Anna Henderson:
I spoke to the Treasurer a short time ago and started off by asking him about whether that worst‑case scenario would mean a recession.
Jim Chalmers:
We’re not anticipating a recession under any of the scenarios that we’ve provided in the Budget. But there is a more severe scenario that we’ve tried to set out for people to give them a sense of just how hostage we are to developments in the Middle East. It’s a big influence on the Budget. It’s a big reason why the first priority of the Budget is to help people through a difficult period because the risks from the war in the Middle East are already serious. They could become severe. And we’ve tried to give you a sense of how severe that could become.
Henderson:
This Working Australian Tax Offset of $250 hits the year 2028. At that point, it could be eaten entirely by inflation. Is that even meaningful?
Chalmers:
Well, 2 things about that. First of all, when it comes to upward revisions to revenue, for the first time in history and 2 budget updates in a row, we’re banking all of that to try and get the deficits down, to get the debt down. The tax relief in the Budget is important. It comes in at a time when the budget can afford to provide that extra tax relief, those extra tax cuts for 13.3 million workers, and it’s aligned to come in roughly when we’re raising revenue in other areas, including changes to capital gains tax and negative gearing.
Henderson:
Bill Shorten took changes to negative gearing of property taxes to an election as Opposition Leader and lost. When did you make up your mind that going back to this was a necessity?
Chalmers:
Well, this was decided in recent weeks by the Expenditure Review Committee of the Cabinet. But I have become increasingly of the view, it’s become increasingly clear that even though the big challenges in housing begin with housing supply, they don’t end there and we didn’t want to leave unattended for any longer this really quite substantial issue, which is the intersection of housing and tax, which is locking too many people, especially young people, out of the housing market. If we left that unattended, if we let that drag on for longer, more people would have been locked out of the housing market.
So, we came to a different view on these policies. We’ve been very upfront that the government has a different view now than we had 12 months ago. Overwhelmingly, the focus was on supply then. We’re still focused on supply, but we’re also making these difficult changes to the tax system, recognising the pressures on people, particularly on young people.
Henderson:
Do you regret not taking it to an election?
Chalmers:
I try not to look back about these sorts of things. You asked me about the 2019 election and the 2025 election. We have to take the decisions in 2026 and what we’ve tried to do in this Budget is to help people through a difficult period, but also engage in some of these big, difficult, often controversial policy reforms. And so, the Budget does both of those things at once.
Henderson:
Just on migration. This Budget flags changes to the point system it says to select migrants who drive productivity. What does that mean? What is going to change?
Chalmers:
It’s about using the existing system to better recognise skills, whether it’s language skills or other skills, more closely aligning it with the needs of our economy.
Henderson:
Is this an acknowledgement that there is a mood in Australia to see English‑language skills be prioritised in the migrant community that comes into the country?
Chalmers:
Well, it’s an important skill to be able to communicate in the workplace, not the only skill that matters to us, but what the changes to the points test recognise is that we can reform the system and make sure that skilled migration is in the national economic interest, that we’re recognising the substantial contribution made by migrants at the same time as we’re training more and more Australians via free TAFE and special incentives in areas like construction.
Henderson:
Treasurer, we appreciate your time. Thank you.
Chalmers:
Thanks very much, Anna.