for a really long time Kochie, the task for governments is to get wages growth which is strong and sustainable, so that people who work hard, can provide for their loved ones and get ahead. You want to make sure that business can afford to pay for it and the best way to ensure that, is to make sure that our workplaces are more productive. If you do all of those things - those are key parts of our economic plan - and you can get that wages growth that people need and deserve, and you can get the kind of productivity you need in the economy.
KOCH:
As you rightly point out, 3.1 per cent - good start, but compared to inflation at close to seven per cent, workers are still going backwards, but we're seeing early signs and inflation is starting to trend down and that will pick up over the next 12 months, won't it?
CHALMERS:
We expect inflation to come off over the course of this year -
KOCH:
By how much?
CHALMERS:
There are some Treasury forecasts from October but this is a pretty fast‑moving environment, so we'll update those in May as well. But I think, you and I've been watching what's been happening in the US and elsewhere, where inflation may have peaked in some of those big economies, we think the peak of inflation is around now in Australia. It will hang around a bit higher than we'd like for a bit longer than we'd like but the lower we can get that inflation, and we'll get that strong and sustainable wages growth, that means we get some real wages growth in the economy. I think one of the best things for your viewers to understand is one of the reasons why, and this is not about COVID, it's not about the current global pressures, but really for a decade now Australian workers haven't been getting the wages growth they really need, and we're seeing that turning around. That is a good thing, we're pleased with that and proud of that but we know that there's more work to do. But there are early signs that our economic plan when it comes to wages is working.
KOCH:
Okay. Alright, a key factor in terms of inflation, energy prices - you put a cap on gas prices but now we've got news that some of the gas suppliers are knocking back, particularly business and industrial new customers, because they can't get the gas at that lower price?
CHALMERS:
Look, the gas cap has only been in operation for a few weeks now and inevitably when you're intervening in the market, people will want more information and more guidance from the ACCC and others, and they will be getting that guidance. But we do need a bit of perspective here Kochie, it's only been in place since just before Christmas, literally a few days before Christmas and that means inevitably people will get their head around the changes. But we expect the price cap to work, we expect the ACCC to provide the kind of guidance that businesses on all sides of the equation need. And when it is up and running properly, and when we get the other parts of our energy plan up and running, including electricity bill relief, then we think that will take the edge off some of these forecast price rises, which are a big part of our inflation problem.
KOCH:
Okay. Jim Chalmers appreciate your time. Thanks for joining us.
CHALMERS:
Thanks Kochie.
