ANDREW CLENNELL:
Joining me live from Logan is Treasurer Jim Chalmers. Jim Chalmers, thanks for your time. Let’s start on this nuclear power policy of Peter Dutton’s. What do you make of it?
JIM CHALMERS:
His numbers are wrong, and his assumptions are dodgy, and every Australian will pay a hefty price for what he is proposing.
What we saw on Friday from Peter Dutton and his colleagues was a total shambles from beginning to end. It wasn’t modelling, it was a meltdown, and it was real slapstick stuff, but unfortunately would have very seriously bad consequences for power bills.
What we saw from the Opposition was a recipe for lower growth, a smaller economy, less energy and higher prices, and it raised more questions than it answered, and there are a lot of unanswered questions still for Peter Dutton and Angus Taylor to come clean on.
CLENNELL:
The Coalition’s figure talks about the government’s renewable energy transformation plan costing $595 billion between 2025 and 2051. Is that estimate roughly accurate?
CHALMERS:
No, it’s ridiculous. If you look at the AEMO number that you quoted rightly in your introduction, they put the number around $122 billion, but our plans have been out there for some time, people know where we’re coming from.
As I said before, what happened on Friday with this nuclear meltdown from Peter Dutton and Angus Taylor was it did genuinely raise more questions than answers. For example, how big will the off‑budget funds be, and how will it be set up? How will they get more energy with less transmission? How do they possibly think that they can build these reactors for around $19 billion when international experience and the CSIRO says it will be multiples of that, perhaps 5 or 8 times more than that to build these? What does it mean for power prices? I’ll tell you what it means, it means higher energy prices.
As I said before, what the Opposition is proposing is a recipe for a smaller economy and less growth, less energy and higher prices, and if you unpack the growth assumptions in what they are proposing, and these are I think new numbers, I’m not sure that they’re out in the public domain yet, but if you look at the consequences of the lower growth that they’re talking about, it means something like an economy $294 billion smaller by 2050, and if you think about that in terms of the lost output between now and then for people who rely on the National Energy Market, it’s about $4 trillion.
You can see that Peter Dutton and the Coalition are the biggest risk to our economy and to household budgets – they come after Medicare, they come after wages, they push power prices up, and they’ve now partly fessed up to the fact that their plan means less energy and less growth in our economy.
That’s what makes it such a diabolical option for Australia. Their costings are a complete shambles, and we saw that on Friday.
CLENNELL:
We see there are capital costs, when I delved into it, it just revealed that building the nuclear power plants is around $140 billion, and I was told by someone in the Opposition yesterday it’s more like $120 billion. It’s a federal government cost. What do you make of that? And in terms of Labor’s plan, how much of that $122 billion, which I have to say is a lot different to $595 billion, I can’t understand the discrepancy, how much of that is federal and state government funded and how much private sector funded?
CHALMERS:
That’s the big difference between the 2 options that have been provided. Ours is an investable plan, ours relies heavily on the private sector.
I convene the biggest investors in this country on a pretty regular basis and behind closed doors they absolutely laugh at Peter Dutton’s nuclear fantasy, because it’s economic insanity.
Our plan is investable, it’s about the cheapest sources of new energy, which are renewable, and it’s about making sure that we take advantage of the combination of advantages and opportunities that we have here in Australia.
You would recall, Andrew, that our political opponents railed against $45 billion in off‑budget funds. They talked about how hairy‑chested they would be about abolishing them and how off‑budget funds are supposed to be so evil.
What they’re proposing here is a massive off‑budget fund, multiples of what is already in the system, and that’s another one of the unanswered questions from Friday. How big will these off‑budget funds be? How much will taxpayers be on the hook for that? How will they set up those funds?
These are big off‑budget funds. They’ve railed against them in the past. They need to explain why they’ve had this change of heart.
CLENNELL:
But there’s a vulnerability here for you, isn’t there, in that, we’ve seen this footage many times of you getting up saying, ‘Our modelling says power bills will reduce by 275 bucks by 2025’. And that just patently hasn’t happened. They’ve gone in the other direction.
The only way you’ve been able to get them down is direct government subsidy, Treasurer. So they have a weakness to work with there on the government argument, don’t they, around the cost of power?
CHALMERS:
Of course they don’t and I’m glad you asked me about it. Part of my answer is in your question. The 275 was a modelled outcome in 2021 that referred to an outcome in 2025, and it’s 2024.
If you look at the most recent inflation data, electricity prices came off 36 per cent in the most recent inflation data, and –
CLENNELL:
Because of your subsidies.
CHALMERS:
– not all of that was the energy rebate, not all of it was because of the energy rebate.
CLENNELL:
Well, what about – was it also –
CHALMERS:
– and that’s clear from the ABS data.
CLENNELL:
– because of the caps? Was it also because of the price caps you put into the system?
CHALMERS:
It was also because of the changes in the market itself. It was a combination of those things. A big part of it was the energy bill rebates. Don’t forget Peter Dutton and Angus Taylor, when they had a chance to vote for them the first time, they voted against it, they didn’t support it the second time either.
If the Coalition had their way, power prices would be $300 more expensive because they didn’t support the energy bill rebates which are helping people take some of the sting out of these power prices –
CLENNELL:
Yeah, but Treasurer, you’re not –
CHALMERS:
– in their household budgets which are already under pressure.
CLENNELL:
You’re not seriously saying you’ve come close, apart from your subsidies, to this 275 promise, are you?
CHALMERS:
What I’m telling you is that the CPI, not an opinion, a fact, the inflation data said they’ve come down almost 36 per cent, and not all of it is energy rebates. That is just a fact, and it’s an inconvenient fact for the Opposition, particularly when you remember that they voted against helping people getting their bills down $300.
CLENNELL:
All right.
CHALMERS:
They don’t have a leg to stand on when it comes to energy prices, and the plan that they half announced on Friday would push energy prices up, not down.
CLENNELL:
I’ve got to move on obviously to the MYEFO this week. But just another brief one on this one if I can. How hard will you attack this policy during the campaign bearing in mind the popularity of having some nuclear power in Australia has increased in recent polls? Do you see this election now as a referendum on nuclear power, for example?
CHALMERS:
I do. This will be a big feature of the election campaign, because what’s being proposed here is economic insanity.
It will vandalise our economy. It will push living standards and growth down. It will produce less energy and it will push energy prices up.
This will be one of the choices that people face when they go into the ballot box next year between Labor’s plan for a future powered by renewables and firmed by gas, relying on storage and hydro, versus this economic insanity and slapstick comedy with serious consequences for upward pressure on bills which has been presented by Peter Dutton and Angus Taylor.
CLENNELL:
All right. So you’ve got MYEFO, that mid‑year economic statement out this week. What day will you be delivering it, and we’ve already had some veterans’ figures, you’re paying extra to veterans, 1.8 billion out today. I understand there’s some other new policy announcements in there. Can you give us a hint on that?
CHALMERS:
Katy Gallagher and I will be producing the mid‑year Budget update on Wednesday. Responsible economic management has been a defining feature of the Albanese Labor government, and it will be a defining feature of the mid‑year Budget update as well.
What it will show is after those big surpluses that we delivered in our first 2 years, the overall picture since we came to office has been the biggest turnaround, the biggest positive turnaround in a budget in a single parliamentary term in history.
It means much less debt than we inherited from the Liberals and Nationals when we came to office, but there will be substantial pressures on the budget, there will be some slippage in some years, not in every year, even as we work to tighten the budget in the year that we’re in now. Some of those pressures are slowing growth, a write down in mining exports and company taxes, they’ll be some of the pressures.
There will also be a number of variations in spending, including the veterans’ one, which I’ll come back to in a moment, but not just veterans, natural disasters, Medicare, early childhood education and the like. There are a handful of quite big pressures that we’ve had to account for, and that means some slippage in some years in the mid‑year Budget update.
When it comes to veterans, what we’ve shown is a willingness to do the right thing by people who have served, a big write‑up of $6.5 billion in the last Budget, another $1.8 billion on this occasion. That’s because we’re working through the backlog that we inherited from the Coalition, getting veterans the help that they need and deserve, but it does come with another $1.8 billion price tag, and that will be one of the very substantial pressures in the mid‑year Budget update, one of a handful of quite significant pressures that we’ve had to account for.
CLENNELL:
Indeed. And you had deficits predicted in your Budget of $28.3 billion growing to $42.8 billion in 25–26 which would be about the sixth largest on record, then $26.7, then $24 billion. Is the totality of those deficits that you’re going to forecast on Wednesday bigger than the totality of those 4 forecasts in the Budget?
CHALMERS:
Oh, you’ll have to wait and see the numbers on Wednesday, Andrew.
CLENNELL:
Is that a yes?
CHALMERS:
We’ve been upfront and said that because of some of these pressures – you have to see on Wednesday, you’ll see all the numbers on Wednesday. There hasn’t been slippage in every year, we’ve been able to do a little bit better in the near term, but there’s been some slippage for reasons that we’ve been upfront about, whether it’s veterans’, natural disasters, early childhood, Medicare, there are substantial pressures on the budget.
But the overall story since we came to office – 2 surpluses, a huge turnaround in the budget situation that we inherited, much less debt, much less interest on the debt – will show that we’ve made really very, very substantial progress since we came to office.
CLENNELL:
Because there is a theory the PM will call an election early to avoid the Budget, so you don’t have headlines around the red ink. Now you must have heard this theory, political commentators talk about it on an almost daily basis. Do you as Treasurer expect to deliver a Budget in March as scheduled?
CHALMERS:
Of course I see the commentary, and I see the pundits and all of the rest of it speculating, as they always do, and understandably, about the timing of the election. The timing of the election is up to Anthony.
From my point of view and Katy Gallagher’s point of view, we’re certainly preparing for a Budget in March. That Budget will be like the others, it will be defined by responsibility and sustainability, trying to get the budget in much better nick, taking pressure off inflation and making room for our priorities, including doing the right thing by people who’ve served our country in uniform.
CLENNELL:
How much work needs to be done on the Budget prior to March 8 when the WA election is? It would almost all be done then, wouldn’t it?
CHALMERS:
We’re doing a lot of work on it already. We’ve been working simultaneously on the mid‑year Budget update, which we’ll release on Wednesday, and the Budget that we’re preparing for March. We work around the clock and around the year on these budgets, as you know. You’ve been knocking around federal politics for a long time, Andrew, you know that this work is more or less non‑stop. We’ve been meeting the Expenditure Review Committee, some things are for the mid‑year Budget update, some things are for March. That’s as you’d expect.
CLENNELL:
You’ve copped a lot of criticism from economists like Chris Richardson who said you haven’t taken advantage of your opportunity, that you’ve been too high‑spending a Treasurer, one of the highest‑spending, I think he said, outside of war time or crisis time. What do you say to that, and is there more that you could have done, or your government could have done on things like the NDIS to rein in spending, Treasurer?
CHALMERS:
Good guy, Chris, but not always right. He fails to acknowledge the first couple of surpluses in almost 2 decades. He fails to acknowledge the biggest nominal turnaround in a budget in the history of the country. He fails to recognise the way that we’ve got interest costs on debt substantially down. He fails to recognise the big structural improvements we’ve made via Bill Shorten’s good work and Anika Wells’s good work in the NDIS and aged care.
We’ve got the budget in much better nick in the near term, we’ve been working on those structural issues in the medium term as well, and that explains why we’ve made such progress. Banking of revisions to revenue, coming up with savings, tens of billions of dollars in savings in total since we’ve come to office.
All of this is about being responsible and getting the budget in better nick at the same time as we fund these pressures which are substantial, and we make room for our priorities – including helping people with the cost of living.
CLENNELL:
The Reserve Bank held rates again this week. Then you had that unemployment figure of 3.9 per cent. Would it be responsible for the bank to cut rates when unemployment is that low? Could you see a scenario where they can cut rates when unemployment’s that low?
CHALMERS:
As you’d expect, Andrew, I’m not going to give free advice to the independent Reserve Bank, but what I will say is those unemployment numbers that we got last week were absolutely remarkable in the context of an economy which is quite weak, weighed down by interest rates and global economic uncertainty and cost‑of‑living pressures.
So pretty remarkable set of numbers, and what they show us is that it’s possible to have inflation come off very substantially at the same time as we’re creating lots of jobs, getting unemployment down, getting wages up and keeping the economy growing.
Those numbers really represented the sort of soft landing that we’re going for. If you think about the progress that’s been made in the last couple of years – the economy’s growing, inflation’s coming down, real wages are coming up, we’ve created a million jobs, we’ve given every taxpayer a tax cut, we’ve knocked out those 2 surpluses, we’ve got debt way down.
These are all indications that we’re making welcome and encouraging progress when it comes to the economy as a consequence of our policies, but we know when we came to office people were going backwards very substantially, and they’re still doing it tough now. We know we’ve got a lot of work to do, and people have got a lot of ground to make up in their household budgets, and that’s why they’re our primary focus.
CLENNELL:
You finally got your Reserve Bank Board legislation through and have spoken about working with the Opposition on new appointments for this rate setting board. Have you got anyone in mind in terms of those appointments? What discussions have you had with the Opposition about those appointments?
CHALMERS:
I’ve consulted now with my Cabinet colleagues and I’ve consulted again with the Shadow Treasurer, and the names that we will be proposing are the product of a very substantial and robust process involving the Reserve Bank Governor, the Treasury Secretary and an independent third party.
I’m confident that the board members that we’ll be appointing to both of the new boards at the RBA will be seen as first‑rate, first‑class appointments with a lot of the relevant skills and experiences to do a really important job.
This is one of the key recommendations of the RBA review, if not the key recommendation, that we set up these 2 new boards, and we intend to fill them with first‑rate, first‑class people.
I actually had a conversation with Angus Taylor on Friday about this, but this wasn’t the first conversation that we’ve had, we had a conversation back in July, and those 2 conversations 5 months apart were consistent. He knows and people will see the quality and calibre of the people that we intend to appoint to these important boards.
CLENNELL:
Are there any of those suggested names he has objected to?
CHALMERS:
I want to be respectful about the conversations that we’ve had, the first one back in July and the subsequent conversation in the last couple of days, I want to be respectful about that. He’s treated them as confidential, and I intend to as well.
But both of those conversations were consistent, and what people will see when we announce these board members this week, ideally tomorrow actually, but certainly in the next couple of days, they’ll see that they are first‑rate, first‑class appointments.
We’ve given the Opposition the opportunity to suggest names. We’ve given them an opportunity 5 months apart to respond to the people that we are proposing, and beyond that I don’t really want to go into the nature of the conversation.
CLENNELL:
Just finally, Treasurer, if the Reserve Bank stubbornly holds rates where they are into next year, for the first half of next year, could that cost you the election?
CHALMERS:
I’m not going to make predictions about decisions that the Reserve Bank takes independently, and I’m certainly not going to apply a political lens to that.
I’m focused on my job – getting the budget in better nick, getting inflation down, getting wages up, providing this cost‑of‑living help that people still need in our communities because their household budgets are under such pressure.
That’s really my focus, and whether it’s the Reserve Bank, the government or the Australian people more broadly, we have made really quite remarkable progress. That unemployment number was evidence of that, the fact that our economy’s still growing when most of the OECD have had negative quarters of growth, the fact we’ve created a million jobs and real wages are growing again.
We know we’ve got a lot of ground to make up in people’s household budgets, but we’re making progress, and that progress is at risk if our political opponents get into office, and that’s because theirs is a recipe for coming after Medicare like they did last time, coming after wages like they do every time, and pushing power prices up with this nuclear fantasy, which is nothing more or less than economic insanity.
CLENNELL:
Treasurer Jim Chalmers, thanks so much for your time.
CHALMERS:
Thanks Andrew and merry Christmas.