Press Conference, Canberra

AMANDA RISHWORTH: Thanks for joining us today. Before I discuss the labour force data that’s just been released, I did want to acknowledge today is the National Day of Mourning and acknowledge the 15 Australians who were murdered on the 14th of December in the Bondi terrorist attack. The theme that the Chabad community in Bondi has chosen for tonight’s gathering is Light will Win, and, indeed, I believe it will.

Now I will go to today’s labour force data. It is good news for Australians with today’s December release of the labour force data with unemployment data going down from 4.3 per cent to 4.1 per cent in December. The employment data released today shows that in December 65,200 more Australians are in jobs. And there are now 165,400 more people in work than a year ago. Coupled with this, it’s very encouraging that we’ve seen the participation rate increase to 66.7 per cent, which is up 0.1 percentage point.

In other good news, youth unemployment is down by 0.9 percentage points, where we’ve seen more than – or just 16,000 more young Australians in jobs in December. The under-employment rate also declined in December and it means that it is the lowest under-employment rate in more than three decades. And this means, of course, people are getting the amount of work that they want.

Now, the employment figures over the last year have demonstrated that our labour market is resilient despite some easing of the underlying pace of employment growth. So under our government’s watch we’ve seen more than 1.2 million jobs being created, delivering income for Australians. And I’ll hand over to the Treasurer.

JIM CHALMERS: Yeah, thanks very much, Amanda. Look, today is a sombre day. It’s a day to unite in grief and resolve and in solidarity. It’s a day to remember the brave and beautiful people whose lives were changed or cut short by the tragedy at Bondi Beach on the 14th of December. So today overwhelmingly is a chance for us to show our support for the Jewish community and to everyone who’s been impacted by this tragedy.

Today we have also got some very welcome news when it comes to our labour market. If there’s a defining feature of this government, it’s the strength of the labour market throughout our term in office. The unemployment rate under this Albanese Government has been 3.9 per cent. The average under our predecessors was 5.6 per cent, even before Covid-19. So under this Labor government we’ve seen the lowest average unemployment of any government in the last half century or so. And today’s numbers are very consistent with that and very welcome.

To see unemployment go down to 4.1 per cent, to see these 65,200 jobs created in our economy to take the total to over 1.2 million new jobs created on our watch is very welcome and very encouraging, particularly when you understand that four out of every five of the 1.2 million jobs created have been in the private sector and most of them have been full-time jobs as well. And that’s before you get to some of the points that Amanda made a moment ago about underemployment and the like.

So, some welcome and encouraging news in the labour market, which we’ve seen released today. And it really does go to, I think, the key conclusion of the OECD report which was released overnight as well. And one of the key conclusions of the OECD report is that Australia has managed a soft landing in our economy better than our peers, and our policies have helped avoid a recession and made sure that we continue to see our labour market as a source of considerable strength.

The OECD endorsed our approach to cutting taxes, our competition policy, our focus on cleaner and cheaper energy, our focus on housing, but also a useful reminder of the big challenges that are still in our economy, the work that we have to continue to do to make sure that we’re addressing inflation, addressing this longstanding productivity challenge and also addressing this global economic uncertainty which is really a big feature of the economy right now.

So, our labour market has been and continues to be a considerable source of strength. It shows, again – these numbers show again that this is a powerful reminder of the very strong economic foundations from which we approach this global economic uncertainty which is impacting every country around the world.

Happy to take a few questions. We’ll start behind you Tom, and then we’ll come to Tom and then [indistinct].

JOURNALIST: Treasurer, you mentioned the OECD there. One of their recommendations was that spending was too high in Australia. What areas are you looking to cut as we go into the next Budget?

CHALMERS: Well, we’ve made a lot of progress on the Budget but we know that it requires ongoing effort. We’ve got the Budget into position where it’s a couple of hundred billion dollars stronger than we inherited. Debt is down considerably from the trajectory in 2022. We’ve delivered two surpluses, we’ve got the deficits down, we delivered an historically responsible midyear Budget update from this room not that long ago. But we know that there’s always more work to do to make the Budget more sustainable.

JOURNALIST: But which specific areas?

CHALMERS: Well, we don’t nominate the savings in a Budget in January. We do the work around in the year, we nominate, announce any steps worth taking on Budget repair in midyear updates and in budgets, as is the usual practice. But I assure you that just like the first seven or so budgets and Budget updates that we’ve done – all of which contained savings – there’ll be savings in the May Budget as well. And we’ll work through them in the usual considered, methodical way that we’ve done the first seven.

Tom.

JOURNALIST: Treasurer, this unemployment has already brought forward some expectations of a rate hike. You won’t want to pre-empt the Reserve Bank, but do you accept that there may be more that needs to be done in the fight against inflation?

CHALMERS: Well, a couple of important things about that. First of all, as you rightly predict, I don’t pre-empt decisions taken independently by the Reserve Bank. There are good reasons why treasurers don’t do that.

When it comes to the inflation outlook, inflation is very considerably lower than what we inherited but it’s still higher than we’d like. We’ve been upfront about that really for some time. But we shouldn’t forget either in the most recent inflation data inflation went down. It actually went down by more than the market and economists were expecting. So, in the most recent data for inflation and for jobs we’ve seen the unemployment rate fall and we’ve seen the inflation come down as well more than what was anticipated.

And obviously we’ll get a new inflation read next week and people will pour over that in the usual way. But I think it goes to the point that the OECD was making, and that is that we have shown in this country that we can have an incredibly strong labour market, historically strong labour market, at the same time as we make progress on inflation. That’s been the story of our first term. It make us rare in the world that we’ve been able to achieve that double. But if you look at the November inflation figures, you look at the December jobs figures, what they show is both inflation and the unemployment rate have both come down, and that’s obviously our objective.

Matthew, I missed you, and then we’ll come back this side.

JOURNALIST: Treasurer, do you think that this really strong low unemployment figure could have some inflationary pressure in the future? And that might come through even through fresh wage growth?

CHALMERS: We’ve seen strong wages growth. Amanda might want to add to this. And, again, you know, when we came to office real wages were falling sharply and we’ve seen we’ve been able to turn that around in recent years. We’re very proud of that. And we want to see wages continue to grow in a strong and sustainable way.

When it comes to jobs and inflation, a bit like my answer to Tom’s question a moment ago, our objective is to keep as many people in work as we can at the same time as we make progress on inflation. Clearly we need inflation lower than what it is right now, but we’ve demonstrated over recent years that we can have low unemployment and progress on inflation at the same time.

I’ll see if Amanda wants to add on wages.

RISHWORTH: Look, I’d just add that we are very proud as a government to be getting wages moving. We think it’s a really important cost of living measure for people. And as the Treasurer has said, not only have we seen good jobs numbers, good wages numbers, but we have made progress on inflation. So there is, of course, more work to be done, but this is progress that is good news for Australians.

CHALMERS: Okay, we’ll go yourself then we’ll come back and we might come back to that if we have time.

JOURNALIST: Treasurer, that OECD report, which of the tax reform recommendations in that OECD report – you know, GST, tax bracket, property taxes – which of those suggestions do you think is the most interesting and might gain momentum in Australia this year?

CHALMERS: Look, I think as always with these kind of reports there are some recommendations which are consistent with the government’s direction and some which aren’t. You know, there’s – the government won’t be pursuing or implementing an inheritance tax, for example. There was commentary around that in the OECD report. We’ve said we’re not looking to increase the GST, for example. That’s a perennial in those sorts of reports. But it does talk about cutting income taxes. And we’ll be cutting income taxes this year and next year as well. And it happened last year, too. And so cutting income taxes is obviously something that we’ve been very enthusiastic about.

The government’s got a record on tax reform – multinational taxes, PRRT, tax breaks for build to rent, production tax credits, income tax cuts, better targeted superannuation concessions. And so we’ve got a big tax reform agenda. The immediate focus is on bedding down the changes that we’ve already announced. There will always be pressure to do more in tax reform, and I always listen respectfully when those views are put to us.

We’ll come back, we’ll go that row that starts with Pat and then we’ll come back to you and [indistinct].

JOURNALIST: Thanks, Treasurer. I had a question about is the recent reacceleration of inflation making you rethink the May Budget strategy with inflation once again the number one priority for this government [indistinct] pivoting toward productivity and pro-growth reforms, but now inflation [indistinct] number one concern?

CHALMERS: Well, we’ve got three priorities for this Budget for this year – addressing inflation, addressing the longstanding productivity challenge and addressing this global economic uncertainty. And the balance between those three things, which has been a feature of all of our budgets and the Budget updates, is obviously informed by the economic data and the economic conditions at the time. And so, we’ll do what we always do and make sure that we carefully calibrate our Budget settings to the economic conditions.

On your point about inflation and, as I said before in the most recent data we saw both underlying and headline inflation go down. On our current forecasts we expect underlying inflation to be back in the band by the end of this calendar year and headline at the start of the following calendar year, and so we expect to see a moderation. But there’ll be a period of time where it’s above band in our forecasts. We’ve been very upfront about that. It’s higher than we’d like, even though it’s very substantially lower than what we inherited from the former Coalition.

And so, we’ve been upfront about that. We know that the Budget is partly about addressing inflation, but we can’t ignore this longstanding productivity challenge and we can’t ignore the fact that the global economic environment is unpredictable, uncertain and volatile, and so the Budget will be about all three of those things.

JOURNALIST: Treasurer, back on the OECD report and you already mentioned the work that you’re already doing on super tax concessions. The OECD report recommends further reducing concessions favouring high superannuants to help return superannuation to its original purpose of ensuring adequate retirement incomes rather than providing [indistinct] tax arrangements for wealth accumulation. Are the changes that you bring to Parliament this year enough to return super to its original purpose or do you think there is still more work that needs to be done?

CHALMERS: Look, that’s the sum of our thinking on superannuation tax concessions. As you know and everyone in this room knows, this has been an issue for the last few years, our attempts to try and restore the intent of superannuation, as you rightly point out in the OECD report. We’re making the superannuation system fairer from top to bottom – better targeting the tax concessions is part of the story but also increasing the low-income super tax offset is a big part of that as well. So that’s our focus, those two things. We’ve done a lot of consultation over the summer and we’re hoping to legislate those changes in the first half of the year, and that’s been our focus.

JOURNALIST: Treasurer, on Mark Carney’s speech –

CHALMERS: I’m just going to go here, Probes, and come back to you.

JOURNALIST: Yeah, okay.

CHALMERS: If it’s not related to that super question, I’ll come back to you. I won’t miss you, mate.

JOURNALIST: You’ve talked a lot about forming consensus in the past and heading forwards into 2026 on policy agendas, but looking at how the Coalition is splitting again this week, do you think that you have an Opposition that will be workable for the policy agenda that you’ve set for this year?

CHALMERS: No, the Coalition is a mess. And I think the kindest thing you can say about the Coalition right now is that it’s a smoking ruin. And I think they’re paying a price for putting internal politics before public safety this week in the Parliament in what I think is, at least, unedifying but, more likely, a shameful preference for internal politics over doing the right thing by public safety and national security. That’s what we’ve seen this week, and that’s why the Coalition is disintegrating.

We’re also seeing this quite bizarre race to the extreme right you know, the reason why the Coalition party looks like a three ring circus is because the Libs and the Nats and the One Nation want to be – they’re all just trying to be this kind of paler shade of orange as they chase bigger and bigger extremes on the political spectrum. And so that’s what we’ve seen play out.

But I want to assure you, and I want to assure the Australian people that our focus in government is on the Day of Mourning, our focus is on these job figures, our focus is on the advice that we received overnight from the OECD. And here the contrast couldn’t be clearer. Now, we do work through issues in a careful, methodical, considered way. Our political opponents in the former Coalition are divided, they’re divisive and they are dysfunctional.

And for all of those reasons we know that Sussan Ley’s days as Opposition Leader are numbered. But to be fair to her, all of the alternatives in the Coalition, or the former Coalition, are worse. You know, you look at the list of names that you guys have been writing about through the course of this crazy day. You know, Angus Taylor is the guy that took to an election a policy for higher income tax and bigger deficits as Shadow Treasurer. Ted O’Brien wanted to borrow hundreds of billions of dollars to build seven nuclear reactors and push energy prices up. Andrew Hastie makes Tony Abbott look like a sensible moderate.

And so it’s slim pickings in the Coalition. I suspect that they’ll make a change before long, but we won’t be distracted by that. We’ll continue to focus on the things that really matter – jobs, the economy, cost of living, housing, public security and national security.

We’ll go here and then come back to you and then to the back and then we’re done.

JOURNALIST: Just on Donald Trump’s Board of Peace, has the Albanese Government accepted that, and does Benjamin Netanyahu signing on overnight influence Australia’s consideration in any way? How long are you going to leave that decision hanging?

CHALMERS: Well, obviously we’re considering that in the usual methodical way that we consider these kinds of proposals. I don’t have an update for you on that today. Obviously, we monitor the comments and the responses of other countries, but we’ll come to our own view in due course.

Andrew.

JOURNALIST: You mentioned global uncertainty before. Mark Carney at Davos has talked about the end of the rules-based order as we’ve known it and wants middle powers, such as possibly Australia, to be working together against the rise of hard power and great power rivalry. Do you believe that the old rules-based order is over, and what are you doing about it?

CHALMERS: Well, first of all, we already work very closely with our Canadian friends. I was spending time with my Canadian counterpart Francois-Phillipe Champagne, Finance Minister in

Canada in Washington DC at the beginning of last week. So, we work closely with Canada and with other middle powers to try to navigate these very uncertain international conditions in the economy but more broadly as well when it comes to the geopolitical situation that you write about, Andrew.

I thought Prime Minister Carney’s speech was a stunning speech. I thought it was very thoughtful, obviously very impactful. We’ve had a number of discussions within the government about the contents of his speech. It’s been widely discussed, it’s been widely shared. No doubt that’s true around the world as well. And I think he makes a powerful point that a lot of the old certainties that we have relied upon for a long time now are breaking down. And just in my part of the shop, you know, we’ve seen these four big economic shocks in the past couple of decades and, you know, that has brought about extraordinary change. You see did in escalating trade tensions, you see it in the discussions with NATO, you see the Russian invasion of Ukraine, you see some of the behaviour on international markets. You know, you can see that there’s this extraordinary period of churn and change.

And so the job for us and the job for our Canadian friends is to work out how we can shape all of this change in our own interests, how we can maintain the commitment to institutions around the world and to international law to try and resolve our differences in a calm and considered way but also to recognise the geopolitical situation’s fragmenting, we’ve got rapid change in technology and energy and industry and demography, democracy, diplomacy, all of these things. And so we spend a lot of time as a government grappling with the sorts of issues that Prime Minister Carney raised. As I said, I thought it was a very thoughtful contribution. Australia’s got a lot of skin in the game when it comes to developments in the world, and so we take those kinds of contributions from Prime Minister Carney and others very seriously.

JOURNALIST: Treasurer, just following on from that, on the great power rivalry that Mark Carney talks about, he was suggesting that middle powers should band together. But he also says that one of the problems is that the United States – he doesn’t name it but you know he’s talking about Donald – that the US has embedded itself in these organisations – the UN, the WTO, NATO – and that they’ve become a problem from within. What thought has Australia got to kind of banding together with ought like-minded nations and getting around the Trump problem?

CHALMERS: Well, first of all, I wouldn’t characterise it the way you have, but there are good reasons for us to work very closely with all of our partners and friend in the world, including other middle powers including, if not especially, our Canadian friends. We’ve got so much in common with the country that Prime Minister Carney runs. And so, we already work closely with them. We don’t see it exactly how you have described it.

We believe, I think as Penny Wong said yesterday, we continue to believe that our interests as Australians are best served by cooperation, they are best served by the kind of rational resolution of our differences, managing our differences within international law and international institutions. That continues to be our belief. We’ve got a long history of that.

At the same time, we can’t ignore this extraordinary disruption in the global economy and the world more broadly. You know, the fact that we’ve had these four major economic shocks in less than two decades, the fact that Australia was such a big beneficiary of that long period of calm between the end of the Cold War and the start of the GFC, we’ve got to work out not just how do we shield our people from the downsides of all this churn and change but how do we maximise our opportunities. And Canada, Australia and others come to this world of churn and change with really quite extraordinary advantages, and we intend to make the most of them.

Up the back, and then we’re done.

JOURNALIST: Dan [indistinct], Bloomberg. In the OECD report you spoke about looking back how Australia had been successful. Looking forward they say that without further tax and spending challenges that there’ll be a steep rise in national debt. Firstly, do you accept that forecast that national debt is going to rise steeply without, you know, substantial changes to the tax and budget system? And, secondly, just on he on the question you were speaking about now, Maroš Šefčovič, the EU Trade Envoy, was talking today about changes to the most-favoured-nations structure in the WTO, which is kind of the same thing that Mark Carney was talking about. Do you think Australia is also interested in looking at the most-favoured-nation system to deal with the rise of China and to deal with, you know, [indistinct] non-market economies like China.

CHALMERS: Yeah, well, first of all, even with the quite remarkable progress that we’ve made already on the Budget, we know that there’s more work to do when it comes to Budget repair. And a central feature of the seven Budget updates that I’ve handed down with my other mate Katy Gallagher they have been all about making room for our priorities. There is $114 billion in savings. And because of our efforts banking most of the upward revisions to revenue, because of our efforts, we’ve seen the debt trajectory much lower than what we inherited from our predecessors. So, we’ve made a lot of progress, but we acknowledge, as the OECD does, that there’s always more work to do. And we’ll take responsibility to continue to do that work.

On trade, I mean, Australia had put its view on trade and particularly on tariffs repeatedly and respectfully. And our view is that tariffs are an act of economic self-harm. The global institutions which have been in place for some time to try and put some order around multilateral trade, they have overwhelmingly been good things for Australia. We’re more trade exposed than most economies. That’s a good thing that we have a big offering to the world, but it also means that when there’s turbulence like this or tensions like this, that Australia has got a lot to lose.

So we engage wherever and whenever we can in global institutions - multilateral, plurilateral, bilateral - to make sure that we get the best deal that we can for Australian workers and businesses and investors and for our economy more broadly. And so, when we see this turbulence that Prime Minister Carney and others have described in recent times, our job is to manage that turbulence the best that we can but also maximise the opportunities for our own economy. We’ve got a combination of advantages which make us a better place than most of our peers. We’ve got a lot coming at us from around the world, but we’ve got a lot going for us as well.

Ron to finish and then [indistinct]. Ron to Amanda, and then we’re done.

JOURNALIST: It’s for you, Treasurer. Have you ever used taxpayer funds for the predominant purpose of attending a Federal Labor Business Forum event?

CHALMERS: I think as I’ve conveyed to you on other occasions, Ron, when I go to these events that are organised by political parties often, the day is about meeting with CEOs and others. I think on one example that you’d written about I met with the CEOs of seven or eight major Australian companies. It’s not unusual for politicians to be asked to participate in political functions. I’m really confident that I make the best use of my time and the best use of taxpayers’ funds, and that means making sure that I’m engaging with CEOs and others, including, I think, on one occasion that you had raised with me in the past, to participate in the Financial Review roundtable on superannuation, to make sure that we’re making the best use of our time and taxpayer dollars. Thanks very much.

Ends