Interview with Andrew Clennell, Sunday Agenda, News24

Subjects: Intergenerational Report, fuel excise, migration Andrew Clennell: Joining me live from Brisbane is Treasurer Jim Chalmers, no doubt in a good mood after the Brisbane Lions won yesterday. Jim Chalmers, thanks for joining us. Jim Chalmers: One of the great, one of the great prelims of all time.

I feel a bit for the Hawthorn supporters, but the Brisbane Lions got it done in the end. Never in doubt, Andrew. A wonderful game.

I think I just gave you a free kick, like Hugh McCluggage, chatting in front of goal right there, Jim Chalmers. Well, that was definitely holding the ball, by the way. Now, let’s start on a more serious note.

Let’s start with a Coalition policy announced today in the Sunday papers to halve the fuel excise every time the crude oil price reaches $100 a barrel. What do you make of this announcement? Well, Angus Taylor is not trying to save Australian motorists from higher petrol prices.

He’s trying to save the Liberal Party from One Nation. He’s come up with an uncapped, unfunded policy. He can’t tell us how much it costs or how he’ll pay for it.

He can’t tell us how many extra billions of dollars it would mean in bigger Liberal deficits and more Liberal debt. If he really cared about the cost‑of‑living pressures that Australians are feeling right now, he wouldn’t have voted against our tax cuts. Our permanent tax cuts are providing cost‑of‑living relief in an ongoing way, just like our efforts on bulk billing, just like our higher wages.

All of this is about helping people with the cost of living in a permanent way. I think Angus Taylor’s proposal today says more about the political position that he is in and the pressures that he is under rather than the pressures that people are feeling around the country because of the re‑escalation of this war on the other side of the world. It is interesting though, isn’t it, because it’s not a blanket fuel excise cut.

It’s not a temporary one. It’s one tied to the crude oil price, and it doesn’t very often over history go over $100. So, does it make sense from that perspective?

It’s kind of like an emergency button on the fuel price to give motorists and consumers a bit of relief. Well, that’s what makes it uncapped and unfunded. That’s why he can’t tell us how much it costs, how he’ll pay for it.

And that’s because he has essentially racked up billions of dollars in bigger deficits and more Liberal debt without telling us how he will pay for it. And once again, dropping an announcement like this overnight into the Sunday papers, I think, is more of a reflection of the political pressure he’s under rather than the cost‑of‑living pressure that Australians are under, that we are responding to in a genuine and in an ongoing and in a permanent way with our tax cuts and with our other cost‑of‑living relief.

Would you ever consider another fuel excise cut? Is there any circumstance where the government would consider that? Look, it’s not something that we’ve been discussing or considering, but we’ve shown a willingness over time to respond to the economic conditions.

I think what you can see in our cost‑of‑living help is we have transitioned from some of that temporary assistance to permanent and ongoing help via the tax system and in other ways as well. That’s been a deliberate transition to provide that cost‑of‑living help in a permanent and in an ongoing way. But from budget to budget, obviously, we weigh up the economic conditions, we weigh up the pressures that people are under, and we make the best and most responsible decision that we can.

In contrast, I think what we’ve seen overnight from Angus Taylor is more about polling numbers than petrol prices. He is under very serious political pressure, and that matters much more to him than the cost‑of‑living pressures that people are feeling around the country that the government is responding to. If he cared about cost of living, he wouldn’t have voted against our tax cuts for millions of workers.

This Intergenerational Report you’re about to release, then, every term it’s released since 1998. You were reported as telling a meeting of MPs that there would be some – it might be poorly received. That was the report anyway.

It might not be that well received. Was that in relation to what it projects in terms of debt or productivity, that you’re concerned about the reception of this report? Well, the Intergenerational Report will show that the risks in our economy and the pressures on our budget are serious, but our advantages as Australians are substantial as well.

And so what I was referring to in that briefing is that there are elements of the Intergenerational Report which are confronting. But it’s not a pessimistic report and the reason it’s not pessimistic is because Australians are genuinely better placed and better prepared for all of this accelerating change that we are seeing, and we also have a plan – What are the confronting bits, since you raise that?

Well, obviously, when you have a population which is ageing, that puts additional pressure on budgets. But Australians living longer and healthier lives is overwhelmingly a good thing. It’s a really welcome reflection of our universal healthcare system and our quality of life here in Australia.

And so, Australians living longer and healthier lives is worth every dollar of extra pressure that that puts on budgets. But you can see, and you will see in the document that I release tomorrow on behalf of the government, very serious economic risks, very serious budget pressures, but also very substantial advantages as well. And that’s what makes it not a pessimistic document, a confronting document in parts, but a reason for us to focus our efforts on the things that we’re doing in areas like making the housing market fairer, strengthening superannuation, managing the risks in artificial intelligence.

All of this is about meeting our intergenerational obligations, taking those intergenerational pressures seriously. And that’s what the IGR report tomorrow is all about. Let’s get into some of the specifics.

I’ve got a few specific questions here, Treasurer. In the 2023 Intergenerational Report, Treasury reduced its long‑run labour productivity assumption from 1.5 per cent to 1.2 per cent a year. And the report found if productivity remained at 1.5, GDP in 2062 would be about 9.5 per cent higher.

Is the productivity prediction in this report even lower than that figure, or the same? It’s 1.2, the assumption. And that’s a long‑term assumption, as you rightly point out.

And you’re also right to point out that we lowered that when we came to government. Our predecessors had an unrealistic assumption of 1.5 per cent. On Treasury advice, we lowered that to 1.2 per cent in our first Budget and in our first Intergenerational Report.

And you’ll see that again in the Intergenerational Report tomorrow. We don’t chop and change that very frequently. The number that is in the IGR and in the budgets reflects the fact that there is a whole range of possibilities above and below that number.

And the 1.2 reflects as well, the range that we see in comparable economies. In fact, the UK has got 1.5, I think the US has got 1.4 as their assumption. So, the Treasury balances all of those considerations and makes a long‑term assumption in the IGR.

It’s lower than what it was in the IGR under our predecessors, which reflects the fact that for too long now we’ve had a productivity challenge in our economy – Why is it so low? – that’s why the Budget had the broadest and deepest productivity agenda of any budget in some decades. Treasurer, why is it so low? Well, I mean, we’re talking about a prediction over decades, so why is it so low?

Well, it reflects the pressures on productivity growth that we’ve seen. You know, areas like growth in the non‑market sector and the care economy, difficulties in measuring productivity, the fact that our economy is not currently dynamic enough, which is why we’ve got this productivity package in the Budget. Some of the other challenges that we are addressing around approval times or foreign investment, environmental approvals.

The government has got the broadest and deepest productivity agenda of any government in decades. It reflects the seriousness of the productivity challenge, which you can see on almost every page of the IGR. That report in 2023 also found that total government spending is projected to increase by 3.8 per cent over 40 years, rising from 24.8 per cent of GDP to 28.6.

Is there an even further increase to that in this report in government spending? Well, tomorrow’s Intergenerational Report will actually show that the budget is in better condition than was expected in the last IGR in 2023. But the pressures on the budget are still very substantial and, in many cases, intensifying rather than easing.

But if you look across the key indicators, including ones like the one that you’ve just mentioned, Andrew, what you can see is that we have made some quite decent progress in the last 3 years when it comes to the budget pressures, but we’re under no illusions. You know, when the population is ageing, of course that puts extra pressure on budgets. And there are other pressures and risks in the economy as well playing out in these forecasts.

But one of the main differences between the 2023 IGR and the 2026 IGR is we’re doing a bit better on the budget than we anticipated. There are other differences as well. For example, artificial intelligence is a much, much bigger feature of the IGR tomorrow than it was last time.

We’ve also seen a further decline in fertility rates, another change between ’23 and ’26. But overwhelmingly, the fiscal story is a little bit better, but still lots, lots more work to do to manage some of these pressures and risks. So, I mentioned this life‑expectancy estimation that will rise several years by the 2060s, 89 for women, 86 for men, and also that fertility will decline ever further.

So, why wouldn’t you consider a baby bonus? It’s estimated that when that was in place, between 2005 and 2012, there was an increase in births between 2 and 6 per cent. Isn’t this worth a go, Treasurer?

Well, first of all, we do acknowledge in the IGR that we expect fertility rates to fall further and faster than we anticipated even 3 years ago. That’s actually one of the biggest influences over the next 40 years or so. Almost half the decline in fertility rates is actually because fewer people are having 3 or more kids.

And what that reflects is mums having fewer kids later in life. That’s what’s playing out in the fertility rates. And so, for us, you asked me about our policy response to that, we think a better way to respond to that with policy, to give families the choice that they need if they want to have more kids or start a family in the first place, is via the early childhood education system, expanding paid parental leave, paying superannuation on paid parental leave.

We think that’s a better combination of policies to deal with this challenge that we have in our society and in our economy. Now, I’m not going to give any Australian family – any Australian mum – free advice when it comes to these decisions that they make about when they start a family, whether they start a family and how big that family is. Our job is to make it a little bit easier for people to make that choice if they want to.

And we think the best way to go about that is via childcare, via paid parental leave and via super. I understand, but if you had a baby bonus scheme – and I’m part of the generation that benefited from that, my family did – are you saying to young people, ‘hey, you know, we know it’s costly at the start, we could help you with that first bit’? And also point out to them they’re doing their bit for the country, because it feels like we’re heading towards a crisis here on this front.

Well, first of all, there’s not a limitless amount of money, and so you work out where you can get the best bang for buck. And from our point of view, we think the best bang for buck is in early childhood, paid parental leave, super – all of the things that we’re doing when it comes to women’s economic participation under the wonderful job that Katy Gallagher and other ministers are doing under the Prime Minister’s leadership.

And so when there’s not limitless funds, when you can’t do everything, you work out where you can make the biggest, most important, most responsible impact. And we think the combination of policies that we have will make it a little bit easier for families to make this decision to start a family or to have more kids, if that’s what they want to do. So, are you happy for immigration to fill the void when it comes to the decline in fertility?

Well, migration is a force for good in our communities, in our economy, in our country more broadly, so long as it’s appropriately and robustly managed and that’s what our reforms are all about. But I think one of the main conclusions that people will draw from the IGR when they see fertility rates coming off further and faster than was anticipated even a few years ago, that there is an important role for migration if it’s well managed.

And what you’ll see in the Intergenerational Report at a time when, you know, we’re nowhere near the replacement rate, as you rightly pointed out before in your introduction, net overseas migration, migration broadly, if we focus on the economic benefits, we focus on the skills, we make sure that the system is robust and transparent and we hit those net overseas migration forecasts that we’ve got in the Budget, if we do all of those things, migration can be a force for good.

It will be a force for good. And I think that’ll be one of the main conclusions people draw from the IGR as well. So, you talk about migration being a force for good.

I mean, there were a few sources told me that you and Tony Burke did have a bit of a spar over this migration policy. Is that accurate? No.

And you shouldn’t believe a lot of that scuttlebutt that you read, Andrew. I have said to Tony privately, and I said publicly in Question Time, Tony has done an absolutely outstanding job. He has been consultative, he’s been collaborative, he’s worked through some of these difficult and complex issues and interactions, I think, in a really considered and in a methodical way.

And he struck a series of important balances here, taking into consideration the integrity and robustness of the system, the economic implications of getting it right, all of these things are really important to us. And I think, contrary to some of the commentary that you might read about it, I’ve played a supportive role in Tony landing this policy area. And I think he’s done an absolutely terrific job, not just explaining it at the Press Club, which was outstanding, but also in the actual policy development itself.

You sound like best mates, Treasurer. Now, the 2023 report found that population was projected to reach 40.5 million by 2062–63, but population growth would fall from roughly 1.4 to 1.1 per cent, and that the share of people aged 65‑plus would rise to 23 per cent from 17 per cent. Are we looking at higher or lower population growth in this report than that report found?

Lower. The population will grow a bit more slowly than was anticipated, and that means that the total population will be lower than what we thought it would be just 3 years ago. So, if you look at the mid‑2060s, the ’23 IGR had population more than 40 million people.

We expect that the population number in the mid‑60s will be more like 39 million people because that population growth will be a bit slower because those fertility rates are coming off a bit quicker. And I think that will be one of the take‑outs that people get from the IGR tomorrow, is the fact that that slower population growth means that the population by the end of the IGR period will be a bit lower than we anticipated in 2023.

Well, I’m going to play something now that you said in 2023 about net migration. The number that you’re hearing about migration is a number called net overseas migration. And that isn’t a government policy or a government target.

It’s not a floor or a ceiling. It’s not something that the government determines. It’s important to remember that this substantial increase in the net overseas migration number is not a number that the government has chosen.

That’s not a number that the government nominates or a target that the government nominates. [End of excerpt] Back then, the government didn’t have any role in deciding this, according to you. It was demand‑driven. Now the government has decided to take charge of it.

Why? Isn’t this because of the influence of One Nation politically? Well, you’re right that since then we have decided to take a more active role in hitting those forecasts in the Budget.

There are still demand‑driven elements of it, but overwhelmingly, if you look at that package that Tony outlined at the Press Club on Thursday, it’s about making sure that the system is tighter, more robust, more geared towards our economic objectives. And that does reflect, I think, a more active role. And that’s about the economics, not about the politics.

You know, we do understand, of course, that people have concerns and sometimes legitimate concerns about population and about migration. Our job is to demonstrate, and we will do this, that you can manage the migration system in a way that is consistent with our national interests. We can manage the migration system in a way which is robust and transparent and maximises the opportunity for Australia and minimises some of the concerns that people have from time to time.

But overwhelmingly, that’s about the economics, not about the politics. We have decided to take a more active role, and I think the reform package that Tony put to you in the last few days reflects that. Labour shortages in this country are a key driver of inflation, I’m sure you’d concede.

Doesn’t reducing net migration lead to labour shortages, which then means more inflation? Look, this is one of the really important balances that we do have to strike. And if you look at the package announced last week, it’s about hitting those NOM forecasts, net overseas migration forecasts, in the Budget, not talking about massive cuts like the One Nation party is talking about, which would have a devastating impact on our economy.

I think objective observers have already made that point really clear. So, for us, as a responsible centre party of government, our job is to manage and balance all of these different complex interactions. And the reason why I think the package that we announced last week is so good and so important is because it does that.

It balances all of the economic considerations, all of the legitimate community concerns, it balances the impact on communities and on the economy more broadly to come out with what we think is the best set of outcomes. Now, there are some skill shortages around Australia. I think that’s self‑evident.

If you look at the response from the housing industry, for example, I’m pretty sure they gave it a 10 out of 10 because they know that we are focusing on those areas where we need workers, whether it be in construction, whether it be healthcare and the care economy more broadly. We are focusing on those skills that Australia desperately needs. At the same time, we’re training more Australians for those opportunities.

And that’s why the Housing Industry Association and others have welcomed our reform package that Tony outlined so well at the Press Club. But farmers and business owners haven’t necessarily welcomed it. What do you say to them?

Well, I know that there have been issues raised from time to time, for example, about backpackers in the workforce. They will continue to play a role in our workforce, including in our agricultural workforce. And there’s also an opportunity to rely a bit more heavily on the PALM scheme, the Pacific scheme, as well.

But they’ll continue to play a role even as we tighten up and make the system a bit more robust and a bit more transparent at the same time. Is inflation going to be higher for longer than you want it? I think certainly when you look at what’s happening with petrol prices around the world, for example, and the global oil price, that does put, I think, substantial upward pressure on inflation.

And even before that, we had our fair share of inflationary pressures in the economy. So, of course, you know, you’ve asked me a lot about the Intergenerational Report today, I mean, still primarily the government is focused on the here and now, the pressures that people are feeling in the here and now. And inflation is obviously the main concern that people have playing out in these cost‑of‑living pressures.

So, of course, we’re very focused on that. Of course, when you see a re‑escalation of the conflict in the Middle East, that’s not good news for inflation. From an economic point of view, the war in the Middle East has been an absolute disaster.

And from an economic point of view, the end of the war in the Middle East can’t come soon enough. And that’s because of the upward pressure that it’s putting on inflation, something that Governor Bullock and others have acknowledged in recent days. Do you accept any responsibility in terms of the level of government spending for inflation?

Of course I take responsibility for the budget settings. I take responsibility for all aspects of my job. And when it comes to responsible economic management, we’ve actually been able to improve the budget quite substantially over our time in office.

Those 2 surpluses, getting debt down a couple of hundred billion dollars from the trajectory that we inherited, whether it’s getting the deficits down, whether it’s finding more savings than our predecessors did, whether it’s banking upward revisions to revenue, that’s the responsible part that we are playing in all of this. Of course I take responsibility for the budget settings, and I think overwhelmingly, over the course of the last 4 years or so, that story has been a story of continuous improvement in the budget.

Of course there’s upward pressure now. If you think about what’s happening with bond yields and borrowing costs and the Budget update that we’ll hand down in November or December, that will be a big upward pressure on the budget. But overwhelmingly, we’ve got the budget in much better condition than what we inherited.

That’s why the ratings agencies have been so positive when they reaffirmed Australia’s AAA credit rating only a couple of weeks ago. There was an embarrassing backdown during the week on the allied health cap for veterans policy. Do you concede this was a very bad budget policy?

And whose idea was it? Well, a couple of things about that. I mean, first of all, when it comes to veterans spending in the Budget, it’s actually up almost $16 billion since we came to office, overwhelmingly.

Huge new investments in veterans, trying to get through that shameful backlog of compensation claims that we inherited when we came to office. So, the first point is, spending on veterans has gone up very considerably. Now, when it comes to our efforts to take the threshold from 12 visits up to $5,000 a year, obviously it became very clear to us that that was not going to be supported by the parliament and wasn’t supported in the broader community or in the veterans community.

And in that context, it’s not unusual for governments to recalibrate their policies to reflect those kinds of realities. And so when it comes to whose idea was it, obviously I’m not going to get into discussions at Cabinet or the Expenditure Review Committee of Cabinet, but I can say that’s not really how it works – Was it yours? How it works is every minister is asked – Can you tell me if it was yours or not?

Every minister – I’m not going to go into those discussions, but it’s not really how it works, Andrew, the way that you’re putting it to me. How it works is every single minister is asked to find ways to fund pressures in their portfolio. And this minister, Minister Keogh, outstanding minister, he has found an extra $16 billion to invest in veterans.

Overwhelmingly, this is one of the biggest increases in spending in a portfolio area over the course of our 4 years in government. Clearly, this initiative wasn’t supported in the parliament or outside the parliament. The last thing I wanted to say, Andrew, is I want to thank Australia’s veterans, not just for their service, obviously and primarily, but also for the way that they have engaged with us on this.

In my case, as a local member, I engaged with the Greenbank RSL on the western side of this community and with the Springwood Tri‑Services on the eastern side, where I am today. We appreciate their engagement. We have come to a conclusion, I think, which reflects the concerns that they raised with us.

But overwhelmingly, this is a government that has invested billions and billions more in veterans because we are so grateful for their service and because we understand how important it is that they are supported after they put their lives on the line for this country. Treasurer, I’ve been told I’m out of time, so I’ll ask you one more question. House prices have fallen in Australia, across Australia, by August by 2.7 per cent from their March 2026 peak.

And Sydney prices have fallen 7 per cent. In some areas it’s 10 per cent. Are you happy with that, and are your Budget measures partly or fully responsible?

Well, they’re just one of a range of factors playing out in the housing market. I think the interest rate hikes from earlier in the year are obviously playing a very substantial role in the softening of house prices, which began before the Budget and before our policy announcements were made. And so I think every serious objective observer of the housing market has acknowledged that there are a range of factors at play.

What we are trying to do here is to make sure that there are more affordable options for first‑home buyers, to make it easier for first‑home buyers to get a toehold in a market which has locked them out for too long. And if you put that in an intergenerational context and in the context of the IGR tomorrow, our efforts in housing are some of the most important things that we are doing.

Because being locked out of the housing market, I think, is one of the defining intergenerational problems that we have in our society. We took some difficult decisions to deal with that. It’s not the only factor playing out in the housing market.

And you should judge our housing policies over the course of the next couple of years, not the last couple of months. But if there are more affordable options for more first‑home buyers to get a toehold in a difficult, difficult market, then that’s a good thing. Treasurer Jim Chalmers, thanks so much for your generous time.

Good luck in the grand final. Thanks so much, Andrew. I appreciate it.