Andrew Clennell:
Joining me live from his electorate is the Treasurer, Jim Chalmers. Thanks for your time, Jim Chalmers. Let’s start with the fact that your counterpart won’t be here when you deliver this statement next week; he’s in the US. Are you surprised by this?
Jim Chalmers:
I am a bit surprised by that. But I’m not going to take a shot at him. There must be a good reason for this. It would be really strange, if not unprecedented for the Shadow Treasurer to go on holidays during the mid‑year budget update, particularly when we’ve said for some time now it will be in the middle of December.
So it’s up to Ted O’Brien to explain to his colleagues, I can’t imagine they’re happy about it, but from my point of view, I’m not going to have a shot at him, because I’ve got more important things to worry about than where Ted is in the country or in the world. I’m very focused on delivering this mid‑year budget update whether he’s here or not.
Clennell:
Well, let’s move more generally to the expenses scandal which is sucking up a lot of oxygen for the government, including this week for you, it seems.
What do you make of some of the more egregious stories we’ve heard about here? Michelle Rowland, she’s now had to admit she’s broken the rules, Treasurer. She’s charged business class flights for her family to go on holiday in Western Australia. Anika Wells has scheduled meetings so she can fly business class and go to her mate’s 40th in Adelaide. As you try to balance the budget, do you get frustrated by this kind of spending by your colleagues?
Chalmers:
Oh, look, certainly I understand that there’s a lot of community concern about this; I think we all understand that, we all get that, that your questions today and on other occasions are really channelling some fairly substantial concerns out there in the community about these rules.
Now these rules are all about trying to ensure that as we go about being the best ministers that we can, that we can also be good parents where we can, and I understand that where the rules reflect that, there’s not a lot of support for that out in the community. But that’s what the rules are about, and we do our best to comply with those rules.
Now there are really good reasons why this is managed at arm’s length from politicians, there are good reasons why from time to time different politicians ask the independent authority to take another look at the claims that they have made. And there are also good reasons why the Prime Minister has asked for advice on whether further changes are necessary.
Now as I understand it, that advice will be received before long. Obviously I will be very interested in that, but for the time being, as I hope you understand, Andrew, my focus is on releasing this mid‑year budget update during the coming week.
Clennell:
Should Michelle Rowland resign, Treasurer?
Chalmers:
No, I don’t believe so. I think Michelle’s done the right thing in asking the IPEA to take another look, as has Anika, asked the independent organisation to make sure that everything that’s happened here is within the rules. I think that’s appropriate. I also think it’s appropriate that the PM has sought advice. We’ll get that advice in due course and we’ll consider it.
But as I said a moment ago, Andrew, I understand that your questions are channelling a very substantial amount of community concern, I respect that, but I hope that you also understand that for me as Treasurer, I’ve been very focused on releasing this mid‑year budget update, which will be on Wednesday.
Clennell:
She’s the First Law Officer, and she’s broken the rules. Others in past governments, including Sussan Ley, have resigned over this. That’s the only point I’d make to you, Treasurer. I mean, to be frank, you can’t be stoked coming on this program and me revealing this story at this particular time, but you know, she’s got a problem, hasn’t she?
Chalmers:
Look, I understand the point that you’re making, but I don’t agree with your conclusion. I think what Michelle Rowland’s done here and Anika Wells as well, is to refer these claims to the independent body; that’s the appropriate course of action. It’s also appropriate that we sought advice on whether any changes are made as well. We’ll await that advice, and in the interim, I’ll focus on doing my job as the Treasurer, which is to update the budget on Wednesday.
Clennell:
And don’t worry, I’ll get to that, but I just want to make this point: there’s a story this morning, Mark Butler flying business with a wife and a son, separate trips, to go to the tennis and cricket in another state; there’s another one.
Now we had a look at your family reunion travel ahead of this interview, and it seems very reasonable, mostly taking the family to Canberra while you work, one trip to Sydney, not many trips, the biggest spend was in budget week, no one would begrudge you your family budget week, with the photos and everything else that went on. Is this what you’d like to see other MPs striving to do as you manage a budget; would you like to see them show your sort of restraint when it comes to these entitlements?
Chalmers:
Well, my colleagues work extremely hard, and as I said before, from time to time they have utilised these family reunion arrangements.
I think in our case it’s made sense to do that for Budget night, for election night, and on a small number of other occasions, but I’m not going to make judgments about others. You know, everyone’s responsibility, including mine, is to adhere to the rules. Those rules are not set in stone; from time to time we seek advice on making sure that they meet community standards. That’s what’s happened on this occasion. We’ve sought that advice. When we get that advice, we will consider it. But in the interim, I’m focused on Wednesday.
Clennell:
See, you could have used these entitlements to take the family on a holiday. You could have gone to Perth, you could have gone to Adelaide. You’re a Broncos fan. You would get an invite to the NRL Grand Final; you could have used it for that. It doesn’t seem that you have. You’re a Lions fan, you would get an invite to the AFL Grand Final very easily. You haven’t used it for that. So why haven’t you? If you could have within the rules, why haven’t you done what Anika Wells and Michelle Rowland and Mark Butler have done? Do you have a different kind of principled view of this personally?
Chalmers:
Well, first of all, when it comes to Anika and when it comes to, Mark, as I understand it, was Acting Sports Minister on those occasions you’re referring to. And so there are different obligations on Sports Ministers and Acting Sports Ministers, as I understand. It’s not really an option to miss those sorts of Grand Finals when you’re the Sports Minister or the Acting Sports Minister. So I make that point.
Secondly, I wanted to watch the Broncos win the Premiership and the Lions win the flag on the couch with my kids. People make different judgments about that. But when you’re the Sports Minister or the Acting Sports Minister, you don’t really have that option.
Clennell:
See, that is family reunion. Well, I’ll talk more broadly about the budget situation in a moment. But today you’re also mandating that retailers use cash, or you’re announcing that’s happening from 1 January. Can you take us through that?
Chalmers:
Yeah, 2 really important changes which are coming into being from Friday just gone, for implementation next year; the first one you referred to, which is this cash mandate.
Even as fewer people want to use cash, we want to make sure that people can use cash for essentials when they want to and when they need to, and so the cash mandate is all about making sure that supermarkets and servos have to accept cash between 7 o’clock in the morning and 9 o’clock at night. There’s a carve‑out for small business for good reason.
But we’ve done a heap of consultation here. We know that for a lot of people they prefer to still use cash for essentials, and we’re mandating that. There’s no obligation currently; we’re changing that to make sure there’s an obligation.
But the other really important change which is just coming into being, just been made law in the last couple of days to bring in next year, is we’re cracking down on price gouging by the supermarkets, and this is all about getting a fairer go for families and pensioners at the checkout. It’s about delivering on our commitment to crack down on price gouging by the major supermarkets.
And so 2025 is a year of delivery; we’re delivering what we promised when it comes to the cash mandate, we’re delivering what we promised when it comes to cracking down on price gouging, and these are really important developments just in the last couple of days.
Clennell:
Let’s move now to the deficit which you’re tackling this week, or tackling over the next few months, but including up to this week. The budget had them at $42 billion for 25–26 and around $35 to $37 billion per year for the next 3 years after that, so pretty substantial. Have you got them down at all, and have you been able to generate much in the way of savings to reduce those deficits in the lead‑up to MYEFO?
Chalmers:
Yeah. A couple of important specific points about that. But first of all, this mid‑year budget update is all about delivery, responsibility and restraint. It’s about delivering the commitments we took to the people in May, it’s about finding room for big pressures on the budget, and it’s about updating our forecasts. So it’s not a mini budget. There’s not a lot of new stuff in there, but there’s a lot of hard yards to make room for our commitments and the big pressures on the budget which are intensifying rather than easing.
And so your question about the deficits, the big task for Katy Gallagher and I and the Expenditure Review Committee this time around has been to make room for tens of billions of dollars in pressures in areas like the age pension, natural disasters, veterans, military superannuation and the like. So that’s been the main game, to try not to go substantially backwards as we make room for our commitments and for these tens of billions of dollars in pressure.
So I can tell your viewers today, Andrew, Wednesday’s mid‑year budget update will have another $20 billion in savings in it. $20 billion in savings, which means that we’ve now found savings in every single one of our 7 budgets and budget updates.
And to give you a sense of the magnitude of that $20 billion, it took our predecessors 7 budget updates to find $20 billion of savings, we’ve found that in just this one budget update for Wednesday.
It means that we’ve now found $114 billion in savings over our 7 budgets and budget updates. That is 5 times more than our predecessors found in their last 7. And what it demonstrates is that this mid‑year budget update will be defined by economic responsibility just like the government is.
Clennell:
Is that $20 billion over 4 years, and even as you do that, does that lower the deficits or not?
Chalmers:
Well, we’ll release all of the detailed numbers around the underlying cash position for each of the 4 years in the usual way. The $20 billion is 4 years of savings, it takes our total to $114 billion since we’ve been in office, and that’s been a really key way that we’ve made room to strengthen Medicare and cut taxes and build Urgent Care Clinics and build the infrastructure that people need in growing communities. That’s what our approach to the budget has been all about. The government is defined by responsible economic management. People can expect to see more of that on Wednesday.
But the main game, as I said a moment ago in relation to those deficits, is when we’ve got, you know, $35 billion of upward pressures, we’ve got commitments to deliver in housing and mental health and infrastructure and fast‑tracking skills for tradies, then the main job has been to not go substantially backwards, and so what you’ll see in Wednesday’s numbers is really our best effort to find those tens of billions of savings, to show considerable spending restraint once again, so that we can deliver on our commitment to make room for those pressures.
Clennell:
So I’m listening to you, and what I’m hearing is they’re not lower deficits.
Chalmers:
Well, you have to wait and see, Andrew. I’m not – I’ve given you a new number this morning, which is $20 billion of savings, but the rest of the numbers will be revealed through the course of the week, and especially on Wednesday.
You’ll see on Wednesday that what defines the mid‑year budget update is responsible economic management. That has been a hallmark of this government, it’s how we found $114 billion in savings over 7 updates, it’s why we found –
Clennell:
All right.
Chalmers:
– $20 billion in savings in the update that Katy and I will release on Wednesday.
Clennell:
Where is that $20 billion? What have you saved?
Chalmers:
We’ll have more to say about that, Andrew, in the course of the week and certainly by Wednesday. We’ll obviously identify all of the constituent parts of that $20 billion in savings.
There’s obviously already announced in the course of the election campaign the changes we’re making to external labour in the public service, but I want to leave the detail of that to the release of the documents and to the work that I do with Katy Gallagher. We’ll make it really clear where those $20 billion in savings are coming from.
But the point I’m making to you and your viewers this morning, Andrew, is in a mid‑year budget update which is all about delivery, responsibility and restraint, there will be $20 billion of savings in there, and that’s an important way that we’ve made room to deliver on our commitments and also to make room for these pressures in areas of spending which are unavoidable.
Clennell:
I’m told you’re close to a deal with the states on the hospitals and the NDIS potentially. Is that fair, and how much would that change the budget position either way if that was achieved?
Chalmers:
Yeah. I mean, first of all, we’ve put a very substantial offer on the table, $23 billion in extra funding for the states and territories for hospitals. We’ve put that on the table in good faith, and we continue to work with the colleagues, whether it be health ministers, treasurers, premiers and chief ministers to try and do that deal by the end of the year if we can. Obviously we will have contingencies if we can’t strike a deal.
But we’ve had to sensibly provision for a future deal in the mid‑year budget update; it’s obviously not finished. But the time that we had to put the numbers to bed. And so this hospitals deal will be a really substantial pressure on the mid‑year budget update on Wednesday, and particularly pressure over the medium term, over the 10‑year horizon.
But those $23 extra billion dollars are over 5 years. We’ve put it on the table in good faith. It’s a very substantial offer. It will put very substantial pressure on our budget. It’s another one of those things that we’ve had to make room for with these savings and with this spending restraint.
Clennell:
All right. What’s Treasury’s prediction on inflation, because the budget forecasts were for 3 per cent this financial year, 2.5 from thereon in. It’s obviously higher than that. And how much of a driver for inflation is energy costs? How much of a mask has this energy bill rebate you’ve put on been for the government’s perceived performance on inflation?
Chalmers:
Well, first of all, really in our forecasts for some time now, they have assumed that these electricity bill rebates will come off. We’ve said – we’ve been very upfront for some time now, not just the last couple of weeks, but the last couple of years in saying these electricity bill rebates are an important part of the budget but not a permanent part of the budget. They’re a key way that we’ve been helping with the cost of living but not the only way.
And so ending these electricity bill rebates at the end of this year I think signifies a big shift away from the temporary help for the cost of living into the more permanent help via the tax system with our 3 income tax cuts, 2 of which will flow over next year and the year after that. So it signifies a shift, that’s the first point.
Obviously we update our inflation forecasts at every budget update, the Treasury goes about that in their usual considered and diligent and methodical way. They will factor in, as they have for some time, that the electricity bill rebates come off.
They will also factor in some of the recent data that we’ve got in inflation which has come in a bit higher than forecast, much lower than what we inherited but higher than we would like. And so they’ll update the forecast for inflation, you’ll see those on Wednesday. That will take into consideration recent data, and it will also take into consideration, as it has for some time, the fact that those rebates will come off.
Clennell:
You were one of those people, Treasurer, whose grabs they repeatedly play from the 2022 election campaign promising that Labor’s renewable energy policy would lead to a $275 a year cut in power bills. It’s obviously been proved to be a lie. Do you regret that statement you made around that?
Chalmers:
Well, that statement reflected modelling we had done in 2021 before a war in Ukraine and before Angus Taylor hid that spike in electricity prices before that subsequent election, and I think we’ve dealt with this over the course of recent years.
The key now is what happens when we try and replace these increasingly unreliable coal‑fired power stations as they exit the system, as they have been planned to do for some time. And the key to that is replacing that generation with cleaner and cheaper renewable, reliable energy, and that’s our plan.
Clennell:
You announced a change, or Chris Bowen did, on the batteries policy yesterday. It’s a little bit hard to follow, but basically you won’t be able to claim for bigger batteries, and obviously this has blown out your budget, this election promise. Can you explain the change to our viewers?
Chalmers:
I can. So this program has been extremely successful, and now we need to make sure that it’s sustainable, and that’s what the changes that Chris announced yesterday are all about.
And what it means is tapering the benefit for bigger batteries, because one of the reasons why there’s been a higher than expected cost of this program is because people are installing bigger and bigger batteries.
Now this is good for the grid, it’s good for household budgets, and we need to make sure it’s good for the budget as well. And so the best way to think about my part of the changes which were announced yesterday is we committed about $2 billion to this, it’s been extraordinarily successful in ways that we welcome and encourage, the take‑up has been amazing, and that’s a very good thing.
But we’re providing another $5 billion or so to take it to $7 billion. But without the changes that Chris announced yesterday for bigger batteries the cost would be around twice that, around $14 billion.
And so what we’ve done is we’ve given certainty, we’ve said we’re going for 2 million batteries by 2030 now, we’re providing very generous subsidies, we’re providing sustainable ways to taper for some of those big batteries, and that means we’re spending more in this program, but not as much as we would be spending had we left it completely untouched.
Clennell:
Just finally, Treasurer, on the social media ban introduced last week, anecdotally, many parents are telling me their kids still have accounts and they’ve really outsmarted the ban. I think it says something about the ingenuity of kids really. But is it in danger of failing, the ban, therefore?
Chalmers:
Well, this is a game‑changer for Australian kids and Australian parents, and it’s world‑leading. And we’ve said throughout that kids will try and find a way around it, no doubt platforms as well will try and find a way around it, there will be bumps along the way, it won’t capture every single kid in every single home, but it will make a huge difference.
And I’ve already noticed, and parents coming up to me around and about here in my own community to the south of Brisbane are very grateful for the changes that we’ve made. They’re courageous changes, they’re bold changes, and people will try all kinds of things to get around them. We’ll do our best to keep up with those efforts.
But let’s not forget what this is all about. This is about protecting our kids online. It’s a game‑changer for Australian families, it’s world‑leading, there are good reasons why the world is paying attention, and that’s because these changes are so warranted.
Clennell:
Treasurer, Jim Chalmers, thanks so much for your time.
Chalmers:
Appreciate it, Andrew. All the best.
Clennell:
Have a good Christmas.