Thursday, 28th July, 2022
JIM WILSON (HOST): We've learnt a great deal about the pressures facing the Australian economy today. Right now, inflation is at 6.1 per cent, but it's been forecast to rise to 7.75 per cent by December and won't fall back to an acceptable level until 2024. Economic growth is also dropping and Labor's promise of real wage rises are but a distant dream for at least the next 18 months. For more, I'm joined by Stephen Jones who's the Assistant Treasurer and Minister for Financial Services, live on the line. Assistant Treasurer, welcome back to the program.
STEPHEN JONES: Good afternoon, good to be with you.
JIM WILSON: Okay so, Clearly, we've got tough times ahead.
STEPHEN JONES: Yeah, look, we can't, you know, isolate ourselves from what's going on from the rest of the world. We've got inflation galloping ahead and right around the world central banks and forecasters are downgrading growth. Our growth expectations have been downgraded by at least half a per cent per annum over the next two to three years and it looks like inflation's going to rise from the current level of about 7 and 6.1 per cent to about 7.5, 7.75 per cent over the next 12 months. So, in short, things are going — prices are going to go up before they come down again. We do think the underlying economy is strong. Employment numbers are good and we do see the inflation numbers coming down again, but it's not going to happen overnight.
JIM WILSON: Labor went to the election promising real wage rises. It was a key pillar of your campaign. When can you deliver on this promise?
STEPHEN JONES: We've already delivered for a proportion of Australians and that's the lowest paid Australians who are on award minimum wages. The day after we got elected, we wrote to the Fair Work Commission and pressed the case for a minimum wage rise of in excess of five per cent for these workers. They got a 5.3 per cent wage rise. On top of that, they've had a 0.5 per cent increase in their superannuation. So, for the lowest paid workers wages are already moving and as I'm talking to employers, many of the professions and people in the services, wages are moving ahead there as well, but I do acknowledge that's not for every worker and a lot of workers, a lot of households are still struggling and we've got to get wages moving for them as well, but that's also contingent on proactivity and growth in the economy moving.
JIM WILSON: We saw inflation rising during the campaign. We even saw an interest rate rise. Why didn't Labor just front up during the campaign saying: “Look, we may not be able to deliver real wage rises as quickly and easily as we thought”?
STEPHEN JONES: We're still committed to doing everything we can. We've got a jobs summit at the end of the month to look at what can be done to get wages and skills and jobs moving. We are still committed to ensuring that over the first term of an Albanese Government we get wages moving again, and, as I said, there are still sectors within the economy where wages are moving. That's not to take anything away from those households and those sectors where the wages are standing still. We acknowledge that, and that will be our focus for the jobs summit.
JIM WILSON: Your Treasurer, Jim Chalmers, spent a lot of time today in his address blaming the previous Government for the economic situation that we find ourselves in. I mean, do you blame them for the inflation numbers?
STEPHEN JONES: Look, I'm not going to blame them for the inflation numbers. There's some things they should have done differently. There's no doubt about that. They were still pumping money into the economy while the Reserve Bank was jacking up interest rates and that was probably a mistake. There's no doubt about that. But a lot of the inflationary pressures that we're facing at the moment are being imported from overseas and it's as a result of shortages in the labour market and it is as a result of supply chain shortages and problems in the energy market as a result of the war in Ukraine. So, China, chasing COVID zero has interrupted our supply chains for manufactured goods, no doubt about that. The war in Ukraine pushing up the price of food and of petrol, oil, gas and energy sources, so that's being imported from overseas as well. We can't seal ourselves off from the rest of the world, so we have to put in place the measure that are going to make us more resilient over the long term, to provide some relief over the short term.
JIM WILSON: Okay. There's plenty of barb throwing by Labor at the moment, but what's your plan to fix things? You've announced a lot of spending, things like cheaper childcare, wage rises, green energy, which is all well and good, about you spending increases inflation, what are you going to do to keep the balance in check?
STEPHEN JONES: Can I deal with all of those in order. Firstly, the investment in childcare actually grows the labour market; and, yes, it provides support for households who are struggling with childcare bills, but it also helps more workers enter the market, more workers do additional days’ work. Currently, there's a real disincentive to work more than three days a week because of the childcare bills, so with the childcare relief, will come more workers working more days a week, which creates more revenue for the Government, but also more income for those households, so it actually makes money over the medium term for those reasons. There are other things that are a part of our plan, you know. We've realised when we shut our borders how reliant our economy has become on importing skills whenever we have a shortage of things. We're importing everything from motor cars to medical equipment and even a lot of our food. We've got to do more in both of those areas so as we go to the jobs summit at the end of the month we'll be saying to businesses, yes, we know we've got to import more workers. We want it to be done on a permanent basis, but we've also got to train more of our own which means investing more in TAFE and universities, vocational education and training, so that's on the skills side. On the manufactured goods side, we've essentially got to be a country that makes stuff again. We've learnt through the pandemic how reliant we are on the manufacturing capacity out of China and the rest of Asia. I think the pandemic has shown us that, everything from cars to medical equipment to solar panels we're reliant on one country to produce all of that. We have got to ensure that we are not so reliant and, therefore, rebooting domestic manufacturing is a part of our plan as well.
JIM WILSON: Before I let you go, the ABCC, do you have absolutely no concerns about abolishing the ABCC?
STEPHEN JONES: I have no concerns about abolishing the ABCC. It's acted as an arm of the Liberal Party for most of the last six years. Highly politically charged Government regulator —
JIM WILSON: It's going to force construction costs up, though in, fairness. It's going to force construction costs up.
STEPHEN JONES: No.
JIM WILSON: And it means the unions will run rampant.
STEPHEN JONES: I don't agree with that for one moment. Can I just say one thing though: every worker in Australia should be subject to the law. If criminal activity is going on, it's the job of the police to prosecute that. We don't need one set of laws for one group of workers and another set of laws for another group of workers. One law should apply to everyone and be enforced with equal force. And as far as building and construction costs at the moment, if anyone who's got a quote to get their house fixed at the moment, it's not labour costs that are driving the cost of building up, it's the fact that there's a shortage of building supplies. Again, getting back to my point, we are so overly reliant on building supplies and everything else coming from China that when that manufacturing process is interrupted over there, we are paying through the nose. Again, another legacy of shifting all of our production offshore, a big mistake.
JIM WILSON: Assistant Treasurer, thanks for your time this afternoon.
STEPHEN JONES: Good to be with you.