Jim Chalmers:
This will be a really responsible Budget which takes seriously the inflation challenge in our economy, because we know that people are under pressure. Australians are already paying a very hefty price for this war in the Middle East and the decision taken by the independent Reserve Bank will make that harder, rather than easier.
The decision that the Reserve Bank took was not about government spending. It wasn’t a factor in the decision that they announced yesterday, it wasn’t a feature of the statement that the Reserve Bank Board released afterwards. And that’s because government spending and budgets are not the primary driver of this inflation that we’re seeing in our economy, first as a consequence of a quicker than expected recovery in the private economy, and then as a consequence of this war in the Middle East. But we intend to play a helpful role in the fight against inflation in this Budget, we’ll do that by saving more than we spend overall. We’ll do that by making sure that there are very, very substantial savings in this Budget as well.
The Governor was asked a hypothetical question about what the bank would think if the government injected heaps more fiscal stimulus into the economy. We don’t intend to do that. That was a hypothetical question based on some budget speculation. There won’t be a heap of additional stimulus pumped into the economy as a consequence of our budget. On the contrary, we will be winding back spending in a number of responsible ways. We’ve already made clear important steps like when it comes to making the NDIS sustainable, making the EV car discount more sustainable as well that there is an appetite in the government to manage this budget in the most responsible way that we can.
It will be one of the most responsible budgets that we’ve seen for a very long time, and that’s because we take this inflation challenge seriously. We know that people are under pressure. We know that budgets aren’t the reason for this spike in inflation that we’ve seen as a consequence of the war in the Middle East, but we intend to play a helpful role in the fight against inflation, and you’ll see that in the Budget on Tuesday night.
The other thing you’ll see in the Budget on Tuesday night is a very substantial fuel security package. Later today, the Prime Minister and Minister Bowen after National Cabinet will be telling you more about the fuel security package in the Budget. This fuel security package is all about more fuel for motorists and industry and more fuel security for the Australian economy, and that’s why it’s a really important part of the Budget that Katy Gallagher and I will hand down on Tuesday night.
It’s one of the major pieces that we’ve taken a little longer to put together, deeper into the budget season than usual, to make sure that we get it right. It builds on the very substantial and very successful work that the PM and Chris and other ministers have done, securing fuel on international markets and getting it where it needs to be, so that we can keep the country moving. So we’ve made good progress when it comes to fuel security, we’ve kept the country moving, but there’s more to do, and this will be one of the major emphases in the Budget that we hand down on Tuesday night, more fuel for motorists and for Australian industry, more fuel security for our economy more broadly, that’s our objective, and the PM and Chris will say a bit more about that later today, after national cabinet making our supply chains more resilient, making our reserves of fuel more secure, and also funding this fuel tax cut, which is helping to take some of the sting out of high petrol prices in communities right around Australia.
Happy to take a couple of questions.
Journalist:
We’ve heard some speculation, of course, about the income tax offset. I know you say some speculation is right and some is wrong. Is this right?
Chalmers:
You always get this kind of speculation in the lead up to budgets, particularly in the last few days, people will see the Budget in its entirety on Tuesday night. It’s important to remember that there’s always this speculation. Sometimes it’s right, sometimes it’s wrong. I’m not going to add to that speculation today. I will remind people that the government is already cutting income taxes and that our opponents said that they will repeal those income tax cuts.
So the government’s cut income taxes once already, we’ll cut them again in July, we’ll cut them again in July next year, there’ll be extra tax relief in the form of the instant tax deduction, there’s extra tax relief in the form of the fuel tax cut as well. And so this is a government which has been using the tax system to help people with the cost of living. We are already doing that and you’ll see when it comes to the fuel tax cut and the instant deduction, you’ll see that funded in the Budget on Tuesday.
Journalist:
Can you rule it out though?
Chalmers:
No treasurer 6 days out from the budget rules in or out every element of the budget that they hand down 6 days later, I think it’s only fair that people wait and see the details in the Budget on Tuesday night. We are already cutting taxes, and we are already making sure that we’re doing what we responsibly can to help with the cost of living.
There are the income tax cuts that you already know about, there’s the fuel tax cut, there’s the instant deduction, there’s everything we’re doing when it comes to urgent care clinics and cheaper medicines, a whole range of ways that we are trying to take some of the pressure off the cost of living in the most responsible way that we can. But people should expect that whatever happens in the Budget on Tuesday night is done in the context of a budget which will save more than it spends, a very, very responsible budget, because we take this inflation challenge seriously.
Journalist:
Do you regret that choice of words when you said that you build trust by tackling what’s in front of you in direct response to CGT and negative gearing? I.e. that you broke a promise?
Chalmers:
I stand by the comments that I made in that press conference earlier this week. My job is to make the right decisions for the right reasons and sometimes those decisions are hard decisions, and especially at a time when we’ve got inflation spiking because of a war in the Middle East. We’ve got more than the usual amount of global economic uncertainty. We are hostage, in lots of ways, to decisions taken in Washington D.C. and Tehran about when this war ends and then how long it takes to get the show back on the road in the global economy. And so I think Australians expect of us, and they expect me to make the right decisions for the right reasons, to factor in all of the different conditions, economic and fiscal and intergenerational, and do the best that we can.
I’m really confident that the Budget that we hand down on Tuesday night will strike the right balance. Helping where we can with the cost of living with this fuel tax cut, making sure that we’re winding back spending overall over the 4 year period so that we can respond to these inflationary pressures in our economy and take seriously our responsibility for our part in the fight against inflation.
Thanks very much.