Source: Australian Parliamentary Secretary to the Minister for Industry
Hamish Macdonald:
The Treasurer, Jim Chalmers is here this morning. He’s delivered a keynote speech at a huge economic conference here in Sydney.
In part he’s announcing plans to make it easier for foreign companies to invest in Australia, to invest here in Sydney as well.
Jim Chalmers, a very good morning to you.
Jim Chalmers:
Good morning, Hamish, thanks for having me back on your show.
Macdonald:
I will get to some of that listener advice on the energy market later –
Chalmers:
Look forward to it.
Macdonald:
– but I want to talk to you about your speech this morning. Under the proposal you’re saying there’d be automatic approvals for so‑called trusted investors in Australia. What is it that’s slowing things down for foreign investment here?
Chalmers:
First of all, this comes from our recognition that if we want the economy to grow in a stronger, more sustainable way, we need more investment. And more investment would make our economy more productive, but it’s also good for our workers and businesses and local economies right around Australia, including here in Sydney.
And so that’s the objective, is to attract more investment. And so the second round of changes that I’m flagging today about foreign investment are all about making the system work faster for low‑risk applications and stronger for higher‑risk applications.
And what I mean by that is that by processing these applications, for people who desperately want to invest in our country, by processing the low‑risk ones faster, we get more of that investment, we attract more of that investment, and that’s good for our economy and our people. But we maintain the ability to scrutinise quite robustly investment in areas which are higher risk, like energy generation, like critical minerals, like critical data and critical infrastructure.
And so we’re not proposing to water down the foreign investment regime or weaken it, we’re proposing to strengthen it, but also to make it faster so that we can attract more of that investment.
Macdonald:
You describe in your speech though a sort of broader competition that Australia is in amongst countries all over the world to attract this investment. What’s the argument or the pitch that you’re making for Australia, ‘cause you’re sort of saying: look, these are complicated times, we’re a better bet. What’s the basis for that?
Chalmers:
I spend a lot of time here talking with big investors and recently on Wall Street in New York City. And one of the things which is very clear from all of that engagement is that Australia is becoming more and more attractive as the world becomes less and less reliable. There’s a lot of global economic uncertainty and volatility, and in that context Australia is seen as a reliable destination for investment. That’s a very good thing for Australia, and we have to make the most of it.
And what investors like about Australia is that our economic fundamentals are very good, obviously our proximity to Asia is very helpful, we’ve got a good skills base, we’ve got big opportunities in energy and technology and critical minerals. And so we’ve got this combination of advantages which make us a very compelling opportunity, and we intend to make the most of it.
Macdonald:
So can you place that pitch in the context of what Kevin Rudd, the Ambassador to the US, has been pitching in Sydney over the last 2 days around Australian super funds investing in the US, because that’s a good opportunity for our super. I’ve noticed as we’ve talked a lot about super in the last couple of weeks, a lot of listeners asking: hang on, why aren’t we directing this investment into Australia and some of the things that we know that we need here?’
Chalmers:
Because it’s not an either, or. The 2‑way investment is really important as well, and we’ve got this enormous pool of capital which comes from super and other sources.
It’s quite remarkable that in an economy which is I think 14th or 15th biggest in the world, we’ve actually got the fourth biggest pool of retirement savings, and very soon we’ll have the second biggest in the world. And so our funds are investing in ways that deliver the best return for their members, there’s huge investments in our own country, but it also is a force multiplier for us in the world.
Superannuation will always primarily be about getting the best returns that we can for the members of those super funds, but it’s a force for good in our own economy, it’s a force multiplier in the world as well, and it’s one of those advantages that we leverage.
And so I work very closely with Kevin Rudd and the superannuation industry to make sure that we’re getting the most of this remarkable opportunity, which is superannuation.
Macdonald:
Could you tease that out a bit, because I think when we were obviously all covering the meeting between the Prime Minister and President Trump, a lot of listeners quite surprised to see their super being a topic of conversation in what’s a much broader geopolitical conversation. What do you mean by force multiplier; why is super something that might be used to the nation’s advantage in those broader arenas?
Chalmers:
Again, primarily, I want to reassure all of your listeners, primarily, first, second and third, the main game for super is to deliver good returns for people’s retirements. That will always be the main game.
But at the same time, it does help us strengthen our economic relationships and partnerships with other countries. And that forecast that President Trump and Prime Minister Albanese and Ambassador Rudd were talking about in Washington DC reflects one very important part of an economic relationship with the US which is of mutual interest.
And so to your listeners thinking about their own superannuation, the funds that their superannuation is held in, they are looking first and foremost and always to get the best returns that they can. But for Australia, the fact that we’ve got these trillions of dollars of investment in Australia, but also around the world, is a very good thing for Australia. It makes us a much more attractive partner, and that’s good for our workers, our businesses, our investors and our local communities.
Macdonald:
What sort of things in the United States might those super investments go into, because I think in part we’re looking at sort of capital infrastructure, the renewal of a lot of the ageing kind of roads and bridges in the United States.
Chalmers:
All kinds of investment. I mean it’s not typically limited, but each fund makes its own decisions. They’ve got investment managers, they look around the world for the best opportunities.
But again, even though there is substantial investment going into the United States, a lot of these funds are investing in those kinds of assets in Australia, in energy assets, in infrastructure, in artificial intelligence and digital economy infrastructure. All of these things which are really important to a new generation of economic growth in our country. Superannuation’s playing a really helpful and a meaningful role here, not just overseas.
Macdonald:
Jim Chalmers, the federal Treasurer is here. Louise in Katoomba’s texted him with a question: ‘If we’re so desirable for investment here in Australia, why are companies closing because of energy costs?’
Now I suspect Louise is referring to Tomago, the aluminium smelter, which we’ve been reporting about here on 702 this week. Between you and the state government you’ve effectively offered a billion‑dollar bail‑out package which Rio Tinto’s rejected. Like, that doesn’t look like a great space for investment, does it?
Chalmers:
Primarily that’s a commercial decision being flagged by Rio, they’ve flagged a consultation process around Tomago. We’ve been working with them, the Industry Minister, we’ve been working with them, and the state government of New South Wales on that for a couple of months now. It’s obviously a very concerning development.
But when it comes to the overall levels of investment in our economy, and Louise’s question that she texted you, investment levels are relatively high, but we need them to be higher.
One of the reasons why we engage in the way that I have been today in Sydney to attract more investment is because we’ve got remarkable industrial opportunities in this country. And in order to make the most of them we need to attract the capital, we need to attract the investment. And it’s possible to do that while recognising that some operations, like Rio’s operation in Tomago and some of the other smelting in other parts of Australia, are going through a difficult time right now and we continue to work with the companies to see if there’s a responsible way for government to help.
Macdonald:
If you can’t do a deal with Rio for them to keep Tomago open, what are the other options you’re looking at as a government.
Chalmers:
I don’t want to flag those, because we are in discussions obviously via Tim Ayres, the Industry Minister, we wouldn’t ordinarily flag those kinds of contingencies and hypotheticals.
But I assure Louise and all of your listeners that if there’s something responsible that we can do there to help, obviously we will consider that. It is a difficult time for the workers in particular, as this consultation process has kicked off in the Hunter.
We’ve engaged with the company, the state government’s got a role here as well, we’ve been talking to them too, to see if there’s anything responsible that we could do.
Macdonald:
We’ve got news headlines coming up with a couple of minutes’ time. Just on energy prices and inflation, inflation figures came out came out this week showing a rise. The former Treasury boss, Ken Henry, had this to say on AM.
[Excerpt]
Ken Henry:
If you have to provide a permanent or semi‑permanent rebate for something, then you’re saying that your policy settings are wrong, you know, your energy policy settings are wrong, there’s just something else that – you can’t have these quick fixes become permanent.
[End of excerpt]
Macdonald:
Are you looking at getting rid of those energy rebates?
Chalmers:
They’re not permanent. I mean Ken’s not right to suggest that they are permanent rebates. We’ve said on a number of occasions that we review them from budget to budget. They won’t be in the budget forever. They’re an important way to help people take some of the edge off their electricity bills. And so we funded them for the last little while, but we’ve made it clear that they’re not a permanent feature of the budget. We’ll have another look at them as we get closer to the mid‑year budget update and the budget in May, but they won’t be in the budget forever.
When it comes to the broader issues that Ken raises – obviously I’ve got a lot of respect for Ken, I spend a bit of time with Ken, and I listened carefully to the back end of your listener in conversation a moment ago – we’ve got a review underway of the National Energy Market to look at some of these structural issues. But we’ve also got this thing called the Capacity Investment Scheme, which is already doing a good job attracting more investment in cleaner and cheaper energy into the grid.
One of the problems we’ve got with the grid is not the new renewable stuff coming on to the grid, it’s the fact that the old stuff, the coal‑fired stuff is becoming less and less reliable, and it will exit the system at some point. And so the Capacity Investment Scheme’s playing an important role, we’ve got other policies which are playing an important role.
So we’re not choosing between near‑term relief or a longer‑term investment and reform of the energy market. We’re doing both simultaneously. There are good reasons to do that, but we won’t be able to afford to do the electricity rebate forever. It may be that when we consider it at some future point that we’ll make an announcement about that then, but it’s not a permanent rebate as Ken Henry was suggesting in your interview.
Macdonald:
All right. We do have to get to the news shortly. I know you’ve been on a big trip over the last few weeks away from home. Will you be home in time for Halloween, taking the kids trick‑or‑treating?
Chalmers:
I’ll take them to basketball training, I think their mum’s going to take them trick‑or‑treating after that.
Macdonald:
Okay, Jim Chalmers, thank you very much.
Chalmers:
Thanks, Hamish, all the best.