Press conference, Blue Room, Canberra
JIM CHALMERS:
Thanks everyone for being here. I've got four things to touch on, but particularly, obviously the rates decision. And we're part way through the Investor Roundtable that I have to get back to, so let me try and be as efficient as I can and run through the four issues before us. First, obviously the Reserve Bank has kept interest rates on hold – 4.35 per cent. This is welcome news for people who are already stretched enough. The last thing that people needed at Christmas time was another rate rise and so I think this decision today from the Reserve Bank will be met with sighs of relief, right around Australia. This is a difficult time of year at the best of times, people are under pressure from the rate rises already in the system from inflation which is moderating but still too high, and our economy is under pressure from global economic uncertainty as well. We are making welcome and encouraging progress in the fight against inflation. We're not getting carried away because we know that people are still under pressure, we know that people are still doing it tough, we know that people are finding it difficult to make ends meet. But if you look at the recent data and look at the recent commentary, it's very clear now that we are making welcome and encouraging progress in this fight against inflation. Our plan which has three parts – to roll out targeted cost-of-living help, to get the budget in much better nick, and to invest in our economy. Those three things are helping to put downward pressure on inflation and we've seen that reflected in recent weeks.
Now, at the same time that we're dealing with pressures on people in the near term, we're also making sure that we are investing in the future of our economy and our community at the same time. And that's why today's Investor Roundtable is so important. These roundtables bring together more than $2 trillion of funds under management. It's all about trying to align what's good for investors and superannuation fund members, with what's good for our communities and what's good for our country more broadly. I really am very grateful for the enthusiasm and the contribution of the big funds – whether they be super funds or other institutional investors – working with the government to find win-wins in our economy, to find these ways where our people can do well, our investors, our super fund members can do well, at the same time as we advance our national economic priorities as well. This is all about making sure that capital is flowing in ways that modernise our economy and maximise our advantages in a really important time for the future of our economy and our people.
We'll get a backward-looking read tomorrow on the economy with the National Accounts for September. We expect that parts of the economy are performing relatively well but other parts are being buffeted by higher interest rates and by global economic uncertainty as well. It remains to be seen, of course, what those numbers say. We already know that people are under pressure, we already know that the global scene is unpredictable but we also know that inflation is moderating, wages are growing, we've had two consecutive quarters of real wage growth, we've got unemployment with a three in front of it. 620,000 jobs are being created on our watch, we've got record participation in the labour market, we've got the first surplus in 15 years and a much stronger budget position, saving tens of billions of dollars in debt and debt interest. So we enter this period of global and domestic economic uncertainty from a position of genuine and relative economic strength. As I've said to you a number of times in this room, we've got a lot coming at us but we got a lot going for us and we'll see some combination of that in the National Accounts tomorrow.
The last thing I wanted to touch on briefly is I wanted to update you that I've now had my first formal conversation with the new Finance Minister of New Zealand Minister Nicola Willis. I met Nicola in opposition when I was in New Zealand, I exchanged messages with her on election night. Clearly, the New Zealanders have a process after election night to put together a governing coalition, and with her appointment confirmed I was really pleased to be able to have that first conversation with her yesterday. We discussed the global economy, our domestic economies, the work that we can do together on Closer Economic Relations, on climate change and energy. We canvassed a whole range of issues and we're looking forward to a face to face meeting before long. I'm prepared to go to New Zealand for that or happy to host Minister Willis here in Australia. We've had a wonderful relationship with the former government of New Zealand, we look forward to a really productive, wonderful relationship with the new government of New Zealand. We've got so much to advance together and that was really the character and the colour and the spirit of the conversation that I had with Finance Minister Willis yesterday.
JOURNALIST:
Just on the budget and the NDIS which is now one of the biggest challenges you have to the budget. If the states decline to engage on reforms, they're threatening to do, is it the case you'll have to go ahead and do what you have to do anyhow, in terms of getting the growth rate down to 8 per cent by lessening the number of people that go on it and cutting the cost of the scheme, will you do that, regardless of the states?
CHALMERS:
We've made it really clear, I think, in recent months not just recent days, that we need to ensure that the NDIS delivers for people it was designed to help. Part of that is making sure that we get the costs under control. And we want to work with the sector, we want to work with the states and territories to deliver on that objective. We are big believers in the scheme, the states and territories are as well. It's an important scheme, it's doing very important work, we've got to make sure that we get the budget for it right. I don't want to pre-empt discussions that might happen tomorrow between leaders. We have been engaging with them, as you know, for a little while now, including last Friday in Brisbane – no doubt tonight and tomorrow at the leader level too. We hope that there's a deal to be done here across a range of areas. We believe there's a deal to be done but not a deal at any cost. We believe that there's progress that we can make together if we want to. And in making that progress, we need to recognise not just the pressures on state and territory budgets, but the pressures on the Commonwealth budget as well. I recognise that every government at every level has got difficult choices to make on health, on the NDIS, the way we think about the GST arrangements and in other areas as well. Our instinct and our inclination is to always work with the states and territories where that's possible, where that's responsible and where that's affordable, and where we can advance our common interests, and that's the approach that we take to the next 24 hours or so.
JOURNALIST:
Notwithstanding the RBA's decision today, we know that there'll be a lot more people coming off fixed rate loans in the next period ahead, people are still going to be feeling the cost-of-living pressure. The Finance Minister said this morning that there will be some spending measures in MYEFO, is that something that people should be looking forward to for their cost-of-living relief?
CHALMERS:
The mid-year budget update will be more like a traditional MYEFO and not a mini budget as I've flagged to you on a couple of occasions now. People shouldn't expect big, new initiatives in the mid-year update. But of course, we need to account for new spending – some of it unavoidable, some of it purely accounting – and there are a number of measures typically in half a year of a government's normal operations. And so, it will be a bit more like a traditional mid-year update, it will be an opportunity to update the forecasts including the budget bottom line. The mid-year budget update will be defined by one thing – responsible economic management. And the reason it will be defined by that one thing is because we know from Fitch, IMF, OECD, the Reserve Bank Governor, the ABS and others, that our three part strategy to fight inflation in our economy is making welcome and encouraging progress. And so people should expect to see more responsible economic management in the mid-year update. We've said publicly on a couple of occasions now that if more measures are necessary, getting closer to the May Budget, then obviously we would consider them then, consistent with the fiscal constraints and the economic conditions.
JOURNALIST:
Treasurer, as the first senior minister to stand up today, what's your reaction to the arrest of this third ex-detainee? Should the House sit earlier and should this legislation be put in place sooner?
CHALMERS:
Well, the parliament needs to pass the preventative detention regime as soon as it can, and we've been clear about that already. I'm aware of reports today – only made aware in the last little while – I thank the authorities for the work that they have done and are doing. We need to be clear here, it wasn't the government's preference for these people to be on the street – that's why we argued against the outcome that the High Court reached. This situation was not chosen by us, it was imposed on us by the High Court and we are responding to that. Whether the government was Labor or a Coalition government, a government of either political persuasion would have to respond to the decision taken by the High Court. We have no option but to play the cards that we've been dealt by the High Court and that's why we responded with the measures that have already been legislated, and that's why we need to pass this preventative detention regime. And I remind the Liberals and Nationals that this legislation is based on their regime for high risk terror offenders, and there is absolutely no reason for them not to commit to passing this legislation when the parliament convenes, and I call on them to do that.
JOURNALIST:
Treasurer, you made the point last week that the GST arrangements the Coalition struck, blow out in costs from 6.7 out to something like 33 billion over the years to 2027. But can you understand the states' concern that any change to that means that they see a sudden drop-off in the revenue that they require for hospitals and for disability services, and that they need longer certainty about how that changes? Even if you want to change that over the longer-term, do you accept that changing over the next four years, over the next five years is really just not going to be possible?
CHALMERS:
I do understand the pressures on state and territory budgets, and I ask them to understand the pressures on ours. And one of the things that they are very focused on, in understandable ways, is what is the future of these arrangements that were struck before the last couple of elections. I think I've been pretty constructive with the states and territories. I respect and enjoy working with the treasurers from the states and territories, I try to understand where they're coming from when they've got concerns and issues that they want to raise, and the conversations that we have about these matters are typically calmer and more collaborative than what you might read about them. And that's because we've all got an interest in helping each other, not just repair our budgets, but provide the services and everything that the people that we represent need and deserve, and that our economy needs. And so I recognise that the point that they're making, I try to take it into consideration, I ask them to consider our point of view as well. From my point of view, there's no animosity in this engagement, this negotiation. I get where they're coming from and ask them to get where I'm coming from. The cost of this deal has blown out in ways that you have accurately described. Scott Morrison thought it was going to be $6 billion, it's become $33 billion. That's not irrelevant to us. There are not tens of billions of dollars down the back of the Commonwealth's couch to fund these kinds of things and so we need to recognise that. The last point that I wanted to make is in this room from time to time, for understandable reasons, you will ask me about a difficult decision that a state or a territory has taken in their own budgets and what I say to you, and what I mean is, I don't like taking pot shots at the states and territories about difficult decisions that they might have to make. And, again, I ask them to understand that the position that our budget is in. We've made some really good progress fixing the budget, but the pressures on our budget intensify rather than ease into the medium term. We're a responsible government, we believe in responsible economic management, and that means trying to find a way through here.
JOURNALIST:
You were meeting today with the Investor Roundtable, one of the issues is around superannuation and getting cash from them into areas such as net zero and housing. Has there been a discussion about best interest tests and do you think there's scope for change in that to enable funds to directly invest more?
CHALMERS:
We're not contemplating a change in the best interest tests. We think it's fundamental to superannuation that the first priority is to deliver great returns for fund members. We have no at any point suggested interfering with the primary responsibility of a superfund to their members. We built super, we designed it, we built it, we put it in place as a Labor government in the past and we advanced it as a Labor government in the present. Its primary purpose is to deliver for people but we believe it's possible to find win-wins here. We believe we can align super funds' obligations to their members with our national economic priorities, and not as some kind of charitable thing, but because it's in the interest of the funds and the other big investors themselves. The net zero transformation is a massive industrial opportunity for this country. Investors recognise it, their government recognises that and we believe we will do better if we work together, and that's what the Investor Roundtables are all about. The issue that I think you might be going to is around the performance test and the performance test has played an important and welcome role in superannuation – that's acknowledged on all sides, I believe. We need to make sure that that is designed in a way that it's intended to, and in a way that doesn't deter investment in important areas. And so all we've agreed today is that we would do some more work on that, some more consultation and collaboration on that. Probably half a dozen different people raised it in the room as an issue worthy of our attention and we agree.
JOURNALIST:
Just sticking with the Investor Roundtable for the moment setting aside the performance test, industry funds and IFM have asked the government for a number of specific things in order to unlock capital for the net zero transition. These included, but not limited to, production credits for sustainable aviation fuel sector, concessional finance and availability payments for transmission builds as well as a regulatory overhaul of who builds the transmission. Is the government open to any of those propositions?
CHALMERS:
We really welcome the contribution from IFM. We asked Cath Bowtell to present to the group today. There's a lot of interest, there's a lot of good work and a lot of deep thinking that's gone into those proposals. We've committed to consider them. We think it's unlikely that a government could do all of those things that they have proposed, but it might be possible for us to do some of them after we carefully consider it. We really like it when industry organisations and investors put forward ideas for us to consider and to hold up to the light and see if we can advance together. That's how these Investor Roundtables are supposed to work. And so when they put out that piece of work on Friday and presented on it again today, I think that's a really good development because there are vast industrial opportunities here in the clean energy transformation. The investors are engaged, their government is engaged, others are engaged in that task, and we welcome ideas from all quarters.
JOURNALIST:
We saw an unexpectedly weak current account balance this morning, a slight deficit. Are you worried what that means for the GDP figures tomorrow?
CHALMERS:
In the couple of days in the lead up to National Accounts we pay very close attention to the partial indicators in the economy. I'm not going to pretend otherwise. We sweat on those partial indicators, particularly on a Monday and Tuesday of a National Accounts week. And that's been the case again this week. There have been indicators going in both directions in the lead up to tomorrow, there's been some that have actually been a bit stronger than what the market was anticipating and some that have not been quite as strong as the market has been expecting and forecasting. The most important thing to remember in National Accounts week is in the absence of the consumption data, which is the most important part, particularly in a world of inflation being higher than we'd like and these interest rate rises, consumption is really the thing that we will be most focused on tomorrow. The partial indicators have told two very different stories. We'll see what happens tomorrow. I think the best summary of our expectations for the National Accounts is that some parts of our economy will be buffeted by higher interest rates and persistent inflation and global economic uncertainty; other parts of our economy are performing relatively well. Overall, our economy has been quite resilient and our economic plan has been helping in important ways. We'll see what the numbers say tomorrow.
JOURNALIST:
The states chipping in more for NDIS and Medicare – is that open for discussion tomorrow?
CHALMERS:
There are a number of issues on the table, and again, I don't want to kind of front run or pre-empt any progress that the Prime Minister intends to make in the next 24 hours or so. There are a lot of discussions going on – I've been part of some of those and not part of others. There's a lot of work going into seeing what might be possible tomorrow at National Cabinet. Obviously, health is a key concern for both levels of government, obviously NDIS is a big pressure on both levels of government. As in David's question, I acknowledge the GST No Worse Off Guarantee is a part of it as well, and there are other issues too. There is a lot of work for states and territories and the Commonwealth to do together, we want to make as much progress as we can but not progress at any cost.
JOURNALIST:
If there aren't to be any major costs of living measures in the mid-year budget update, if inflation proves stubborn next year and is slow to come down, would you consider more measures in the next budget?
CHALMERS:
We've said that will contemplate the budget situation and the economic conditions closer to the May Budget. Obviously, as I've explained in the mid-year budget update, we will update our expectations for the budget and for the economy but our consideration of whether any further steps need to be taken in that area or in other areas will really happen after MYEFO and before the next budget.
JOURNALIST:
The Senate is going to vote to set up an inquiry into supermarket price gouging later today. Would you support tougher competition laws that say put controls on excessive pricing? And you mentioned that the rates pause is welcome relief ahead of Christmas, do you have any particular message to Coles and Woolies before they price ham and prawns?
CHALMERS:
We want Coles and Woolies and the supermarkets to pass on savings when inflation moderates, and we've made that clear on a number of occasions. The supermarkets have got a really important role to play here, and we want to make sure that they're doing the right thing by their customers. We support the parliamentary inquiry, we're in favour of more transparency. If the supermarkets have nothing to hide when it comes to their pricing, then they can explain that to the Parliament, that's appropriate. The broader competition settings are a focus for me. That's why we've got this Competition Review that I'm working closely with Andrew Leigh on. It's a two-year process but we've said as nearer term priorities emerge, we're prepared to act in the near term and not wait to the end of that two-year period. We've said that our focus at the beginning is on mergers and acquisitions and non-compete clauses but there's nothing stopping us considering any other responsible considered methodical steps to get at some of these issues that you are talking about.
