Press conference, Blue Room, Canberra
JIM CHALMERS:
What was really clear at the G20 meetings last week in India is that some parts of the global economy are in recession, some parts are proving more resilient, but there are risks in the global economy and we are not immune from those risks. Right around the world inflation is moderating, but it is still higher than what people would like to see. We will get a read on our own inflation numbers in a quarterly sense and a monthly sense later in the week but we've made it clear that inflation is moderating in our economy. We would like to see it moderate quicker. It will be higher than we'd like for longer than we'd like but it has come off that peak in inflation that we saw around Christmas time and certainly the expectation is for less than what we saw at the beginning of 2022, remembering that the worst quarterly read for inflation was before the election last year.
Now the government's primary focus is rolling out cost‑of‑living relief for people doing it tough. That is the overwhelming primary, main focus of the government: that we roll out that billions of dollars in cost‑of‑living help that people need right now to get them through a difficult period. And we're doing that in a way that takes the edge off cost‑of‑living pressures without adding to inflation, a point that the Reserve Bank Governor has made earlier on. We've got a lot going for us in this country: half a million jobs created under the life of this Albanese Labor government, a record for a first year in office for a new government, half a million jobs, our labour market is remarkably resilient. And we've also got the first surplus in 15 years and in the coming weeks, the officials will finalise the Final Budget Outcome for the year just finished. We now expect that the surplus for last year will be around $20 billion, and likely north of $20 billion, but we will do the work and the checking over the course of the next few weeks and we will release the Final Budget Outcome in the usual way. The current expectation of the officials is that the surplus for 22‑23 will be around $20 billion, or more likely, just north of that figure. Now we've managed to provide this cost‑of‑living relief at the same time as we're repairing the budget. And we're providing this cost‑of‑living relief at the same time as we are investing in a more productive economy so that we can lay the foundations for future growth as well.
Part of our efforts, whether it comes to productivity or economic policy more broadly, is to make sure that we've got the right institutions and the right leadership of those institutions, to take our economy and to take our country forward. That was the motivation behind the last time I was here in this room with you appointing Michele Bullock as the new Governor of the Reserve Bank, and today I wanted to announce the new head, the new chair of the Productivity Commission as well. Today Cabinet has agreed to recommend to the Governor‑General that Chris Barrett be appointed the chair of the Productivity Commission for a term of five years. Chris's appointment recognises that if we want to build a stronger economy then we've got to build stronger economic institutions, and that means renewing and refocusing and revitalising the Productivity Commission. Chris Barrett is a very experienced and very well‑regarded economist and public servant. He has spent almost three decades working in public policy - the majority of that time as a senior public servant. Currently, he's Deputy Secretary of the economic division of the Victorian Department of Treasury and Finance. He's got a Master of Public Policy from Princeton where he was first in his class. He's got a Master of Arts from the University of Melbourne and a Bachelor of Commerce from the University of Melbourne as well. His appointment comes after a rigorous, merit‑based process, which involved interviews with two departmental secretaries and the Australian Public Service Commissioner as well. His experience, whether it's from key senior roles in important international institutions, to practical experience delivering reforms in both state and in federal governments will be absolutely invaluable to our thinking, as we renew and refocus and revitalise the Productivity Commission for the future. We see the PC as a really crucial institution as we try and get productivity growth going again in our economy, as we try and reform and renew our institutions. Chris's appointment will be an important part of that effort. I'm looking forward to working with Chris on our PC reform agenda, which will pick up the ideas and contributions which have been gleaned from months of consultation, on the best ways to take the PC forward. The Treasury has been leading quite a detailed and comprehensive consultation process as we go about making sure that the Productivity Commission is the best version of itself.
I really want to thank the outgoing chair, Michael Brennan. He has made a significant contribution to that institution and to the national economic debate, and I'm grateful for that and for his time before that as a senior public servant and a ministerial adviser as well. Under Mr Brennan's leadership, the Productivity Commission has delivered more than 20 reports to the government, including the productivity inquiry that I received from him a couple of months ago. Subject to the Governor‑General's approval, Chris Barrett will commence in his role at the PC in September. I'm looking forward to working with such a well credentialed, experienced and well‑regarded economist and public servant. He's a very good appointment, and we're very pleased that he's agreed to take it up.
JOURNALIST:
On Mr Barrett's appointment, given I think he preceded you as Wayne Swan's chief of staff, are you anticipating a fairer run from the PC for a Labor government under Mr Barrett then say his predecessor, and bearing in mind that report last week was highly critical of the manufacturing fund and its intention to produce batteries. Are you looking for a shift in thinking from PC under Mr Barrett, more aligned with the Labor government?
CHALMERS:
The way that you describe it hasn't been my motivation but I'm certainly looking to revitalise and renew and refocus the Productivity Commission. There'll be some people that say leave the PC exactly as it is, others will say abolish it entirely. I think we've got a really important opportunity here under Chris Barrett's leadership to take the PC forward into the future in ways that recognise that the productivity challenge has evolved as well. Now, we know that the productivity gains made in recent Australian history were the product of governments which were prepared to recognise the economic conditions and the economic opportunities to make our economy more productive. And that is our task now as we look to the next generation of prosperity as well but there are different levers. And we've made it clear that we think that the productivity opportunity for Australia is not to make people work longer for less but it is to invest in human capital, it's to invest in the energy transformation, to get much better at adapting and adopting technology as it evolves. And so I'm hoping we can focus the PC on those areas. It will remain fiercely independent as it should be, and it will be a very valued part of our institutional landscape when it comes to economic policy.
JOURNALIST:
Could you give us the timeframe for the changes in the Productivity Commission? And also just on the other side of what you've said, where do you think that Productivity Commission has been focused that you wouldn't want it too much focused on? What have been the faults of the Productivity Commission's approach?
CHALMERS:
I don't want to get into a kind of a performance review necessarily because partly I have a lot of respect and regard for Michael Brennan but also because I see this opportunity is a forward‑facing opportunity. And I want to make sure that the Productivity Commission is providing the kinds of insights and perspectives about a more modern economy that a government can pick up and run with, and that's an important part of what we're trying to do here. In terms of the timeframe, we have been doing a heap of work behind the scenes. We decided very deliberately that the Reserve Bank Review was one kind of review and the PC work would be different. Treasury has been leading the PC work and been talking to a heap of people and I'm very grateful to all those people who've contributed. And what I wanted to do was to get the new chair of the PC into the role so that we can work with them and with Treasury on the reform program, but clearly a more modern approach to data, clearly an approach which recognises the vast industrial and productivity opportunities of the energy transformation, clearly the way we think about human capital. All of these sorts of things will be central to the way that we recast the Productivity Commission. We will do that maintaining a laser‑like focus on productivity, but in addition to productivity, broadening and deepening the PC's role as well.
JOURNALIST:
Any date for the release of that?
CHALMERS:
I'll have more to say about the timing of the PC reform process. I want to get it right. Now that we have a new Chair of the PC, or when the Governor‑General approves that, I'll have an opportunity to work with Chris Barrett to finalise it. Hopefully, before too long - certainly months rather than years.
JOURNALIST:
Treasurer, the Reserve Bank Governor Phil Lowe has repeatedly said that productivity is really key, we don't want wages growth to affect inflation. How important is that aspect of Chris Barrett's role going forward?
CHALMERS:
Well, it's crucial. I've recognised, including last week, I sat a metre or two from Phil Lowe and we made almost exactly the same point - which is if we want to see rising living standards, and we want to see decent wages, then productivity needs to be part of that. We've made that clear on earlier occasions as well. The economy has not been productive enough for too long. The decade to 2020 was the worst for productivity growth in Australia in the last 60 years, and it will take time to turn that around. Nobody pretends that there's a switch that you can flick to turn around what has been disappointing performance on the productivity front. We've been realistic, and we've been upfront about that as well. We see productivity as absolutely central to growing the economy the right way, getting decent wages growth, and lifting living standards over time as well.
JOURNALIST:
On the RBA, Treasurer, are you open to giving the RBA more than two of the nine votes on the new monetary policy board or implementing the review’s recommendations exactly as they're specified?
CHALMERS:
My intention is to implement the recommendations of the Reserve Bank Review. And with respect to you for the piece that you wrote today, the new monetary policy board will be the same arrangements that we've seen in the Reserve Bank Board to now and if the argument is that the rest of the board has the ability to challenge the assumptions and recommendations of the Reserve Bank and its staff, the answer to that is yes, they will have that opportunity and I see that as a strength rather than a weakness of the reforms that we are proposing. The Governor and the Deputy Governor will be part of these deliberations, there'll be a recommendation in the usual way. But I think the more that it can be contested, the more that recommendations can be held up to the light, the better but that more or less reflects, at least in numerical terms, the situation as it stands.
JOURNALIST:
Treasurer, with a $20 billion‑plus surplus, which I think would be a record in cash terms, in dollar terms, does that give you a greater scope to look at further options for cost‑of‑living relief? Or do you think with inflation now starting to trend down and interest rates - the outlook starting to moderate - that it mightn't be necessary?
CHALMERS:
I think that surplus is really important on a range of fronts. First of all, when we've got this inflation - even though it's moderating, it's higher than we want it to be - it's really important that the government is not adding unnecessarily to those pressures and so by banking such a big proportion of the upward revisions to revenue, then we're making our contribution on that front. That hasn't come at the expense of providing cost‑of‑living relief. Our focus, the government's main focus is on providing cost‑of‑living relief by rolling out the commitments that we've made over our first two Budgets. We're not currently working on a new package of cost‑of‑living relief, we're focused on rolling out billions of dollars in cost‑of‑living relief that we have already announced but what a much better budget position allows for, is it gives you the flexibility down the track in future budgets - if you want to do more on the cost‑of‑living front, it gives you the flexibility to do that, it builds a buffer against this international uncertainty that we are confronting right now as well and we also need to recognise that even though the budget is in much better nick in the near term, we've still got those longer‑term intensifying pressures as well. So we weigh all of that up but the approach that we've taken is textbook fiscal policy in the circumstances, targeted relief for people but not at the expense of repairing the budget.
JOURNALIST:
When the budget bottom line last improved, there was a focus on housing - given that housing package is still not through, and there's still a big demand for housing which is driving so much of the cost-of-living struggles - isn't that a good place to put some of this money that can solve both of those problems?
CHALMERS:
First of all, we're really proud of the $2 billion that we announced as an accelerator for public housing - the Prime Minister announced that a few weeks ago and that's really, really important because we've got a big housing challenge - we're very aware of that and we understand that. We'd like to see the Housing Australia Future Fund pass through the Senate as well - it's part of our broad and ambitious agenda for housing but it's important to recognise the surplus for 22-23 is now banked, it now takes some of the edge off that trillion dollars in debt that we inherited from our Liberal predecessors, with not enough to show for it and it also helps us avoid some of the debt interest that we were anticipating which is another upside of this surplus. But that's now banked for last year, we're now in the subsequent budget year and so we're not looking for ways to spend out of last year's budget - even if we wanted to, that wouldn't be a goal.
JOURNALIST:
In your role as the leading Labor Queensland MP, will you be actively campaigning for the Voice once Anthony Albanese calls the referendum? How will you be convincing Queenslanders to say yes? And I'm keen for your response to calls to delay the referendum to build broader consensus.
CHALMERS:
First of all, I'm not going to wait for the timing of the referendum to be announced to campaign for the Voice, I'm looking forward to campaigning for the Voice in my community, in my home state and around the country. All of us who are passionate about a yes vote in this referendum - we all need to put the work in and we will and so I will be an enthusiastic part of that campaign. I recognise historically that Queensland has been a difficult place to make the case for changes like this one, but that fires me up more rather than deters me and I look forward to making the case. When it comes to the timing of the referendum, obviously, that's a decision largely for the Prime Minister and Minister Burney and others, I will campaign for it whenever it is.
JOURNALIST:
Given the data coming out of China, is it now a situation where Australia is, in sort of upfront terms of the Australian people on track to move into recession?
CHALMERS:
A lot of the conversation at the G20 meetings in India, were about the last couple of pieces of softer data out of China. Obviously, this was part of the conversation with my ministerial counterpart too, Minister Liu, and that's something that we're monitoring very closely but our expectations for our economy have not changed. Our forecasts have not changed. The budget forecasts had the Australian economy continuing to grow, but much slower. We need to be realistic about the consequences and the implications of the rate rises on our economy and this global uncertainty that we all confront - China is part of that story. The global economic challenges are substantial and we expect the slowdown in our economy to be significant but our forecasts have the Australian economy continuing to grow, that hasn't changed. We're monitoring very closely developments in China.
JOURNALIST:
Thanks, Treasurer. Just to follow up Rosie's question, has there been any consideration by the government about a referendum other than the current timeframe of the last quarter of the year?
CHALMERS:
Not that I'm aware of, no. As far as I'm aware, we will make an announcement before long about the timing of the referendum, which will be consistent with what we've said in the past.
JOURNALIST:
Treasurer, why did you reject Austroid's application regarding the Bald Hill lithium mine and what message does that signal about future China-linked investment in critical minerals in Australia?
CHALMERS:
First of all, we run a non-discriminatory foreign investment process, very similar across governments of either political persuasion. I issued a prohibition order last week consistent with advice from the Foreign Investment Review Board and just like other decisions that I've taken in the past, I don't think it's appropriate that I provide further commentary on specific cases like that one.
JOURNALIST:
You say you don't want to politicise the Productivity Commission, but you've just appointed a former federal Labor staff member to the top job and then you've mentioned key Labor policy priorities - clean energy transition, human capital and workplace reforms. You said that the last PC report didn't align with Labor values in a lot of ways. So how are you going to convince the public that you're not undermining the independence of the Productivity Commission, given how imperative its mission is?
CHALMERS:
My intention is to strengthen the Productivity Commission and its independence is an important part of that. And I'd encourage you - I know you read it at the time, but I encourage you to look again at the CEDA speech that I gave in Brisbane earlier in the year when the five-yearly review was released and that had a lot of the ways that we think the government's policy agenda is aligned with the things that the PC has been talking about and obviously there have been areas where we don't have an identical view and I suspect there'll be areas in the future where we don't have an identical view as well. What we're talking about here is the appointment of someone who has been a highly-regarded and a very experienced public policy practitioner for three decades, most of that time has been as a senior public servant, including in the last 13 years or so he's been our Ambassador to the OECD, he's done a very important climate change job in Europe and he's a very senior public servant in the Victorian system right now as well. This comes after a very rigorous, merit-based approach that deliberately involved my departmental secretary, another departmental secretary and the head of the Public Service Commission. And so it's a very robust, very involved process, it had interviews with departmental secretaries and others. I think if you look at Chris Barrett's CV and you look at the range of experience he's had, particularly as a senior public servant, I think he's incredibly well-placed to do this job and he will do this job in an independent way and he will do this job in the best traditions of the Productivity Commission. We have made it clear that when it comes to productivity, we have a range of priorities, it may be that the PC has other priorities under Chris's leadership and that's fine as well. I want to strengthen the PC, not diminish it and I see this appointment in that light.
JOURNALIST:
Treasurer, on this project of recasting the PC, can I just clarify, what are the government's key objectives from this process and how would you characterise this? Is this a major renovation of the PC or is it sort of tweaking around the edges?
CHALMERS:
Well, I feel like we've got this wonderful opportunity at the PC - we've got this organisation which has some credibility and some history and some longevity but a bit like the Reserve Bank of Australia, we should always be looking for ways to renew, refocus, and modernise these really important institutions and that's how I see the opportunity here with the PC. I've made it clear for some time, I think, at least since the beginning of the year and maybe before that, that I see the Productivity Commission as a good institution that can be even better and I want to modernise it, I want to focus it on the future, I want to renew it and that's what this appointment is all about.
JOURNALIST:
What does that mean in practice, Treasurer - modernising it, renewal?
CHALMERS:
Well, it means making sure, for example, that it's got the best possible approach to data, it's got the best possible approach to the energy transformation which I think - when they write the history of this period, this defining decade which is the 2020s - the energy transformation will be a huge part of whether we succeed or fail in our economy, whether we make it more productive or otherwise, whether we make it modern and forward looking, so the Productivity Commission's got a role to play there and Chris has got a lot of experience in that field of policy as well. Comm-state relations, a whole bunch of things where we've got an opportunity here to refresh the place, to renew it and refocus it and that's what the appointment's about.
JOURNALIST:
Treasurer, we've got a poll today showing a 20-point drop in the primary vote in WA down to 32 per cent for Labor, and the Fadden by‑election continued the strong vote for the LNP. Has the gloss come off Labor in these two crucial states?
CHALMERS:
Given I don't comment in any detail on federal polls, I don't see why I'd make an exception for a state poll even in a newspaper as good as yours, Katina, so I'm not going to get into that. We take no vote for granted, whether it's in states that have been traditionally difficult for us or indeed right around Australia, we take nobody's support for granted, we work for it every day and in the life of governments, sometimes you're doing difficult things, sometimes you're making the case for change, inevitably you will find there is choppy water. I don't see the Fadden by‑election result in that regard, I think the Liberals underperformed in Fadden rather than over‑performed in Fadden for all the reasons I said at the time including on TV the morning after the election. I don't see Fadden that way, I don't know whether the WA poll is right, I'm not going to get into that but we don't govern for week‑to‑week in the opinion polls, we govern to do the right thing ‑ provide cost‑of‑living relief, modernise our economy, make sure our institutions are up to scratch - and that's our focus.
JOURNALIST:
Treasurer, just on the Commonwealth Games - did you know about the cost blowouts before Victoria announced it was cancelling the event? And if you did, did the state government come to you and ask for more than $1.3 billion under a 50‑50 funding split?
CHALMERS:
The first answer is no. The second answer is I can't speak for my other colleagues, it may have happened with other colleagues - certainly we were in the midst of the usual kind of discussions that you'd expect when a state government is putting on an event like the Commonwealth Games. Usually those negotiations happen with sports ministers and infrastructure ministers and others. Obviously, we were aware of - I was aware of - the fact that projects are costing more to deliver for all of the obvious reasons that we've talked about in this room before, I wasn't specifically aware of this decision that they were about to take, I was prepared to engage in the usual conversations about the usual Commonwealth support.
JOURNALIST:
Treasurer, in opposition, Labor was critical of Coalition appointments to places like the AAT. We've seen with the Fair Work Commission and the Productivity Commission the appointment of people close to the labour and union movement. How are your appointments any different to the former government's?
CHALMERS:
This appointment that I'm making today is a very senior, outstanding, well‑regarded economist and public servant who has spent most of his career in public policy as a senior public servant and the person that he replaces was an adviser to ministers, Liberal ministers, state and federal and I didn't criticise Michael Brennan for that, in fact, I think I've said publicly my high regard for Michael Brennan. This is a very, very good appointment of someone who has a long track record as an outstanding economist and very senior public servant, he will do a wonderful job at the PC, his appointment comes after a rigorous, merit‑based process and that's as it should be.
JOURNALIST:
Ross Garnaut says the Productivity Commission should recommend a shadow carbon price in the absence of a full market price for carbon, do you agree?
CHALMERS:
We've got our own approach to climate change. When it comes to the energy transformation, we've got the safeguard mechanism and all of the associated policies - that's our policy when it comes to this really crucial energy transformation. I see this - as Ross does - as a huge economic opportunity for Australia and if we get this right, if we broaden and deepen our industrial base, we get human capital, right, we get energy right, we get technology right, we modernise our economy and make it more productive, then this defining decade that we're in right now can be absolutely key to delivering another generation of prosperity like the generation of prosperity that ended with the pandemic a couple of years ago. Thanks very much.
