Interview with Sally Sara, RN Breakfast, ABC Radio

Subjects: Intergenerational Report, productivity, superannuation, Senate Committee Triple zero recommendations Sally Sara: Well, the federal government has released the latest Intergenerational Report outlining how an ageing population is expected to reshape the economy in the next 40 years. The report predicts for the first time that deaths will outpace births in Australia by the mid‑2060s.

Jim Chalmers is the federal Treasurer and joins me in our Parliament House studio. Treasurer, welcome back. Jim Chalmers: Nice to see you, Sally.

In the next 4 decades we’ll be in deficit territory. Have you given up on ever returning to a budget surplus? No, not necessarily.

The Intergenerational Report does paint a picture of some pretty serious budget pressures and economic risks, but we’re optimistic about the future because we’ve got a lot going for us as well. And one of the things we’ve got going for us – even in the context of these very substantial budget pressures that come from things like ageing and other pressures in our economy – is we’ve actually got a budget which is substantially stronger than other countries.

And even if you look at the debt profile in the Intergenerational Report, you’ll see that debt as a proportion of our economy actually comes down over the 40‑year period. Whereas in a lot of other countries in the next decade and decades, debt is going up. Is that going to put the onus on future generations to pay all this money back?

Well, there are certainly some intergenerational pressures laid bare in the report, whether it’s the budget pressures that you’re referring to, but also, you know, in the housing market and in the tax system more broadly. And you know, one of the key takeouts from the Intergenerational Report is just how important our efforts are to reform the housing market, to reform the tax system, to cut taxes for workers, to strengthen superannuation, to minimise the risks of AI.

So much of what is in the Intergenerational Report justifies and validates, and I think will vindicate some of the difficult steps that we’re taking to boost productivity, to make our economy more dynamic, to cut taxes for workers, make the housing market fairer, strengthen super, minimise the risks of AI. All of that is absolutely crucial to address the intergenerational pressures that you’re right to identify.

The population is expected to grow to just under 40 million by 2066. Do you think Australians will be comfortable with that growth? And is infrastructure going to keep up with that?

We must, and certainly, when it comes to housing, we’re putting a huge amount of effort into building more homes at the same time as we make it easier for people to buy their first home. But when it comes to the population forecasts, they’ve actually come down a bit since the last Intergenerational Report. In the last IGR a few years ago, it was expected the population would be over 40 million.

Now we think it will be under 40 million by the mid‑60s, and that’s because our population growth is slowing. Fertility rates are falling further and faster than anticipated a few years ago. We’re managing migration down from those big peaks that we had a few years ago.

And all of that means that population growth will be a bit slower and the population we expect in the mid‑60s will be a bit lower than we anticipated even a few years ago. The Australian Chamber of Commerce and Industry CEO Andrew McKellar says the Intergenerational Report quote ’relies heavily on an assumption of serious uplift in productivity. But when the on‑the‑ground evidence of this dividend in Australia is scant, it is a risk to bake this result into future budget planning.’ Is it a risk for the report to have long‑term productivity growth assumption of 1.2 per cent per year?

Well, first of all, all 7 of the Intergenerational Reports have made an assumption about long‑term productivity. Obviously the further you go out, the more uncertain that is. But what Treasury have done here, when I came to office, when I came to the Treasurership a bit over 4 years ago, we revised down the productivity assumption to make it more realistic than the one and a half that our predecessors pretended in their budgets.

We got it down to 1.2. And the reason we chose 1.2, or the Treasury advised 1.2, is because it’s about in the middle of countries that we compare ourselves with. You know, the US assumes 1.4, the UK assumes 1.5, and so we’ve assumed a much more conservative number than they have.

Is it overly optimistic? Well, it remains to be seen, but we think it strikes the best balance. There’s actually a range of possibilities above and below the 1.2.

It reflects what we’re seeing in other countries and what other countries have assumed. And so, we think it is a robust assumption. Now, when it comes to the comments made by the Chamber of Commerce, they should also acknowledge at the same time, when it comes to productivity, we’ve acknowledged that the country needs to have a more productive economy because that’s what delivers higher living standards and decent wages into the future.

We’ve acknowledged that, more than acknowledge that in the Budget I handed down in May we had the broadest productivity package of any budget in decades. And a lot of it was – It’s not shifting, is it? Well, it takes time to turn a 2‑decade problem around.

You can’t turn a 2‑decade problem around in a couple of months or a couple of years. It requires a lot of effort across a lot of fronts. And we’ve taken the productivity challenge more seriously than our predecessors did.

And in doing that, we’ve worked closely with ACCI. Andrew was at the roundtable that we brought together for this purpose. So, much of what was discussed and agreed at that roundtable a bit over a year ago found its way into our Budget.

Faster approvals – including EPBC reform, the way that we attract investment – foreign investment included, the way that we work with the states to create a more seamless national economy, National Competition Policy, cutting compliance costs by $10 billion a year. All of this is about not just acknowledging we’ve got a productivity challenge, but doing something about it – Are you disappointed by Andrew McKellar’s comments?

I wouldn’t describe it like that. I mean, Andrew’s got a right to put his views forward on behalf of the businesses that he represents. I meet with Andrew relatively regularly.

I think I met with him last week to discuss all of these important issues, and we do what we can to work with them. You’re listening to Radio National Breakfast. My guest is the federal Treasurer, Jim Chalmers.

You’ve said you believe this, the report justifies the government’s capital gains tax and negative gearing changes as a way to get more young Australians into the housing market. Why? Well, because the defining intergenerational challenge is the fact that too many Australians – particularly too many younger Australians – have been locked out of home ownership for too long.

And we could have left everything exactly as it was. We could have acknowledged the intergenerational unfairness that exists in the housing market and done nothing about it. We chose to make some difficult changes, some ambitious reforms to make it easier for young people to buy their first home.

I think this intergenerational injustice that exists in the housing market can’t be left to endure. It’s endured for too long. We’re taking decisive steps to try and deal with it.

And that’s because if you look at that 40‑year horizon, the most important things that we are doing, making the housing market fairer, cutting taxes for workers who would otherwise carry an even greater burden of the tax system in an ageing population, strengthening superannuation, minimising the risks of AI. Really, across our whole agenda, we’ve shown a capacity to deal with the here and now and help with the cost of living at the same time as we deal with some of these big intergenerational issues.

Your shadow counterpart, Tim Wilson, says the government is overly focused on superannuation at the expense of getting more people into home ownership. What do you think? Well, they hate super.

Yeah, they always have and they always will. And they’re coming after superannuation. They put all of their time and effort into copying One Nation on superannuation.

That would be devastating for people’s retirement incomes. It would make people worse off. Superannuation is for retirement.

The intergenerational report makes it really clear just how important that is to the future of our country. The economy, retirement incomes and budget pressures. And the Liberals, the Nationals and One Nation all want to vandalise that in ways that would make Australians worse off and the budget much worse off as well.

Just finally, the Senate committee has recommended the creation of a national authority to take over responsibility for overseeing the Triple zero emergency hotline. How seriously is the government considering that? We’ll go through the recommendations of that committee in the usual way.

We thank them for their work, but we’ve already legislated a custodian for Triple zero. We’ve increased the penalties for telcos who don’t follow the Triple-zero rules. We’ve had the ACMA investigation, which turned into a court process around the Optus outage.

So, we haven’t waited for the recommendations of this report to take some very substantial action when it comes to Triple zero. Every Australian needs and deserves access to reliable 000, often at the most difficult times that they’re going through. All of the government’s efforts are about ensuring that.

If there are additional steps in this committee report that the government needs to consider, I’m sure that Minister Wells, in her characteristically diligent way, will go through it. Jim Chalmers, thank you. Thanks so much, Sally