Interview with Hamish Macdonald, RN Breakfast, ABC
HAMISH MACDONALD:
This is RN Breakfast. $5 billion – that’s the cost of last year’s flooding in lost economic activity, not even physical damage, according to new Federal Government data. Fresh figures also show that last year two‑thirds of us were impacted by natural disasters according to separate findings from the new National Emergency Management Agency, NEMA. It’s ushered warnings from the Treasurer, Jim Chalmers, that natural disasters will put more pressure on the economy next year with disaster funding set to be a focus of the May Budget.
This morning with Anthony Albanese still in Papua New Guinea, as Acting Prime Minister Jim Chalmers is heading to Lismore, alongside the Emergency Management Minister Murray Watt, to inspect rebuilding efforts following the devastation there last year. He joins us from northern New South Wales this morning. Welcome back to Breakfast, happy new year and all of that.
JIM CHALMERS:
Thanks, Hamish, and happy new year to you and your listeners.
MACDONALD:
$5 billion, what does that actually represent?
CHALMERS:
That, as you rightly pointed out in our introduction, Hamish, is lost economic activity. It doesn’t really begin to capture the full human cost, community cost but even the full cost to infrastructure and assets and communities more broadly. And so we’ve put that number out there really just as a reminder that even though we are rightly focused on the human cost of these natural disasters, which are becoming more and more frequent, there is a cost to the economy as well and a cost to the budget.
We will, of course, be there for Australians impacted by natural disasters in the same way that Australians are there for each other. And also ‑ as you said a moment ago, when you think about it ‑ when almost seven in every 10 Australians lived in a disaster‑impacted area in 2022, that gives you a sense of the size and scale of the challenge that we’re up against.
MACDONALD:
Can you put a figure on the total cost of natural disasters in Australia in a year, when you take all of that into account?
CHALMERS:
It’s difficult to do, different organisations try and put a price tag on it. One of them during the course of the last week or so, an international organisation, said that what happened in northern New South Wales and southeast Queensland was the fourth biggest natural disaster in the world last year, which is another, I think, pretty useful reminder of the scale of these particularly recent flooding events in Australia. It’s something that our West Australian friends and South Australian friends are unfortunately very familiar with quite recently.
So, it is possible to put dollars figures on this, but again, recognising human cost first and foremost. But our job as the Government, as part of making our economy more resilient and our budget more responsible, is to try and do a much better job not just of managing natural disasters as they occur but trying to get in ahead and mitigate some of these where that’s possible. And that’s why Murray Watt’s work and the work of the Albanese Government when it comes to disaster readiness is so important.
MACDONALD:
The estimate that I think you’re talking about there came from Munich Re, the German reinsurance company.
CHALMERS:
Correct.
MACDONALD:
What happens when commercial insurers no longer find it viable to offer policies in specific parts of Australia? What’s your plan after that?
CHALMERS:
We have made the beginnings of an investment in trying to strengthen our insurance market, and we don’t pretend that there’s an easy solution here. Ask friends in north Queensland, for example – they’ve been dealing with issues around high premiums and cyclone insurance for some time and we’ve been working with the insurance companies and with communities most likely to be affected. But there’s no kind of easy answer here. If there was, it would have been fixed already. There’s a reinsurance pool, there’s the beginnings of an investment that we are making, but I think one of the real fears that people have in communities which are most susceptible is that insurance premiums will become priced out of reach, and that obviously makes things riskier for people.
And so part of the job again – and why our biggest focus in this area is in mitigation – is because in a lot of these communities, whether it’s where people are building, whether it’s what we’re doing with local infrastructure, there is a really important role to play there for government, and we’re prepared to play it.
MACDONALD:
But the writing is on the wall, isn’t it? Government in the longer term is going to have to play a much bigger part in the insurance market if Australians are going to be able to insure their homes and businesses?
CHALMERS:
I think there’s a leadership role, but we need to be careful about how we expose the Government’s balance sheet to some of these big risks. We’re prepared to do that in some ways – the reinsurance pool is one example ‑ there are other examples in the Commonwealth budget. But I think the most important thing that we can do as we work on these issues in insurance, is around mitigation. It made no sense to us over the course of our predecessor’s term in government that a lot of the effort – all of the effort was on the response. We will be there to respond to natural disasters, but we will also need to be there before they occur. They are going to become more and more frequent. We need to recognise that.
MACDONALD:
You’ll be hearing the stories in Lismore today about the difficulty in getting tradies in, as well as supplies to do the rebuild job. In WA, the Acting Transport Minister has flagged how expensive the repairs there are going to be due to the flooding in the Kimberley. Can the Federal Government do anything more to resolve some of these issues given that, as you say, they’re going to be more regular, they’re going to be more costly, we actually need people there to be able to rebuild, don’t we?
CHALMERS:
Absolutely, and this is where the local impact merges with the national economic impact as well. At a time when we’ve already got skills and labour shortages which have been there for some time, we’ve already got big pressures on supply chains as a consequence of COVID and for other reasons as well, and so what we’re seeing in northern New South Wales and what Murray and I will see today, no doubt, are some of the consequences of those skills shortages.
So the role for the Federal Government, which we embrace and take responsibility for, is to build a bigger and better workforce nationally but also to make sure that we can get the workers where they’re needed. Beyond that, think about WA, the infrastructure rebuild there will be substantial. The Great Northern Highway and other local infrastructure, this puts additional pressure on some of our logistics chains and supply chains. We’re conscious of that, and we’ll be there for part of the cost of restoring and rebuilding what’s been damaged.
MACDONALD:
Sure, but on that point, you’re the Acting Prime Minister right now as the Prime Minister himself is in Papua New Guinea. He’s talking there about being committed to increasing PNG’s involvement in the Pacific Labour Mobility Scheme. Why don’t you just make it much easier for people in PNG and the Pacific to come to Australia and work, as so many of them want to, given that we have this dire need?
CHALMERS:
This is an important part of what we’re working on with our Papua New Guinean friends. The Prime Minister is meeting with his counterpart. I met with the Papua New Guinean Treasurer last week, and this was a central focus of what we’re trying to work up with them. My colleague Clare O’Neil’s got a migration review underway right now which, of course, is absolutely central to that of course as well. But what we need –
MACDONALD:
It doesn’t sound like any decisions, with respect, are being made immediately. I mean, there’s acute need.
CHALMERS:
I don’t think that’s quite right, Hamish. I mean, the Jobs and Skills Summit that the Prime Minister and I convened in September in Canberra, one of the big outcomes there was about immediate steps to get more skilled workers into our economy, not as a substitute for training people but recognising that when you’ve got these acute skills and labour shortages there is a role for migration, there is a role for training, there is a role for cheaper child care so people can work more and earn more if they want to. We need to act on all of these fronts simultaneously, because one of the big handbrakes on the economy in recent times has been these skills and labour shortages. We can come up with a sensible combination of those policies, and we’ve already started acting.
MACDONALD:
What do you make of the suggestion that’s been floating around this week from the Business Council about, I suppose, settings – putting in place some automatic settings around migration flow?
CHALMERS:
I obviously listen respectfully when the BCA put forward views like that. I think there is some thinking to be done, and no doubt Clare O’Neil and Brendan O’Connor and others in our team are doing that thinking about how we get the most flexible and appropriate arrangements for migration. And what the BCA is proposing is pretty similar to what others have proposed in recent times, including at that Jobs and Skills Summit.
So if there is a way that we can streamline some of these processes to get the right mix at the same time as we recognise that migration is not a substitute for training and all of the other things that we need to do, then I’m certainly personally up for that conversation. I’m sure my colleagues are, too.
MACDONALD:
Internationally, the International Monetary Fund has warned that a third of the global economy will be in recession this year. You’ve often talked about the storm clouds gathering. Do you think it’s becoming more likely Australia will follow much of the rest of the world into recession?
CHALMERS:
That’s not our expectation, Hamish. The Treasury forecasts from the Budget not that long ago were that Australia will continue to grow. But our challenges are growing as well. I’m optimistic about the future of our economy, the future of our country, but I’m realistic about what this global downturn means for us here in Australia. We won’t be completely immune from some of the difficulties that other economies are feeling around the world. And so we need to be realistic about that in 2023.
MACDONALD:
You say you’re optimistic. Housing debt sits at 188 per cent of incomes compared to less than 50 per cent in the 1990s. The value of people’s homes is sliding in most of our capital cities. Do you understand why so many Australians, mortgage holders, home owners, aren’t as optimistic as you?
CHALMERS:
I understand that with interest rates rising as they have been since before the election that that puts more pressure on people who are paying a mortgage, obviously. And one of the big reasons why the Budget in October was so responsible, why it had inflation as its major focus and cost of living, was because people are under pressure. And one of the big things that will determine how our economy performs and how our country performs in 2023 will be the impact of these rate rises, particularly as people come off fixed rates on to variable rates throughout the course of the year.
So obviously this is a big concern to us, something we’re monitoring very closely. And where this merges with some of the other questions you’ve asked me, Hamish is, there’s a handful of things that will largely determine how our economy goes in 2023 – obviously the war in Ukraine, obviously COVID in China, obviously how those major events, economies fare, and the IMF has been pretty pessimistic about that. But also how these interest rate rises bite in our economy and also the role that natural disasters will play over the course of the next 12 months.
Those five things combined will have a lot to say about how we go. I’m optimistic about the future, but we do need to recognise that we’ve got these difficulties in the near‑term to manage.
MACDONALD:
The New South Wales Premier Dominic Perrottet is under fire this morning. He apologised for wearing a Nazi costume at his 21st birthday party. It was fancy dress, we’re told. Is it tenable for an Australian political leader who’s done something like that to remain in office?
CHALMERS:
It’s a shocker, obviously, what came out yesterday. And it’s appropriate that he apologised for it. My view about this, Hamish, is that we want the state of New South Wales and we want Australia to be more inclusive and more tolerant, and when something like this comes out that’s obviously a challenge for that. People in New South Wales will have an opportunity to express their view in March on a more inclusive and more tolerant state of New South Wales, in the same way that people had that opportunity nationally in May. But obviously a pretty shocking revelation and very hurtful, no doubt, to a whole bunch of communities and people more broadly.
MACDONALD:
Do you think that it’s plausible that someone didn’t know how offensive that kind of thing was, even at the age of 21?
CHALMERS:
I find that hard to believe, Hamish, of course. And I think it’s a particularly hurtful thing to have done, particularly for people who have memories of the war, obviously the Jewish community and others, who would be deeply hurt by it, deeply offended by that – and for good reason. And I think the ultimate judge of this will be the people of New South Wales, and they’ve got an opportunity in March to express a view about a more tolerant and more inclusive state, just like the people of Australia voted for more inclusion and more tolerance in May last year.
MACDONALD:
Jim Chalmers, appreciate your time this morning. Good luck in Lismore today.
CHALMERS:
All the best, Hamish. Thanks very much.
