Source: Australian Parliamentary Secretary to the Minister for Industry
Jim Chalmers:
Overnight we got a report from the OECD. And what the OECD has concluded is that there’s a lot of uncertainty and volatility weighing on the global economy, but Australia is in an enviable position. The OECD expects Australia to grow as fast as the fastest major advanced economy this year and next year they expect Australia to grow much faster than any major advanced economy.
Our economy is characterised by stability and opportunity in a global economy which is defined by uncertainty, unpredictability and volatility. Those are the conclusions of the OECD. Under Labor, inflation is down, real wages are up, unemployment is low, we’ve got the debt down and we’ve seen interest rates come down 3 times this year as well. So there’s a lot coming at us from around the world, we’ve got a lot of work to do, but we’ve got a lot going for us as well. And the OECD report makes that clear.
We also welcome today the news that underlying inflation in August fell once again. It is a very good thing to see underlying inflation down to 2.6 per cent, around the middle of the Reserve Bank’s target range. Today’s figures show the very substantial and sustained progress that we have made together when it comes to underlying inflation. Despite that increased volatility in the global economy, underlying inflation is within the target range, and that’s a promising result in uncertain times.
Headline inflation fell slightly in the month, but the annual rate increased slightly to 3.0 per cent. That’s because of the way that it’s calculated, the base effects in that number and also because of the timing of the ending of state energy rebates. This outcome was within the range that the market expected. Headline inflation has now been at or below 3 per cent for more than a year, remembering it was 6.1 per cent when we came to office. And underlying inflation has now been within the Reserve Bank’s target range for 9 consecutive months, and that’s a very good thing.
We know that monthly inflation figures can be more volatile and less reliable than the quarterly figures because they don’t compare the exact same basket of goods and services from month to month. I refer you to the Reserve Bank Governor’s comments earlier this week in that regard. The quarterly figures are more reliable than the monthly figures for the time being. And what those official quarterly numbers show is that both underlying and headline inflation are at their lowest rates in almost 4 years, if you use the quarterly measure rather than today’s monthly measure.
Now, this progress that we’ve made together on inflation has given the Reserve Bank the confidence that it has needed to cut interest rates 3 times in the space of 6 months this year. We also need to remember that these results today and recent inflation data has come at a time when inflation has ticked up in other parts of the world, including the US, Canada and New Zealand, and it’s still stubbornly high in places like the United Kingdom as well.
So we’re making really good progress on underlying inflation. Those numbers today make it clear. But we’ve been able to focus on getting inflation down at the same time as we maintain a focus as well on some of the bigger, longer term structural issues in our economy, like productivity.
And today I’m announcing that I’ve asked the Board of Tax to look at responsible and affordable ways to cut compliance costs in the tax system by cutting red tape. This is all about finding material and measurable ways to get compliance costs down, to cut red tape in the tax system.
It’s an important part of the work that we are doing already with the Australian Tax Office and also separately with the major regulators to make sure that regulation is fit for purpose, to make sure that we have better regulation, to see where we can eliminate unnecessary duplication, whether it’s in regulation of the financial system but also in the context of today’s announcement when it comes to the tax system. So, the Board of Tax is a really important institution. I’ve tasked them today to look for meaningful, measurable, responsible, affordable ways to cut red tape in the tax system, and I’m looking forward to their conclusions.
I also wanted to alert you to the release later today of the terms of reference for the Productivity Commission inquiry into the GST distribution. These terms of reference are broad enough to look into some of the issues and concerns which have been raised by the states. The GST distribution will always be a contentious issue. We’re working through that issue in a methodical way.
We’ve asked the Productivity Commission or, indeed, our predecessors asked the Productivity Commission to look into the GST distribution to make sure that we are looking at all of the issues, including issues raised by the states. I’ll be releasing those terms of reference later today, and that will give people the opportunity to express a view, and it will make sure that the PC’s work can begin in earnest.
Now, with that, I’m happy to take a couple of questions.
Journalist:
Queensland Treasurer David Janetzki has accused you of planning a watered‑down review of the GST‑funding deal. What do you make of those comments he’s made today?
Chalmers:
They are ridiculous, but they’re not surprising. Unfortunately, David has made a habit of trying to blame the Commonwealth for his own problems in his own budget. Now, we are investing billions and billions of extra dollars in Queensland. We do that enthusiastically. Whether it’s the Bruce Highway or the schools deal or the skills deal, we have shown a willingness to invest billions of extra dollars in Queensland.
It’s not a new thing that state treasurers would like more money from the Commonwealth. It’s not an especially new thing that treasurers like David Janetzki point the finger at the Commonwealth in the hope that it will distract people from his own challenges that he is dealing with. I see that through that perspective.
Unfortunately, I think whenever David tries to blame the Commonwealth for the problems in his own budget, I think it shows that he’s a bit out of his depth. He would be better off engaging, like we do, in good faith with other levels of government. We all recognise that everyone’s budget is under pressure of one kind or another, including the Commonwealth’s budget. We’ve shown a willingness to do the best we can for the states, to work with them in a collaborative, considered, methodical way, and that’s what this PC review is all about.
Journalist:
Treasurer, Donald Trump has called climate change the greatest con job ever perpetrated on the world. And he also said that renewables are an expensive joke. What’s your reaction to that?
Chalmers:
We don’t see it that way in Australia. Donald Trump’s comments, President Trump’s comments, are a matter for him. His views are a matter for him. Our job is to work through the Australian opportunity in an Australian way. Other countries make their own decisions about that. Australia is working through this opportunity in a considered and methodical way, informed by experts and informed by economic modelling.
And because of that work that we have done and the work that we are doing, we see cleaner and cheaper energy as a massive economic opportunity for Australia. And as big investors around the world are looking for the best place to invest in cleaner and cheaper energy, Australia is becoming a more and more appealing place. A more and more appealing destination for that investment capital.
Now, one of the reasons we released our targets last week – the Prime Minister, the Energy Minister and I released those targets last week – it’s all about giving investors the clarity and the certainty that they need to invest with confidence. And so I say to investors around the world who are looking at developments in other countries that we are providing the clarity and the certainty that they need to invest in Australian cleaner and cheaper energy with confidence.
When it comes to global developments also, don’t forget that more than 80 per cent of global GDP is covered by net‑zero commitments. And I think when it comes to Australia’s major trading partners, the number goes up to more than 90 per cent of GDP. This is a huge opportunity for Australia, we intend to grasp it. And we will do that by working through these issues in a considered and methodical way, informed by experts and by economic modelling of the sort that we released last week.
Journalist:
Treasurer, the latest jump in the headline inflation figure is driven by higher electricity bills. Once all the energy rebates come off, what plan do you have to lower power prices?
Chalmers:
Well, a couple of things about that. First of all, in the monthly figure in August electricity prices fell by 6.3 per cent. You’re obviously referring to the through‑the‑year figure, which was a bit higher because of some of the issues around the timing of state energy rebates, especially WA, Queensland and Tasmania, from memory.
So this monthly number, whether it’s for electricity prices or more broadly, it’s more volatile. And what we’re seeing in these numbers today for electricity is the timing of some of those state rebates coming off. But in monthly terms, for the month of August electricity prices went down 6.3 per cent according to the ABS.
One of the best ways to smooth out some of that volatility in the monthly figures is to rely a bit more heavily on the quarterly data. And if you look at the quarterly data, electricity fell 6.2 per cent through the year to the June quarter, and that’s an important bit of perspective as well.
When it comes to our rebates, we are helping people with their electricity bills by extending those rebates to the end of the year. Our political opponents would rather those electricity bills were higher. They don’t want us providing that assistance to people to help with the cost of living. That’s clear. That’s a big difference between the political parties. But we see it as an important way to take some of the sting out of these electricity prices that we’re seeing.
Now, in the medium term and in the longer term, as our economic modelling makes clear that we released last week, the cheapest form of new energy is renewable energy. We want to add more and more cleaner and cheaper energy to the grid. If you listen to the experts, they will tell you that one of the reasons why we’ve had upward pressure on electricity prices is not because of the new renewable stuff being added to the grid but by the increasingly less reliable old legacy stuff in the grid. And so over the medium term and over the longer term the best way to put downward pressure on prices is to introduce cleaner and cheaper energy, and that’s an important part of our plan.
Journalist:
Mr Janetzki has indicated that coal will power Queensland for decades to come. Does that undermine your own government’s emission targets and net zero?
Chalmers:
Well, what our modelling makes clear is that traditional sources of energy will have a role to play in the transition. Particularly, I think when it comes to gas. I think the point that Premier Malinauskas from South Australia was making today in the media is that some of these traditional energy sources have a role to play, gas in particular.
And I think when it comes to the coal industry, the big determinant when it comes to the coal industry and our modelling is actually global demand. But what we are proposing is to add more cleaner and cheaper renewable energy to the grid over time. That’s good for our economy, it’s good for our environment, and over time good for electricity prices, too.
Journalist:
Have you had conversations with the Treasurer and the Queensland Government about their own coal plans and how that could affect your 2035 emissions targets?
Chalmers:
We have discussions all the time with the states and territories about our energy policies and our policies more broadly. David, typically communicates with me via The Courier Mail or The Australian. But we do have the time at these treasurers’ meetings to engage on these important issues, whether it’s GST distribution, whether it’s regulation in the energy market. These are important issues that we work together on constructively.
But one of the reasons that we put out so much detail last Thursday when we released our economic modelling, the CCA advice, our climate targets and all of that associated detail is because we wanted to be upfront and transparent with states and territories and local government, investors and the community more broadly about our plans to get more cleaner and cheaper energy into the system, what that means for the economy, the tremendous economic opportunity that represents for Australia and for Queensland.
Journalist:
The US is pushing ahead with a deal that would see TikTok’s algorithm in the states controlled by American companies. Will Australia follow suit with that to have the app’s algorithm in Australia controlled by Australian companies?
Chalmers:
That’s not something I’m in a position to go into today. Obviously, we monitor closely the developments around the world when it comes to the regulation of tech companies, social media companies and others. My colleague Anika Wells is in New York with the Prime Minister and the Foreign Minister talking about some other issues related to social media and particularly where it comes to protecting Australian youngsters on social media. But we monitor these developments. We obviously take these developments very seriously, but I don’t have much to add beyond what we’ve said publicly about this before.
I might just take one or 2 more and then we’re done.
Journalist:
A quick question from the 7 newsroom?
Chalmers:
Okay, I’ll come back to you, mate.
Journalist:
You picked up the phone to the ANZ boss over mass job cuts this month. Now 200 teller roles at Westpac are being replaced. What do you think – what do you say to Australians who feel like banks support profit before people?
Chalmers:
Obviously very concerning these developments that we’re seeing in the banking system, and we are focused on the people who are losing their jobs or who are at risk of losing their jobs. Overall, the story of jobs in our country has been a very encouraging one. But in the banking system we have seen recent announcements, and these are difficult days for the people who are affected.
The point that I would make to Westpac is the same point that I made to the ANZ. Which is when you are making and taking these difficult decisions the onus is on the banks to explain them to the people involved, the people at risk, to ideally involve the relevant union, to make sure that people are treated as well as they can be. But obviously very difficult times for people impacted by these job losses in the banking sector. And we want to make sure that the leadership of these banks works through these issues in a consultative way with the affected workers.
Last one.
Journalist:
What’s your response to reports Singtel cut more than 200 million from Optus mobile networks last year just by being under pressure to improve mobile reliability after its ’23 outage?
Chalmers:
We’re going to look at all of those issues. What we’ve seen with Optus and with the failures with 000 is a disgrace, and my colleagues have made that clear. These are devastating, disgraceful developments and whether it’s ACMA or other processes which are underway, we will get to the bottom of what’s happened here. This can never happen again. And so there are a number of processes underway to get to the bottom of it. And the issue that you raised no doubt will be part of that. Thanks very much.