Interview with Rebecca Levingston, ABC Radio, Brisbane
REBECCA LEVINGSTON:
First of all, the National Accounts will be out later this morning, what will they reveal?
JIM CHALMERS:
They will be the National Accounts for the September quarter, so they're a bit backward looking. They won't capture all of the uncertainty in our economy, but they'll capture some of the global uncertainty, in particular. We've got some things going for us in the economy at the moment ‑ low unemployment, good prices for our exports, the beginnings of some wages growth ‑ and that's all really important. But a lot of the global uncertainty is ahead of us rather than behind us. So it'll be a useful picture, a snapshot of the economy but from a couple of months ago, and we've learned a bit more about the economy since that period that will be covered by the National Accounts.
LEVINGSTON:
What everyone in Australia learnt yesterday who has a mortgage is that interest rates went up for the eighth time in a row. I'm going to ask you for your ‘word of the year’ at the end of this chat. I wonder what word you uttered yesterday when the Reserve Bank pushed them up another quarter per cent.
CHALMERS:
I think a lot of people around Australia probably uttered a word that's not suitable for morning ABC radio, because obviously, it makes life a lot harder. We've had eight interest rate rises in a row, they started before the election. And the independent Reserve Bank has said that there may be more to come. Australians are already under the pump and if you've got a mortgage, life got a bit harder yesterday. And the thing the Reserve Bank has to weigh up is the impact on your mortgage repayments is immediate when rates go up. But the impact on the economy ‑ and they're trying to take some of the sting out of this inflation ‑ is felt down the track, and so they've got a difficult balance to try and strike. Unfortunately, the consequences for people with a mortgage are really tough. They're harsh and heavy consequences, and I think a lot of people got a Christmas present yesterday that they didn't want.
LEVINGSTON:
When do you think interest rates will stop going up?
CHALMERS:
It's hard to say. In my job, it's important that I don't try and predict. I don't try and second guess them and I don't try and predict the future movements in interest rates. But they have said themselves that more interest rate rises might be necessary. Homeowners get a bit of a reprieve next month because the RBA board doesn't meet in January. So that will give the Reserve Bank an opportunity to evaluate where things are up to in a couple of months when they meet next. And to see what's happening with inflation and what's happening with some of the other economic indicators that determine whether rates go up further. But they put out a press release yesterday that said that there might be some further interest rate rises, but they're keeping an eye on things like ‑ how much are we spending, what's happening with some of the other indicators in the economy. So they'll have a chance in a couple of months to weigh all that up.
LEVINGSTON:
How worried are you, Treasurer, about a mortgage cliff next year? I was having a conversation with an economist yesterday ‑ 1.1 million Australians expected to be in mortgage stress early next year, how worried are you?
CHALMERS:
I am worried about that. I'm worried about people who took out a mortgage relatively recently when interest rates were incredibly low, so that's part of the challenge here. And I know that in pockets of the country, mortgage stress is more severe than in others. And so there is a concern here and also a lot of people are on fixed rate mortgages. And when the fixed component of their loan comes off, obviously, it'll come off into a much higher interest rate environment. So there's enough there to trouble us, and at a time when some of the other costs in the economy are going up as well. I know that a lot of people are under the pump, we get that. That's why we handed down a Budget with some responsible cost‑of‑living relief. It's why we're working on a plan to try and take the edge off some of these energy price rises because some people are doing it incredibly tough.
LEVINGSTON:
You're listening to Jim Chalmers, the Federal Treasurer, on ABC Radio Brisbane. My name is Rebecca Levingston. Let's talk about power bills, Treasurer. The PM wants to put a price cap on coal. Why?
CHALMERS:
What we're trying to do, is to work out a way to recognise that energy prices are high because we've got this war in Ukraine. So we've got this big temporary spike that we're anticipating, particularly next year. And so what we've been working on ‑ talking with the states, talking with the regulators and with the impacted industries ‑ is how do we put in place something which is really responsible and considered and sensible, but also impactful and meaningful and temporary, to try and limit these price rises. Prices will go up next year, but if we can make them go up by a little bit less, then we should try and do that. So conversations the Energy Minister is having with his colleagues, the Prime Minister is having with his colleagues, a lot of work that I'm doing with other ministers, is to see if we can come up with some regulation here that does the job. And because there's a lot of complexity in these markets ‑ we care about our international obligations, we care about investment, we care about whether or not high gas prices have the capacity to hollow out some of their industries, particularly manufacturing, but others as well ‑ there's a lot of complexity there. So we're acting with some urgency but there are no kind of easy quick fixes here. And that's why there's a lot of consultation going on, especially this week in the lead up to National Cabinet.
LEVINGSTON:
If you put a price cap on coal, who loses out?
CHALMERS:
The coal producers, they're getting incredibly high prices right now, and sometimes $300 a tonne ‑ more than that in some cases. And that is because the world market is going crazy, because of the implications of the war in Ukraine. And so very high prices for coal, very high prices for gas. We do well on international markets because of that, but it has the capacity to punish local industry and Australians more broadly.
LEVINGSTON:
So why not introduce a windfall tax on those big profits?
CHALMERS:
That's one of the options that gets put to us quite a bit. That's not our intention, what we're looking at doing instead, is some of these changes in regulation. You just mentioned a cap which is one of the options on the table. Now, if we can bring in a temporary regulation that limits some of these price increases, that's our preference. But obviously, we listen respectfully when people put other options to us, and that one gets raised with us quite a bit.
LEVINGSTON:
It rattles around all the time. I asked in particular though today, because your state colleague Cameron Dick, the Queensland Treasurer, will reveal a coal royalties jump today that'll pump an extra $2 billion into the state's coffers. Cameron Dick says we've secured a big win for Queensland by securing a share of the windfall profits made by coal companies. I had a look and Germany's put a cap on gas prices for companies and households, the UK has put a 25 per cent levy on oil and gas companies ‑ so Queensland's doing it, Germany and the UK are doing it.
CHALMERS:
Different countries and different jurisdictions are going about this same problem in different ways ‑ I think that's self‑evident. Everyone's got a version of this challenge, because it's a challenge on global markets. It is true that when commodity prices are high, it's good for state and Commonwealth budgets, but it's bad for industries and for households. And the steps that Cameron has taken ‑ I work closely with Cameron, as you'd expect‑ we represent the same people, south of Brisbane. I work closely with him and he's taken some difficult decisions to try and capture more of that revenue when commodity prices are high. Our job is a little bit different ‑ the national task ‑ we think that our best avenue having thought about this for some time, is to do something on the regulatory side, and that's what we're trying to do.
LEVINGSTON:
Jim Chalmers, the meeting between the Prime Minister and state and territory leaders was supposed to happen today. But because Mr Albanese has COVID, it's been postponed until Friday. But what the Queensland Premier has said in the meantime, to the concept of a price cap on coal, is 'hands off our generators.' You guys are on the same political team, why is the Premier opposed to a price cap?
CHALMERS:
I think people from different jurisdictions, whether they're Labor or Liberal jurisdictions ‑ there's a range of views here, we don't pretend otherwise ‑ we come to these conversations in a really respectful, reasonable way. We're having conversations with the state governments, particularly of Queensland and New South Wales but more broadly as well, the PM is talking to the premiers, the Energy Minister is talking to the energy ministers. And there's a constructive conversation going on, but everyone brings to the table, different perspectives, different objectives. But sitting over the top of all of this is‑ we’ve got a big problem with energy prices. It's feeding an even bigger problem with inflation in our economy, which is our biggest challenge right now. And so everyone, at all levels of government has an interest in getting on top of this. And I think people recognise that, there will be a conversation about the best way to do it, but I'm confident that premiers of both political persuasions have the interests of the people at heart. And we'll have a conversation about the best way to serve them.
LEVINGSTON:
Just two more quick questions on this, Treasurer, and then I'll move on and hopefully get to your ‘word of the year’. Will the Federal Government compensate Queensland if the coal cap is introduced?
CHALMERS:
To be determined. What we said yesterday was that our priority is regulation, as we keep coming back to. But I'm prepared to be reasonable about the best way to deliver that.
LEVINGSTON:
The Australian today is reporting that the PM has issued a list of demands to both the Queensland and New South Wales Governments, to impose their own coal price caps and recall their Parliaments. Is that correct?
CHALMERS:
We don't see it like that, we don't see it as demands. But obviously there's a lead up to National Cabinet inevitably, and particularly when there's something as important as this on the agenda. We put on the table our issues, they put on the table the issues that they have, and the perspectives and objectives that they have. And we try and reach a landing point. That's kind of uncontroversial, that's how it typically works.
LEVINGSTON:
But would it require recalling Parliament for Christmas?
CHALMERS:
Depends where we land and that's still to be determined. We've got thoughts and views and we've made those clear to the state governments, and the state governments have made those clear to us. And in the normal course of conversation and negotiation, hopefully we can get to a landing point between now and Christmas.
LEVINGSTON:
Just finally, Jim Chalmers, the Prime Minister at the moment has the spicy cough which is one of the words of the year. ‘Goblin‑mode’ is up there as well which is if you've spent more time in your tracky‑dacks or your PJs on the couch this year eating, then you're in ‘Goblin‑mode’ ‑
CHALMERS:
I have not.
LEVINGSTON:
[laughs] yes we’ve seen your suit and tie a lot. ‘Teal’ is one of the words that made the list for one dictionary. ‘Bachelor’s handbag’, do you know what that is?
CHALMERS:
I do, it's a chicken that you get from the supermarket when you forgot to get something out of the freezer for dinner.
LEVINGSTON:
That's it. But Jim Chalmers, what is your word of 2022?
CHALMERS:
I've got a bad habit when it comes to a particular word because of my formative years, which is if someone sends me something which is good, I describe it as phat with a P‑H. And that's because of my formative musical years. And I get a lot of raised eyebrows when I use that word. That's probably my word of the year.
LEVINGSTON:
Can you use it in a sentence?
CHALMERS:
Yeah like someone will say, ‘hey I got you a coffee’ and I say phat ‑ P‑H.
LEVINGSTON:
Well Treasurer, that’s phat.
CHALMERS:
Did you not say that when you were growing up? If a song was good, if a song was good you’d say it was phat.
LEVINGSTON:
Okay, like a phat beat. Alright, got it. I’ll add it to the list. Treasurer, thanks so much. Merry Christmas, we’ll talk in the new year.
