October 16, 2025 • 23 mins
They said he couldn’t do it, but he’s doing it. In a few days, Prime Minister Anthony Albanese, fresh from a week’s holiday, will be flying to Washington to meet US President Donald Trump.
And also, what really went on between the PM and his Treasurer over the super reforms that Jim Chalmers abandoned this week. Paul Sakkal says the Treasurer had his pants pulled down by the PM. Is he right?
Joining Jacqueline Maley is chief political correspondent Paul Sakkal and chief economics correspondent Shane Wright.
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Episode Transcript
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S1 (00:00):
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics. I'm Jacqueline Maley, it's Friday, October 17th. Well,
they said he couldn't do it, but he's doing it
in a few days time. Prime Minister Anthony Albanese, fresh
from a week's holiday, will be flying to Washington to
meet President Trump. So today we're going to talk about
what he hopes to achieve there. And we're also going
(00:23):
to delve into what really went on between the PM
and his treasurer, Jim Chalmers, over the super reforms that
Jim Chalmers abandoned this week. Paul said the treasurer had
his pants pulled down by the PM, which is, you know,
an interesting phrasing, but is he right? As always, I'm
joined by chief political correspondent Paul Chuckle. And also our
special guest star, chief economics correspondent Shane Wright is joining us. Hi, guys.
S2 (00:48):
I'm still waiting for the music to come in for
my special guest appearance.
S1 (00:51):
I know, I know, I've got I keep forgetting to
push the button. I do want to do a shout
out to Shane Wright's t shirt, which, if you're listening
and not watching, it's a Kate Bush tribute, which is
which would fetch a lot of good money in a
vintage store. No offense.
S2 (01:08):
She's she's no vintage star. She's she's live and pumping
it all out.
S1 (01:13):
She is, she is.
S3 (01:14):
I didn't realize my my comments to you in private.
Jack will make it into your intro. So I've got
to be a bit careful now going forward.
S1 (01:21):
Oh, right. The pulling pants down thing. Should we. We can,
we can.
S3 (01:25):
No, no, I'm just joking. That's fine. I stand.
S1 (01:28):
By it. I thought it was very colorful phrasing. And
we'll get into what it really means later. Um, Paul,
when does the Prime Minister leave for Washington?
S3 (01:35):
He leaves on Sunday, I believe, in the afternoon. And
it's a quick trip because he just spent, I think,
nearly ten days in New York longer. Yeah. Well, it
was about 3 or 4 days in London, maybe ten
days in New York for the United Nations General Assembly, uh,
which was about a fortnight ago. Uh, so he's all, uh,
(01:56):
jet lagged out and keen to do some domestic politics
ahead of even more summits at the end of this
month at Asean and APEC. So it's a quick trip.
He'll be in Washington for two working days, I believe.
He meets with Trump on Tuesday at 2 a.m. Australian time.
So you've got to be pretty hardcore to stay up
that late or wake up at that time or feel
(02:17):
like a, you know, a Socceroos World Cup game when
just the diehards on Twitter are live tweeting through it? Yeah.
S2 (02:23):
And there could be an interesting scoreline though out of
this one. Yeah.
S3 (02:26):
You never reckon which which way will this be a
Fabio Grosso Italy versus Socceroos style national tragedy moment or
a or a conquest?
S2 (02:35):
This is one of the great questions and as as
I'm not going to express an opinion on the Socceroos
as I am not an expert in that field. But yes,
it could. This could go any way it could.
S1 (02:46):
I mean, and Paul Paul's got views on that too.
I know the PM, of course, copped a lot of
criticism from the media about the fact that he hadn't
gotten a meeting with the with Trump since his inauguration
in January, and that it was all too late. But
now he's got the meeting. What form will the meeting take?
Do we know?
S3 (03:02):
It's not a formal state visit. There'll be no big
state dinner. And it will not be full of that
kind of pomp. It's it's been called a working visit,
which will take the form of, you know, elbow walking
into the Oval Office, do a quick handshake photograph and
then a longer sit down meeting in the in the
Oval Office. There may be a huge pack of journalists
(03:22):
in there asking all kinds of questions, and it may
be a more rambunctious affair.
S1 (03:27):
Yeah, but the actual meeting itself obviously takes place in private.
And then they ask the journalists in. Yeah. So and
that could be a freewheeling press conference. That's sort of
where the fireworks happen, right, with, with a Trump press conference.
Because you never know what he's going to say. There's always,
I think, a little bit of tension, dramatic or otherwise,
on the part of the foreign leader who's visiting. And then,
of course, you've got the white House press corps, which
(03:48):
are by no means a conventional press corps anymore. So
what does he want to accomplish in this meeting? What
does he need to accomplish in this meeting. He's got
to really make make it work for him, right?
S3 (03:57):
Yeah, there's a lot of pressure going into it, although
I feel I mean, it's only a few days away
now and there's not a huge amount of media speculation
about it. I'm surprised at how long it's taken for
attention to turn to it. And I wonder if that's
because there's a bit of fatigue on on previewing this
potential meeting, because it was meant to occur at Canada,
at the G7 in whenever that was June, and then
(04:18):
it was meant to happen again at the United Nations
General Assembly. And so I wonder if people are just
a bit sick of forecasting what will occur.
S1 (04:25):
Tell us quickly what he needs to do there, because
he wrote about that this week.
S3 (04:28):
Well, Critical Minerals is turning into. I interviewed Richard Marles,
the defence and defence minister and deputy prime minister, last week,
and I said, how big a deal is this becoming
geopolitically for Australia as it crystallizes in the minds of
many Western leaders, but in particular Trump and his key allies,
that this is a core part of the contest with China.
So to explain to listeners, critical minerals are a whole
(04:49):
bunch of elements in the periodic table that are becoming
much more in demand because they're used in modern defense
technologies and really core to the green revolution for solar
panels and magnets and also semiconductors and many different new
modern age products. China has cornered this market for about
20 or 30 years, so they mine about 75% and
(05:09):
they produce about 90%. Yeah, they're not actually that rare.
There are many big deposits in the world, but they're
very expensive to mine. But Australia has a tremendous amount.
We effectively have the whole periodic table, but we've not
invested enough in it over time to actually bring them
out of the ground. The US now acknowledges that Australia
is arguably the most important place it can start supplying
(05:29):
critical minerals from. And so there's a huge push being
led by Kevin Rudd in Washington, who's been doing this
for the best part of two years to get US
and European investment to dig it out of Australia and
create a non-china supply chain. And Richard Marles, his argument
was that, you know, this is not some second tier
interest of Trump. This is a core interest of the
Trump administration brought to light last week when China started
(05:53):
again restricting these exports to the US, which has sparked
another bout in the trade war between China and the US.
S1 (06:00):
And Shane, our interests, our economic interests really align with
the US on this. I mean, we also need these
critical minerals and we are also reliant on China. If
China's got more or less a monopoly on at least
producing them because they're very dirty to produce and expensive,
as Paul said.
S2 (06:14):
Yeah. Um, I don't know if the economic interests are
aligned specifically with, uh, the US as also China. Remember,
China is still the big cash cow for this country
with iron ore. So the context is someone there are
two big competing forces for these these minerals. We can't
refine them and use them because we're too small a country.
(06:37):
We're too far away from the main sources, like some
of the stuff that ends up in semiconductors, which are
vital to the AI revolution. Like we are not going
to replicate Taiwan and become a great producer of semiconductors,
so ultimately we actually have a really strong position economically
with both powers because China, yes, China does have 75%,
(07:02):
but they don't have all of them. They're not as
easy to mine in parts of China as they are
in Australia. Like you get out into parts of Western Australia. Yep.
Pick it up, dig it out. Off you go. A
lot easier. So I find it really interesting that like
at that economic power play that's going on between China
and the US and how Central Australia is to both
(07:23):
of those nations.
S1 (07:25):
So we're almost like a sort of we're a pivot
point or we've got leverage on both sides.
S3 (07:29):
Yeah.
S2 (07:29):
Yeah.
S1 (07:30):
Paul I want to ask you about tariffs as well,
because that's another thing that Albanese will be perhaps delicately
raising in this meeting. What does he want to achieve
on tariffs.
S3 (07:39):
Well we're subject to the lowest baseline tariff of 10%.
No country has had that has been exempted from that.
S1 (07:46):
This is an across the board tariff.
S3 (07:48):
Across the board tariff, which in a relative sense, given
much of the world is at a higher baseline rate.
We are put at a competitive advantage because of that.
And the Productivity Commission has actually said that we might
benefit in the long run if other countries escalate and
do reciprocal tariffs. That hasn't quite happened yet to the
extent that we thought, but we're still yet to see
the consequences of what happens with China and the US,
(08:10):
which has been delayed, the consequences of that tariff war,
in part because the US backed away from Chinese tariffs,
because when China responded by blocking critical minerals, Ford and
other car manufacturers said, hey, can we not tariff them
because we actually need these things to build cars and
our economy will stop. So these things are all intertwined.
Don Farrell, every time he speaks, the trade minister says,
(08:31):
you know, we still want to get rid of that 10%
and we still want to get rid of that steel
and aluminium tariff. I think there's there's more that's more
of a talking point now than anything. I don't think
the government.
S1 (08:41):
Does that mean that Albanese just won't raise tariffs, or
will he sort of say, oh, mate, you know, what
do you want to think about that 10% and then
just drop it?
S3 (08:48):
I think he'll raise it because it has to be
part of the readout. The readout being what they tell
the Australian public he raised. We can't be seen to
have given up on it, but I don't think there's
any likelihood of dropping the 10%. There is a prospect,
if there in some broader critical minerals deal, which the
government is very quiet about, given the sensitivity that there's
a potential that we get some sort of carve out
(09:09):
in the steel and aluminium space, and maybe a deal
for to ensure that CSL, the drug manufacturer, doesn't get
caught up in the pharmaceutical tariffs. Keir Starmer got some
adjustments to auto tariffs and steel I believe, when he
did a deal with Trump.
S2 (09:24):
But he got an adjustment. They're still paying tariffs and
the US budget and every like Scott Bessent, the Treasury secretary,
keeps reminding him you actually need the tariff revenue because
of the huge deficit that the US because.
S3 (09:37):
He keeps.
S2 (09:38):
Cutting taxes. So it's like the whole argument that, oh,
you'll get a country like whoever whichever political leader turns
up in Washington says get an exclusion on tariffs. Trump
cannot do that without absolutely crushing even further a terrible
budget situation.
S1 (09:55):
So just really quickly, Shane, and this is probably a
much bigger conversation. But, you know, we heard so much
panic mongering amongst people like yourself, economists about the tariffs
and that they were going to crash the US economy
and they were going to push up inflation. And, you know,
people were even worried about a sort of global recession
in some cases. What has been the impact of the
tariffs so far that we can see.
S2 (10:15):
It's pushing up inflation. It's starting to slow the American economy. Yeah.
If it wasn't for the AI data build out that's
occurring across the United States. The US would be in
recession right now. And and Trump is causing that. The
thing that hasn't happened and most and every economist is going,
thank God, is that there hasn't been the retribution from
(10:37):
everybody else. Yeah. That's that's what it all swung on.
Because at this point Trump is causing pain to his
own economy and to his own residence. And you can
see that as much as like we hear about how
successful Trump is, he is so underwater in the American polls.
All of the opinion polls, because of the cost of
(10:57):
living pressures that are going on, and because you can
see the softness in the jobs market and you can
see businesses are just they did bought a lot of
pre tariff products into the US. And they're now having
to start pass on that increase in prices.
S1 (11:15):
So there's a lag effect. But it's only going to
kind of there's the momentum on the inflation front is
only going to build on the US economy. I just
want to switch now. Obviously we Albanese will be talking
also about Aukus just very quickly, because you did have
this interesting interview with Richard Marles that was published this week,
where he talked about how vice President JD Vance is
actually sort of like the Trump whisperer or the guy
(11:37):
that Marles really wanted to build a connection with in
order to sort of have an end to the Trump administration.
Tell us about what Miles said.
S3 (11:46):
Yeah. Well, there was this. Much discussed trip that Miles did.
He was a bit secretive. He went without giving the
Australian media much notice in August, and it was a
key part of the focus from the Australian media was
whether he would get this formal meeting with Pete Hegseth,
his defense counterpart. He's met Pete Hegseth a number of
times before, but Miles opened up in an interview with
(12:09):
me last week on the on the real purpose of
that trip. And the the key thing he was seeking
to do was to build a political deputy to deputy
relationship with JD Vance. JD Vance is doing a lot
of one to ones with foreign leaders, Keir Starmer and others.
He's been seen as a kind of intellectual thought leader
of the MAGA foreign policy, clearly a very influential figure
(12:29):
close to Trump. Many people think he'll succeed Trump. And
so Miles said that that's a key relationship for the
government to effectively build trust, to emphasize the points of
Shared values, shared language, shared strategy in the Indo-Pacific with Vance,
and to use that as a way to pave the
way for Albanese to meet Trump this month. Yeah. Marles
(12:50):
as you said, Jack Aukus will be key to the
meeting as well. Uh, the Pentagon still reviewing it. Marles
said that he received only positive feedback from Marco Rubio,
JD Vance, Pete Hegseth, uh, and Stephen Miller, Trump's influential
deputy chief of staff during that one and two days
of meetings, which was really, um, to give Marles credit,
(13:10):
this government has copped a lot of flack for their
relationship with the Trump administration. Some of it justified, some
of it not. But to meet those four guys within
the space of I think it was really one day
is a pretty impressive swing through Washington.
S1 (13:22):
Just coming back to the domestic front. Obviously the Prime
Minister's in such a powerful position at the moment. He's
you know, he's flying high in the polls. He's had
all these sort of foreign policy successes. He's almost sort
of like floating above domestic politics in a way at
the moment, but we did see this week that there
was the back down on the super changes. And I
know we've already canvassed in other podcasts, like the sort
(13:43):
of ins and outs of the actual changes themselves. It
was basically an abandonment of these reforms, or a partial
abandonment of these reforms that they were hoping to get
more tax from high super earners. I want to talk
about the politics of it, because it was reported that,
as Paul said, that Chalmers got his pants pulled down
by the PM, the PM basically overruled him and said, look,
(14:04):
you've got to you got to get rid of this.
Shane what happened?
S2 (14:08):
Yeah. And ultimately, this is how past relationships between treasurers
and prime ministers work. Um hawke-keating Howard Costello, hockey and Abbott,
which a lot of people tend to forget, uh, what
went on there? There's always a tension. Yeah. Um, and
in this case, Albanese has effectively said come up with
(14:29):
something different. Yeah. And that's what he's done. The ultimate
end game is that the tax on high end Superannuants
is going up by not an inconsequential amount, but nowhere
near by as much.
S1 (14:43):
And it leaves. It leaves Jim Chalmers with a problem,
because now he's got a hole in the budget where,
you know, the projections of what they were going to
save with those costings has sort of gone.
S3 (14:52):
And it's really one of their only savings measures.
S1 (14:55):
Yeah. Yeah.
S2 (14:56):
I wouldn't call it savings measure. This was a revenue.
This was increasing tax.
S3 (14:59):
Revenue measure to actually bring in cash.
S2 (15:00):
Yeah. So this this I think rule of thumb rather
than say 40 billion, which is we actually have some
idea because the Liberal Party went to the last election
saying we're going to repeal this tax. So there was
an analysis done by the Parliamentary Budget Office which said
the cost of repealing that tax, the original tax proposal
(15:22):
was 43, 44 billion over the next ten years. Nothing
to sneeze at. Um, the cost of that was much
larger for the coalition because they were going to blow up.
The whole thing was going to be extra government debt
as well. So the total cost was 750. Bill. Coming
back to where Chalmers has ended up the change to indexation.
By indexing these thresholds, he has changed remarkably how much
(15:46):
they're going to earn. I'm thinking at about half.
S1 (15:49):
Of.
S2 (15:49):
That.
S1 (15:49):
But they haven't given us any official costings on, like
we were going to. We were saying back then that
we were going to, you know, save all this money,
but now it's actually only going to be this tiny
amount of money.
S2 (15:59):
Well, I mean, you say 43 billion is a lot
and 20 billion is nothing like I don't know where
you shop, Jack, but more than.
S3 (16:07):
Half.
S2 (16:07):
I'm getting I'm getting worried, Jack. Jack, about your spending proclivities.
S1 (16:12):
I know, I know. I mean, yeah, um, so am I.
I guess what I'm saying is, what I'm trying to
get at is that they had this economic round table
which was obviously pushed by Jim Chalmers. They were like,
you know, we're really interested in tax reform. We're open
to it. Um, it's on the table. But they're not
really are they?
S2 (16:29):
No, there are there are other things coming.
S1 (16:32):
What? There are.
S2 (16:33):
Well? What's coming? I'm not going to give it all away.
S1 (16:36):
Right now on this podcast.
S2 (16:37):
I think you will see the next budget. There'll be more.
There'll be more changes. Okay. Like. Right. Everyone's forgotten what
actually went on during those three days. And we focus
on tax. Yeah. But say for instance, this week, a
big shift which the reserve Bank has been banging on
about is the lack of competition in the country. Yes.
The government's competition reforms in that space actually took another
(17:00):
step forward this week.
S3 (17:01):
Epbc act is.
S2 (17:02):
Epbc. There are those things like ultimately they are good
for the economy and for the budget, but they are
not nearly as sexy as write a tax change.
S1 (17:12):
Yeah, Paul, treasurers and prime ministers have to work together.
Their success depends on each other. They're so interdependent. And
yet they do, you know, always traditionally have a rivalry.
Do we see any of that with Albanese and Chalmers?
I know they have a good working relationship. I would
not say. You couldn't say at the moment that they
have a rivalry with each other, but could there be
(17:32):
a rivalry in the future? They have very different interests,
don't they?
S3 (17:35):
Yeah, there. There's a big age gap between them as well.
Chalmers is from the Queensland right. Albanese is from the
labor left. They're institutionally different characters. I mean they're both
they are both. I think Phil Currie wrote this this week,
both kind of working class guys who love rugby league.
So there's some similarities there. But they're from different parts
of the party. They have fundamentally different interests. In terms
of Chalmers trying to build himself up to become the
(17:56):
prime minister and Albanese trying to retain this immense power
and this special position he has now with this big majority.
But it's not you mentioned earlier, Jack, and I'm not
not to quibble with your language, but it's not just
my view that he got rolled by the PM. He
just he just did. Yeah. Um, Chalmers has been defending
this policy for two years, not giving any room to
(18:18):
the criticism that taxing paper profits might set a bad
precedent for the government for it to be potentially, you know,
if a if a negative scare campaign is launched by
the Liberal Party to suggest that it would be used
on the family home or whatever else. He gave no
room to that theory. The Prime Minister, before the election,
we reported this yesterday, started to become concerned about the
prospects of a scare campaign. He decided not to make
(18:41):
any changes pre-election because Angus Taylor, who was widely criticised,
criticised as an incompetent shadow treasurer, didn't weaponize the issue.
Tim Wilson then got elected after the election. Tim Wilson,
the master of a big scare campaign against the labor
tax policy. He started banging the drum through the Australian
Financial Review and other newspapers. The Australian became interested through
their economics correspondent, who was just quite dogmatic about this policy.
(19:06):
And so the campaign unusually, very unusually, came to life
after the election. And so this raised up the fear
in the Prime Minister's mind again that he had pre-election
and around the time of the economic Roundtable, which was August,
which we spent a lot of time in here calling
Canberra's Coachella. The Prime Minister said to Chalmers, look, we're
not going forward with this proposal in its current form.
(19:27):
I'm not going to tell you how to suck eggs.
You need to own this, but it can't have these
components of unrealized gains and no indexation. Come up with
a new plan. That's my order. I was told the
Prime Minister barely even consulted his cabinet on this. He
made a call off his own judgment with some key lieutenants,
and Chalmers was forced to announce this on Albanese's first
(19:48):
day in the Pacific Islands on holiday. It was a
proverbial sandwich for the treasurer, and kind of leads to
questions about his authority around the cabinet table and his
ability to pursue reform. If this is, if he backs,
if he's been forced to back down on something that,
you know, many commentators, I think rightfully said was not
as big a deal as some of the critics made out.
(20:08):
Then what does that say about his ability to do
bigger things?
S1 (20:10):
Well, that's what I'm sort of interested in on an
interpersonal level, because it's a humiliating thing to be, to
have to back down publicly from this policy that you've
been touting and really backing for two years. How does
that feel for Chalmers? And does that not breed some
resentment towards the Prime Minister, who maybe could have let
him know a little bit sooner, perhaps, that, you know,
he was not in favor of this, you know, reasonable
(20:33):
sort of change in a lot of people's minds.
S3 (20:36):
Well, that's a good question. I can't read Chalmers mind.
I mean, he was pretty stony faced in that press
conference on Monday in the Blue Room. He's a master politician,
Jim Chalmers. He knows how these things work. I think
he did as good a job of possible as presenting
this new change as, um, good reform. And in some
ways it is good reform. What he did to the
top tax bracket and the low income measure to give
(20:57):
the green something the new policy is not. It will
have more fans than the old policy. So I think
he's found a good solution. But I think it Marginalises
Chalmers in the government, it enhances the idea that the
Prime Minister has ultimate control. To your point, earlier, Jack,
about how the special position the Prime Minister is in,
(21:17):
I don't know if I should say this, but I'll
say it anyway. The Prime Minister was walking out of
Question Time on Wednesday or Thursday last week, and there
was a small a small group of people in the corridors,
and he joked that the only thing his colleagues were
split on was whether he was going to serve 5
or 6 terms. He was absolutely joking. But it's just
it's a sign of where he's at. Chalmers. Chalmers has
been overshadowed by Tony. Tony Burke. At the moment, in
(21:39):
some ways. Right. Um, Mark Butler is growing.
S2 (21:42):
I want to wind you back there. Marginalising treasurers. Doesn't happen. Well.
S3 (21:46):
I'm not saying he's marginalised, but I just did.
S2 (21:49):
You just said this marginalizes the treasurer. I'm going to
pull you up because historically, the guy and they've all
been guys who holds the finances of the country is
impossible to marginalize because, remember, because you've got the Treasury.
The Treasury itself has so along with finance, they have
so much control of everybody else's, like the political.
S3 (22:13):
I just think it's happened here to some extent, to
some extent.
S2 (22:15):
But to some extent. But I don't think you can
go it's end of days but marginalising it because ultimately
the budget which is pivotal to how a government runs.
That's that's the that's the very good treasurer.
S3 (22:27):
Of the day. And he'll bounce back. But this is
a low moment.
S1 (22:30):
Yeah, yeah. Thanks, guys. That was a very interesting wild
roving chat. I really enjoyed it. See you very soon.
S2 (22:36):
It's always a pleasure to see you, Jack.
S1 (22:43):
Today's episode was produced by Kai Wong with technical assistance
from Debbie Harrington. Our executive producer is Tammy Mills. Tom
McKendrick is our head of audio. To listen to our
episodes as soon as they drop, follow Inside Politics on Apple,
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stay up to date with all the politics, news and exclusives,
visit The Age and The Sydney Morning Herald websites. To
(23:06):
support our journalism, subscribe to us by visiting The Age
or smh.com.au. Subscribe. I'm Jacqueline Maley. Thank you for listening.
From the newsrooms of the Sydney Morning Herald and The Age.
This is inside politics. I'm Jacqueline Maley, it's Friday, October 17th. Well,
they said he couldn't do it, but he's doing it
in a few days time. Prime Minister Anthony Albanese, fresh
from a week's holiday, will be flying to Washington to
meet President Trump. So today we're going to talk about
what he hopes to achieve there. And we're also going
(00:23):
to delve into what really went on between the PM
and his treasurer, Jim Chalmers, over the super reforms that
Jim Chalmers abandoned this week. Paul said the treasurer had
his pants pulled down by the PM, which is, you know,
an interesting phrasing, but is he right? As always, I'm
joined by chief political correspondent Paul Chuckle. And also our
special guest star, chief economics correspondent Shane Wright is joining us. Hi, guys.
S2 (00:48):
I'm still waiting for the music to come in for
my special guest appearance.
S1 (00:51):
I know, I know, I've got I keep forgetting to
push the button. I do want to do a shout
out to Shane Wright's t shirt, which, if you're listening
and not watching, it's a Kate Bush tribute, which is
which would fetch a lot of good money in a
vintage store. No offense.
S2 (01:08):
She's she's no vintage star. She's she's live and pumping
it all out.
S1 (01:13):
She is, she is.
S3 (01:14):
I didn't realize my my comments to you in private.
Jack will make it into your intro. So I've got
to be a bit careful now going forward.
S1 (01:21):
Oh, right. The pulling pants down thing. Should we. We can,
we can.
S3 (01:25):
No, no, I'm just joking. That's fine. I stand.
S1 (01:28):
By it. I thought it was very colorful phrasing. And
we'll get into what it really means later. Um, Paul,
when does the Prime Minister leave for Washington?
S3 (01:35):
He leaves on Sunday, I believe, in the afternoon. And
it's a quick trip because he just spent, I think,
nearly ten days in New York longer. Yeah. Well, it
was about 3 or 4 days in London, maybe ten
days in New York for the United Nations General Assembly, uh,
which was about a fortnight ago. Uh, so he's all, uh,
(01:56):
jet lagged out and keen to do some domestic politics
ahead of even more summits at the end of this
month at Asean and APEC. So it's a quick trip.
He'll be in Washington for two working days, I believe.
He meets with Trump on Tuesday at 2 a.m. Australian time.
So you've got to be pretty hardcore to stay up
that late or wake up at that time or feel
(02:17):
like a, you know, a Socceroos World Cup game when
just the diehards on Twitter are live tweeting through it? Yeah.
S2 (02:23):
And there could be an interesting scoreline though out of
this one. Yeah.
S3 (02:26):
You never reckon which which way will this be a
Fabio Grosso Italy versus Socceroos style national tragedy moment or
a or a conquest?
S2 (02:35):
This is one of the great questions and as as
I'm not going to express an opinion on the Socceroos
as I am not an expert in that field. But yes,
it could. This could go any way it could.
S1 (02:46):
I mean, and Paul Paul's got views on that too.
I know the PM, of course, copped a lot of
criticism from the media about the fact that he hadn't
gotten a meeting with the with Trump since his inauguration
in January, and that it was all too late. But
now he's got the meeting. What form will the meeting take?
Do we know?
S3 (03:02):
It's not a formal state visit. There'll be no big
state dinner. And it will not be full of that
kind of pomp. It's it's been called a working visit,
which will take the form of, you know, elbow walking
into the Oval Office, do a quick handshake photograph and
then a longer sit down meeting in the in the
Oval Office. There may be a huge pack of journalists
(03:22):
in there asking all kinds of questions, and it may
be a more rambunctious affair.
S1 (03:27):
Yeah, but the actual meeting itself obviously takes place in private.
And then they ask the journalists in. Yeah. So and
that could be a freewheeling press conference. That's sort of
where the fireworks happen, right, with, with a Trump press conference.
Because you never know what he's going to say. There's always,
I think, a little bit of tension, dramatic or otherwise,
on the part of the foreign leader who's visiting. And then,
of course, you've got the white House press corps, which
(03:48):
are by no means a conventional press corps anymore. So
what does he want to accomplish in this meeting? What
does he need to accomplish in this meeting. He's got
to really make make it work for him, right?
S3 (03:57):
Yeah, there's a lot of pressure going into it, although
I feel I mean, it's only a few days away
now and there's not a huge amount of media speculation
about it. I'm surprised at how long it's taken for
attention to turn to it. And I wonder if that's
because there's a bit of fatigue on on previewing this
potential meeting, because it was meant to occur at Canada,
at the G7 in whenever that was June, and then
(04:18):
it was meant to happen again at the United Nations
General Assembly. And so I wonder if people are just
a bit sick of forecasting what will occur.
S1 (04:25):
Tell us quickly what he needs to do there, because
he wrote about that this week.
S3 (04:28):
Well, Critical Minerals is turning into. I interviewed Richard Marles,
the defence and defence minister and deputy prime minister, last week,
and I said, how big a deal is this becoming
geopolitically for Australia as it crystallizes in the minds of
many Western leaders, but in particular Trump and his key allies,
that this is a core part of the contest with China.
So to explain to listeners, critical minerals are a whole
(04:49):
bunch of elements in the periodic table that are becoming
much more in demand because they're used in modern defense
technologies and really core to the green revolution for solar
panels and magnets and also semiconductors and many different new
modern age products. China has cornered this market for about
20 or 30 years, so they mine about 75% and
(05:09):
they produce about 90%. Yeah, they're not actually that rare.
There are many big deposits in the world, but they're
very expensive to mine. But Australia has a tremendous amount.
We effectively have the whole periodic table, but we've not
invested enough in it over time to actually bring them
out of the ground. The US now acknowledges that Australia
is arguably the most important place it can start supplying
(05:29):
critical minerals from. And so there's a huge push being
led by Kevin Rudd in Washington, who's been doing this
for the best part of two years to get US
and European investment to dig it out of Australia and
create a non-china supply chain. And Richard Marles, his argument
was that, you know, this is not some second tier
interest of Trump. This is a core interest of the
Trump administration brought to light last week when China started
(05:53):
again restricting these exports to the US, which has sparked
another bout in the trade war between China and the US.
S1 (06:00):
And Shane, our interests, our economic interests really align with
the US on this. I mean, we also need these
critical minerals and we are also reliant on China. If
China's got more or less a monopoly on at least
producing them because they're very dirty to produce and expensive,
as Paul said.
S2 (06:14):
Yeah. Um, I don't know if the economic interests are
aligned specifically with, uh, the US as also China. Remember,
China is still the big cash cow for this country
with iron ore. So the context is someone there are
two big competing forces for these these minerals. We can't
refine them and use them because we're too small a country.
(06:37):
We're too far away from the main sources, like some
of the stuff that ends up in semiconductors, which are
vital to the AI revolution. Like we are not going
to replicate Taiwan and become a great producer of semiconductors,
so ultimately we actually have a really strong position economically
with both powers because China, yes, China does have 75%,
(07:02):
but they don't have all of them. They're not as
easy to mine in parts of China as they are
in Australia. Like you get out into parts of Western Australia. Yep.
Pick it up, dig it out. Off you go. A
lot easier. So I find it really interesting that like
at that economic power play that's going on between China
and the US and how Central Australia is to both
(07:23):
of those nations.
S1 (07:25):
So we're almost like a sort of we're a pivot
point or we've got leverage on both sides.
S3 (07:29):
Yeah.
S2 (07:29):
Yeah.
S1 (07:30):
Paul I want to ask you about tariffs as well,
because that's another thing that Albanese will be perhaps delicately
raising in this meeting. What does he want to achieve
on tariffs.
S3 (07:39):
Well we're subject to the lowest baseline tariff of 10%.
No country has had that has been exempted from that.
S1 (07:46):
This is an across the board tariff.
S3 (07:48):
Across the board tariff, which in a relative sense, given
much of the world is at a higher baseline rate.
We are put at a competitive advantage because of that.
And the Productivity Commission has actually said that we might
benefit in the long run if other countries escalate and
do reciprocal tariffs. That hasn't quite happened yet to the
extent that we thought, but we're still yet to see
the consequences of what happens with China and the US,
(08:10):
which has been delayed, the consequences of that tariff war,
in part because the US backed away from Chinese tariffs,
because when China responded by blocking critical minerals, Ford and
other car manufacturers said, hey, can we not tariff them
because we actually need these things to build cars and
our economy will stop. So these things are all intertwined.
Don Farrell, every time he speaks, the trade minister says,
(08:31):
you know, we still want to get rid of that 10%
and we still want to get rid of that steel
and aluminium tariff. I think there's there's more that's more
of a talking point now than anything. I don't think
the government.
S1 (08:41):
Does that mean that Albanese just won't raise tariffs, or
will he sort of say, oh, mate, you know, what
do you want to think about that 10% and then
just drop it?
S3 (08:48):
I think he'll raise it because it has to be
part of the readout. The readout being what they tell
the Australian public he raised. We can't be seen to
have given up on it, but I don't think there's
any likelihood of dropping the 10%. There is a prospect,
if there in some broader critical minerals deal, which the
government is very quiet about, given the sensitivity that there's
a potential that we get some sort of carve out
(09:09):
in the steel and aluminium space, and maybe a deal
for to ensure that CSL, the drug manufacturer, doesn't get
caught up in the pharmaceutical tariffs. Keir Starmer got some
adjustments to auto tariffs and steel I believe, when he
did a deal with Trump.
S2 (09:24):
But he got an adjustment. They're still paying tariffs and
the US budget and every like Scott Bessent, the Treasury secretary,
keeps reminding him you actually need the tariff revenue because
of the huge deficit that the US because.
S3 (09:37):
He keeps.
S2 (09:38):
Cutting taxes. So it's like the whole argument that, oh,
you'll get a country like whoever whichever political leader turns
up in Washington says get an exclusion on tariffs. Trump
cannot do that without absolutely crushing even further a terrible
budget situation.
S1 (09:55):
So just really quickly, Shane, and this is probably a
much bigger conversation. But, you know, we heard so much
panic mongering amongst people like yourself, economists about the tariffs
and that they were going to crash the US economy
and they were going to push up inflation. And, you know,
people were even worried about a sort of global recession
in some cases. What has been the impact of the
tariffs so far that we can see.
S2 (10:15):
It's pushing up inflation. It's starting to slow the American economy. Yeah.
If it wasn't for the AI data build out that's
occurring across the United States. The US would be in
recession right now. And and Trump is causing that. The
thing that hasn't happened and most and every economist is going,
thank God, is that there hasn't been the retribution from
(10:37):
everybody else. Yeah. That's that's what it all swung on.
Because at this point Trump is causing pain to his
own economy and to his own residence. And you can
see that as much as like we hear about how
successful Trump is, he is so underwater in the American polls.
All of the opinion polls, because of the cost of
(10:57):
living pressures that are going on, and because you can
see the softness in the jobs market and you can
see businesses are just they did bought a lot of
pre tariff products into the US. And they're now having
to start pass on that increase in prices.
S1 (11:15):
So there's a lag effect. But it's only going to
kind of there's the momentum on the inflation front is
only going to build on the US economy. I just
want to switch now. Obviously we Albanese will be talking
also about Aukus just very quickly, because you did have
this interesting interview with Richard Marles that was published this week,
where he talked about how vice President JD Vance is
actually sort of like the Trump whisperer or the guy
(11:37):
that Marles really wanted to build a connection with in
order to sort of have an end to the Trump administration.
Tell us about what Miles said.
S3 (11:46):
Yeah. Well, there was this. Much discussed trip that Miles did.
He was a bit secretive. He went without giving the
Australian media much notice in August, and it was a
key part of the focus from the Australian media was
whether he would get this formal meeting with Pete Hegseth,
his defense counterpart. He's met Pete Hegseth a number of
times before, but Miles opened up in an interview with
(12:09):
me last week on the on the real purpose of
that trip. And the the key thing he was seeking
to do was to build a political deputy to deputy
relationship with JD Vance. JD Vance is doing a lot
of one to ones with foreign leaders, Keir Starmer and others.
He's been seen as a kind of intellectual thought leader
of the MAGA foreign policy, clearly a very influential figure
(12:29):
close to Trump. Many people think he'll succeed Trump. And
so Miles said that that's a key relationship for the
government to effectively build trust, to emphasize the points of
Shared values, shared language, shared strategy in the Indo-Pacific with Vance,
and to use that as a way to pave the
way for Albanese to meet Trump this month. Yeah. Marles
(12:50):
as you said, Jack Aukus will be key to the
meeting as well. Uh, the Pentagon still reviewing it. Marles
said that he received only positive feedback from Marco Rubio,
JD Vance, Pete Hegseth, uh, and Stephen Miller, Trump's influential
deputy chief of staff during that one and two days
of meetings, which was really, um, to give Marles credit,
(13:10):
this government has copped a lot of flack for their
relationship with the Trump administration. Some of it justified, some
of it not. But to meet those four guys within
the space of I think it was really one day
is a pretty impressive swing through Washington.
S1 (13:22):
Just coming back to the domestic front. Obviously the Prime
Minister's in such a powerful position at the moment. He's
you know, he's flying high in the polls. He's had
all these sort of foreign policy successes. He's almost sort
of like floating above domestic politics in a way at
the moment, but we did see this week that there
was the back down on the super changes. And I
know we've already canvassed in other podcasts, like the sort
(13:43):
of ins and outs of the actual changes themselves. It
was basically an abandonment of these reforms, or a partial
abandonment of these reforms that they were hoping to get
more tax from high super earners. I want to talk
about the politics of it, because it was reported that,
as Paul said, that Chalmers got his pants pulled down
by the PM, the PM basically overruled him and said, look,
(14:04):
you've got to you got to get rid of this.
Shane what happened?
S2 (14:08):
Yeah. And ultimately, this is how past relationships between treasurers
and prime ministers work. Um hawke-keating Howard Costello, hockey and Abbott,
which a lot of people tend to forget, uh, what
went on there? There's always a tension. Yeah. Um, and
in this case, Albanese has effectively said come up with
(14:29):
something different. Yeah. And that's what he's done. The ultimate
end game is that the tax on high end Superannuants
is going up by not an inconsequential amount, but nowhere
near by as much.
S1 (14:43):
And it leaves. It leaves Jim Chalmers with a problem,
because now he's got a hole in the budget where,
you know, the projections of what they were going to
save with those costings has sort of gone.
S3 (14:52):
And it's really one of their only savings measures.
S1 (14:55):
Yeah. Yeah.
S2 (14:56):
I wouldn't call it savings measure. This was a revenue.
This was increasing tax.
S3 (14:59):
Revenue measure to actually bring in cash.
S2 (15:00):
Yeah. So this this I think rule of thumb rather
than say 40 billion, which is we actually have some
idea because the Liberal Party went to the last election
saying we're going to repeal this tax. So there was
an analysis done by the Parliamentary Budget Office which said
the cost of repealing that tax, the original tax proposal
(15:22):
was 43, 44 billion over the next ten years. Nothing
to sneeze at. Um, the cost of that was much
larger for the coalition because they were going to blow up.
The whole thing was going to be extra government debt
as well. So the total cost was 750. Bill. Coming
back to where Chalmers has ended up the change to indexation.
By indexing these thresholds, he has changed remarkably how much
(15:46):
they're going to earn. I'm thinking at about half.
S1 (15:49):
Of.
S2 (15:49):
That.
S1 (15:49):
But they haven't given us any official costings on, like
we were going to. We were saying back then that
we were going to, you know, save all this money,
but now it's actually only going to be this tiny
amount of money.
S2 (15:59):
Well, I mean, you say 43 billion is a lot
and 20 billion is nothing like I don't know where
you shop, Jack, but more than.
S3 (16:07):
Half.
S2 (16:07):
I'm getting I'm getting worried, Jack. Jack, about your spending proclivities.
S1 (16:12):
I know, I know. I mean, yeah, um, so am I.
I guess what I'm saying is, what I'm trying to
get at is that they had this economic round table
which was obviously pushed by Jim Chalmers. They were like,
you know, we're really interested in tax reform. We're open
to it. Um, it's on the table. But they're not
really are they?
S2 (16:29):
No, there are there are other things coming.
S1 (16:32):
What? There are.
S2 (16:33):
Well? What's coming? I'm not going to give it all away.
S1 (16:36):
Right now on this podcast.
S2 (16:37):
I think you will see the next budget. There'll be more.
There'll be more changes. Okay. Like. Right. Everyone's forgotten what
actually went on during those three days. And we focus
on tax. Yeah. But say for instance, this week, a
big shift which the reserve Bank has been banging on
about is the lack of competition in the country. Yes.
The government's competition reforms in that space actually took another
(17:00):
step forward this week.
S3 (17:01):
Epbc act is.
S2 (17:02):
Epbc. There are those things like ultimately they are good
for the economy and for the budget, but they are
not nearly as sexy as write a tax change.
S1 (17:12):
Yeah, Paul, treasurers and prime ministers have to work together.
Their success depends on each other. They're so interdependent. And
yet they do, you know, always traditionally have a rivalry.
Do we see any of that with Albanese and Chalmers?
I know they have a good working relationship. I would
not say. You couldn't say at the moment that they
have a rivalry with each other, but could there be
(17:32):
a rivalry in the future? They have very different interests,
don't they?
S3 (17:35):
Yeah, there. There's a big age gap between them as well.
Chalmers is from the Queensland right. Albanese is from the
labor left. They're institutionally different characters. I mean they're both
they are both. I think Phil Currie wrote this this week,
both kind of working class guys who love rugby league.
So there's some similarities there. But they're from different parts
of the party. They have fundamentally different interests. In terms
of Chalmers trying to build himself up to become the
(17:56):
prime minister and Albanese trying to retain this immense power
and this special position he has now with this big majority.
But it's not you mentioned earlier, Jack, and I'm not
not to quibble with your language, but it's not just
my view that he got rolled by the PM. He
just he just did. Yeah. Um, Chalmers has been defending
this policy for two years, not giving any room to
(18:18):
the criticism that taxing paper profits might set a bad
precedent for the government for it to be potentially, you know,
if a if a negative scare campaign is launched by
the Liberal Party to suggest that it would be used
on the family home or whatever else. He gave no
room to that theory. The Prime Minister, before the election,
we reported this yesterday, started to become concerned about the
prospects of a scare campaign. He decided not to make
(18:41):
any changes pre-election because Angus Taylor, who was widely criticised,
criticised as an incompetent shadow treasurer, didn't weaponize the issue.
Tim Wilson then got elected after the election. Tim Wilson,
the master of a big scare campaign against the labor
tax policy. He started banging the drum through the Australian
Financial Review and other newspapers. The Australian became interested through
their economics correspondent, who was just quite dogmatic about this policy.
(19:06):
And so the campaign unusually, very unusually, came to life
after the election. And so this raised up the fear
in the Prime Minister's mind again that he had pre-election
and around the time of the economic Roundtable, which was August,
which we spent a lot of time in here calling
Canberra's Coachella. The Prime Minister said to Chalmers, look, we're
not going forward with this proposal in its current form.
(19:27):
I'm not going to tell you how to suck eggs.
You need to own this, but it can't have these
components of unrealized gains and no indexation. Come up with
a new plan. That's my order. I was told the
Prime Minister barely even consulted his cabinet on this. He
made a call off his own judgment with some key lieutenants,
and Chalmers was forced to announce this on Albanese's first
(19:48):
day in the Pacific Islands on holiday. It was a
proverbial sandwich for the treasurer, and kind of leads to
questions about his authority around the cabinet table and his
ability to pursue reform. If this is, if he backs,
if he's been forced to back down on something that,
you know, many commentators, I think rightfully said was not
as big a deal as some of the critics made out.
(20:08):
Then what does that say about his ability to do
bigger things?
S1 (20:10):
Well, that's what I'm sort of interested in on an
interpersonal level, because it's a humiliating thing to be, to
have to back down publicly from this policy that you've
been touting and really backing for two years. How does
that feel for Chalmers? And does that not breed some
resentment towards the Prime Minister, who maybe could have let
him know a little bit sooner, perhaps, that, you know,
he was not in favor of this, you know, reasonable
(20:33):
sort of change in a lot of people's minds.
S3 (20:36):
Well, that's a good question. I can't read Chalmers mind.
I mean, he was pretty stony faced in that press
conference on Monday in the Blue Room. He's a master politician,
Jim Chalmers. He knows how these things work. I think
he did as good a job of possible as presenting
this new change as, um, good reform. And in some
ways it is good reform. What he did to the
top tax bracket and the low income measure to give
(20:57):
the green something the new policy is not. It will
have more fans than the old policy. So I think
he's found a good solution. But I think it Marginalises
Chalmers in the government, it enhances the idea that the
Prime Minister has ultimate control. To your point, earlier, Jack,
about how the special position the Prime Minister is in,
(21:17):
I don't know if I should say this, but I'll
say it anyway. The Prime Minister was walking out of
Question Time on Wednesday or Thursday last week, and there
was a small a small group of people in the corridors,
and he joked that the only thing his colleagues were
split on was whether he was going to serve 5
or 6 terms. He was absolutely joking. But it's just
it's a sign of where he's at. Chalmers. Chalmers has
been overshadowed by Tony. Tony Burke. At the moment, in
(21:39):
some ways. Right. Um, Mark Butler is growing.
S2 (21:42):
I want to wind you back there. Marginalising treasurers. Doesn't happen. Well.
S3 (21:46):
I'm not saying he's marginalised, but I just did.
S2 (21:49):
You just said this marginalizes the treasurer. I'm going to
pull you up because historically, the guy and they've all
been guys who holds the finances of the country is
impossible to marginalize because, remember, because you've got the Treasury.
The Treasury itself has so along with finance, they have
so much control of everybody else's, like the political.
S3 (22:13):
I just think it's happened here to some extent, to
some extent.
S2 (22:15):
But to some extent. But I don't think you can
go it's end of days but marginalising it because ultimately
the budget which is pivotal to how a government runs.
That's that's the that's the very good treasurer.
S3 (22:27):
Of the day. And he'll bounce back. But this is
a low moment.
S1 (22:30):
Yeah, yeah. Thanks, guys. That was a very interesting wild
roving chat. I really enjoyed it. See you very soon.
S2 (22:36):
It's always a pleasure to see you, Jack.
S1 (22:43):
Today's episode was produced by Kai Wong with technical assistance
from Debbie Harrington. Our executive producer is Tammy Mills. Tom
McKendrick is our head of audio. To listen to our
episodes as soon as they drop, follow Inside Politics on Apple,
Spotify or anywhere else you listen to your podcasts. To
stay up to date with all the politics, news and exclusives,
visit The Age and The Sydney Morning Herald websites. To
(23:06):
support our journalism, subscribe to us by visiting The Age
or smh.com.au. Subscribe. I'm Jacqueline Maley. Thank you for listening.
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