Press conference, Blue Room, Canberra
JIM CHALMERS:
Today we learned that the unemployment rate has fallen to 3.6 per cent and that 6,700 new jobs were created in September. This is very welcome news given what's coming at us from around the world. It's a very welcome result because it comes at a time of serious global volatility, as well as the impact of rate rises here at home. 561,500 jobs have now been created on our watch – this is the most jobs created in the first term of any government on record and we're only halfway through the term. Since these monthly records began in 1978, there's only been 19 times, 19 months where unemployment has had a 'three' in front of it – and 16 of those are under this Albanese Labor Government. Unemployment, despite all of our economic challenges, is lower now than when we came to office. It has averaged 3.6 per cent under us, compared to 5.6 per cent under our predecessors, so this is a really welcome result. We welcome the fall in the unemployment rate, we welcome every one of those new jobs given the economic challenges – global and domestic – that we all confront together. But we still expect unemployment to rise as a consequence of higher interest rates and concerns around China, and conflict in Europe and now the Middle East as well. And we are seeing in the numbers before you today, some softening around the edges of the data. You see it in hours worked, participation has come off a bit but still near record highs, and we also know that job ads have been a bit weaker, as well. So we're seeing some of that softening as a consequence of the combined economic challenges from around the world and here at home. We know that the interest rate rises which are already in the system are biting consumption hard, in particular. We know that retail turnover has been soft, and we know that people are under pressure.
Conflict in the Middle East is now another concerning part of the economic outlook. We're already seeing global oil prices come up in recent months, and conflict in the Middle East risks making that worse. Governor Bullock made a very similar point yesterday. The inflation numbers that we see next week, which pre-date the escalation of the conflict in the Middle East, we think, will capture some of those early impacts of the elevated global oil price as a consequence of the way that supply was ramped back, even before we'd seen the developments in Israel and on the Gaza Strip in recent days.
So, we've got a lot coming at us and a lot going for us. The welcome fall in the unemployment rate today means that we confront these uncertainties from a position of strength. We are rolling out $23 billion in cost-of-living relief, we're getting the budget in better nick, wages are growing, Australian mums and dads will benefit from more paid parental leave, we've released our vision for the labour market and we're seeing today new records on jobs. As I said at the outset, this is the most jobs created by a first term government on record and we're only halfway through. 16 of 19 months since 1978, where the unemployment rate has had a 'three' in front of it, is under this Prime Minister and this Government.
JOURNALIST:
Treasurer, the figures you just mentioned on jobs. Full time jobs have been flat for the last six months and they’ve fallen 53,000 since June. Are you worried that that is the canary in the coal mine and that's the indicator that the jobs market is going to slow, and you won't be celebrating unemployment with a 'three' in front of it for very much longer?
CHALMERS:
First of all, as I said a little bit earlier on, we still expect the unemployment rate to tick up for all of the reasons that I've run through. I think hours worked is an indication of that – we're seeing in today's numbers that hours worked are softening. We're seeing the participation rate come off a little bit but still near record highs and we know that job ads have been softer as well. Obviously, we're always conscious of the part time-full time mix and the gender mix as well. The story of our labour market is one of remarkable resilience but it is beginning to soften around the edges. But we start from a really quite remarkable position as we confront the global and domestic economic uncertainties ahead.
JOURNALIST:
Your colleagues, Ed Husic and Anne Aly, have accused Israel of war crimes through 'collective punishment' in the Palestinian territories. Do you agree with them?
CHALMERS:
I think the point that Ed and Anne and others have made, is identical to the point that the Prime Minister made yesterday. That point is this – an innocent, civilian life on one side of a wall is not worth any more or any less, than an innocent civilian life on the other side of the wall. And what we have said consistently, is what we are seeing in this conflict in recent days is a devastating loss of innocent lives. That is being felt, of course, in that part of the world, but also around our communities around our country and around the world, as well. We expect international law to be respected – that means humanitarian laws and the rules governing conflict as well. And our hearts are with the civilians on either side of this conflict, who are caught up in the violence and the bloodshed that we've seen in recent days.
JOURNALIST:
Are you concerned that conflict in the Middle East means inflation could be higher for longer than both the Treasury and the Reserve Bank currently forecast?
CHALMERS:
That's certainly the point that Governor Bullock was making yesterday. Obviously, when you've got conflict in that part of the world, the risk is upward pressure on global oil prices – and Australians would feel that at the bowser. I think it's important to recognise that since around the middle of the year, from about June, I believe from memory, we have seen global oil producers ramp down their supply and that has pushed up oil prices and that's why we've seen the petrol price spike here in Australia, including up into the high $2.30s, around there. And so we are already seeing elevated oil prices as a consequence of decisions taken by suppliers and this does risk putting additional upward pressure on the global oil price. We expect in next week's inflation figures that we will see some of the first part of that – elevated global oil prices – reflected in the CPI. And that's the point really that Governor Bullock was making. In addition to that, since then, obviously conflict in the Middle East introduces an element of uncertainty in the global economy because it runs the risk of putting upward pressure on oil prices.
JOURNALIST:
The High Court yesterday said the imposition of road user charging for electric vehicles lays only with the Commonwealth now. States and territories can't introduce it. How are you going to address the decline in the fuel excise that is going to occur over the next decade and deal with that infrastructure spending shortfall?
CHALMERS:
We'll work through the issues in considered and a methodical way. Obviously, we acknowledge the decision of the High Court. These decisions and these issues are complex so we'll take the time to consider them, we'll seek all of the relevant advice, and we'll have more to say in due course. I think Australians know that we are big supporters of electric vehicles – that's why we've got the tax cuts to encourage more people to take up EVs, that's why we're also committed to the fuel efficiency standard. So we want to work with the Victorians and with the other states and territories on policy relating to electric vehicles. Clearly, the decision taken by the High Court has implications for that, for the Comm-state tax mix. We'll work through these issues in the usual considered and methodical way.
JOURNALIST:
Treasurer, just back on the jobs figures. As you say a welcome drop [inaudible]
CHALMERS:
The participation rate is still near record highs, but it has come off a little bit in these numbers. And similar to what I said to your former colleague up the front here, there are signs around the edges of these numbers that we're seeing the expected softening in the labour market, but overall to have the unemployment rate at 3.6 per cent, to have a record-setting performance for a new government in terms of jobs created, we enter this period of weaker economic growth brought about by global economic uncertainty and the impact of higher rates, we enter all of that from a position of strength. We see that in the overall rate even as we acknowledge some of the softer components elsewhere in the numbers.
JOURNALIST:
You've just said Ed Husic's comments were identical to the Prime Minister's but neither the Prime Minister nor Foreign Minister have accused Israel of carrying out collective punishment, which is a war crime. Can you just be very clear, does your government believe Israel is carrying out collective punishment of Palestinians?
CHALMERS:
A couple of things about that. The point that I was making is that when the Prime Minister said yesterday that all human lives matter, and Ed Husic said today, and I've repeated today, that we can't see innocent lives on one side of this as worth any more or less than innocent lives on the other side of this, we are all making the same point about the need for innocent civilian lives to be respected and protected, consistent with humanitarian law. I'm not going to get into parsing the language used by colleagues. We all choose our own ways to describe our reactions to what's happening over there in the Middle East. I've done that a moment ago, Ed did that this morning as well. And I think whether it's Ed Husic, the Prime Minister, Anne Aly, Josh Burns, myself, we are all incredibly concerned about the violence and the bloodshed. We've all condemned the actions of the terrorist group Hamas and we've all expressed our concern for the loss of human life.
JOURNALIST:
On electric vehicles, as you mentioned, state and federal governments are investing to incentivise an increasingly rapid uptake. Is it equitable and fair for the shrinking pool of motorists who can't afford to buy a more expensive electric vehicle to bear the burden of road infrastructure costs?
CHALMERS:
These are obviously the sorts of considerations that we now need to grapple with, following the decision of the High Court. But even before then, the Intergenerational Report that I released made it clear and we have said in this room and elsewhere on other occasions, that we understand that the tax base is changing over time as a consequence of more EVs coming into the mix. And so governments of either political persuasion, and at both levels, state and federal, need to grapple with this development. We are and we will do that in a considered and methodical way.
JOURNALIST:
It's expected that the large Chinese property developer, Country Garden, might default in coming hours or by the end of the week. Sales and investments in the Chinese property sector are going down. What implications do you think that has? How serious is that?
CHALMERS:
We have been concerned for some time now about the outlook for the Chinese economy, particularly the property sector but not just the property sector. You look across the Chinese economy at retail, exports, the finance sector, and the property sector – as you rightly point out – and there is cause for concern in the Chinese economy. And the authorities have flagged in different ways that they understand and acknowledge that softness and that weakness, and clearly the rest of the world is watching to see what, if anything, the Chinese authorities do about it. But I've said to you for a little while now and I say to you again, China is high on the list of global economic concerns for Australia. Our exposure to a weaker Chinese economy is obvious. You add that to the impact of higher interest rates here at home, combined with now a conflict in the Middle East, and you can see why we expect the Australian economy to slow, our unemployment rate to tick up. But what these jobs numbers show today as we enter that new period of uncertainty from a position of genuine economic strength.
JOURNALIST:
On the High Court decision, you mentioned implications for the tax mix. Do you agree with Labor premiers and treasurers who are warning the decision could cost their budgets billions of dollars in revenue because everything from waste levies to gaming taxes could be subject to challenge? And what did your legal advice tell you about that before the Commonwealth decided to intervene in this case, because you weren't just observers, you were weighing in on the side of the plaintiffs?
CHALMERS:
First of all, on the implications for the tax base, we're working through those implications right now, as you'd expect following the decision of the court. I'm not going to get into the advice today that we received about this issue. Clearly, it's a contentious issue, clearly it has consequences for the taxpayers of both levels of government. We'll work through what, if anything, that means for other taxes that states levy. Obviously our primary focus here is on what it means for EVs.
JOURNALIST:
Youth unemployment is at 8.1 per cent. It's more than double the rate of the rest of the country. Are you concerned that that message isn't getting through to young people, that jobs aren't available for young people, and then when that slowdown that you're expecting happens, it will be young people that go first?
CHALMERS:
A big focus of the Employment White Paper from a few weeks ago is to recognise the unemployment rate is really important but there are other measures that we care about too. We care about the prospects of young people, and older workers for that matter, men and women part time and full time, underutilisation, participation – all of these things are really important to our understanding of the labour market. And when it comes to young workers, we want to train up and skill up more young workers because better training equals better pay. And that's what the skills deal that Minister O'Connor and the Prime Minister announced earlier in this week was all about. It shows how central training and wages and unemployment is to our cost-of-living plan. Because when people are under cost-of-living pressure, we want to make sure that there are good, secure, well-paid jobs for them to access – young and old – and a big part of that is training.
JOURNALIST:
The Albanese government said it would move away from political appointments. However, revelations have come to light that Don Farrell picked his ally Chris Ketter over a more qualified female candidate, Kirstyn Thomson. How is that following through with that promise?
CHALMERS:
Well, Chris Ketter is incredibly experienced across government, in the defence industry and in the technology sector, as well. And his experience aligns really well with our objectives in that part of the world. As you allude to in your question – from time to time governments of both persuasions, over a number of years will appoint people who have a range of experience, including political experience. I think what ministers have been able to do in this government is to strike a much better balance than we saw under our predecessors. Not to say that there will never be appointments of this nature but that we take a more appropriate approach to it. Chris Ketter is a person of substance and experience, and he will make a very fine appointment.
JOURNALIST:
But he didn't even apply for the job, so why was he given it when he didn't apply for it?
CHALMERS:
I've just run through all the reasons why we've appointed Chris Ketter to this position. He will do a great job and he will rely on his substantial experience. And as a government, we have struck a much better balance between relying on the experience and the expertise and the talents of people who might have had political experience versus people who've come out of the department itself. Thanks very much.
