National Press Club address, Q&A
LAURA TINGLE:
Thanks very much, Treasurer. You talked about how the productivity agenda has changed as a result of changes in the economy. One of the big differences between the 2002 report and 2023 report is that you’re looking at climate change and its very real impacts on how people work. Basically, that some people won’t be able to go outside to do their jobs because it’s going to be too hot. In the same way – I know you’ve ruled out in the last few days radical tax reform. We always keep going back to the same debate about GST, but I was wondering if you could just sort of fill out for us a little bit the issues about how the change in our revenue base and our resources economy will affect the tax base and what that suggests for the tax debate in the future.
JIM CHALMERS:
Thanks, Laura. A couple things about that. First of all, I’m pleased people have noticed we’ve taken a much broader approach to the Intergenerational Report than the early IGRs. That’s deliberate. We want to think about the pressures which are impacting our budget as well as the pressures that are impacting our economy and our society, and climate change is among the most obvious of those, and so we have tried to lean into that a bit more in this report. Now, what that leads us to is a much broader appreciation that whether it’s the productivity challenge or other challenges in our economy, I think our approach to productivity in this country has been unnecessarily narrowed and it has become almost exclusively a conversation about industrial relations and sometimes tax. And, obviously, industrial relations policy, tax policy are very important levers that governments have to pull but so is energy policy, so is policy about human capital. And I believe that the productivity challenge has changed sufficiently that our approach to productivity needs to change with it. And a lot of people are making the same points that they’ve been making for 30 or 40 years, and I would rather look forward. And I think if we look forward, we will see – and ideally at some point we will agree – that the best chance we give ourselves to turn around this problematic productivity sluggishness that we’ve seen in our economy for some time is to invest in our people and our industries and the energy transformation and technology. And I think that’s where the gains will be made. You talked about the impact on the Budget of the way the economy is changing. The composition of our tax base is changing. And the best example in the Intergenerational Report is, obviously we will collect less fuel excise as more people take up electric vehicles. I hope at some point a Treasurer can stand here and say we’re no longer collecting any tax on smokes. There’s a whole bunch of ways that the changes in our society and our economy are evolving over time, and the IGR spends a bit of time thinking about it.
TINGLE:
Phil Coorey.
PHIL COOREY:
Thanks, Laura. Thanks, Treasurer. You just alluded to it then. In your speech you sort of alluded to the decisions made by government 40 years ago, Hawke-Keating, which carried us successfully over the past 40 years and you’re going to need that sort of application to get through the next 40. What Hawke and Keating did required an element of political bravery. Can I just pick you up on one element of political bravery? As you just mentioned, electric cars. So, that’s going to wipe out fuel excise. That was worth $14 billion net to the budget last year – $13.7 billion. Ever since Ken Henry did his tax review, there’s been calls that we’ve got to replace that with a road-user charge. Turnbull had a look at it and then chickened out when the Nationals arced up and now the states are starting to make noise about going alone on it. Is it something your Government is even considering or are you worried about it being seen as a tax on motorists and you’re prepared to cop a hole in the Budget and find the money elsewhere?
CHALMERS:
Thanks, Phil. First of all, our tax reform priorities have been in the areas you’re familiar with to this point: multinationals, PRRT, high-balance superannuation, changes on cigarettes, compliance, those sorts of issues. That’s our focus. And some of that is still unlegislated, so a lot of our tax reform energy will be expended in the coming months making sure we can get that through the Senate. I think in the next few years an increasing focus, certainly of our government and most likely governments that follow us, will be this public policy challenge, this revenue challenge, this challenge to the revenue base. And you’re right that there’s a big part of this is states‑related. There’s a court case underway right now which goes to the core of this. It is part of the discussions that I have with my state and territory colleagues, and in the coming years people will come at this challenge. Our focus for the time being is a couple of strategies that Catherine King and Chris Bowen are consulting on and working up when it comes to the broader environment and infrastructure for electric vehicles, and no doubt at some point, probably relatively soon, by which I mean in the next few years, a government, our government or a successor, will turn our mind to it.
TINGLE:
Mark Riley.
MARK RILEY:
Mark Riley, Seven Network. Treasurer, I want to ask you about the outlook for super over the IGR’s 40 years. I think at present one in every $5 of super is not being spent. It’s being sent on in bequests and over 40 years that becomes one in three dollars. You’re talking tens of billions of dollars that Australians are essentially short-changing themselves. I guess it seems that retirees could be leading better more comfortable lives and have chosen not to. What’s your message to Australians in retirement with their super?
CHALMERS:
I think the next frontier for us, working closely with Stephen Jones and with other colleagues, is to put as much attention into the retirement phase of superannuation as we’ve been putting into the accumulation phase. I do think that there’s a big problem, a big challenge, for us to address, and that is an absence of literacy and options when it comes to retirement products in the drawdown phase, in the retirement phase. And that’s because, as you rightly point out, people are more frugal than they need to be; they’re more conservative than they probably want to be because there is what the experts call this longevity risk in the superannuation system. So, Stephen and I, really, before long, ideally before the end of the year, we will try and shape some policy development around retirement income products. More broadly one of the really stunning, I think, conclusions of this report is the intergenerational genius of superannuation. Most countries have got some version of an ageing population, but not many have got the spending on pensions as a proportion of the economy going down and that’s because of superannuation. So, the story that this tells about superannuation is a very positive one. Super is one of the big national advantages we have, but it’s not perfect. We need to keep working to try and perfect it and one of the things that we will turn our mind to, Stephen and I and the team, will be in that retirement phase.
TINGLE:
Michelle Grattan.
MICHELLE GRATTAN:
Michelle Grattan from The Conversation. Treasurer, I think you’d agree that very often it’s easier to start walking down the reform path than to actually land the reforms. So, I wonder if you could sketch out for us what you see as the three or four main hurdles, main sources of headwinds, against the changes you want to make.
CHALMERS:
I think short‑sightedness. The Senate can be difficult. [Laughter] I think there are a range of obvious obstacles. I think our mindset needs to change too. You think about the 1980s, and probably maybe there are people here who have thought more about the Hawke–Keating government than I have, but not many people have. And, there’s this rewriting of history that I don’t need to tell you about, Michelle, which sort of says that Bob and Paul popped up here one day and had this whole range of difficult decisions on a list and everybody said, “Oh, that sounds fair enough. Let’s do all those difficult things and in 2023 one of your successors will say how well it all went.” It was contested and it’s contested now. It should be. We want the contest of ideas and we want the clash of priorities and from that we want to create something wonderful. And what I’ve tried to do here in spending such a big chunk of my speech not just on the analysis of the IGR, which is effectively what Josh did last time, but to try and lay out in those eight areas that there’s a huge reform agenda underway, but it’s incomplete. We’ve only been here 15 months or whatever it is. So, we have, in your words, begun to walk down that reform path and it’s difficult. I well remember the feedback that I got around the superannuation tax concessions, for example – all my scribblings over Christmas. All these things are contested. They’re difficult, but they’re worth it and they pay off in the long term. If this IGR can focus the national mind on the longer term and give people an appreciation of the kinds of issues we’re grappling with and the difficult things that we might need to do to realise our promise as a country, that will be a good thing.
TINGLE:
Shane Wright.
SHANE WRIGHT:
G’day, Treasurer. Shane Wright from the SMH and The Age. The electric lightbulb, the car and the telephone were all invented in a five-year period in the 1870s. They’re three of the most productive transformative inventions ever done. You’ve had to downgrade the productivity assumption, but your sensitivity analysis shows you’re at something about point 9, which is what we’ve had for effectively the last 10 years. People are $10,000 worse off. You’ve mentioned AI in your speech but apart from that, do you really believe that something as transformative as an electric lightbulb isn’t coming down the way that will drive the productivity that you need to pay for all the things that you want to do?
CHALMERS:
Well, I’m not sure we’ve come at it precisely the same way when we’ve settled on these projections and, obviously, relying heavily on the work of the Treasury in setting what we think is a more realistic assumption for productivity. But if your question is we might undershoot it or overshoot it, of course, that’s the case. We might. The point that I’m making and really the motivation around renewing and refocusing the Productivity Commission and thinking about how we measure productivity in the care economy and how we think about adapting and adopting technology is to recognise that the productivity story is a huge, huge part of our prospects in the years ahead. The last IGR relied on a productivity assumption which I thought was absurd and said so at the time, and so I’ve written it down, with the help of Treasury colleagues, to help give people a more realistic assessment. But we can even fall short of that. That’s one of the warnings in the thing. One of the warnings that I hope people appreciate is that if productivity is such a big part of the story of a successful, growing, inclusive, sustainable economy in the years ahead, then we’re going to have to work our tails off even to hit the 1.2, which is a more realistic assumption than existed a couple of years ago.
TINGLE:
Anna Henderson.
ANNA HENDERSON:
Thank you. Anna Henderson from SBS World News. You spoke about the Voice in your address, Treasurer, and a poll released this month found 91 per cent of respondents nominated cost of living as their top priority; Indigenous policy was down at the other end of 18 topics. So, how much do you believe that cost‑of‑living pressures will impact on the success of the Yes Campaign in the years after this vote is held?
CHALMERS:
I think it remains to be seen. I think this welcome opportunity for a Voice to Parliament, constitutional recognition, I think it’s got – even though we have been thinking about it and talking about it for some time, there will be a lot of water under the bridge between now and referendum day, and it remains to be seen what kind of factors play out over the course of that. We’ve been really up‑front. Anthony has, I have, Katy, the whole team. Our highest priority by far is helping people through a difficult people period right now. The cost‑of‑living pressures, rolling out these billions of dollars in assistance, that is our number one priority. But what we’ve tried to convey and what I think we’ve been conveying by showing is that good governments are capable of more than one thing at once. We should not artificially limit ourselves. We can provide help with the cost of living; we can invest in the future of our economy at the same time as we do what I think is satisfy a generational opportunity and grab this generational opportunity to do the right thing.
TINGLE:
David Speers.
DAVID SPEERS:
Thanks, Laura. David Speers from the ABC. You mentioned earlier, Treasurer, that the composition of the tax base is changing, is evolving. One of the big shifts that the report shows is that we’re going to be relying more and more on income tax in the tax base. So, more and more on working-age Australians to support an older population. I want to ask you if you think that’s fair, appropriate, or do we need to address taxing assets more in the future?
CHALMERS:
Well, again, a bit like the answer to the question before – I think maybe Phil’s question – we’ve made our tax reform priorities clear and that journey is not finished yet. We’ve got to legislate some important changes to our tax system, and that will help get the Budget in better nick. One of the reasons why we are all focused on the way that the revenue base is presented in the IGR is because, consistent with or broadly consistent with the practice of other IGRs, we’ve had to make an assumption about the level of tax in the economy over a really long period. And so, we’ve kept it constant at that 24.4 at the end of the 10‑year period. And what that means is if you assume that’s going to be the amount of tax in the economy and you assume rightly that fuel excise is going to fall off, and tobacco excise is going to fall off, then some of these numbers make up the difference. It’s not a policy outcome. It’s not saying that we think that in 40 years’ time we’d rather the personal income tax component of the tax take to be this percentage. It’s just one of those calculations that we’re shining a light on. Obviously, next year, there’s legislated tax cuts. Obviously, between next year and 2063, governments, I think, of both political persuasions will take decisions to return some or all of the bracket creep that we see in the economy, and so that number will change over time.
TINGLE:
Olivia Caisley.
OLIVIA CAISLEY:
Olivia Caisley from Sky News. Thank you for your speech. The Intergenerational Report lays bare some pretty major challenges over the next four decades and you have spoken today about making decisions that allow us to own the future. Do you think it’s a mistake to not spend some of the political capital that Labor has now by getting started on major economic reform? Do you feel that you’re just tinkering around the edging when it comes to changes such as the PRRT? And are you prepared to take a bolder reform agenda to the next election?
CHALMERS:
We have a big, broad, ambitious reform agenda, particularly when it comes to the economy. If you put on a list the big reforms I mentioned in my speech and stacked that up against the first 15 months of any other government since Federation, that would look like a hefty list of economic reform. The energy transformation, the way we’re changing how capital flows in our economy, the way we’re thinking about markets and reforming those, it really is and I really – one of the things I really want to convey to you and leave with you is that our reform agenda in the economy is substantial and it is particularly geared to those five big trends and transitions that we’ve built this whole IGR on. And there will always be an appetite, I think particularly in the press gallery in Canberra, for things to happen faster and for there to be more action and more activity, but I think if anyone who looks at the list of things that we’re contemplating 15 months into the life of the new government, it’s a big, broad, ambitious list of economic reform and it will pay off into the future.
TINGLE:
Patrick Commins.
PATRICK COMMINS:
Thanks very much, Treasurer. My question follows a bit from Liv’s. The scale of the challenge and particularly around the Budget, around the spending and tax pressures that we’re going to be under as a nation, I think it demands some or suggests that we really need to take some hard choices as a country in the future. So, what are the hard choices that we as a country will have to make either in the coming years or decades to get what the IGR says is going to be a rolling 40 years of deficits, essentially, under control?
CHALMERS:
I think in an ongoing way our government and future governments will try and find the best combination of spending restraint, savings and meaningful tax reform. That’s what Katy and I have been doing with the help of our ERC colleagues and the officials in the room. We’ve been trying to find that best balance and we’ve made a hell of a lot of progress in the 15 months. The deficit for last year was projected to be $78 billion. It became a surplus north of $20 billion. We’ve found $40 billion of savings compared to zero dollars in savings in the last Coalition budget. We are working progressively, methodically, in an iterative way to get the Budget in much better nick to face the uncertainty of the future and fund the services that Australians need and deserve, particularly as we get older. We’ve made a heap of progress. There’s a number which isn’t in the IGR, which is Treasury analysis, which shows that because of the approach that we’ve taken to those first two budgets, our interest costs alone are projected to be cumulatively 25 per cent lower than they would have otherwise been over the next 40 years, and that’s avoiding something like $440 billion in debt interest costs in today’s dollars. So almost half a trillion dollars in debt interests costs avoided, which instead of using to pay interest on the debt that’s been accumulated, with not enough to show for it, we can make all kinds of other decisions, including better ways to fund aged care or the NDIS or our hospitals and Medicare or our national security. And so, I use that as an example of saying, the work that we’ve been able to do, the progress that we’ve been able to make to really transform, in the near term at least and we’ve got more work to do on the medium term, that’s paying dividends already. And that’s the sort of approach you should expect to see from us not just in the first couple of budgets but really any of the budgets that we have the opportunity to hand down.
TINGLE:
Ben Westcott.
BEN WESTCOTT:
Ben Westcott from Bloomberg. Thanks very much for your speech, Treasurer. In the IGR it says that over the past 40 years home ownership for people aged 25 to 34 years has fallen by about 18 per cent and it highlights in the IGR that that is going to be a major problem for the age pension and superannuation as young people – not young people but future old people who are then renting – who are still renting and still drawing down their superannuation to pay for rent and really high mortgages they’ve still got. So, by the time that all the millennials at the back table are at retirement age, don’t you think we need some more significant housing policy to raise home ownership and ensure that the superannuation system and the age pension system are viable in 40 years’ time?
CHALMERS:
Well, we’ve got more policy and more investment in this housing challenge in the time we’ve been in office really since Tanya – at any time since Tanya Plibersek was the Minister during the GFC, and that will pay dividends. One of the reasons, again, why we make these numbers so public in such a frank and up-front way is because we want people to understand that there are pressures on housing and that’s what motivates and inspires our housing policy. There’s about half a dozen really important areas where we’re acting on housing. One of those is held up in the Senate and we wish that were different, but there are other areas as well. Billions of dollars in our two budgets investing in housing and that’s because we recognise the challenges you’ve rightfully identified and located in the IGR.
TINGLE:
Andrew Brown.
CHALMERS:
I thought you said Andrew Barr then and I thought: that’s cheeky!
ANDREW BROWN:
Not quite. The report mentioned how regional areas will be affected more in 40 years’ time due to things like climate change; they will be missing out on many areas of the technology revolutions and that many industries that support regional areas will be phased out or scaled down due to going onto a net zero economy. So, what would you and the government look to do to bring regions on board to make sure they’re not left behind in 40 years’ time and they’re not put out by all these changes that we may not even see coming yet?
CHALMERS:
Wonderful question. Let me answer it in two parts. The first is in the specific and then in the broad. In the specific, we’ve put a lot of time putting together Net Zero Authority and putting it into the capable hands of one of the most impressive Australians that we know in Greg Combet, because we think or we understand, we expect, that the net zero transformation can be a good thing for regional communities, not a bad thing for regional communities. And so, we’ve set him to work, working closely with Chris Bowen and Ed Husic and Madeleine King and myself and Katy and others, to make sure that this transformation works for regional communities and not against them in places like Gladstone and the Hunter and elsewhere. In the specific, that’s how we’re making sure we’re attentive to this challenge that you rightly identify. More broadly, one of the differences I hope that you notice in the way that I think about and talk about the economy and the future is those three reform principles. People have talked about productivity in the past. I get that. We’ve tried to put a bigger emphasis on the future. That’s the third of the priorities. But the second one is about people and place. And it’s probably partly because I’m from Logan City, but I think about place when I think about economic policy. I don’t just think about aggregates. I don’t just think about national aggregates. I think about pockets of disadvantage and pockets of opportunity in our country. And when you think about it that way you see the vast opportunities and possibilities of regional Australia. So, we put the regions front and centre when we think about these issues – the energy transformation but really right across the board.
TINGLE:
Chloe Bouras.
CHALMERS:
From the millennial table that Ben was on about!
CHLOE BOURAS:
Yes. Chloe Bouras from Network Ten. And as a millennial/future old person [Laughter], I would like to follow on from Ben’s question because obviously we’ve spoken so much. There’s going to be an ageing population, the participation rate is going to be down, we’re not going to have as much in the income tax pool. So, do you think the future old people, like myself – I will be in my 70s – do you think there’s going to be more pressure? Will older people be encouraged to work later in life? Will there be a change to the pension age?
CHALMERS:
We’re not contemplating a change to the pension age, but we are looking for ways to give older workers more options and more choices. Coming out of the Jobs and Skills Summit, we made a change in that area and we’re monitoring that and evaluating that right now. A key focus of the Employment White Paper will be about older workers and how we can give them more choices and more chances if they want to work, rather than necessarily compelling them to work more. People make different decisions and maybe people in blue-collar industries have got different abilities in their 70s than people in white-collar industries and all of those kinds of considerations. So, it is a major focus of ours to try to work out in a world where there will be a smaller and smaller pool of workers, how do we encourage people to work more if they want to? And you’ll see more of that in the White Paper.
TINGLE:
Paul Karp.
PAUL KARP:
Paul Karp from The Guardian. Thanks for your speech. I also want to ask about participation. It’s down from 66.6 per cent to 63.8, mostly driven by a decrease in men’s participation. Some elements of which your participation agenda, like child care and parental leave, are very well‑known but does this projection indicate that after the Employment White Paper, a lot more is going to need to be done to improve employment services and training so that particularly blue-collar blokes who don’t work in the care economy and who face the biggest disruption because of new technologies are not redundant at 50, never to work again?
CHALMERS:
Well, the way that we’re approaching this Employment White Paper is in five parts. How do we think about full employment as our economy changes? How do we make work secure and well paid? How do we make our economy more productive? How do we fill these skills shortages as our workforce needs evolve over time. And then lastly, what are the barriers to people participating more? There’s a lot of barriers. You’ve mentioned some of them. Also, geographical barriers where there are areas of entrenched intergenerational disadvantage. So those are the five broad areas of focus. And the examples that you mentioned, I think are good ones and they’re captured in more than one of those different kind of themes of the Employment White Paper. We need to make it much easier for people to work and to work more if they want to. That goes right across incentives, it goes across training, it goes across employment services and all of the sorts of things that you will you’ll see in the Employment White Paper when we let it out into the wild.
TINGLE:
Katina Curtis.
KATINA CURTIS:
Thanks. Katina Curtis from The West Australian. You’ve painted a very rosy picture here today. I guess that’s your job. I’m wondering if you can tell us the warning in the report as well. What happens if at the next election you get a Senate that’s harder to deal with? Maybe you get a minority government. You can’t do things over the next five years that are the choices that this report says need to be made now. What does Australia look like then?
CHALMERS:
Well, I think what I tried to do, Katina, and at the end of the speech is to give a brief description of what happens if we fall short here. Climate could ravage our economy. We might not build the workforce that we need. We might miss this kind of new productivity frontier. We might not make the most of our advantages. We might leave ourselves more vulnerable to a world that is getting riskier. Those are the costs and consequences if we don’t take these challenges seriously. And you mentioned some of the political obstacles and they are ever-present, and the political situation evolves and changes and there are cycles to it. And sometimes you’ve got a lot of capital to spend and sometimes you don’t have as much capital to spend. All of that is part and parcel, really, of the ups and downs of political life and trying to make the country better. So, we play the cards that we’re dealt in the political system and we do what we can to change the country for the better and when one avenue is shut off, we try another one.
TINGLE:
Ellen Ransley.
ELLEN RANSLEY:
Treasurer, Ellen Ransley from News Corp Australia. Thank you for your speech. Not only will the population be ageing, but the report sets out that population growth will stagnate. The fertility rate will stagnate to 1.62 babies per woman in the next decade. To supplement the workforce that we’ll need to care for an ageing population, do you foresee it being possible that in the next 40 years we will need to have another baby bonus?
CHALMERS:
I think that the baby bonus served a purpose then in the early 2000s, but the opportunities and the policy levers are different now, and we’ve found a better way, I believe, to service the same objective, which is by extending paid parental leave, making early childhood education cheaper so that parents, particularly mums, can work more and earn more if they want to. And that really goes at the same sort of challenge that Peter Costello was describing, probably from this lectern 20 years ago. And when he sat down and saw the challenges posed by an aged population he considered the baby bonus to be the best response to that. When Katy and I and the Cabinet sit down and look at these similar set of challenges, we think PPL and early childhood education are – you get more value for money. And in both those cases it serves a need for participation in the workforce at the same time it ticks a whole bunch of other boxes, cost of living and the like.
TINGLE:
Adrian Rollins.
CHALMERS:
Adrian Rollins and I already had a chat on the way down here so he’s having a second bite here.
ADRIAN ROLLINS:
Good afternoon. Adrian Rollins from The Canberra Times. I want to take you back to yesterday when you announced with Andrew Leigh the competition review. Also yesterday we heard – there was an economics committee hearing about some of the claimed effects of a claimed lack of competition in the airline industry. We’ve also seen large profit results announced by various large organisations like the supermarkets and the banks. And I wanted to get an idea about what the government thinks needs to be done about the sorts of claims of extraordinary profits that are being made by large corporations and thinking about this in terms of the productivity agenda.
CHALMERS:
Well, when corporate Australia’s costs moderate, we want to see their prices moderate too, and that’s our belief across the economy. When it comes to particular sectors, one of the reasons why Andrew and I have assembled this crack team, including internal and external experts on competition policy, and why we’ve unleashed the expertise and enthusiasm of Andrew on this task in particular, is because we are worried that our economy is not competitive enough and, therefore, not dynamic enough and, therefore, not productive enough. And that’s really the motivation behind the competition review. Individual companies will make their own explanations about profit reports and the like. They’ll get an opportunity at parliamentary committees and in front of all of you. Our job is to make sure the settings are right and that’s what we’re going to spend the next couple of years making sure that they are.
TINGLE:
Melissa Coade.
MELISSA COADE:
Hi, Treasurer, Melissa Coade from The Mandarin. My question is about the future Jenny Wilkinson or Steven Kennedy. You’ve previously referenced three big documents, the Intergenerational Report, Measuring What Matters framework and the Employment White Paper as being of a piece for this reform road that Labor has.
CHALMERS:
Yes.
COADE:
But sort of wrapped up in that is vision informed by evidence and consultation and iteration, all the political headwinds and all the sorts of uncertainties that you outlined in your speech. How can you make sure that the future Jenny Wilkinson or Steven Kennedy is able to imbue that kind of evidence-based iterative thing in the vision you lay out?
CHALMERS:
Well, we want to make these kinds of things normal, rather than novel. We want to lock down the wellbeing framework and improve it, frankly. We want to release the Intergenerational Report more frequently. The Employment White Paper is part of this story. Reforming and refocusing and re-energising our institutions is a big part of this story. And, hopefully, whenever I’m done here, I would like to leave behind a different way – not just a different reform agenda and seeing the benefits of that, but a different way that we go about it as well. And we found very willing partners in the officials, including the two wonderful officials that you have name-checked already, but really right across the Australian Public Service, and this is under Katy’s leadership in her portfolio. I think there’s an appetite to do things differently, to have more of an information base, more of an empirical way of going about these big challenges. They find in this Treasurer and this Finance Minister and these colleagues very enthusiastic partners in that endeavour.
TINGLE:
Tim Shaw.
TIM SHAW:
Thanks, Laura. Treasurer, Tim Shaw, director of the National Press Club. I want to go back to people and place. You partially said that in your answer to Andrew. How can you in government and especially Treasury and for future IGR planning, how do you better communicate with the Australian people? Is it at census time when you say, “Look, you’re living here and you’ve got the three kids and the ute, but where do you want to be in five years?”? Are these the kinds of questions that would assist governments of the future by actually saying, “Tell us where you are today, but tell us more frequently where you’d like to be tomorrow”?
CHALMERS:
I think families and Australians more broadly already have these conversations around the kitchen tables of this country. And I think what we are doing here is of a piece, really, with how people think about the intergenerational challenges in their own lives. And you think people make difficult decisions in the near term to set their kids up for the future all of the time and that’s in some ways what we are kind of contemplating here. So, I don’t think people need in their own lives encouragement to think this way, but I think the political system needs encouragement to think this way. I’m conscious that we are getting towards ringing the bell again in a moment, so what this really goes to is the country’s willingness to think about its own future. Right? And I see, our political opponents like Angus Taylor saying, “Well, we shouldn’t be thinking about the future because people are under cost‑of‑living pressure?” Well, Angus might not be able to think about two things at once, but I think the country can and the government can, and that’s what we’re trying to demonstrate. I think we’ve got to reject a kind of narrow-minded kind of intellectually limited, deliberately short-sighted kind of opposition that says a country like ours is not capable of this, of thinking about the long term at the same time as we deal with the near term. I believe not caring about the future should be disqualifying in my line of work. That’s my view. I think if you do not care about the next 40 years, you’ve got no business being here in the political system. I really believe that. That’s not just an Angus thing. More broadly. If you want to personalise it a little bit, when you spend as much time as we all do away from kids and families, dragging our arses around airports at 4.30 in the morning, getting the first flight and cursing the alarm when it goes off at quarter to four or whatever it is, the thing that justifies it in our minds is the idea that being away from the kids – at least you’re trying to create something that you can give to them and be proud of. And I think that’s how people think about it in their own lives and that’s how I think about the country. If we spend our time and all the sacrifice that you all make trying to build something that at least we can be proud to give to them, then that will make it worth it. Another way of thinking about that is that if you don’t have that, if you don’t have that sense of the future kind of – that flame kind of flickering in you if you don’t have that pilot light of purpose in you, then you’ve got no business being here in our line of work. I really believe that. And if you don’t have that pilot light of purpose, that little pilot light of purpose, flickering in you, you should get out of our way and leave it to people like the rest of us who do.
SHAW:
Thank you, Treasurer.
TINGLE:
Treasurer, we’ve got a bit more broadcast time if you’re happy to take a few more questions.
CHALMERS:
I always find it hard to say no at this point. I don’t know if anyone has ever said, “Well, actually –
TINGLE:
“I have a train to catch!” But my colleagues have been very disciplined, so they should be rewarded. Peter Martin’s got a question.
PETER MARTIN:
Peter Martin from The Conversation. Congratulations on the report, firstly. Like Laura, I remember the first one. This is the most comprehensive of them. But I’ve also looked back to the first one. This one says, “Look, real incomes are going to be more than 50 per cent bigger. GDP per person, 57 per cent bigger”, which sounds pretty good. It sounds like, as I’ve been saying, every IGR; look, we can cope with a few more percentage points in tax. Look how much richer our children or their children are going to be in 40 years’ time. But the first IGR had us being not 50 to 60 per cent richer, but 90 per cent richer. That was only 20 years ago. Now, what I want to ask, though, is to what extent has climate change factored into that? This report hasn’t made explicit the chunk of, I suppose, that downgrade, if you like – huge downgrade due to that. You’ve set up a unit in the Treasury to forecast the economic impacts of climate change. When – I suppose this is my second question, second part. When are we going to see the results of that work?
CHALMERS:
A couple things about that. The comparisons that you make between IGRs is a reminder that none of this is preordained. There’s always an element of uncertainty; there will always be things like global financial crises and pandemics that will knock a country off course and make us think about the starting point differently and, therefore, the end destination differently as well- so none of it is preordained. We accept that, we embrace that uncertainty in some ways. Really the major lesson from all of that is that we can’t be complacent about the future. And where that complacency could be the most damaging is when it comes to climate change. We’ve tried complacency on climate change and it’s meant that we’ve wasted a lot of time and we’ve got to catch up and our policies are about getting things right after a whole series of missed opportunities and, to be fair, not just under the other mob. So that’s that. Part of that is making sure that our reforms in the energy transformation and in climate change more broadly are as best and are as well informed as they can be. They’re already going to be well intentioned but we want to make sure they’re well informed as well. That’s why we did ask Steven and his colleagues to stack up, as you rightly say, a new much more rigorous way of modelling the impacts but also the opportunities of climate change and that work is ongoing. We talk about it frequently. We meet about it frequently. We are stacking that up. You can’t click your fingers and go from what we had to what we want immediately, so we’re building that up. In the interim what the IGR does is there’s a heap of new analysis about climate change in the IGR and you’ve noticed that. You’ve spent the last few hours engaging with that, but there’s more work to do there, and the modelling capacity that we stack up in Treasury will mean that future IGRs can have even more rigorous analysis of the risks and opportunities.
TINGLE:
David Crowe.
DAVID CROWE:
Thanks, Laura. Thanks, Treasurer, for your speech. David Crowe from The Sydney Morning Herald and The Age of Melbourne. You’ve been asked about so many different areas of reform here today. I guess one sort of near‑term option is employment because you’ve got the Employment White Paper coming out. And you’ve got this warning sign today about not having a big enough workforce to look after older Australians as they age. Does that mean that the Employment White Paper must address or do you want it to address the incentives to get people off welfare and into work, and that you need to change tax at that low end of the income range so that there’s a greater incentive for people to get into the workforce? Can that be done in this term of Parliament?
CHALMERS:
One of the things that the Employment White Paper will engage with is work incentives, but primarily from the point of view of Amanda Rishworth’s portfolio, rather than my portfolio. And, obviously, we are still working on the Employment White Paper. We haven’t yet finalised it. But one of the specific things – one of the specific pieces of work that we’ve commissioned from Amanda is to look at some of these incentives. It won’t be silent on some of these incentives. I would encourage you not to anticipate some big revolutionary change to the income tax scales, but where there’s an opportunity, whether it’s older workers or in different ways, to think differently about some of these incentives to work, we’ve asked Amanda to do a piece of work on that.
TINGLE:
Andrew Tillett.
ANDREW TILLETT:
Thanks, Laura. Thanks, Treasurer. Andrew Tillett from The Fin and also board member here at the Press Club. A non-IGR question: a couple of months ago the Canadian government announced it was reviewing its membership of the Asian Infrastructure Investment Bank after one of its executives resigned complaining of Chinese Communist Party influence in that body. I understand we’ve been maybe engaging with the Canadian Government about it. We’re also a member of the bank. Can you give us a sense of what that engagement is and is it in Australia’s interest to stay a member of the AIIB?
CHALMERS:
Well, we take seriously these concerns that have been raised by our Canadian friends. We said at the time and it remains the case that Penny, myself and other relevant colleagues are working through the issues that were raised. It is true that I’ve engaged with Minister Freeland, who’s my closest counterpart in the Canadian system, about some of these issues. And for the time being I don’t have anything to add to what we’ve said already. When we can say more about that, we will.
TINGLE:
Julie Hare.
JULIE HARE:
Treasurer, thank you. Julie Hare from The Australian Financial Review. I would like to speak to you about education. The Productivity Commission has made the point a number of times in the last few months that there seems to have been a decoupling between levels of education and productivity, that we’re the most highly educated population ever and yet productivity is sluggish. At the same time, the government has very, very ambitious targets around increasing the number of people with university degrees. How do you see the future with a vastly educated population, 55 per cent of young people with degrees, while productivity is stuck? How do you sort of unstick it?
CHALMERS:
I don’t want to front-run Jason Clare’s work here, but I think the direction of travel is pretty clear. We need to modernise our education system. The way that I think about it is making it easier for people to adapt and adopt technology, but one of the reasons I wrote that long piece of work with Mike Quigley a few years ago is to try and work out: how can we think differently about lifelong learning in a world where people can’t just finish school, go and do a TAFE qualification or a university degree and hope that that sustains them for another 45 years of working life? We need to be able to update people and refresh peoples skills and make sure that they can keep up with the way the workforce is changing. Jason, to his credit, has done a heap of work with stakeholders who are in the room, important stakeholders, to see how we might go about that. The University Accord is part of that. Brendan O’Connor’s work in skills, the way that we’re thinking differently about identifying the skills we need and how they evolve over time – it’s really all part of the same effort, which is to make sure that the money we invest in education and training, one of the most important things that government invests taxpayer dollars in, that we are getting maximum bang for buck. And we should judge that by people’s ability to grab the opportunities of an economy which is being changed by those five forces that I talked about.
TINGLE:
Ron Mizen.
RON MIZEN:
Lucky last, Treasurer, and thank you so much for sticking around for the trio of AFR questions at the end. [Laughter.]
CHALMERS:
What’s the AFR done to get the last three?
TINGLE:
Can’t say too much! [Laughter.]
MIZEN:
Treasurer, I just want to go to your push to revitalise and overhaul the nation’s economic institutions and processes. In particularly, I want to go to the Australian Securities and Investments Commission. We saw during the Banking Royal Commission it was heavily criticised. Since then, there’s been a multitude of scandals. We’ve had investigation into commissioners. Yesterday before a parliamentary committee there was a conga line of people complaining about ASIC’s responses to investigations, saying they didn’t do them properly, including the peak body for insolvency practitioners. We also had the former chair of ASIC yesterday basically saying Treasury and ASIC had failed in their work health and safety obligations towards him and others. Are you confident in where ASIC sits at the moment? You’ve got potentially four commissioners to replace in the months ahead. How are you thinking about that organisation and its revitalisation?
CHALMERS:
Well, first of all, we take seriously the issues that are raised at the parliamentary committee. Obviously, I have tried to stay across those matters that were raised. We are trying to reform and renew and refresh our economic institutions and the focus has been on the Reserve Bank and to some extent the Productivity Commission. When it comes to ASIC, I think we do have a really important opportunity with these appointments all coming at one point to see that as an opportunity to refresh an organisation and an institution that has copped a bit of flack in recent times. But I don’t yet have in the way that I – we came to office with a very firm view about the Reserve Bank. We had partly formed but now almost fully formed views about renewing and refocusing the Productivity Commission. We haven’t yet gotten to ASIC.
MIZEN:
Thank you.
TINGLE:
Treasurer, you’ve been very generous with your time and I would like to thank you on behalf of the room for being so generous with engaging on our questions.
