JIM CHALMERS:
On Wednesday Katy Gallagher and I will be releasing the mid‑year budget update. Responsible economic management has been a defining feature of the Albanese Labor government, and it will be the defining feature of the mid‑year budget update as well.
Since we’ve come to office we’ve delivered the first back‑to‑back surpluses in almost 2 decades, and we’ve got the amount of debt that we inherited from the Coalition down, and that means we’re paying less interest on that debt.
What we’ve seen since we came to office is actually the biggest nominal turnaround in a budget in a positive sense in history. The biggest nominal positive turnaround in a budget in history has been delivered by this Albanese Labor government, 2 surpluses and much less debt, which means much less interest on that debt. What we’ll be able to do on Wednesday is to show the very substantial progress that has been made since we came to office about 2 and a half years ago.
But there are also substantial pressures on the budget which need to be accounted for in the mid‑year budget update: a slowing growth, a write‑down in mining exports as well as a write‑down in company taxes, that will be accounted for in the mid‑year budget update.
We also have a number of spending pressures in areas that are very important to us, which are putting substantial pressure on the budget, and which will be accounted for on Wednesday when we hand down the mid‑year budget update.
There is additional spending for veterans, for Medicare, for early childhood education, for natural disasters, and in other areas as well, and a combination of these things, slowing growth, a write‑down in mining exports, a write‑down in company taxes, combined with upward pressure on spending in these important areas means that there will be some slippage in some of the bottom lines over the forward estimates even as we work very hard to get the bottom line in the current year into slightly better nick. You will see that in the mid‑year budget update.
Another $1.8 billion for veterans is a very important way that we demonstrate our support for people who have served our country in uniform. This is one of the very big estimates variations in the budget. It’s not the only one. There are a handful of very big estimates variations, veterans, disaster funding, early childhood education, Medicare and some others as well, and they are putting pressure on the budget, they need to be accounted for.
We’re proud to be providing this extra support for veterans. When we came to office there was a shameful backlog of veterans’ claims and we’ve been working through that. In the last budget, we spent an extra $6.5 billion because we’d been processing these claims more quickly, and in this mid‑year budget update there will be another $1.8 billion for veterans.
This is all about providing Australians veterans with the help that they need and deserve after they had been stuffed around for too long under the Morrison government.
There will be pressure on the budget, but this spending is very, very important. It’s all about getting veterans the help that they need and deserve, and we will account for that in the usual way in the budget update on Wednesday.
It’s going to be a really big week for the economy. I’ll also be announcing the new members of the 2 new Reserve Bank boards this week, ideally tomorrow, but certainly in the next couple of days.
The appointments that I make to the independent Reserve Bank boards will be first‑rate, first‑class people with lots of the relevant skills and experience to make sure that they do a great job in this very important economic institution.
One of, if not the most important recommendation of the independent review of our central bank, was to split out the governance function from the monetary policy decision making, and that’s what the legislation which passed the Senate in the last couple of weeks now allows us to do. There will be 2 new boards, a Monetary Policy Board and a Governance Board.
Nobody will be sacked from the existing board. What will happen is people will serve on the board of their choosing. Existing members will serve on the board of their choosing, and we will have these new boards up and running, not before the next meeting of Reserve Bank in February but from around the 1st of March, as we’ve said publicly on a number of occasions.
These appointments are the product of a very robust process involving the Reserve Bank Governor, the Treasury Secretary and an independent third party. They have provided a lot of advice to us. I have now consulted my Cabinet colleagues. I have consulted the Shadow Treasurer now on multiple occasions, going all the way back to July and as recently as Friday.
I don’t propose to go into the detail of those conversations. I treat those conversations with respect, as does he, I believe, but we’ve taken a number of opportunities to consult with the Shadow Treasurer and the Opposition, also with Cabinet colleagues.
These appointments are first‑class and first‑rate, and people will see that when we announce them, ideally tomorrow, certainly in the next couple of days, as part of a very, very big week for the economy.
The last set of issues I wanted to touch on briefly go to the Opposition’s nuclear announcements on Friday. This wasn’t modelling that was released, it was a meltdown. It was a total shambles from beginning to end, what we saw from Peter Dutton and Angus Taylor last week.
What we saw was slapstick comedy at its worst, but with very serious consequences for electricity bills that people would be forced to pay under their proposal.
Theirs is a recipe for a smaller economy, growing more slowly with less energy at higher prices.
This is the absolute economic insanity of Peter Dutton’s nuclear fantasy.
Peter Dutton’s nuclear fantasy will vandalise our economy, and we know that from the numbers that were released last week, and the numbers we’ve seen from experts, including the CSIRO.
If you just take one of their assumptions around growth in the economy: what they are assuming is that the Australian economy is around $294 billion smaller by 2050, and what that means between now and then, the cumulative impact of that for Australians who rely on the national electricity market is something like $4 trillion in lost output.
Theirs is a recipe for lower growth, a smaller economy, less energy, something like 44 per cent less energy, they’ve assumed, and it will push power prices up.
This will be the contest at the next election. We know that Peter Dutton is a risk to the economy and to household budgets, because we know his record. He came after Medicare when he was last in government, they come after wages whenever they can, and now they’ll be pushing power prices up as well.
And here the contrast couldn’t be clearer. Our plan is investable, it is affordable, and it is all about the cheapest new sources of energy which are renewable energy, firmed by gas, relying on storage and hydro, all of the things that sensible investors and energy market experts and economists have been talking about. Behind closed doors, the investors, the big investors in this country laugh about what Peter Dutton and Angus Taylor are proposing.
Remember the Opposition not that long ago were talking about how we shouldn’t have off‑budget funds, and they talked about $45 billion in off‑budget funds. What they’re proposing here is an off‑budget fund which is multiples of what they’ve been rallying against, and these are some of the unanswered questions from the shambles which was Friday’s press conference about the Opposition’s nuclear costings.
How big will the off‑budget fund be, and how will it be set up, and what will it cost taxpayers?
Secondly, what will their plan mean for power prices?
Why do they think they can build nuclear reactors at a fraction of the cost that experts, including the CSIRO, have been talking about?
What will it mean, all of this uncertainty in their proposal, what will that mean for the cost of renewables?
These are the unanswered questions from the Opposition, and the press conference, the shambolic, slapstick press conference given by our political opponents last week raised more questions than it answered.
What we’ve been doing in the Albanese Labor government is rolling out a plan for cleaner and cheaper energy and getting more capital flowing in this area, which is a huge national advantage for us.
Nobody has our combination of economic advantages and opportunities when it comes to the global net zero transformation. We intend to make the most of it, and it’s part of our broader plan. We’re making welcome and encouraging progress in the economy even as we acknowledge that people are doing it tough.
We have got a situation in our economy where the economy is growing, inflation is coming down, unemployment is falling, a million new jobs have been created, the gender pay gap is narrowing, we’ve got tax cuts going to every taxpayer, energy bill relief going to every household, we’ve delivered 2 surpluses, and that means much less debt and much less debt interest.
When we came to office people were going backwards very substantially, real wages were falling and living standards were falling. We’ve worked very hard to turn that around.
We are making welcome and encouraging progress, but we know that people are still under pressure. We know that people still have ground to make up in their household budgets. That’s why the response to the cost‑of‑living pressure is such an important part of our economic plan, as is the energy transformation.
Our plan is out there for all to see, it is considered. The Opposition’s plan will push power prices up at the same time as they come after Medicare and come after wages.
Happy to take a couple of questions.
JOURNALIST:
Treasurer, power prices haven’t come down under your government [inaudible].
CHALMERS:
In the latest inflation figures, power prices came down almost 36 per cent in the most recent inflation figures, and that is partly about our energy bill rebates, but not completely about our energy bill rebates.
The most recent inflation data from the Australian Bureau of Stats shows that energy prices have come off almost 36 per cent.
Don’t forget Peter Dutton opposed our energy bill relief, and so if he had his way, energy bills would be $300 more expensive, because he opposed our energy bill relief. We see that as an important way to take some of the edge off these cost‑of‑living pressures that people are feeling, and that’s why we’re providing the help in the way that we are, but it doesn’t explain the whole moderation in electricity prices that we saw in the most recent inflation data.
JOURNALIST:
Did your government’s failure to cut power prices by $275 as promised open the door for people to consider other options like nuclear?
CHALMERS:
First of all, the figure you’re referring to is from 2021 modelling referring to a 2025 outcome, and we’re in 2024. The most recent inflation data showed that our electricity price has come off almost 36 per cent and electricity prices will be $300 higher if Peter Dutton had his way when he opposed those energy bill rebates.
JOURNALIST:
Do you think voters would be more trusting of your criticisms of the Coalition’s nuclear policy if you were transparent with your own figures, including on future emissions targets?
CHALMERS:
We’ve got emissions targets, and we’re working very hard to meet them, and the only risk to getting emissions down is Peter Dutton who said he might not have any targets at all.
We’ve got a 2030 target. It requires us to hit around 82 per cent of renewable energy. We’re working very hard to do that as part of our plan to get to net zero by 2050.
We’ve been upfront about our 2030 target, we’re working very hard to achieve it. The only risk to it is the return of a Coalition government which doesn’t believe in cleaner and cheaper energy, and we know that because of that shambolic press conference they did on Friday.
JOURNALIST:
You seem pretty confident voters will oppose the Coalition’s nuclear policy. If voters actually did support it, would Labor agree to drop the nuclear moratorium?
CHALMERS:
It’s more likely that Peter Dutton drops it, and that’s because we know his form. Every time he tries to come up with a detailed policy it falls into a heap. He announced that he was going to bring back the Stage 3 tax cuts, and then he walked away from that in a humiliating fashion. He announced he was going to have a target for net overseas migration, and he had to walk away from that in a humiliating fashion.
What we saw on Friday from the Opposition was so shambolic, so laughable, that it just will not hang together, and sensible people, energy market experts, economists, investors and others know that what they’re proposing is a complete and utter joke.
What he’s proposing would take longer, cost more, push up energy prices, it’s based on assumptions of a much smaller economy and less economic growth, and it would turn our back on Australia’s combination of economic opportunities and advantages.
It’s economic madness, it’s economic insanity what Peter Dutton is proposing, and as we saw on Friday it didn’t survive 5 minutes of serious scrutiny.
JOURNALIST:
Are you worried it’s going to give it a traction though, the whole nuclear argument?
CHALMERS:
No.
JOURNALIST:
Housing. Your Housing Minister does not support house prices falling. Should young people accept it will always cost them much more to own their own home than what their parents have [inaudible].
CHALMERS:
I’m not sure that’s a perfectly accurate description of what my colleague was saying. The point that Clare was making, and the point that I’m happy to make again is, we’ve got a very broad, very ambitious policy on housing, $32 billion of investment, a lot of different ways that we’re coming at this challenge.
But the common denominator is we’re trying to build more homes. We know how hard it is to find a home to buy or to rent. We’ve got the Commonwealth Rent Assistance on the renting side, we’ve got the Build to Rent that passed the Parliament in the last couple of weeks.
All of this is about building more homes so that people can find a more affordable place to rent or to buy. That’s the focus of our policy, and that’s the point that Clare O’Neil has been making, not just that day but on every occasion.
JOURNALIST:
Treasurer, do you think you’ve done enough to win the next election?
CHALMERS:
We don’t take any outcome for granted when it comes to the next election next year. We know that people are doing it tough, and that’s why cost of living is the primary focus of the government, and we know that we’ve got to continue to work hard.
But the choice at the next election is between an Albanese Labor government managing the economy responsibly, getting inflation down, getting wages up, creating jobs, providing cost‑of‑living help and getting the budget in much better nick than what we inherited from our predecessors versus the economic insanity of Peter Dutton and Angus Taylor who came after Medicare last time they were in office, they come after wages whenever they can, and who will push up energy prices if they get the opportunity.
That’s an important choice that people will be able to make at the next election, and we take no outcome for granted, but I look forward to the contest, and what we saw on Friday is that they still don’t have proper costings. They still don’t tell us how much this is all going to cost or how they’re going to budget for it, but every time that they are under pressure to put out coherent, costed, credible economic policies, they fail.
We’ve shown a willingness and an ability to manage the economy in a responsible way. They’ve shown a complete inability to come up with responsible and sensible economic policy, and that’s why the economy will be a key battleground in the next election.
Thanks very much.