Interview with Peter Stefanovic, First Edition, Sky News
PETER STEFANOVIC:
Let's start off with wages growth. You got some good numbers yesterday, it was starting to inch a little higher though from that low base in 2021. So how much credit do you give the former government for that?
JIM CHALMERS:
The former government presided over a decade of deliberate wage stagnation and wage suppression. What we're seeing now in these really welcome and pleasing figures from the first months of the Albanese Labor Government, is that wages growth has picked up substantially - it's around 3.1 per cent right now. The average of the decade before that was about 2.3 per cent, and that's because our predecessors had a policy of deliberate wage suppression. We take a different approach and that's why I was pleased to see the beginnings of some wages growth in our economy, because when you think about the year ahead, Pete, 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, the beginnings of some wages growth and good prices for our exports. And we're really pleased when it comes to unemployment, particularly when it comes to getting wages growing again in this country, that our economic plan is beginning to work.
STEFANOVIC:
Inflation is still out of control though, Treasurer, do you expect the RBA to increase rates again next month?
CHALMERS:
It's a matter for them, they take their decisions independently as you know, and the markets have got a range of views about what the Reserve Bank might now do. It will have a big impact on our economy, particularly as people go off fixed rates on to variable rate mortgages through the course of 2023. We've had those eight interest rate rises that began before the election and continued afterwards and that will bite when it comes to mortgages, obviously, but also when it comes to our economy. When it comes to the inflation challenge, obviously that is the primary challenge in our economy right now. We want to see that inflation moderate, it will over the course of this year, but it will hang around a bit higher than we'd like for a bit longer than we'd like. And that's why we're providing cost-of-living relief when it comes to electricity bills, when it comes to cheaper childcare, cheaper medicines, were doing that in a responsible way to try and take some of the edge off these cost-of-living pressures. But one of the most important things you can do when you recognise that ordinary working people have been going backwards for too long in this country, is to get wages moving again, that's what we're doing - we're seeing the beginnings of that and that's a good thing.
STEFANOVIC:
Okay, so when you say that inflation will hang around longer than you'd like, is that to suggest that the current policies you've got in place are not working?
CHALMERS:
No, we expect to see inflation to moderate over the course of this year, one of the most important things that we did in the October Budget was we made sure that we took an incredibly responsible and restrained approach when it comes to spending. We budgeted for our election commitments but we also let that revenue surge from higher commodity prices flow through to the Budget - 99 per cent of it over the next two years and that makes a meaningful difference to the budget position. So we're taking a very responsible approach to the Budget, we're providing cost-of-living relief in ways that is not making inflation worse. We want to see that inflation moderate over the course of this year, and we expect it to. We want to see wages to continue to grow in a sustainable way, and we expect that too.
STEFANOVIC:
Okay, all of that is going to mean very little for those who are going to be facing increased mortgage payments, those who are going to be facing increased rent. You've been in charge for almost a year now and you're inevitably going to get stick for that, so how are you going to explain that away?
CHALMERS:
We take responsibility for managing the economy, in the interests of ordinary people who are doing it especially tough right now with this inflation challenge in our economy, brought to us by a war in Ukraine, and COVID's pressure on supply chains and all of these other factors. So we've got these pressures coming at us from around the world, they're being felt around the kitchen table. The responsibility that we embrace is to get wages moving again and we're seeing that, provide cost-of-living relief - whether it's early childhood education, or medicines or electricity bills - and we're doing that as well. But we're doing it in a responsible way that will ease people's cost-of-living pressures rather than make them worse.
STEFANOVIC:
Will the JobSeeker rate be increased?
CHALMERS:
We're not proposing to do that, we don't have a proposal on the table to do that but we're listening respectfully to a lot of people in the community who were advocating for that and campaigning for that. We've got a committee, an Economic Inclusion Committee which Jenny Macklin chairs, that Amanda Rishworth and I have been participating in and that's all about trying to work out how do we get these various work incentives and payments right, into the future. But we recognise people on pensions and payments are doing it tough, that's why the indexation has been so important to try and keep up with inflation. And it's also why when we provide this electricity bill relief that I'm working on right now with my state and territory colleagues, that the priority there and the focus there will be people on pensions and payments.
STEFANOVIC:
Okay, just one more on JobSeeker. So is there any plan to increase that rate this Budget?
CHALMERS:
We don't have that plan before us right now, it's something obviously we consider from Budget to Budget. We always want to do better for people if we can, but we've got to weigh that against all of the other pressures and priorities, including a trillion dollars of debt in the Budget.
STEFANOVIC:
Okay, well on gas now, are you willing to go back to the drawing board at all and modify or even cancel the price caps that are in place?
CHALMERS:
Oh, of course not. We need a bit of perspective here. Pete, you know, obviously, there'll be parts of the economy, which will campaign against a change of this nature. That is inevitable, and that is expected, but the price cap was only put in place a few weeks ago, on the eve of Christmas. Inevitably, as we implement that there'll be an appetite for some more guidance and information as people wrap their heads around the changes - people on both sides of the equation, sellers and buyers. The ACCC will provide that guidance . We’ll consult on the ongoing reasonable pricing regime and we've got a review of the price cap already built in at the midway point. So all of these things are more or less expected. It won't be uncontentious when you make an intervention of this type, we expect that but we will bed it down and we expect it to work.
STEFANOVIC:
Okay, so just backing up that second last question, Treasurer, just before we go - so there is help on the way when it comes to bills for pensioners, just to clarify that point you made. So have you settled on that, and what sort of help that that will be in the Budget?
CHALMERS:
There'll be relief for people in their electricity bills, that's something that we're working with the states and territories on, because we both want to kick in.
STEFANOVIC:
But you're still working on that?
CHALMERS:
Yeah, we're working on that. We said we'd work on that over summer and we're doing that but the priority there will be people on payments and pensions.
STEFANOVIC:
Okay, Jim Chalmers Federal Treasurer, appreciate your time. Thank you so much. We'll talk to you again soon.
CHALMERS:
Thanks Pete.
