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Politics with Michelle Grattan: Treasurer Jim Chalmers on jobs and work

Politics with Michelle Grattan: Treasurer Jim Chalmers on jobs and work

Treasurer Jim Chalmers released his White Paper on employment this week.

Its aim is for everyone who wants a job to be able to get one without having to search for too long.

The paper says that a surprisingly large number of people are looking for work or for more hours of work, some three million, and that’s when unemployment is at a low 3.7% and we have labour shortages in multiple sectors.

Chalmers recognises that Australia’s labour market is “really resilient” and the government started in a position of “genuine strength” but the unemployment figures don’t paint the full picture:

There are other indications around under utilisation and other data that we talk about in the white paper, but also a lot of people confront barriers to working or to working more. And that’s why really a big feature, a key focus of the white paper is how do we make it easier for people to grab the opportunities of a changing economy, which is creating jobs.

In this podcast, Chalmers also canvasses inflation, migration, the cost of living pressures on households and concerns about China’s economy.


The Hon Jim Chalmers MP




SUBJECTS: Employment White Paper, full employment, employment services, Indigenous employment, industrial relations, migration, housing, China economy, budget, inflation, cost-of-living relief, interest rates.

MICHELLE GRATTAN, HOST: Jim Chalmers has released his white paper on employment this week. Its aim is for everyone who wants a job to be able to get one without having to search for too long - that’s full employment. The paper says that a surprisingly large number of people are looking for work or for more hours of work - up to some three million - and that’s when unemployment is at a low 3.7 per cent and we have labour shortages all around the place. Today, we have Jim Chalmers to talk with us about some of the issues in the white paper.

Jim Chalmers, how is it that all these people are looking for work or for more hours when we have this low unemployment rate and labour market shortages? What’s the story here?

JIM CHALMERS, TREASURER: First of all, Michelle, I think it is good to recognise that the labour market has been really resilient. I think the most stunning indication of that is since we started measuring unemployment month to month in 1978, 45 years ago, there’s only been 18 times where unemployment had a three in front of it, and 15 of those times have been under this Prime Minister Albanese so we start from a position of genuine strength but as you rightly say in your question, there are still people looking for more work or for more hours. A couple of ways to understand that - first of all, the unemployment rate is not the whole story. There are other indicators around underutilisation and other data that we talk about in the White Paper on jobs and opportunities but also a lot of people confront barriers to working or to working more and that’s why really a big feature, a key focus of the white paper is how do we make it easier for people to grab the opportunities of a changing economy which is creating jobs but we need to get better at hooking people up to them.

GRATTAN: And obviously, this is going to extend across a number of areas. For example, we’ve got the Royal Commission on Disability tabled today, a lot of people in the disabled sector will need help to get more work.

CHALMERS: Absolutely, and I pay tribute to Bill Shorten and Amanda Rishworth for the work that they’re doing alongside this Royal Commission. And again, if your listeners read the Employment White Paper, there is a big focus on how do we make it easier for people to overcome barriers to work and those barriers might be disability, they might be caring responsibilities. Frequently, it’s about communities where there is entrenched and often intergenerational disadvantage - and that’s a bit personal for me because I represent communities like that and in lots of ways one of the reasons I’m here and certainly one of the motivations for the white paper is because we need to bust up this cycle of intergenerational disadvantage and long-term unemployment. There are barriers to people being beneficiaries of the big changes underway in our economy and our society and we want to make it easier for people to grab those opportunities.

GRATTAN: One particular area of disadvantage is Indigenous communities, especially those away from the major population centres, from towns and so on out in the outback. Have you any particular strategy to try to deal with that challenge?

CHALMERS: I think two things are really important here, Michelle. One of the specific announcements we made when we released the white paper was about a genuine partnership between the Government and the Coalition of Peaks, an economic partnership which is all about working out the specific challenges in First Nations communities, but particularly, as you rightfully say, in remote communities. The whole white paper tries to say when we’ve got unemployment low in aggregate across the country, when we’ve got all these opportunities in aggregate, how do we get much better about thinking about specific communities and First Nations communities are obviously a big part of that, so there’s the economic partnership with the Coalition of Peaks, there’s also the way that we are reforming the CDP, Linda Burney is leading that work but the Voice is important here as well because whether it’s jobs policy or other kinds of policies, we need to move away from making policy for First Nations people and move towards making policy with First Nations people and that applies to the labour market, just as it applies to all of the other ways that we want to close the gap in health, incarceration, education and the like.

GRATTAN: I just should explain for our listeners, the Coalition of Peaks is a representative body that covers a very large number of Indigenous organisations. Now just returning to the general on employment, do you think that our employment agencies need a shake up? The system was privatised decades ago. Has that worked? Is it working?

CHALMERS: I don’t think it’s working as it should, or as well as it can. I pay tribute here to my colleagues, Julian Hill, who’s doing an important piece of committee work on this but also Tony Burke, the responsible minister. We recognise that employment services aren’t doing as good a job as we want them to and so what we’ve done in the Employment White Paper is to say, here are eight principles - I won’t read them all out for your listeners - but eight principles that we will rely on to reform the system. Julian, Tony, myself and other ministers are working to reform employment services along the lines of these eight principles but our objective here is really to think about it in terms of how do we invest in people’s opportunities and their capacity, their capability to grasp the opportunities of a labour market which has been relatively strong and for lots of reasons, too many to go into here, the system has been falling short and that’s why we want to change it but we’re doing it in a really methodical, really considered way and we thought the best way to give people a sense of where that’s headed is to outline the eight principles that we’ll build the new system on.

GRATTAN: In the paper, you define full employment as everybody who wants to get a job being able to do so in a reasonable time, without too much delay. Did you consider putting a number on the unemployment rate that represents full employment? Why did you decide not to publish such a number? The Keating white paper on employment in 1994, for example, had a target of cutting unemployment from then 10 per cent to five per cent by the year 2000.

CHALMERS: Now I understand that people have raised this in the week or so since we released the white paper. There’s a few things I’d say about that. First of all, there is a technical assumption about full employment called the non-accelerating inflation rate of unemployment, the NAIRU and that’s an important assumption. It’s a necessary number that feeds forecasts in budgets and the work of the Reserve Bank but that is distinct, but complementary to how we talk about full employment in the white paper and the reason why we’ve tried to broaden it out and talked about sustained and inclusive full employment, a new definition of full employment, is because as I said earlier, this isn’t just about the unemployment rate, it’s about underutilisation, it’s about underemployment, it’s about concentrated areas of long-term unemployment and so we’ve tried to broaden out these considerations rather than say the be all and end all is one number. The other important thing here, the other reason why we haven’t gone down the path that you describe in your question is because we want to drive down full employment over time. There’s a near-term consideration but in the medium term and in the longer term, a lot of the investment we talk about in the white paper is about trying to get unemployment lower, as low as we can, but consistent with all of the other pressures in our economy, so one static number wouldn’t really do the job - it’s a range of measures and it’s an aspiration over time to create sufficient opportunities so that everyone who wants a job can find one without looking for too long.

GRATTAN: Business representatives have said that the initiatives in the White Paper will be overwhelmed by the Government’s proposed changes to industrial relations. How do you respond to this? And why was relatively little said about industrial relations issues in the paper?

CHALMERS: First of all, I don’t accept that we went ‘light on’ describing our changes to industrial relations. I think in a number of places in the White Paper, you can see where we’ve talked about job security or getting wages moving again, or the gig economy, these are all important parts of our industrial relations strategy so I’m not sure that that critique - obviously I’ve heard it – obviously, I listen respectfully when people have got views about the work that we’ve done here but I don’t accept or agree that industrial relations is absent, it’s in lots of ways kind of central but I think just as importantly, if you look at the feedback from the major business groups, which has been caricatured as focused almost exclusively on industrial relations - that’s not been the experience. The head of ACCI said “this is an important strategy, no doubt about it”, and backed in our approach to full employment, talked about our approach to productivity - quite positive about it. The BCA said that the White Paper’s areas are “well targeted to deliver sustained employment growth, job security and productivity.” They talked about the synergies between their work and my work and this paper. The AIG said, “it’s an important blueprint designed to equip ourselves for the future.” And I could go on, but I won’t. My point is here, Michelle, the business community - which I work closely with and I appreciate, and I’m grateful for all the ways that we do that, collaborate very closely - they’ve been quite positive overall about the Employment White Paper. They haven’t been focused exclusively on the areas where there’s not unanimity in industrial relations, and I really welcome the quite positive feedback that we’ve had from them.

GRATTAN: We’re getting a detailed policy on migration soon but there are a couple of questions I’d like to explore with you on this. The net migration intake is running well ahead of the forecast, is this a problem, especially given the acute housing shortage we confront?

CHALMERS: Well, the net overseas migration figure is historically high and that’s largely a consequence of two things. First of all, the international students are coming back much faster than was anticipated after COVID and secondly, we are an incredibly attractive destination for people on tourist visas. So the students and the tourists are driving that higher than usual number and both of those things are good for our economy in the sense that they feed our services, exports and so that’s important. I think one of the things that people don’t understand about the net overseas migration numbers is that it’s demand driven - it’s not a government target, it’s not a government policy to hit a certain number, it is a consequence of those students and the tourists and it’s a net figure and so what we need to do is to make sure that we can manage pressure on our population and that’s what we’re doing. That’s one of the big reasons why housing has become one of the top handful of priorities for the Government - billions of dollars flowing into investing in affordable housing and that’s because if we want all of the benefits of migration, being an attractive place for people to live, then we’ve got to make sure that we manage those pressures wisely and that’s what we’re doing, that’s what our housing policies are about, the Employment White Paper goes to it, and Clare O'Neil’s migration strategy will go to that as well.

GRATTAN: The Government’s emphasis is on attracting high skilled migrants yet a lot of our labour shortages are in semi-skilled or even unskilled work - for example, in aged care, even in the building industry. So, how do you deal with this problem?

CHALMERS: Well, the migration strategy that Clare O'Neil is putting together does go to some of these issues - and aged care, in fact, has been already - even before the release of that overarching strategy has been a big priority for us, and in building as well. I think what people will see, and I don’t want to kind of front run or pre-empt Clare’s really great work on this, but the migration strategy is largely an economic strategy. It’s about making sure that the migration system works for us, in our interests and part of that is making sure that we’re filling the needs of workers in areas where they are genuinely needed, but also not treating that as a substitute for training. The Employment White Paper has a big focus on training and education, lifelong learning, retraining, reskilling, and that’s our highest priority. But the migration system’s got a role to play here, not as a substitute for training but as a way to make it complementary and that’s the approach that Clare’s taking.

GRATTAN: One of your goals is to reignite productivity, and of course, you’re overhauling the Productivity Commission, but is this getting harder to do in an increasingly service-dominated economy? There’s much less scope for productivity improvement in areas like hairdressing or aged care than in manufacturing.

CHALMERS: I think it’s harder to measure productivity in some of these industries, the services sector, and we know from the Intergenerational Report and the Employment White Paper that we expect workers, for example in the care and support economy, the need for those workers is going to absolutely explode as our population ages and it is harder to measure productivity in those areas but that doesn’t make it any less important. And so, so much of our training agenda, so much of what we’re investing in in terms of participation, all of that is to try and make sure that our whole economy but particularly sectors where we’re going to get lots of growth, that they are as productive and innovative and as competitive as possible. How we adapt and adopt technology is crucial to that, how we manage the energy transformation is crucial to that but I think most of all, how we invest in people, how we invest in the stocks of human capital in this country will go a long way to determining whether we can make these growing sectors of the economy, including in the services sector, more productive so that people can get higher wages and lift living standards overall in our economy.

GRATTAN: What happens to the economy also depends on what happens elsewhere outside Australia. You’ve been worried about developments in China over recent months, the slowing of the Chinese economy. What’s your latest thinking and information on this?

CHALMERS: Well, I’m still quite concerned about China. I think you would expect me to sort of maintain a hierarchy of concerns about our global economy in our domestic economy and I think in the global economy, China’s really number one for me at the moment. There are challenges in their property sector in particular, we’ve seen really quite a substantial slowing across a range of indicators in the Chinese economy and that has big consequences for us, of course, in a world where China plays such a big role in our prospects and so I’m still concerned about it. I monitor the Chinese economy very closely, as does the Treasury, as do all the private sector players that we talk to and it remains an ongoing concern. I’m confident that the authorities there know that they’ve got a problem and you hear in dispatches the different sorts of considerations that that might bring the Chinese Government but overall, China’s still a big concern, it’s something that we monitor incredibly closely.

GRATTAN: You’ve just announced a $22 billion surplus for last financial year, the Budget projects deficits for this financial year and continuing on. But surely now, realistically, there’s a good chance of a surplus this financial year isn’t there?

CHALMERS: It genuinely remains to be seen, Michelle, and revenue in the budget is really unpredictable at the moment for a couple of reasons. First of all, we’ve seen a bit of a recovery in some of our commodity prices, but they have actually been underneath forecast trajectory, for a little while, earlier in the year and so how that all kind of nets out remains to be seen - revenue is a bit unpredictable and also, there are good reasons to be conservative about all of this. Our economy is slowing considerably as a consequence of China and the impact of the rate rises which began before the election and that has implications for revenue and for the budget as well, so I would prefer to be careful and cautious and conservative about revenue really all of the time, that’s the approach I take but especially when the global and domestic economy is so unpredictable and that has consequences for the prices the world pays for our goods and services.

GRATTAN: There is increasing pressure at the moment, of course, given higher petrol prices and people’s grocery bills going up and so on to spend more money. We’re hearing calls all over the place for extra help for households. You’re resisting this. How do you justify that?

CHALMERS: Well, the point I’m making is that we are right now rolling out billions of dollars in cost-of-living help and that’s because we recognise that people are under extreme pressure right now and that’s why we’ve been able to get the budget in better nick but that hasn’t come at the expense of rolling out relief - whether it’s help with energy bills or taking the edge off out-of-pocket health costs, the biggest increase in Commonwealth Rent Assistance in 30 years, really so many different ways we’re trying to roll out this cost-of-living help to take some of the edge off inflation without adding to it and so that’s our focus, that’s still rolling out right now and that’s an important part of helping people to deal with it. We’ve also got to ensure that we can afford whatever assistance we’re providing and last year we were able to get the budget in better nick and provide that assistance but the pressures on the budget are actually intensifying rather than easing - whether it’s aged care or Medicare, defence, the NDIS, the interest bill on our debt, we need to make sure that we’re managing the economy in the most responsible way. We’ve struck a good balance to here on cost-of-living help as well as improving the budget position and that’s our focus right now - rolling that help out. In future budgets, if there’s room to do more or if there’s a case to do more, obviously we consider that then but for now, our focus is on the cost-of-living relief that we’ve already budgeted for.

GRATTAN: This week we saw the monthly inflation numbers tick up. Do you think that people should be worried about another interest rate rise now or later?

CHALMERS: As you know Michelle, I try not to predict or pre-empt the decisions that the Reserve Bank takes independently but what they would typically do is they would look at the overall direction of travel when it comes to inflation and yes, there was a tick up in that monthly number but those monthly numbers are notoriously volatile, they can get lumpy and so what they would do is they would see that quarterly inflation peaked before the election last year, it peaked in annual terms around Christmas time, the overall direction of travel has been that inflation is moderating and I would anticipate that they would factor all of that in, including really quite a weak retail figure that we got this week as well. They will factor all of that in but the other thing which is really important here - and none of your listeners who’ve got a mortgage need reminding of this - but the interest rate rises that are already in the system are biting quite hard in our economy, you see that in the consumption figures, you see it in retail, you see it in household saving and so the Reserve Bank, when they look at this and take their decision independently, they will weigh all of those things up and not just one monthly inflation figure which was driven largely by petrol prices as a consequence of some of the global suppliers pulling back on production.

GRATTAN: Jim Chalmers, I just want to finish up by going back to the Employment White Paper and putting to you a somewhat contrarian point of view when we’re thinking about encouraging more employment, people to work longer. Do you think there’s a case to be made that people are actually working too much? In other words, they need jobs, obviously, but when we talk about more and more hours, more and more participation, this is good for economic growth but beyond a certain point, are there social and other costs from everyone working so much?

CHALMERS: Of course there are and what we’re really trying to do here is to give people choices. People are best placed to work out what is the best combination of their work responsibilities and family responsibilities and how do they work enough and earn enough to provide for their loved ones and what we’re talking about here, whether it’s our changes to early childhood education or the way that we think about investing in skills or really right across the board including making it easier for older people to work a little bit more if they want to, not forcing them but giving them that choice - all of these things really are about helping people make the best choice that they can for their own situation. Obviously it’s concerning when so many people have to work so many jobs in order to provide for their loved ones and so we want to make sure that jobs are not just secure but that people are fairly paid so that they get decent reward for their effort and that all comes back to giving people the choices and the capability and the skills to do the best thing for themselves and for their loved ones and that’s a pretty good summary of what we’re trying to do in the White Paper.

GRATTAN: Jim Chalmers, thanks very much for making time to catch up with us today. It’s been a big week for you because you’ve been travelling around Queensland, selling the message and getting in touch with people’s feedback, no doubt. That’s all for today’s politics podcast. Thank you to my producer Mikey Burnet. We’ll be back with another interview soon but goodbye for now.


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