DAVID KOCH:
Let’s gets back to the federal Budget now. Joining me now, Treasurer Jim Chalmers. Treasurer, an inflation‑busting Budget. You’ve said inflation is public enemy number one. You’re putting $21 billion of new spending into the economy. Why won’t that increase inflation?
JIM CHALMERS:
Good morning, Kochie, and to all your viewers. Well, the main reason is because it doesn’t all hit the economy at once. That’s a number that gets rolled out over the four years of the Budget. So it doesn’t all hit the economy at once. It’s also very targeted. It’s also very, very carefully calibrated so that it addresses some of the cost‑of‑living challenges in our economy rather than adds to them.
KOCH:
Yeah, and the experts I’ve been talking to this morning agree with you that it won’t add to inflation, which is good news on the interest rate front as well. We’re not going to go into recession and only a slight increase in unemployment. So people’s job prospects still are solid, aren’t they? That’s the big thing for most families.
CHALMERS:
Absolutely. Even with the unemployment rate ticking up a little bit in the Budget forecast, we’re still expecting it to be near historic lows. And the fact that we’ve got unemployment at three and a half per cent right now really is one of the big advantages that we’ve got going into a bit of a slowing in the economy. But the other, I think, welcome news in the forecasts in the Budget is that after a decade of wages growth being really stagnant and really sluggish, we are expecting a pick‑up in wages growth. And I think it’s important to recognise that when it comes to these cost‑of‑living pressures that so many people are under ‑ so many people are under the pump right now ‑ we see that decent wages growth, if it’s sustainable and responsible, as part of the solution to these cost‑of‑living pressures, not part of the problem.
KOCH:
And, gee, it produces a river of gold for you as well, doesn’t it, because bracket creep means we’re going to be paying more taxes on those higher wages as well. So can you guarantee that those stage three tax cuts are going to be delivered by you to ease bracket creep?
CHALMERS:
Well, a couple of things about that, Kochie. You’re right that one of the reasons why the budget is improving in the near term is because more people are working and more people are earning more, and that is a big reason why we’re seeing this improvement. That’s a welcome improvement across all fronts. We want people to be earning more, and that’s reflected in the Budget. When it comes to those –
KOCH:
But we’re paying more tax.
CHALMERS:
Well, when it comes – well, people are working more and earning more and in aggregate that means that that is helpful for the budget. When it comes to those stage three tax cuts, I think it’s important to recognise that they kick in at $45,000. We do support giving back bracket creep, particularly to low and middle‑income earners.
KOCH:
Right.
CHALMERS:
That is an important part of those tax cuts. But they haven’t been a central part of our deliberations for this Budget. They were legislated some time ago. We haven’t changed our position on it. I was asked yesterday how much they cost and I gave an honest answer, but they haven’t been something that we’ve been focused on.
KOCH:
Okay, but at this stage they’re going to come through. You haven’t changed your view on it. Good stuff. Households struggling with power bills, but there’s only relief for about five million households. What about the rest?
CHALMERS:
Well, I don’t see five million as a small number. More than five million people will get a bit of help with their electricity bills. I think that’s a good thing. But that’s not the only part of our cost‑of‑living package. The cost‑of‑living package is much broader than that and one of the things that we’re proudest about about the Budget last night, Kochie, was the tripling of the bulk‑billing incentive. A lot of people you would talk to, a lot of people I talk to, they’re worried about finding a doctor that bulk bills, and so we’ve tripled the incentive to try and address that big challenge. That will make a difference to people’s out of pocket health costs and make it easier to find a doctor when they’re sick.
KOCH:
Yep. What about middle Australia? A lot of people are saying you’ve largely forgotten about them?
CHALMERS:
I don’t agree with that. I mean obviously we’ve tried to prioritise the people doing it toughest. But there’s a substantial amount in here for middle Australia, as you describe it. That Medicare bulk‑billing incentive is a big part of the story, and our broader efforts to strength Medicare. There’s a program in there to help people make their homes more energy efficient and try and get their bills down. There is a range of initiatives in there for middle Australia at the same time as we prioritise people on the lowest incomes.
KOCH:
Okay. And just finally, I’ve been doing my traditional calculations on your commodity slush fund. You owe me a bottle of red.
CHALMERS:
How did I know that you’d raise this, Kochie.
KOCH:
Yeah, you owe me a bottle of red from the last time. Just on my rough calculations, the way you’ve underestimated the revenue coming from iron ore and coal, you could have a Budget surplus this next financial year as well.
CHALMERS:
Well a couple of things about that. I knew you’d raise that, Kochie. I figured you would. A couple of things about that – there are good reasons to be cautious about it. For example, the iron ore price has come off a bit even in the last few weeks, and I like to be cautious and conservative about these assumptions.
KOCH:
Right.
CHALMERS:
But we have updated them. Since we last spoke the Treasury has come to us and tried to come forward with what they see as a more realistic assumption about commodity prices, but we should be cautious about it. There’s good reasons for that. We just handed down last night’s Budget, we’ll turn our mind to next year’s Budget before long.
KOCH:
Okay. Jim Chalmers, thanks very much for joining us. Appreciate it.
CHALMERS:
Thanks, Kochie.