28 July 2022


E&OE Transcript
Radio interview
3AW Drive
Thursday, 28th July 2022

TOM ELLIOTT (HOST): Anybody who's been to the supermarket, which we all do, or the petrol station recently knows that those aspects of cost of living have also got a lot more expensive. Our next guest is the Federal Assistant Treasurer, he's also the Minister for Financial Services. Stephens Jones, good afternoon.


STEPHEN JONES: Good afternoon. So good to be with you.


TOM ELLIOTT: Thank you. Although given the timing and how badly the economy has deteriorated, are you still sure you want the job as Assistant Treasurer?


STEPHEN JONES: Look, you don't get to choose the circumstances. We're elected to govern and that's exactly what we've got to do and that is to help Australian households and businesses, families, navigate our way through what is going to be quite frankly a difficult 18 months. But we're confident that the fundamentals are strong and we can get through this. Yes, there'll be some pain and we've just got to be frank with people. There'll be some pain over the next 18 months. We can't isolate ourselves from what's going on in the rest of the world and most of the stuff that we're experiencing here in Australia is largely influenced by what's going on overseas, the energy prices, the inflation, yeah, they're all supply‑side issues.


TOM ELLIOTT: Well, on that, then, if the bulk of the inflation — and I agree with you that's coming from supply concerns, like the war in Ukraine and the chip shortage and things like that — why is the Reserve Bank punishing people by putting up interest rates?


STEPHEN JONES: Because we actually — this might sound bizarre to many of your listeners — but if we have demand galloping ahead and galloping ahead and people just putting up prices for a limited supply of goods and services, then that is going to feed into hyperinflation. If I could use the example, think of a car. Okay, anyone who's been trying to buy a car over the last 12 months will know you're going to probably have to wait six months or longer for many makes of car. Left unchecked the price of that car could go up 10, 15, 20 per cent. As car dealers say, "Well, I can command more fruit because people are willing to pay more for it because there's a limited supply." 


TOM ELLIOTT: Okay, but I mean you did say that it is the supply issues which are causing the problem. Wouldn't our efforts or the Reserve Bank’s efforts be better at trying to improve that rather than punishing demand?


STEPHEN JONES: Look, the Reserve Bank will speak for itself, and they do through their monetary policy. My view is they shouldn't be raising rates any higher or any faster than is absolutely necessary. So, it's their job to deal with monetary policy — that is, interest rates. It's our job as a Government to try and work our way through the supply constraints within the labour market. That'll mean we'll have a jobs summit in a couple of weeks' time but that'll be looking at both retraining of our domestic workforce and what we need to do by way of immigration to bring in skills in short supply.




STEPHEN JONES: In the product — in the product market it means, frankly, it means rebooting our manufacturing industry again which has fallen into decline over many decades so we can be more resilient when this sort of thing happens again.


TOM ELLIOTT: But, realistically, I mean, restarting immigration will help with labour supply and restarting manufacturing might help with product supply, but the reality is, as you said, the pain is going to be with us for 18 months. Now, you're not going to get car factories built in Australia and that sort of thing within 18 months, so what can you could that's concrete during the next 18 months to try and reduce cost‑of‑living pressures on average households?


STEPHEN JONES: Well, a couple of things, if I could just pick you up on the examples you used. Yes, it's true that we won't be able to reduce the constraints in every part of the economy. But there are some areas where absolutely bringing in some additional workers to fill short‑term, or to fill labour shortages, will have immediate impacts. If you're in the services sector, if you're in aged care, for example where we have a shortage of nursing staff, of caring staff, an immediate benefit will be gained from bringing in some workers to fill those gaps. And if you're in the professional services area, where there are shortages as well, bringing in people with those skills will have an immediate benefit and an immediate and short‑term benefit. But for the vast majority, for the rest of Australians not in those areas, we are looking at a couple of different things: relief on childcare fees being one of them and boosting our investment in skills and training being another. There are some things we can do and some things we can do to provide relief but we've also got to be frank with Australians about what we simply cannot do in the environment that we're in. 


TOM ELLIOTT: Speaking of things you can and can't do, so four and a bit months ago, former Treasurer Josh Frydenberg cut the petrol tax and the diesel tax from 44 down to 22 cents a litre. Now, that cut was temporary at the time and it's due to be reinstated midway through September, which is only — what are we — six or seven weeks away. Will you maybe extend the fuel tax cut, you know, to give some relief to working families?


STEPHEN JONES: As much as we would like to, we can't. It's about a $6 billion hit to the Budget and the Budget is already well in debt. We've got a trillion dollars worth of debt that we've got to service and that the cost of that is now costing us more than we pay for medicines. It'll be costing us about as much as we pay for Medicare some time towards the end of next year, so the costs are significant, so a tax cut is basically a hit to the Budget as well and we just simply can't afford to be doing that at the moment. And our experience over the last four months has been that those small changes in fuel excise were swallowed up pretty quickly in volatility in the petrol market around suburban Australia.


TOM ELLIOTT: All right. But that does mean that from mid‑September onwards, let's say, petrol is still $2 a litre, the day after the excise cut is reinstated, it'll be $2.22 a litre.


STEPHEN JONES: Again, depending on where — there's going to be some volatility, but yes, the petrol prices will go up when we remove the fuel excise relief, there's no doubt about that. But those changes, that 22 cent change you mentioned, prices are moving more than that over the course of a fortnight in the suburb where I live and I'm sure that's experienced by many of your listeners around Victoria as well.



TOM ELLIOTT: Okay, now, I spoke to Ben Davis from the Australian Workers Union before and he predicted that when prices go up, that strike action will go up. Are you prepared or do you welcome the labour movement going on strike to try and get better wages for their workers?


STEPHEN JONES: I welcome the labour movement entering into negotiations with employers on behalf their workers to get fair pay rises, particularly in those areas where they've fallen behind over the last decade; I absolutely welcome that. I think strikes should be a last resort and I know for the vast majority of union representatives, they are. No worker wants to lose pay, particularly when they're already doing it tough, so my prediction will be, yes, there'll be strikes but they'll be very, very minimal and I think employers at the moment know that they are in a tight labour market and they're happy to pay more and are paying more to hang on to their workers and to show that they value the workers who are looking after them.


TOM ELLIOTT: Final question: we've had calls from people who say they're actually struggling to feed their families now, that you, you know, the price of after average basket of goods at the supermarket has gone up so much they do not have enough money left in the till. What would you say to them?


STEPHEN JONES: We understand that cost of living is hitting families particularly those who — you know, the highest costs and the highest burden, we understand that, which is why we're working hard to ensure that we're not adding to inflationary pressures and that we're doing what we can to do build capacity within the economy, but we also, the Prime Minister feels very strongly about this, you've just got to be frank with people, and be very honest about what you can do, what you can't do and the consequences of making the wrong decisions, and that's what the Treasurer and Prime Minister outlined in Parliament today.


TOM ELLIOTT: Thank you for your time. Stephen Jones there, Assistant Treasurer.