CHARLES CROUCHER:
Treasurer, welcome to the traditional pre‑Budget interview.
JIM CHALMERS:
Thanks, Charles.
CROUCHER:
You've said all along that this Budget will be targeted at the most vulnerable in the country, I'm interested in how you judge who is the most vulnerable.
CHALMERS:
Well, this will be a responsible Budget for Australians doing it tough, and our priority here is to provide cost‑of‑living relief for the most vulnerable Australians. And that means beginning with people of modest means. And so, what we've tried to do in this Budget, in prioritising the people who are doing it toughest, is to try and make the Budget part of the solution to these cost‑of‑living pressures, rather than adding to those pressures.
CROUCHER:
Because I think people at home would think of modest means that might apply to them. I think everyone around the Cabinet table would have a different idea of who that is. So, for you personally, what are you looking for?
CHALMERS:
I understand that a lot of people are doing it tough, really right across the board. And some of the cost‑of‑living measures in the Budget, whether it's cheaper medicines, cheaper early childhood education, help with energy bills, some of those will apply to different parts of our community. But overwhelmingly, when you've got a budget with a bit of pressure on it over the medium term, you try and do what you can ‑ that makes sense to begin with the most vulnerable people. And it also helps to recognise that if you want to do things for people, provide responsible cost‑of‑living relief, invest in the future growth in the economy, you need to do that from a foundation of economic responsibility, which is what Tuesday will be.
CROUCHER:
You mentioned the medium term and longer‑term problems with the budget. Short term, though, it's looking pretty good. We've been told a lot about this sort of influx of cash that's coming mostly from resources. You've got a different idea, though?
CHALMERS:
Oh, that's a common misconception. I mean, the commodity prices that we're getting on global markets are helping the budget, but only about a fifth of the budget upgrade on Tuesday night will be from higher commodity prices. Much more than that will be because the labour market's a bit stronger, unemployment is lower, and we're seeing the welcome beginnings of wages growth after a decade of stagnation. So, about 40 per cent of the improvement in revenue in the Budget's from the labour market, about 20 per cent from commodities. That's an important part of the story, but not the biggest part of the story.
CROUCHER:
This was a real concern, I think, post pandemic, was that there wouldn't be enough jobs for everyone. Clearly there is. What does the Budget say about employment in the future?
CHALMERS:
The unemployment forecast is a little bit better in the Budget, and the wages forecast is a bit stronger as well. And as a consequence of that, we're expecting real wages growth a bit earlier than what we anticipated in October, and that's helping the Budget too. People are working more and earning more, and that's a good thing more broadly.
CROUCHER:
I asked that because going back to the most vulnerable, there is still a cohort of long term unemployed in the country. Why do you think that is, given there are so many jobs? I don't mean that to be cruel. I mean to identify a problem that we can solve.
CHALMERS:
No, I understand. This is a real passion of mine. There are communities around Australia, including the one I grew up in and represent, where we haven't been able to hook up the opportunities of a growing job‑creating economy in areas where there’s entrenched disadvantaged or long‑term unemployment. So, there will be a package of measures specifically for that. At the same time as we try and make sure, more broadly, whether it's how we hook up people to these jobs that are being created ‑ we need to do a much better job of that as a country. We've got incredibly low unemployment, but there are still people who are living in communities of entrenched disadvantage, and we want to try and shift the needle in those communities.
CROUCHER:
Yeah, you've mentioned your community a lot growing up, and that's obviously an important part of this Budget. I grew up in a coal mining community where they're now looking at a transition to renewable energy and trying to be part of that as well while still facing all those same cost‑of‑living pressures. How do you transition to renewable and green energy while competing with the US with such a huge investment in that Inflation Reduction Act? I mean, our competitors aren't on the same field.
CHALMERS:
Yeah, the Americans are making big investments in cleaner and cheaper energy, and so are we. And we'll see that in the Budget as well and our job ‑
CROUCHER:
Is there more to come, though? Because that's hard to compete.
CHALMERS:
I'll have more to say about that on Tuesday night. But we've said that cleaner and cheaper energy is the central part of our plans to grow the economy into the future. We want to be beneficiaries, not victims of what the Americans are doing, and that's within our reach. And whether it's the Net Zero Transformation Authority that Chris Bowen announced, whether it's all of these other policies that we've got to maximise our industrial and economic opportunities from this transformation. I think Australia can be a renewable energy superpower and that will be central to our prospects in the decades ahead.
CROUCHER:
Part of that, and this is something we're learning this morning, $2.4 billion is going to come into the budget from greater taxes on offshore gas projects. What will that fund?
CHALMERS:
Well, this is all about making sure that these offshore LNG projects pay more tax sooner so that we can fund our cost‑of‑living package and other priorities in the Budget. And what it does is it strikes the best balance between getting a fairer return for Australians sooner, but also being cognisant of investment and supply and our international relationships. And so, $2.4 billion into the forward estimates that wouldn't be there were it not for this change. It's something that we've arrived at in a responsible, methodical, considered and consultative way. It will make a meaningful difference to the budget, it will help fund our priorities, but it will also recognise the important role of the gas industry in our economy.
CROUCHER:
And for people sitting at home worried about electricity prices or power prices or gas prices going forward, is this going to have an impact on that?
CHALMERS:
Well, these projects are primarily export projects and what we're talking about doesn't have an impact on the East Coast onshore projects, for example. We've gone through a lot of consultation, we've considered this, it's been a process that's been running since my predecessor set it up some years ago. It's a really important change, but it's a change that strikes all of the right balances and I hope the parliament supports it.
CROUCHER:
We're also learning today about a $4 billion plan to change the indexation on some of the government services. This will impact Australians at their kitchen table, won't it?
CHALMERS:
Absolutely. This is all about making sure that community organisations and service providers can pay their bills and pay their workers and continue to the amazing work that they do in our community.
CROUCHER:
And what impact will that have on someone who is looking for one of those services? Because getting to a GP, we know, is so hard at the moment, but these services can almost intervene.
CHALMERS:
Well, these services are under extreme pressure, as are a lot of organisations in our community, and we want them providing health services, mental health services, other community organisations doing amazing work. They're under pressure. We want to make it easier for them to pay their workers and pay their bills. And this indexation change, about $4 billion in all, will achieve that objective.
CROUCHER:
You just mentioned paying bills. We've said it numerous times, both in this interview, in our last interview in the Budget, just how hard things are. When does it get easier?
CHALMERS:
Well, our job as a government is to try and take some of the edge off these cost‑of‑living pressures. We have acknowledged that people are genuinely under the pump. And what the Budget does is it provides as much help as we can to get people through a difficult period at the same time as we try and set up our economy and our country for the future. But the primary thing that we've been focused on in this Cabinet room as we've put together this budget is how do we make sure this Budget is part of the solution to these cost‑of‑living pressures, not part of the problem. That has involved a series of fine balances as we calibrate the Budget. But I'm confident that what people will see on Tuesday night is a genuine effort to take some of the pressure off people at the same time as we invest in the future.
CROUCHER:
And the biggest pressure for so many is housing. I know there's something stuck in the parliament at the moment that would be a big injection into the housing market, but if that doesn't get through, what's plan B?
CHALMERS:
We still hope it will get through. It beggar’s belief that the parliament's not supporting the building of more social and affordable homes. That is the ridiculous position that the parliament seems to be taking. We've got other new measures in the Budget, including a tax break for build to rent properties because we need more supply. That's why vacancies are low, and rents are high. We don't have enough properties, so there'll be a new tax break to encourage build to rent. And there might be other announcements in the Budget on Tuesday night.
CROUCHER:
We look forward to it, Treasurer. Thank you for your time.