JIM CHALMERS MP
SHADOW TREASURER
MEMBER FOR RANKIN

 

E&OE TRANSCRIPT

TELEVISION INTERVIEW

SKY BUSINESS NOW

WEDNESDAY, 2 FEBRUARY 2022 

SUBJECTS: Reserve Bank Governor’s Speech to the National Press Club; Unemployment and Wages Growth; Interest Rates Rises; Negative Gearing and House Prices.

ROSS GREENWOOD, HOST: Well to get reaction to the Reserve Bank Governor is the man who might be managing our economy as interest rates rise, and that is Shadow Treasurer, Jim Chalmers. Jim, many thanks for your time as always. Just in regards to the Reserve Bank and where it sits right now, interest rate rises could come as early as this year if inflation and therefore wages start to rise. Do you imagine that that could happen? And you could be the Treasurer who's actually having to try and preside over that?

JIM CHALMERS, SHADOW TREASURER: Good afternoon, Ross. I thought that was a really welcome contribution broadly from the Reserve Bank Governor today. It's always good to get an insight into the thinking of the Governor and the Board as they deal with the economy as it hopefully recovers strongly from the worst part of the pandemic. I think the Governor has been pretty clear that interest rates won't stay near zero forever. Nobody expects that to be the case. That has absolutely nothing to do with who wins the next election. They can't be near zero forever. But also the Reserve Bank seems to be indicating to people that they're in no rush and that they want to be convinced that interest rate hikes are necessary. So like everybody, we respect the independence of the RBA board and we will keep an eye on the contribution they make to the economic conversation. In the future, if interest rates do go up, it'll be difficult for families so the bank has to has to weigh that up, too.

GREENWOOD: Okay, can I just go to one aspect of it, which clearly has got to be a tip for the government and that is the unemployment rate falling into the threes, the Reserve Bank is now forecasting that. That surely is welcome and indeed, has got to be one of the hallmarks of the government in this recovery phase.

CHALMERS: We want that unemployment rate to be as low as possible, because we want to see some of that pressure on wages, but it hasn't been there so far. We need to think about the labour market as broader than just the unemployment rate. The unemployment rate matters, we want it as low as possible but we also need to understand that there's job insecurity, and we’ve had stagnant wages growth, as you know, for much of the last eight or nine years. So when you look at the labour market more broadly, there are some encouraging signs, but there are also some substantial weaknesses in wages and job security. We've also got this issue where we've got about 1.5 million Australians who are either unemployed or underemployed at the same time, as we've got the skill shortages emerging in the economy. The labour market more broadly is a mixed bag. We want unemployment to be as low as possible. But we need to have some perspective there when we talk about that number.

GREENWOOD: I’ll take it to you the unemployment rate is the unemployment rate and underemployment is certainly always there but the participation rate is higher than it's ever been. Go back to July 2020 you told the ABC at that time “That is absolutely the key test. The Government, the Opposition, any decision-maker in the economy, should be judged on what happens to unemployment and what happens to underemployment too - we had an issue there before the crisis.” - unemployment is now lower than it has ever been for 50 years. So this again has got to show the strength of the Australian economy, the strength even of some of the government's measures?

CHALMERS: Again, Ross, we want that number as low as possible and when it goes down rather than up we welcome that. We've done that repeatedly. After I said that, we saw there were some months subsequent to that where the number of unemployed Australians rose markedly. There was about 56,000 Australians in Treasury's estimation after the withdrawal of JobKeeper, who lost their job as a consequence of that, for example. There has been months since I made those comments where a substantial amount of Australians have lost their jobs. More broadly I've said repeatedly now, as I said to you a moment ago, we want the unemployment rate to be as low as possible. The labour market is broader than just the unemployment rate. Let's get wages growth going again. Let's deal with job insecurity. Those two challenges are related and they are in many ways the defining challenges as the economy recovers. The Reserve Bank Governor was talking today and yesterday in the statement that the board released that there are some encouraging signs in the economy. We want the economy to recover strongly. We expect it to recover strongly. But it's not the right kind of recovery if people aren't getting that wages growth that they need and deserve and have been missing out on for much the last eight or nine years.

GREENWOOD: Okay, there's a couple of points here I want to go to one is the wages because you as a potential future Treasurer, will also have to deal with unions when enterprise bargaining agreements come up. But you as a Treasurer will you try and keep those as low as possible despite the fact of course you've got a situation where inflation is rising, and therefore wages growth so there will be pressure there. Are you going to deal with those unions in a strong manner?

CHALMERS: We want what's best for the economy Ross and the thing that's been the problem for a large chunk of the last eight or nine years is the absence of that wages growth has flowed through to some of the other challenges in the economy. Obviously we don't want a free for all on wages, but there hasn't been that for some time. There hasn't been substantial wages growth for some time. It's been near at or near historic lows in recent years. We need to get wages growing again. In industrial relations, there has been an issue with the tearing up of agreements. There's been an issue around labour hire undercutting people's wages, there's job insecurity in the gig economy and more broadly, and in the care economy. So we need sensible, responsible, sustainable wages growth, because that will be good for the economy more broadly, when that disposable income finds its way into the small businesses and local economies of this country.

GREENWOOD: Okay, one final point for you with lower interest rates has come rocketing house prices in capital cities, so many of your potential voters are being squeezed out or if they don't have a house are really finding it tough to buy a house. That comes through wages, growth that comes through a bunch of other things, but housing affordability also goes potentially, to the policy you took to the last election on negative hearing. The suggestion is of course that post the next election you might try and deal with this by also dealing with negative gearing. Is it really off the agenda or not?

CHALMERS: It's off the agenda Ross. We've made that really clear, that people expressed a view about that proposal at the last election. Housing affordability is obviously a big problem and we've got to work out the best way we can deal with it consistent with our commitments to be responsible economic managers. That's why we've said the highest priority is around social and affordable housing particularly for people who are finding it hard to live near where they work and that's why we've got that housing Future Fund. That's the best place to start. But we won't be doing the negative gearing policy that we took to the last election.

GREENWOOD: Jim Chalmers always great to have you on the program and good to speak with you today.

CHALMERS: Appreciate the opportunity Ross all the best.

ENDS