CANBERRA, ACT, Sept. 3 -- The Treasurer of Australia issued the following transcript:
Sally Sara:
New data released by the Australian Bureau of Statistics shows the Australian economy has expanded faster than expected, growing by 2.1percent over the year to June 30. So, the question that many Australians are pondering is: will the RBA increase interest rates later this month?
Jim Chalmers is the federal Treasurer and joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks, Sally. How are you?
Sara:
Very well, thank you. You said the data is that of a robust and resilient economy, but how disappointed were you by the productivity figures in the national accounts data, which showed that productivity has fallen over the past year?
Chalmers:
I think the main story of the national accounts is about an economy which has substantial advantages but in the face of serious challenges, and productivity is one of them. Inflation of course is another, and also this very serious global economic uncertainty is the third.
And so when you look at these national accounts, what you can see is that Australia's economy is robust, it is resilient, but we face some serious challenges together and they are the government's focus.
Sara:
Reserve Bank Governor Michele Bullock said at her last press conference that the bank may need to raise rates again. You don't comment on rates, but do you accept the idea that Australia is leaning right up against its economic speed limit and that inflation is still a risk?
Chalmers:
Well, you're right that I won't do anything that predicts or pre‑empts decisions taken independently by the Reserve Bank. But I've said on other occasions, and happy to say again, that one of the issues we have in our economy is as the private sector recovered much quicker than anticipated last year, and again in the national accounts yesterday we saw domestic growth being driven overwhelmingly by private demand, then we do come up against speed limits in our economy. And one of the main reasons and motivations in the Budget for the big productivity package, probably the biggest and broadest productivity package in decades, was that we do recognise the best way to lift living standards is to make our economy more productive, to lift the speed limit on the economy so it can grow quicker with lower inflation.
Sara:
So why is it a year on from the roundtable that we're not seeing productivity improve, in fact we've seen it slip?
Chalmers:
Because this is a 2‑decade problem that will take more than 12months or even more than a couple of years to turn around. Right around the world, with the possible exception of the US, countries have got a productivity challenge a bit like ours, and for us it's been there for decades.
The difference between this government's approach and our predecessor's is that we take it seriously enough to have a big broad productivity package in the Budget, which will cut compliance costs by more than $10billion a year, a national competition policy to boost GDP, all of our efforts on AI and teaching and training. This is all about trying to shift the productivity challenge which has been a huge problem in our economy for some decades now and will take time to turn around.
Sara:
We've seen several pessimistic forecasts on the property market this week. Are you still confident that Treasury's advice that your tax changes would only shave 2 percentage points off house price growth over 2years?
Chalmers:
Well, the really important thing to remember about that, Sally, is that the Treasury assumption is over the next couple of years, not the last couple of months.
And if you look at movements in house prices over the last couple of decades, it's not unusual. In fact, we think on at least 7 different occasions we've seen house prices come off, and that's because they react to things like interest rate movements, like developments in the global and domestic economy.
Sara:
So you don't think the current changes are because of your changes to capital gains tax?
Chalmers:
I think that's one of a number of reasons. I think that there's not one factor driving softness in the housing market. We saw house prices and auction clearance rates soften even before the Budget, reacting to interest rate changes and developments in the economy more broadly.
So there's a range of factors at play here. In the last couple of decades, we've seen house prices come off on 7 occasions. We've still had house price growth in 15 of the last 20months, I believe. House prices are up about 25percent over the last 5years. And that's a reminder that investing in housing or buying your own home is a long‑term proposition, and there are movements and volatility in house prices over time.
Overwhelmingly over the past quarter century we've seen very quick house price growth that has locked a lot of young people out of the market and that's the challenge that we're addressing.
Sara:
Whatever the cause, has the steep decline in prices taken you by surprise?
Chalmers:
Not necessarily. I mean, we have seen house price movements before the Budget, as I said. We have seen some substantial movements in some markets.
But if you look at the numbers put out by the Commonwealth Bank, for example, this week, where they had some forecasts- updated forecasts for house prices- they still expected house prices to return to growth next year.
And so again, another really important reminder, people don't buy and sell houses on a week‑to‑week or month‑to‑month basis. Housing is a longer‑term investment. Over time we expect our policies to have an impact on house prices, but house prices will continue to grow, but a bit more modestly and that means more affordable options for more first‑home buyers to get into the market, which is our objective here.
Sara:
The Coalition is proposing to cut the tobacco excise by 80percent and tax and legalise vapes and nicotine pouches. Is that a good idea?
Chalmers:
Well, I've seen some summaries of reports of their policy, I haven't seen their policy. But for the government, we recognise that this is a really serious challenge. Illicit tobacco is a very serious challenge. Not one that we've just discovered.
In fact, in the last couple of budgets we've provided more than $350million for extra effort on compliance and law enforcement because for the government our focus, our primary focus, has been in those areas. Trying to bust up this market.
We've had some recent successes for which I'm very grateful to the police and other authorities, because primarily this is a law‑and‑order challenge and that's how we've approached it.
Sara:
Angus Taylor says the Parliamentary Budget Office has costed the policy, and it will raise money. Do you believe that?
Chalmers:
Well, I haven't seen the Parliamentary Budget Office figures, so I'm a bit reluctant to come at that. All I can say is, from the government's point of view, we take our advice from law enforcement, we take our advice from the health authorities, and our focus from the government's point of view has been resourcing these law and order and compliance efforts, trying to bust up what we do acknowledge is a very substantial challenge in communities right around Australia.
Sara:
Jim Chalmers, thank you for your time this morning.
Chalmers:
Thanks so much.
Disclaimer: Curated by HT Syndication.
