Today Show 04/05/22

04 May 2022

SUBJECTS: RBA interest rates decision; Labor’s Economic Plan; Federal election.




SUBJECTS: RBA interest rates decision; Labor’s Economic Plan; Federal election.


KARL STEFANOVIC, HOST: Welcome back. Too early to be talking about Christmas, right? Not if you’re a homeowner bracing for interest rate rises every month, right the way through until the festive season. How does that sound? For millions of Aussies with variable mortgages it could be a very lean Christmas indeed. Let’s discuss with Labor Leader Jim Chalmers…


STEFANOVIC: …didn't even bat and eye. Took him a while! Took him a while!


STEFANOVIC: And the editor of Stellar and Body and Soul magazines Sarrah Le Marquand. Nice to see you. Jim to you first.

JIM CHALMERS, SHADOW TREASURER: You’re in a very cheeky mood this morning, Karl.

STEFANOVIC: Well, you know what, it's hump day. We're almost there. Things are getting really interesting. I saw you yesterday happily whipping up economic hysteria, blaming everything on Scott Morrison. How would Labor do it any differently?

CHALMERS: I wasn't happy about it Karl, I dispute that obviously. Yesterday was a really difficult day. People are already doing it tough enough. They've got their cost of living going through the roof, their real wages are falling, and now they've got an interest rate rise to contend with as well. So it was a difficult day I think yesterday, and clearly what we need here is a plan to grow the economy without adding to these inflationary pressures that are out of control. That's why some of the policies that we've announced are so important, whether it's dealing with the skills shortage, whether it's making it easier for people to work more and earn more by reforming the child care system, whether it's investing in secure well-paid jobs in areas like advanced manufacturing, the digital economy, the care economy, these things become even more important and they're central to our economic plan.

STEFANOVIC: So what you're saying definitively to the Australian people is that by electing a Labor Government interest rates will somehow miraculously stabilise?

CHALMERS: We don't pre-empt or try and position the independent Reserve Bank. They've made it clear already that there will be a number of rate rises throughout the course of this year at least and that will make it even harder...

STEFANOVIC: So it will make no difference then?

CHALMERS: We think that the difference between Labor and the Government is the Government's trying to wash their hands at this challenge. They don't understand the pressure that people are under, under Scott Morrison's cost of living crisis, and we do. And there are things that governments need to be focused on - growing the economy without adding to inflation, getting real wages moving again, trying to have something to show from this Budget which is heaving with a trillion dollars in debt.

STEFANOVIC: Okay, Sarah, for everyone at home, does Labor run the risk a little bit here of making people really zero in on economic credentials? Or have they had enough time to try and prove their economic worth in government and failed it?

SARAH LE MARQUAND, STELLA MAGAZINE: I think that is a really fascinating question Karl, because yesterday when this sort of inevitable, let's face it, interest rate rise was announced it seemed like immediately bad news for the Government. And I think Scott Morrison did look pretty shaken by it. And as we've seen with Jim there, it's a great opportunity for the ALP to capitalise on.

STEFANOVIC: And Jim Chalmers is brutal at the one liners and it takes down Scott Morrison and it obviously makes him squirm.

LE MARQUAND: Absolutely, because Morrison from the outset has really been trying to position his government as being the force to be reckoned with when it comes to managing the economy and international security, and we've seen both of those issues come into question in the last two weeks. So, it's never good. We know that the last time that there was an interest rate rise during a federal election campaign was in 2007, when John Howard went on to lose to Kevin Rudd. So, it's not a positive omen at all for the Prime Minister. But to your question Karl, I do think this puts both of the major parties under pressure and that can't be underestimated. Because, as Jim said, we're going to see more interest rate rises between now and Christmas. And a lot of people will think, well, they'll go back to that Howard campaign. Remember in 2004 when he took on Mark Latham - and what was really Latham's election to lose - Howard was very clever, because he ran a scare campaign, a flat-out scare campaign on interest rates. Remember, "who do you trust?" And I think really, that's the kind of rhetoric that Morrison is going to pick up on now.

STEFANOVIC: Okay, Jim, that all lies ahead for you. Will inflation be more stable under Labor?

CHALMERS: The Reserve Bank says that inflation is going to go up further before it starts to come down. What the Reserve Bank Governor said yesterday was that inflation will go up to around 6%, it's already 5.1%. That's already the highest in the last two decades, so that will be a tough ship to turn around. We're realistic about the challenges that we'd inherit. If the government changed hands on the 21st of May, the new government would inherit a trillion dollars in debt, they'd inherit high and rising inflation, rising interest rates, falling real wages. So these are the challenges that we need to be realistic and upfront about.

STEFANOVIC: Don't forget the fuel excise?

CHALMERS: And the fuel excise will come off in September. I think the interesting point that Sarah made, the last time that John Howard did effectively run that scare campaign in 2004, interest rates went up I think six times straight after that election. And I think that goes to the core now of Scott Morrison's economic credibility because as far back as November last year he was trying to run this big scare campaign about interest rates and petrol prices, and that's now blown up in his face, and that's why his economic credibility has been shredded - not just by the rate rise yesterday as important as that is, but the broader cost of living crisis which has got those real wages falling and it's got prices in our economy skyrocketing out of control.

STEFANOVIC: Sarah, there is weight to that side of the argument. How do you think people at home are feeling when they see and read the front pages of, for example, the Courier Mail this morning, that says you've got to find $600 by Christmas?

LE MARQUAND: It's the last thing that the average punter wants to hear because we know, we're so acutely aware in average Australian households, the cost of living pressures that were undone. But again, I think it comes back to this concept that can Morrison get traction and sell the line that this rate rise has happened because the economy is bouncing back much better. Now, if he can sell the line convincingly that that's because of his good economic management, then that's obviously going to neutralise this argument that Jim and the Opposition are prosecuting.

STEFANOVIC: Jim Chalmers, hard to neutralise.


STEFANOVIC: Thank you guys, nice to see you this morning. Appreciate it.