Laura Jayes, Host: Welcome back. You're watching AM Agenda. We are talking cost of living this morning because we saw a spike in inflation yesterday. We just heard from Shane Oliver who's pointed to petrol prices, but also wages being a factor in all of that. So, joining me now is the Assistant Trade Minister, Tim Ayres. He joins me here at the desk.

Tim Ayres, Assistant Minister for Trade and Manufacturing: G’day Laura.

Laura Jayes: Good to see you.

Assistant Minister: Likewise.

Laura Jayes: I don't have much company in the studio very often. So, good to have you here. Wages, we're not in a wage price spiral, I'm not going to put that to you, but do you accept that wages going up across the board adds to inflation and therefore could add to interest rate rises?

Assistant Minister: Well, no, I don't accept that proposition. I'll watch carefully what Shane's had to say and what others have had to say about this issue. As I understand it, we've got a monthly move in inflation and those monthly figures are volatile. That does reflect particularly petrol prices, but energy prices more broadly, which is an issue around the world, wage increases that are persistently above productivity growth over a sustained period of time. Well, that's why we've got to make sure there's productivity growth in the system.

Laura Jayes: Is that happening?

Assistant Minister: No.

Laura Jayes: Because the Productivity Commissioner says it's pretty bad at the moment.

Assistant Minister: What we've got to look at – there are ten years of low wage growth, of a decoupling of profitability and wage growth for ordinary Australians. This government's unashamedly put its hand up, put our shoulder to the wheel, if I can mangle the metaphor completely, to put upward pressure on wages, that's a good thing. Australian families need to be able to catch up with rises and cost of living.

Laura Jayes: They’re never going to catch up if you see inflation go up. That's the point. What’s the biggest driver of productivity from your government?

Assistant Minister: That's why we've got to put downward pressure on inflation and upward pressure on wages to get real growth, real growth in wages over time. If we hadn't seen the wage rises that we've seen in the system over the course of the last twelve months, Australian families would be even further behind.

Laura Jayes: Sure. What are you doing for productivity though? Give me one thing.

Assistant Minister: So, number one thing actually getting unions and employers and the institutions in the Australian economy working together rather than trying to divide and to promote conflict.

Laura Jayes: That’s not happening at the moment, I just watched these barneys for months in NSW.

Assistant Minister: This is collective bargaining. That is part of a democratic system.

Laura Jayes: But I’m asking about productivity to be fair.  

Assistant Minister: You can't decouple these issues. A constructive, effective bargaining system-

Laura Jayes: Are you really telling me unions are the number one thing that's driving productivity? I don't think so.

Assistant Minister: Well, good collective bargaining where unions and employers engage constructively over those issues absolutely drives productivity. Well, there's always been that disagreement, but you look at the international evidence where there's strong effective collective bargaining regimes, that is, where you have the highest productivity, the highest wages, the highest levels of employment, lowest levels of unemployment, highest levels of workplace satisfaction and good jobs. Good collective bargaining drives those outcomes. And in Australia, we've had a pretty reductive debate over the course of the last 20 or 30 years about these issues. Actually getting the institutions together the way the government did in the Jobs and Skills Summit, the Employment White Paper, driving good outcomes. That's how we lift productivity in the economy.

Laura Jayes:  Well, 1.2 million homes, the next five years. If you don't lift productivity, that is simply just not going to happen. Do you accept that?

Assistant Minister: All of these issues are linked, driving productivity through the building sector, which is about doing the smart things, like doing what the government did a couple of weeks ago to lift the performance of the states and territories. And you can see the states and territories responding. Chris Minns here in NSW talking about getting the planning regime right, encouraging more development, making sure that there's a bias towards building homes. These are responding to the Federal Government's agenda in the housing sector, that's a good thing.

Laura Jayes: But can I put to you as well that you do have a lot of NIMBYs within the Labor Party at the moment. You have rejections from the Member for Coogee in NSW for apartments to be built above the Coogee Bay Hotel. Mike Freelander doesn't want – Royal Commission into planning after there was an approval in Appin, and there are more examples of that. That's a problem.

Assistant Minister: Are there?

Laura Jayes: Yeah.

Assistant Minister: Well, I’m not sure. There is always going to be a local dynamic about housing-

Laura Jayes: I've got a list for you. I didn’t have it on hand but I can get it for you if you like.

Assistant Minister: There's always going to be that local dynamic. But what is the bias here? We have to build, as you say, meet those targets in terms of new homes. We have a housing challenges out there in the housing sector. The government's got on and delivered Housing Affordability Future Fund, a broad sweep of housing reforms. We don't pretend that there aren't future challenges in delivering on those targets. That is going to require the states and territories and the Commonwealth working together. Not finger pointing, but working together. Local government playing its role, unions and employer associations, firms and workers, all working together to achieve those objectives. That's the only way, as Australians, we're going to get there.

Laura Jayes: Okay, I'll get that NIMBY list for you. I'll send it to your office.

Assistant Minister: Okay.

Laura Jayes: Tim Ayres. Thanks so much for your time.

Assistant Minister: Good on you Laura.

Laura Jayes: Appreciate it.

ENDS.