Interview with Patricia Karvelas, RN Breakfast, ABC
PATRICIA KARVELAS:
Jim Chalmers is the Treasurer and he's in our Parliament House studio right here with me. Welcome back, Treasurer.
JIM CHALMERS:
Thanks very much, Patricia.
KARVELAS:
You were ropeable when you first learned about the significant breach, the Committee's made these interim findings, what are you going to do about them?
CHALMERS:
Well, it is a deeply disappointing breach of trust, completely unacceptable, because what's happened here is we've seen the consultation process trashed, and we need to get to the bottom of it. That's what this interim report from the Committee is all about. I commend Deb O'Neill and her colleagues for the work that they are doing. We do want to see more information and more transparency. It needs to be consistent with and not get in the way of some of the other processes underway, including the AFP referral from the Treasury, at the same time as we get on with all the other work that we're doing - cleaning up the Tax Practitioners Board, the work that Katy Gallagher is doing, when it comes to procurement - all of these things are important ways to ensure we get to the bottom of what's happened here but also, we make sure it never happens again.
KARVELAS:
Last month, you said those PwC names would be released in time, should PwC now release them as a matter of urgency?
CHALMERS:
Certainly we want to see an element of transparency here. And the Committee is capable of doing their work without my guidance, necessarily -
KARVELAS:
But do we need to know the names immediately?
CHALMERS:
We need to know more information, certainly. We need to know much more about what's happened here as part of our efforts to make sure it doesn't happen again. There's a committee process doing a great job, there's the AFP referral, there's all of our other efforts, as well. We will get to the bottom of this and we will make sure that it doesn't happen again. It is deeply, deeply disappointing, completely unacceptable, and the government and the Parliament more broadly is acting decisively to deal with it.
KARVELAS:
The Committee strongly recommends the names be released but is there a way to compel PwC to reveal them?
CHALMERS:
There's certainly a number of parliamentary processes that the Committee has available to them and -
KARVELAS:
Like what?
CHALMERS:
I've heard people talk about producing lists and documents and compelling that kind of information. In that regard, we're in Deb O'Neill and the hands of the Committee in lots of ways, but the AFP has its own processes too. What I've tried to do last time we spoke and this time as well, is to make sure that nothing we do across multiple fronts gets in the way of the AFP investigation. We need to make sure that it's consistent, that's what we're doing but some of these processes need to be aligned.
KARVELAS:
Should this be referred to the NACC, the integrity commission?
CHALMERS:
Well, I think that remains to be seen. We've got some processes in the first instance and it's not for us necessarily refer it to the Anti‑Corruption Commission -
KARVELAS:
No, but I've spoken to senior colleagues on your side who think it should be on the NACC's agenda.
CHALMERS:
Understood, people are filthy about this for good reason. And they want to see the maximum amount of effort to get to the bottom of it, to make sure that there is a price paid and to make sure it doesn't happen again. I think it makes a lot of sense to have this committee process running, to have the AFP referral from the Treasury and all of the other things that we are doing. If there are other steps that need to be taken beyond that, obviously, we'll consider them.
KARVELAS:
Moving to another issue, earlier this week Deputy Reserve Bank Governor Michele Bullock said unemployment would have to rise to around 4.5 per cent to help bring inflation back to the bank’s two to three per cent inflation target. Last quarter, unemployment dropped to 3.6 per cent. How is unemployment going to rise? What does that mean - inevitably more rate rises?
CHALMERS:
I think what the Deputy Governor was referring to was simply reflecting the fact that both the Reserve Bank's forecasts and the Treasury forecasts in the Budget expect an uptick in unemployment at the same time as we expect a moderation in inflation. I think her comments really just reflected those forecasts. And we've been pretty upfront, I think, as a government in saying that we expect the economy to slow because of higher interest rates and because of tricky global conditions, and that will have implications for the labour market as well. But let's not lose sight of the really quite remarkable performance of our country when it comes to the labour market, record employment, record participation, unemployment with a `three’ in front of it. Given everything that's coming at us from around the world, those are remarkable outcomes, and it means we enter this period of global economic uncertainty from a position of relative strength and that's a good thing.
KARVELAS:
What's your view on our chances now of avoiding a recession?
CHALMERS:
The Treasury's expectations for the economy and their forecasts in the Budget haven't changed.
KARVELAS:
But things have changed since your Budget.
CHALMERS:
Well, I think a lot of the things that are happening in our economy have been anticipated, we have expected for a little while now that the global economy, the global economic conditions are difficult for us, we're seeing an element of that. Obviously, we've seen a number of interest rate rises which are impacting on the economy, we saw that in the March National Accounts, we've seen it in retail and in consumption, and in construction approvals, that those interest rate rises are biting. And the global conditions are biting as well. And every time we talk to your listeners, Patricia, we try to be really upfront, and say that we do expect the economy to slow considerably over the coming months. And that's why the Budget tried to deal with the primary challenge in the economy which is inflation, provide some cost‑of‑living relief without adding to that inflation, at the same time as we lay the foundations for growth in our economy when growth won't exactly be thick on the ground. And at the same time as we get the budget in much better nick so that we can build our buffers against this uncertainty that we're all confronting right now. Those were the three boxes that the Budget ticked.
KARVELAS:
You've got three months before Governor Philip Lowe's term ends. You said you'd announce whether he stays or goes around the middle of the year - middle of the year has different interpretations depending on who you ask. When will this happen?
CHALMERS:
You're right that the Governor's current term ends in September, and it's always been the government's intention to consider this appointment around the middle of the year. I think you and I talked about this around March or so if memory serves. This is a big job and it's a big call, and we're working through it in the usual methodical and considered way. I'm in the process right now of consulting with my Cabinet colleagues, and with others as well. I hope to finalise a view in the coming weeks. I'm aiming to make an announcement in July, but certainly by the time that parliament returns. That's been our intention and our timeframe all along. But this is a big job, it's a big call. We work through it in a methodical way. We've always been shooting for around the middle of the year, I hope to be able to finalise a view and announce a view in July but certainly before the parliament comes back.
KARVELAS:
There was some speculation that it might even happen in the month we're in, why not?
CHALMERS:
What we said was we would put out the RBA Review and we would get through the Budget, and we would try and finalise a view towards the middle of the year. I think any reasonable person would think that's June and July, and that's what we're doing. But this is not a minor matter. This is this is an important decision.
KARVELAS:
Can you give a sense of what you're weighing up then?
CHALMERS:
There are a range of factors here. Obviously, the Reserve Bank Governor needs to be well placed to implement the recommendations of the review and to take the Reserve Bank into the future. There are all of the usual considerations in that - a person of credibility, a person with experience, and a person able to take the Reserve Bank forward. It's a key institution and obviously makes decisions which matter a great deal to the living standards of the Australian people, and that's why we don't take decisions like this lightly.
KARVELAS:
So does Phil Lowe not meet that criteria because of the review and the direction you want the bank to go in?
CHALMERS:
That's not what I'm saying and I think I've made it very clear on multiple occasions when you and I have chatted, that I have very high regard for Phil Lowe. And he's got a difficult job to do and he's doing it.
KARVELAS:
Okay. But after the last rate rise, and I listened very carefully, I wasn't presenting the show at the time but listened to everything you said very carefully. You said the board would need to explain and defend their decision. Is there a growing rift between your government and the Reserve Bank Governor?
CHALMERS:
Absolutely not, and I would say that on other occasions as well. The point that I was making is that I cherish the independence of the Reserve Bank. I've made that clear on multiple occasions. I think it's an important feature of our system. And part of that means that I explain and defend the decisions that I take in fiscal policy and the Governor and the Board explain and defend the decisions that they take on monetary policy, and that's appropriate.
KARVELAS:
You weren't happy with their last decision. You made it pretty clear.
CHALMERS:
I have gone out of my way to focus on my job. The point that I made at the time - which I think is self‑evident - is when interest rates go it makes it harder for people to pay the bills. For a lot of people, when interest rates go up, it's hard for them to find the extra repayments. And I think I made the obvious point, which I'd continue to make no matter who was the Governor or what the decision was, is that there's an important role for the Reserve Bank, Governor and board to explain the decisions that they take.
KARVELAS:
I just want to talk about housing before I say goodbye to you. The Greens want you to pressure the states to place rent caps across the country. Now there is a specific model in the ACT. It's existed since 2019. It limits rental increases to 110 per cent of the inflation rate. Is that something you could pursue?
CHALMERS:
We're prepared to show leadership at the National Cabinet level on renters rights and other aspects of the relationship between landlords and tenants. There are issues with some of those models when it comes to housing supply and other issues. But I think the main point, which is at the very core of your question, is that they these are largely matters for the states. And we've got our own broad and ambitious housing policy housing agenda, including $2 billion for social housing announced over the weekend.
KARVELAS:
Where did you find the money for that?
CHALMERS:
We've found the room in the Budget to fund a big priority for us, which is to build more social and affordable homes. It's disappointing that the Greens and the Coalition in the Senate don't agree with that.
KARVELAS:
Wasn't it actually the Greens that got you to announce it?
CHALMERS:
We thought that there was a case - given conditions in the housing market and the obvious need and the fact that we are having trouble getting the Housing Australia Future Fund through the Senate - there are other ways that we can build social and affordable housing for people. That's our objective. And at the end of the day, the permanent record of the Senate will show that when we tried to build even more social and affordable homes for people, the Greens joined up with the Coalition and voted against it.
KARVELAS:
Okay, so it's now being delayed to October. Just give me a sense, is there any more budging from your government on this issue of rents?
CHALMERS:
I think we've already been incredibly accommodating and respectful.
KARVELAS:
So that's it. Is there any more movement?
CHALMERS:
We put it to the Senate and the Greens voted against it. They voted against 30,000 social and affordable homes when the country desperately needs them.
KARVELAS:
They say because there's a rental crisis. That's their argument.
CHALMERS:
We know why they do it, and that's because they're more interested in fighting with Labor than fighting for Australians who need somewhere to live. That's what it boils down to.
KARVELAS:
No movement on rents?
CHALMERS:
We've got the biggest increase in rent assistance for three decades. We've got new tax breaks for build‑to‑rent properties. We've got a whole suite of policies, including tomorrow I'll be convening the state and territory treasurers to advance our Housing Accord, and to make sure we're all working together to get the funding right to get the zoning and planning right, to work with industry to build more homes for more people who desperately need them. We would prefer the support of the Greens in order to do that, but in the absence of that support, with all of their political posturing and product differentiation, we will do what we can without them.
KARVELAS:
Treasurer. Thanks for your time.
