THE HON JIM CHALMERS MP
MEMBER FOR RANKIN
TUESDAY, 21 JUNE 2022
SUBJECTS: COVID-19 Isolation; G20 Health And Finance Ministers Meeting; RBA Governor’s Speech; ACCC Energy Prices Investigation; Economic Statement; Interest Rates; Sri Lanka; State Budgets.
JIM CHALMERS, TREASURER: I'm out of COVID isolation today, and I wanted to thank people for their kind messages, but most of all I wanted to thank all of the organisations where I was able to keep commitments by video, with the Chamber of Commerce, the Industry Group, the ACTU, major investors, and others. I'm really conscious that I was very fortunate and the COVID that I had was incredibly mild, but I know that a lot of people are doing it much tougher than that, and my thoughts are with them as well of course.
COVID is, obviously, still a big influence on our communities and on our economy as well, and on the economies of our friends around the world. That's why tonight I'll be joining with our Health Minister, Mark Butler, in a G20 Meeting of Finance Ministers and Health Ministers, to make sure that we are working together to do what we can to strengthen our health systems, to strengthen our economies, and strengthen our friendships as well. Healthy economies are dependent on healthy societies, and what we know within our own countries and around the world is that it's often the most vulnerable who are hit the hardest. There is a role for the global community to be there for each other, and to do what we can for each other, to make sure that we are dealing as best we can with the health and economic challenges presented by COVID-19. This G20 meeting is all about strengthening health systems, strengthening economies, and strengthening friendships. I look forward to joining Mark Butler in conversation with G20 partners, hosted by Indonesian friends tonight, so that we can do what we can as a global community to deal with the challenges posed by COVID-19, and I look forward to joining in person with my colleagues and counterparts from the G20 next month in Bali for the G20 Finance Ministers Meeting as well.
We've got COVID as a big ongoing challenge in the global economy, but we've also got, in economies right around the world, what is probably the defining challenge, which is inflation. I want to welcome and thank Governor Philip Lowe for his candour and his frankness today, speaking about this inflation challenge in our economy. The expectation across the board is that inflation will get worse before it gets better, and that interest rates will get higher as well. This is making life very difficult for Australians already, and for Australian industry, as the prices for goods and services and supplies go through the roof. As interest rates rise further, as flagged by the Reserve Bank Governor, obviously, it will make it harder for Australians to service their mortgages as well. So this is a really difficult period, and I welcome the candour and the frankness with which Governor Lowe has described the challenges before us.
We've got a lot going for us in this country and in our economy, but we can't just pretend away these big challenges that we confront in the next six or twelve months in particular. It's possible to be optimistic about the future of our economy and the future of our country, while also recognising that we have to navigate together a really tricky, really difficult, combination of circumstances. It's a fact not an opinion that government changed hands at a time of high and rising inflation, rising interest rates, falling real wages, and our ability to deal with some of these challenges is constrained by the fact that the Budget is heaving with a trillion dollars in Liberal debt. We need to be honest and upfront about all of that. A lot of these pressures have been building for some time, even in many cases before COVID-19. We need to be realistic about how quickly they can be turned around.
What's necessary here is some patience, some persistence, a lot of collaboration, and working together. These are the sorts of things that the new Labor Government under Anthony Albanese is looking to provide, but it begins by taking these challenges seriously, by fronting up to them, and recognising where there are vulnerabilities. The truth is, that this wasted decade of missed opportunities has made our economy more vulnerable and the job of our government is to make our economy more resilient. That will be a key task, not just of the Budget in October, not even just the second Budget in May next year, but an ongoing task of Albanese Labor Government. We recognise that our economy is more vulnerable than it should be because of this wasted decade of missed opportunities. Our job is to take responsibility for strengthening the economy in an inclusive way and making it more resilient to the kinds of shocks that we're seeing at the moment.
Energy is a big part of the inflation story. I've maximized the ACCC's monitoring role when it comes to energy markets. We want to know if there's any dodgy behaviour going on, we don't want to see dodgy pricing behaviour in energy markets. I've maximised the ACCC's role when it comes to monitoring prices in energy markets. We don't want to see dodgy behaviour. We want to see the ACCC empowered to make recommendations to the Government on the best mix of regulations, based on the detailed information that they provide us after having a proper look at what's going on here. We won't tolerate dodgy behaviour when it comes to pricing in energy markets. There's already enough inflation in energy. It's already tough enough for families, and pensioners, and industry, when it comes to dealing with these skyrocketing energy costs. I want to thank the ACCC for the positive way that they have responded to my request to maximise their role here; to engage in thorough, robust, monitoring of energy prices, and to make recommendations to us about any further steps which may be necessary, based on the information that they provide. There's an important role for the regulators here. They've been exercising their role, I think, with a degree of professionalism. Chris Bowen has been working closely with the state and territory energy ministers as well. Madeleine King is engaged in the task of updating and reforming the trigger mechanism, but the most important thing that we can do after this wasted decade of missed opportunities is an energy policy which builds certainty and builds resilience, so that we can have an economy and an energy market which is more resilient to the type of shocks the we're seeing right now.
I'm conscious that today is Queensland Budget day, I wish my friend Cameron Dick all the best as he hands down the Budget. Happy to take a couple of questions before the focus shifts to that.
JOURNALIST: Do you expect the ACCC will find energy companies have gamed the market?
CHALMERS: I don't want to pre-empt the important work of the ACCC. Obviously, there are a range of concerns that have been raised about pricing in energy markets. We want to make sure that there's no dodgy behaviour making life even harder for families, and pensioners, and Australian industry. There's an important role for the ACCC there. I've dialled up the ACCC's role, I've maximised their monitoring of this really crucial market because we want to make sure that if there's dodgy behaviour going on that we know about it, and we could crack down on it. There are a range of sources of these energy price pressures, but right across the board more transparency is better. The more transparency we can have the better, and that's what this ACCC role is all about.
JOURNALIST: Governor Lowe says Australia can still avoid a recession despite rising inflation. Do you agree?
CHALMERS: Obviously that's our objective. We're not working on the expectation at this point of that risk occurring or eventuating. I've said a number of times, we have reason to be cautiously optimistic about the future of our economy, but first we have to navigate these difficulties which are right ahead of us. The fact of the matter is that the economy is more vulnerable than it needs to be to these kinds of shocks because we've had that wasted decade. So our job, as the new government, is to take responsibility for the economy, take responsibility for making it more resilient to these sorts of shocks, so that we can avoid the worst.
JOURNALIST: Can inflation be kept below 7 per cent?
CHALMERS: It remains to be seen. Certainly, the expectation across the board is that inflation will get significantly higher than the 5.1 per cent we saw in the March quarter. I've said that, the Treasury Secretary and the Reserve Bank Governor have all made the obvious point, that inflation will get worse before it gets better. I will update the Government's expectations and forecasts for inflation when I provide an economic statement to the parliament when it returns at the end of next month. Inflation will be a really important focus of that.
JOURNALIST: In your estimation, are interest rates going up by 0.5 per cent each month?
CHALMERS: I don't want to pre-empt the decisions taken by the independent Reserve Bank. Governor Lowe, I think, in quite a welcome, frank, blunt, way today has indicated that interest rates will go up further. That's the universal expectation in the market and I think in the broader Australian community. I'm not going to get into the business of predicting how much further they will rise. There's an important role for the independent Reserve Bank here, but there's also a role for the Government to make sure that we can grow our economy without adding unnecessary inflationary pressures. That's what our child care changes, our training changes, our energy policy - really, our whole economic agenda in one way or another - is about making the economy more resilient, making it grow without adding to inflationary pressures, doing what we responsibly can to deal with these cost of living issues, which is so acute for so many people right now, at the same time as we make a start on dealing with this legacy of waste and rorts that we've inherited. Those are the tasks of the October Budget, and for the subsequent Budgets after that as well.
JOURNALIST: How much higher do you expect inflation to go?
CHALMERS: I'll make our views known towards the end of July when the parliament returns. I intend to update the Government's forecasts for inflation. But I've already said, as has the Governor, as has the Treasury Secretary, we expect inflation to be significantly higher than what we saw in March.
JOURNALIST: Do you agree that inflation is increasingly being driven within Australia rather than globally?
CHALMERS: It's got a number of sources, there are domestic and international factors at play here. We acknowledged that before the election, and after the election. I think the Reserve Bank Governor made it very clear too that the international situation is not helping here. There are some global pressures which are impacting here, but I think, as I've said before, Australians are focused on what it means for us here in our own country. That's the focus. The Governor made it clear that there are some domestic sources of inflation as well. Our energy policies have been part of the story for too long. What we're seeing in large part here, in the energy market in particular, are the costs and consequences of almost a decade of energy policy chaos.
JOURNALIST: Should Australia be doing more to assist with the current crisis in Sri Lanka, and would doing so help prevent people smugglers sending more boats to Australia?
CHALMERS: We've certainly got a role to play in helping Sri Lankan friends through what is an extremely difficult period. Clare O'Neil, the Home Affairs Minister, is in Sri Lanka, as you know, doing a really important job , which is engaging with Sri Lankan friends to make sure that we're making our contribution. The price pressures on Sri Lanka, the inflation challenge, how that's feeding through to social unrest and difficulties in their broader communities and broader society, should be of concern to all of us. Part of that is the role that that's playing in pressures on people smuggling and asylum seekers. We've been upfront about that, and that's why Clare O'Neil's there.
JOURNALIST: Should Julian Assange be extradited to the US to face espionage charges?
CHALMERS: I think we've made our views clear that that case has been dragging on for far too long, we would rather see it concluded. Beyond that, I'm happy to leave commentary to the relevant spokespeople.
JOURNALIST: Jim, New South Wales has abolished stamp duty for first home buyers. Will you guys help their state government?
CHALMERS: We've got extreme pressures in our own Budget. The Commonwealth Budget is in lots of ways, and indeed by most measures, in a far weaker position than the state budgets. When it comes to the reforms that states are engaged in, whether it's in the tax system or otherwise, it's a matter for them. We've said that we're prepared to facilitate a discussion about tax reform at the state level, but we need to recognise that we don't have billions of dollars lying around to compensate states for the decisions that they take off their own bat. I think that's just the reality, I think that they understand that. We've got a lot of pressures on our Commonwealth Budget, we've got a lot of priorities that we need to implement. It is hard for us, on the basis of decisions states take independently, to throw billions of dollars of compensation. Thanks very much.