Studio 10 07/06/22

07 June 2022

SUBJECTS: Energy Prices; Cost Of Living Pressures.






SUBJECTS: Energy Prices; Cost Of Living Pressures.

SARAH HARRIS, HOST: Federal Treasurer, Jim Chalmers, is confronting what's been described as Australia's worst energy crisis in 50 years, with skyrocketing gas and electricity prices. The Treasurer joins us now from Brisbane. Treasurer, it's great to see you again. Can you help us understand why we're facing sky-high bills? How can Australia be one of the top gas suppliers in the world and not have enough for the people here?

JIM CHALMERS, TREASURER: Thanks Sarah. We've got, unfortunately, this perfect storm of conditions when it comes to our energy market, particularly our gas market but also some of the other areas as well, and the perfect storm is basically a combination of some of our supply is offline, planned and unplanned, we've got international pressures, we've had a whole range of other pressures on the market. So what we need to do is think about this challenge in terms of the near-term solutions and the longer term solutions.

So in the near term we've got to make sure there's nothing dodgy going on with pricing. We've got to make sure that the State and Territories are involved in considering their options. We've got to make sure that the regulators are imposing price caps and guarantees as they have been doing in welcome ways over the course of the last week or so. But unfortunately there's no short-term perfect solution to what we're seeing here.

A lot of these challenges are the costs and consequences of almost a decade now of energy policy uncertainty. So they will take some time to turnaround. We will do what we can in the near term but really, the best thing that we can do in the medium term is to have a decent energy policy which gets some certainty and some resilience back into the system so that we can get cleaner and cheaper energy deployed around the country and we're working on that as well. 

TRISTAN MacMANUS, HOST: Treasurer, the first thing you could do you've done, in that you've written to the ACCC to express your deep concern over spiking power prices. You've asked them to investigate false or misleading conduct from energy companies. Has there been any suggestion that there has?

CHALMERS: Well that's what the process is for, Tristan. I don't want to pre-empt the important work of the ACCC. I have been working really closely with them in tasking them to make sure that they're dialling up their monitoring of any potentially dodgy behaviour so that they can use that to recommend to me any regulatory changes that they think are appropriate, based on evidence.

But that's just part of what we're considering. As I said, States and Territories have got a role, the other regulators have a role here to make sure that the energy market is operating as efficiently as it can. These are extraordinary price spikes and they're feeding into a broader cost-of-living crisis. Everybody expects interest rate rises to be an additional part of that pain later today. So all of this needs to be seen together. There are steps that we can responsibly and methodically take that we are taking. But in the medium term the best thing we can do is to give this country what it hasn't had for the best part of a decade which is a decent energy policy.

HARRIS: As you mentioned, we're likely to see those interest rate hikes this afternoon, plus if you factor in we've got high cost of living, a rental crisis, where does a kid from Logan start in fixing all this mess now that you're in the job?

CHALMERS: I think first of all we've got to acknowledge this problem. What I've tried to do since I became the Treasurer a couple of weeks ago is to be really upfront with people. There's no point mincing words. We inherited a full-blown cost-of-living crisis. We've got high and rising inflation, rising interest rates, falling real wages and our ability to deal with a lot of these issues is constrained by the fact that we also inherited a Budget heaving with more than a trillion in debt. So we need to be up-front about that. 

There's some cost of living relief being deployed at the moment when it comes to some petrol price relief and other types of relief that the parties agreed in the last budget. When I hand down a budget in October, a cost-of-living package will be part of that budget as well and it will focus on things like child care and medicine prices, but also getting some downward pressure on power bills and getting real wages moving again. 

We need to see this challenge in its entirety. Energy prices are the most problematic part of it right now but also building costs, grocery costs, a whole range of issues playing out at once. So there's no use pretending otherwise. It is going to be a difficult period for a lot of Australians, particularly those who will now have to find more money to service their mortgage on top of all these other pressures. But the new Government is doing what it responsibly can to alleviate these pressures and you will see some of that in the October Budget. 

MacMANUS: I guess there's households all around the country trying to find that balance. I mean, we have to tighten our belts but if we do it's going to have a devastating effect on the economy, as well. Is that right?

CHALMERS:  We've got some things going for us in the economy. So we've got a lot of demand in the economy, the unemployment rate has come down in welcome ways, which is something we've acknowledged for some time so we've got some advantages. But what the Reserve Bank is having to deal with today is the fact that we do have that high and rising inflation. So that goes right to the core of people's ability to get ahead in life. When your real wages are falling and your costs of living are skyrocketing as they are now, then people fall further and further behind. 

When Sarah talked before about where I'm from in Logan City, there's a lot of parts of Australia which are doing it really tough right now. We acknowledge that. We'll do what we responsibly can to alleviate some of that pressure. I actually think in the next couple of years we can have a really strong economy. There are actually reasons to believe that we can get through this but first it's going to be a difficult winter for a lot of people with what we're seeing now with prices and wages combining at the same time. So we will do what we can to take some of that pressure off in the October Budget.

HARRIS: Straight into that job, aren't you, Treasurer? Jim Chalmers there from Brisbane. Thank you so much for your time this morning. We do appreciate it. 

CHALMERS: Thanks Sarah and Tristan.