Q&A – Sky News Economic Outlook Conference
ANDREW CLENNELL, HOST: Well, thanks for joining us.
ANTHONY ALBANESE, PRIME MINISTER: Good to be here.
CLENNELL: So, you’ve had eleven interest rate hikes since you’ve become PM.
PRIME MINISTER: Good start, Andrew.
CLENNELL: How’s that narrow path to avoid recession going?
PRIME MINISTER: I’m very positive and optimistic about the future. You forgot that there was one beforehand.
CLENNELL: I thought you’d mention it.
PRIME MINISTER: You forgot there was one beforehand. But interest rates began rising and were anticipated, of course, that they would increase. That was foreshadowed prior to the election. Interest rates were never going to stay at 0.1. That was never going to happen. So it is placing pressure on families and it’s placing pressure on mortgage holders. We acknowledge that. But I’m very optimistic for the reasons that I outlined. And I’ll add another one of why I’m optimistic, as well. Our location for so long has been seen as a disadvantage, for a long time, this island continent, located where we are it is now a massive advantage. And one of the reasons for our international engagement is that we’re located very close to the fastest growing region of the world in human history. What that represents is massive markets, a growing middle class to our north, and that represents real opportunity if we get it right, if we seize those opportunities.
CLENNELL: Why did the Budget predict the cash rate to stay at 3.85 per cent? I mean, it’s wrong a month later.
PRIME MINISTER: Well, that’s a question for the Treasury Department, and I’m sure Mr Kennedy will be able to answer that. The Reserve Bank, of course, makes these decisions independently of government, as you know. And that’s not the only prediction on interest rates that have not been correct. It’s not as incorrect as the one saying there’d be no increases till 2024. So these things are all relative.
CLENNELL: I’m glad you mentioned that. Is he gone, then? Philip Lowe?
PRIME MINISTER: Well, as much as I love Sky News during the day, before weird stuff happens as the dark comes down, I’ve got to say. But as much as I love Sky News, you’re not getting that exclusive here, even though I know that no one would be able to keep it in this room. So, those decisions are down the track.
CLENNELL: Mid-year, the Treasurer said. So, it’s kind of mid-year, I was thinking?
PRIME MINISTER: Not really. Not really. Although Laura said we’re halfway through the term. We’re only a year in.
CLENNELL: Well, maybe.
PRIME MINISTER: We only have three year terms.
CLENNELL: So no early election, okay. All right.
PRIME MINISTER: There you go. There’s your exclusive.
CLENNELL: I’ll believe that when I see it.
PRIME MINISTER: I think three years are too short as it is. So I’m not contemplating an early election. There you go.
CLENNELL: You spoke about productivity, and again, in your time in office, it’s down 4.6 per cent. The Reserve Bank Governor has made it clear that to accommodate wage rises without further interest rate hikes, we need to increase productivity.
PRIME MINISTER: Absolutely we do.
CLENNELL: What’s your plan on that?
PRIME MINISTER: We have a range of plans on that. Infrastructure investment is obviously one, and we’re making sure that that be got right. One of the reasons we’ve done the review, you can’t have a Commonwealth Government with 800 infrastructure projects. It’s not the role of Commonwealth Government to do roundabouts. It’s the role of the Government to do things like I did yesterday, the second airport at Badgerys Creek, which, as you know, I spoke about in my first speech almost 30 years ago, and I’ve been a strong advocate. They’re the changes that drive through productivity. We need to skill-up our workforce. 180,000 fee-free TAFE places underway now – 300,000 in our budget. Cheaper child care is about boosting productivity. The low hanging fruit in our economy, in terms of the labour market, is putting women at the centre of our economic agenda. Cheaper child care will be good for the three P’s that you have for growth – participation, productivity and population. It’s good for all three. So, we have identified through our investments that we’ve prioritised, whilst being fiscally responsible, we’ve identified the areas both before we were elected, but since then as well, what are the areas we need to invest in that will drive productivity, that will drive growth.
CLENNELL: Alright, I’ll tell you who else has identified some things you can do in productivity – the Productivity Commission. Now, that report came out and was kind of set aside, so I mean, it talked about tax reform and IR reform. Do you have any plans for a second term agenda in any of these areas?
PRIME MINISTER: Well, we’ll wait and we’ll announce our second term agenda in the lead-up to what we hope will be our second term. One of the things that my government has done is to lay out, in an orderly way, what we were doing when we were doing it. We outlined very clearly our agenda for this term, and we’ve been going through, putting those measures in place. I think it’s fair to say that in our first year, if you look at what we promised to do, we have put almost all of that legislation in place. We have some unfinished business with the Housing Australia Future Fund legislation next week, but we have put in place those measures, and that will, I think, certainly be a pretty big agenda for this term. The job of reform, I gave a speech at, I think it was an Oz conference before the election, where I said, I quoted John Howard saying, the job of reform is never done. And certainly it’s not. You constantly have to be looking towards, how do you drive the economy? How do you continue to have change to shape it in Australia’s national interest?
CLENNELL: That report talked about areas of state responsibility as well, zoning law changes, road user charges. Is it time for you to press the state governments on some of this stuff?
PRIME MINISTER: Well, we are through the National Cabinet. I must say that on some of those issues, when we raise them, it would be good to get a bit more back in from everyone for doing it, because they aren’t easy. One of the things that we’ve got, connected with the Housing Australia Future Fund, is the Housing Supply and Affordability Council. Now, you can’t address housing issues overnight. It takes time. But the big issue we all know is supply. And one of the big issues with supply, and some of the hypocrisy, it must be said, of the Greens political party, is they’ve never seen a medium-density development, let alone a high-density development that they wanted to support. And we need to address those issues. We need increased density along transport corridors, in particular. They are things that we need reform on. And one of the things I’ve said.
CLENNELL: A high-rise in Marrickville?
PRIME MINISTER: I have supported, on the record, projects like, it’s called Revolution, right next to Marrickville train station. I remember a group coming to see me in my electorate office in Marrickville, and they were like, ‘This is terrible.’ And I was like, ‘Why is it terrible? This is a good density.’ It wasn’t too high, it wasn’t in excess. A fantastic development. Similarly, the old Marrickville Hospital site was developed by Mirvac, to give credit where credit’s due, to put in a library that’s won awards, a bit of open space, but really good density, really good quality development. I’m not for ‘let it rip’ bad developments in inappropriate locations. But you can have increased density, particularly along transport corridors. I’m on the record of doing so. I’ve done so in my own electorate, consistently. There’s a proposal at the moment before the Inner West Council, pretty close to Parramatta Road at Taverners Hill. It’s a good proposal. The density that’s around Lewisham in my own electorate, it’s good. So, I’m happy to do that. And one of the things that I think the National Cabinet can do, is that in areas of federation reform, sometimes state governments can use the fact that National Cabinet has a decision to say, well, we have to do this, even where things are politically difficult. So, I’ve spoken certainly with the Premiers and Chief Ministers about that. And National Cabinet is working well.
CLENNELL: Business are arguing some of your industrial relations changes operate counter to productivity. What do you say to that?
PRIME MINISTER: Well, there haven’t been, if you go through the pages of the Oz or the Telegraph or what have you, there won’t be many times saying, correct me if I’m wrong, one of the editors who are here – ‘Business welcomes wage increase,’ is a headline I’ve been looking for for a while. I haven’t seen that up to this point. So, in some of what is put forward, I saw some of the critique, for example, this week with some of the advertising campaign, is a campaign being run against a program that no one is arguing. No one’s arguing that people shouldn’t be rewarded for their experience and their capacity at all. No one’s arguing that case. No one in my government is. It’s not reflected in the cooperation and the discussions that we’re having with employers. What we don’t want, though, is a manipulation whereby labour hire is used to do exactly the same job with the same experience and the same skills, but someone essentially is being used to undermine award wages and the enterprise bargaining process.
CLENNELL: But do you blow up some businesses with this, though?
PRIME MINISTER: No.
CLENNELL: And is there a wage price spiral?
PRIME MINISTER: Well no.
CLENNELL: Saying here, on the record, we won’t have a wage price spiral?
PRIME MINISTER: Well, there isn’t a wage price spiral.
CLENNELL: There could be, though, the way you’re going, perhaps.
PRIME MINISTER: No, look, there isn’t one. There isn’t one. And there hasn’t been one for a long period of time. What we’ve seen is that wages as a proportion of the economy have gone down. Have gone down. All of the figures know that that’s the case. And you can’t argue that people are under pressure, in terms of cost of living, but that wages aren’t a factor. Wages are a factor in people’s living standards. There’s inputs and outputs. The inputs are people’s wages. The outputs are the cost of living and inflation. You need to make sure, and we have made sure, that wages are a factor, but that also, we’re addressing cost of living through things like cheaper child care, will have a massive impact as well on people’s living standards.
CLENNELL: People my age are pretty haunted by the early ‘90s recession, the Keating recession, really. High inflation, high interest rates. The economy had to be slowed down, and that led to disastrous levels of unemployment. How far away are we from this sort of catastrophe today? And if we’re not going to get there, why?
PRIME MINISTER: Well, unemployment’s at 3.7. Unemployment’s had a three in front of it for some time. You’ve seen more jobs created under the government that I lead than any previous government, new government, in history. I’m optimistic, and I’m not one who talks down the economy. We have a level of catastrophizing occurring from the Coalition at the moment over everything. Everything that was going to happen. Our IR legislation, I’ll say this to you, Andrew. Our IR legislation, if you go back and look at interviews that you did with Opposition members prior to the IR legislation last year, that was carried, there were predictions of general strikes, the economy was going to end. It was going to be a catastrophe. Where are they? Where are the general strikes today? Where are the strikes today? It was going to lead to industrial chaos.
CLENNELL: It’s only just come into effect, those laws, haven’t they?
PRIME MINISTER: They’ve been around, in terms of the lead-up to it. Where is the action? The truth is that I think that Australia is well positioned, but we need to not be complacent. We need to make sure that we continue to take action. We’ll continue to work with business, as well as with unions. Business are being consulted about the next tranche of reform, which is consistent with what we said before the election. We spoke about issues like same job, same pay, casualisation, we spoke about the gig economy. We were told that you can’t do anything about the gig economy. Well, I don’t want to give them a free ad, but why not? Menulog have an agreement with a union. They’re still functioning pretty well. It’s functioning pretty well. But what you’re not having is the sort of changes in the economy that are placing so much pressure on people. So that if a bike ride to deliver a meal, is going to take 15 minutes, but they’re only going to take five, then what we saw was the consequences, get paid for five. We saw the consequences of that. Not just consequences in terms of living standards, but consequences as well in terms of people taking risks on the road. And we need to do better than that as a society.
CLENNELL: I’m glad you mentioned the unemployment rate. We’ve spoken about that before. Look, Budget predicts it won’t go higher than four and a half per cent. You confident about that?
PRIME MINISTER: Well, certainly the Budget predictions are there. But I think that we can, I think, see significant gains in new industries. We can see significant productivity gains. And as I go around the economy, as well, and meet with business and see best practice, whether it’s at the new airport that I got to see yesterday that will have faster taxiways, faster baggage handling, much more productive than any other airport in Australia, because it’s newer. When I looked at a distribution centre pretty close to Ipswich recently, that was just phenomenal in terms of what it’s achieving. When you look at women’s workforce participation increasing. When you look at the prospects that are there, I am optimistic. We have challenges. We have global challenges that are having an impact. We’re not immune to it. We’re not immune to the impact of the Russian invasion of Ukraine, has meant global inflation is a factor. But compare where we’re at on all of the key indices, with G7 countries where, I was with up in Japan, there’s no country that says, ‘Gee, we’re glad we’re not Australia.’ I’ll tell you what they say to you. They say, ‘how are you doing so well compared with how we’re going?’
CLENNELL: All right. Just on electricity prices in Australia being powered by 80% renewables by 2030. AMA said you need a Snowy 2.0 every year. The way transmission is going, the construction of transmission, it doesn’t look likely. Is it time for you to pull back from that target and from the $275 promise of cutting your power bills by 2025? Because that’s just not going to happen.
PRIME MINISTER: Well, I’ll tell you what. If you don’t have ambition, you won’t have achievement. And we have an ambition to take advantage of the transition that’s there for renewable energy. If you look at the contracts in New South Wales recently, for both solar and wind, they are having a real impact. The challenge of transmission is a real one. And that’s why in my first budget reply, we announced the $20 billion Rewiring the Nation Program, to bring the energy grid into the 21st century. Now, I, in the lead up to that, we met with all sorts of experts, but of course, there’s no great secret. It was on the AEMO, the Australian Energy Market Operator website, had a plan for transmission to bring the grid into the 21st century. I thought, if we announce that, they’ll jump on it, the government of the day, and that’ll be one less thing. Like they did half of our child care policy, they did a sort of step towards it. But crickets, nothing. How is it that Snowy 2.0 is not connected to the grid? What is the point of doing a massive project like that, that isn’t plugged in? I mean, it’s absurd. And we are having to deal with that. We are having to deal with a decade of inaction, where you had $4 million for a new coal fired power station study, to the proponents at Collinsville in Queensland. No one thought that was going to go ahead. There’s nothing to stop someone going out there and investing in a new coal fired power plant – except reality. Except the market. And the market tells you the cheapest form of new energy is renewables. And what we need to do, the task for government, is to work with the private sector, which we are doing, and work with state governments through issues like the Marinus Link, Hume Link, which is about plugging in Snowy 2.0. And we worked, the largest announcement that we made, connected with Rewiring the Nation, has been here with the Perrottet Government.
CLENNELL: Just finally, you’ve committed at the moment to keep stage three tax cuts in their current form. Sometimes it doesn’t feel like your heart’s really in it, though?
PRIME MINISTER: Well, I said very clearly, at the time, at the time, we tried to amend those tax cuts. We tried.
CLENNELL: Now you’re in government.
PRIME MINISTER: We are, I’ve noticed. I’ve noticed Andrew.
CLENNELL: So what does it matter what you did in Opposition?
PRIME MINISTER: And I’m glad you’ve noticed, too. So, they’re legislated.
CLENNELL: Because there’s this theory you’ll take it to the next election, we’re altering it, that’s not going to happen?
PRIME MINISTER: We’ve said that we haven’t changed our position.
CLENNELL: Thank you so much for your time, PM.
PRIME MINISTER: Thanks mate.