The Hon Jim Chalmers MP
Treasurer
E&OE Transcript
TELEVISION INTERVIEW
BUSINESS WEEKEND, SKY NEWS
SUNDAY, 17 JULY 2022
SUBJECTS: Jobs and Skills Summit; inflation; wages growth; migration settings.
ROSS GREENWOOD, HOST: …But as many economists including Phil O'Donoghue just now told us, if wages inflation gets out of control, then rates will have to stay higher for longer and potentially hurt the economy. But how do you balance that up against workers who want their pay to keep up with the rising cost of living? I spoke to the man in the middle of this delicate balancing act, the Treasurer Jim Chalmers, before he left for the G20 Finance Ministers Summit this week.
JIM CHALMERS, TREASURER: Thanks for having me back on your show, Ross. I think there are a couple of things about that. First of all, when it comes to inflation expectations, I think there's the universal expectation that inflation will get a bit worse before it gets a bit better. But everybody understands that it will get better. And most of the economists including at least one that you've just referenced in your introduction expect inflation to moderate next year in 2023 and I think that is important to understand.
We've got this spike in inflation right now, which has a number of sources, both global and domestic. And our expectation, and our hope is that those pressures will moderate. And as you know, I'll be updating the Parliament later this month in quite a detailed way, on the expectations that the government has and the Treasury have for inflation, but also growth and wages and all the rest of it.
But you're absolutely spot on to say how important the Jobs Summit is to all of these various balances that we are trying to strike as we manage the near-term pressures in our economy and chart the course to a better future at the same time. And what we hope that the Jobs and Skills Summit will do is bring people together around these big economic challenges. We're not so naive to think that there will be unanimity around some of these issues, including some of the issues around wages. But we do hope and expect and we do want to see some sort of consensus emerging around skill shortages and labour shortages and strong and sustainable wages growth and training and migration. And all of these really important areas.
GREENWOOD: So then the different streams that you will have, the different ministers will be responsible for, one of the key ones here clearly is immigration, because right now you've got business groups calling for a significant increase in migration rates to take pressure off the shortage of skills in Australia. Then there's a second part about this, when you looked at the immigration data this week from the Bureau of Statistics it's still back only at around the third of the level, that it was pre the pandemic. So there is room to move more people into this country to potentially take pressure off the labour market and therefore, off wage rises as well.
CHALMERS: We do recognise Ross, that migration needs to be part of the story but it can't ever be the whole story. You know, we can't see migration as a substitute for what we need to do in terms of training Australians for opportunities. What we need to do when it comes to participation, so primarily, by making childcare cheaper, you get more participation, particularly of newer parents into an economy that desperately needs their skills and abilities. So migration will be part of the conversation at the Jobs Summit. It is already part of the conversation that so many of us are having with stakeholders in business and unions and elsewhere. It will be an important part of the story, but not the whole thing.
And I think that there is, if you want to reflect on the way this conversation unfolds, and Ross, you've been a veteran of this conversation, as have I, I think too often people assume that we have to choose between one lever or another. When it comes to these pressures in our labour markets and our supply chains, and what's happening to wages, and all of that, when in reality, we need to work out the best combination of these measures. And one of the benefits of bringing everyone together in one room to nut out and address some of these challenges is that we can consider them all together, rather than in these kinds of unnecessary silos that sometimes it degenerates into. And so I think that's another important part of our objectives for the summit.
GREENWOOD: Do you get a sense out of this Summit, that it leads to some sort of reform, either in industrial relations or in tax? Because these have been some of the most fraught political areas for any government to change in the past?
CHALMERS: They sure have, Ross, and there's no hiding from that or pretending otherwise. But again, I don't expect all 100 or so of the participants in the Jobs Summit to agree on every issue. And perhaps some of those that you've just listed will be difficult as well. It would be naive to think that everybody's going to come there and in the first five minutes agree on a way forward. But I think that there is some prospect of a general consensus and perhaps some specific policy ideas that come out of the Summit, so that we can begin to make progress on some of these big economic challenges.
I genuinely think that there's an appetite in business and unions and other key stakeholder groups, but also in the broader Australian community, an appetite to come together and see what we might be able to achieve together. I think there has been too much division, and too much assumed division in the way we think about some of these big economic challenges. I think we've just had a wasted decade of missed opportunities because things have been too divisive. And nobody's kind of genuinely tried to bring people together to see where the common ground is and the common interest is. That's how I see the Summit. I think it's a great opportunity. It'll be here before long - the first week of September. And there'll be lots going on in the lead-up to that as well. And so, I think it's a big chance for Australia, everybody now understands the economic challenges that we've got. I think most people are relatively optimistic as I am about the future of this country and the future of its economy. But our ability to fully capitalise on the opportunities which will present themselves in the next year and the coming years after that will depend on our ability to find that common ground like we intend to do at the Summit.
GREENWOOD: Speaking of common ground, I mean, the Hawke and Keating government, famously found common ground with the ACTU with the wages accord. Now, we're talking early 1990s. Is there the pressure now to have a similar wages accord as there was then? There is, after all, no indexation?
CHALMERS: Again, I think there's a specific part of that and a broader part of that. On the specific side around wages, I know that people have expressed a view about about wages. But if you made a long list of all of the things which are contributing to this inflation problem we've got in the economy, wages growth wouldn't be on that list right now. Wages are not the reason why we've got this inflation. And so I don't share a number of the concerns which have been raised about some kind of destructive wage spiral or whatever you would like to call it. We've still got real wages falling quite substantially. We want to see those wages growing in a sustainable way. And that means by making the economy more productive, so that there are lots of win-wins for employers and employees and we get living standards up. So I don't share some of those kind of quite dire warnings about all of that. But we need to be vigilant, the best way to be vigilant about wages is to make sure we're growing the economy the right way, that incomes growth is sustainable, based on productivity growth, in a way that everybody can benefit.
And if you think about that period, that you're referencing from history from 1983 - and I speak to Paul Keating, and Bill Kelty, about this, and I speak to them about the accord - and that did kick off, I think, a period of quite remarkable reform, because people were prepared in the early eighties to put their heads together to see what they could achieve together. And that's the spirit that we're trying to recapture.
On the accord very specifically, whatever you call the relationship between government, business and unions, we do want to revitalise that relationship. I think that there are really important ways we could do that - in climate change, in wages growth, in labour shortages. Really, there's so many areas where the government, business and unions could put their heads together and achieve something remarkable for the country. So we do want to recapture that spirit, but the issues that will be central to that relationship will inevitably be different in 2022 and 2023, than they were in 1983.
GREENWOOD: Good to have you on the program and many thanks for your time today.
CHALMERS: Appreciate it Ross, all the best.
ENDS
