DAVID SPEERS:
Treasurer, thanks for joining us.
JIM CHALMERS:
Thanks, David.
SPEERS:
And thank you for rushing out of the House of Reps chamber to be with us. Look, as you said tonight in the speech, inflation is the primary challenge confronting the economy, and certainly households as well.
Your Budget tonight pumps more than $20 billion into the economy, most of that in just the coming year. Are you making the Reserve Bank's job harder?
CHALMERS:
Absolutely not. We're making the job of the independent Reserve Bank easier by taking seriously this inflation challenge - big investments in the supply side of the economy, responsible economic management, banking 82 per cent of the upward revision to revenue, and also making sure that our cost‑of‑living package is delivered over time in the most responsible way. And the reason why there's some spending in 23‑24, frankly, is because there are a whole bunch of unfunded, ongoing programs that we had to fund, some COVID liabilities as well. The structure of our small business package and a little bit of the cost‑of‑living package is in 23‑24.
SPEERS:
The point is, don't you need to offset that extra spending to avoid impacting inflation? I mean, as I say, it's a $12 billion net increase in the coming year, more than $20 billion over the four years. Just explain to me how that's not putting more money into the economy and pushing up inflation?
CHALMERS:
Well, it partly depends on how you spend it, not just the magnitude of the spend, but the quality of the spend. But I invite you to look at the Budget in its entirety. You know, this is an historic turnaround in the Budget, which wouldn't be possible were it not for the historic restraint that we've shown in banking 82 per cent of the upward revision in revenue, 87 per cent over two Budgets, we wouldn't be within cooee of a forecast surplus this year were it not for the responsible economic management that we've shown. Now, it is necessary –
SPEERS:
And I'm not arguing that, I'm just pointing to the extra spending that you're putting into the economy.
CHALMERS:
Yes. And I've explained that some of that is unavoidable legacy spending left to us by our predecessors, unfunded ongoing programs. Some of this –
SPEERS:
But a lot of this is your cost‑of‑living package?
CHALMERS:
Some of it is the cost‑of‑living package, but in areas, for example, energy bill relief, which will put downward pressure on the inflation forecast, because it makes people's bills lower than they would otherwise be, the combination of our gas and coal caps with our energy bill relief is expected to take three‑quarters of a per cent off the inflation forecast next year.
SPEERS:
But the other changes in JobSeeker, rent assistance, the GP bulk billing incentive, all of these things, can you give any sort of guarantee that this all won't lead to higher interest rates?
CHALMERS:
Well, I don't speak on behalf of the Reserve Bank Governor, at every step of this Budget, the remarkable restraint we've shown, the investments in the supply side of the economy, and the way we've targeted and staged our cost‑of‑living package, all of that is because inflation is the biggest challenge in our economy. This Budget has been carefully calibrated and carefully designed to take the pressure off the cost of living, not add to inflation.
SPEERS:
So, 5 million households and 1 million small businesses will receive this energy bill relief. Who's eligible and who's not?
CHALMERS:
Well, the eligibility differs a little bit because we've had to do eight deals with eight different states and territories, but largely, people on pensions and payments, people who are already eligible for state programs, in addition to, depending on the state and territory, others; for example, people on family payments. But one of the reasons why it's taken us a little while to get it together is because we've had to do these deals. The amounts are different, depending on price pressures, depending on the state programs, the delivery is a little bit different, but more than 5 million people will get up to $500 off their electricity bill, their winter electricity bill, and that will make a difference.
SPEERS:
But you have to be on one of these payments to receive the help?
CHALMERS:
The eligibility is a little bit different around the states and territories, but largely, it's people on pensions and payments.
SPEERS:
Does your power company have to know that you're on one of those payments, know what your income is?
CHALMERS:
Yes, we work closely with retailers to make sure –
SPEERS:
With every power company?
CHALMERS:
We make sure that this relief is provided on the bill rather than spraying around cash cheques to people, we do it at the bill level. That gets the price of electricity lower than it would otherwise be. It means working with the retailers and working with the states and territories.
SPEERS:
Your Budget does still suggest though that we will see further increases in electricity prices at I think more than 10 per cent in the coming year.
CHALMERS:
Yes, it was going to be 36 per cent, David. The forecast was 36 per cent.
SPEERS:
So better than that, it's still going up is the point for a lot of people struggling at the moment.
CHALMERS:
David, as a consequence of our policies, we've taken an electricity price rise that was going to be 36 per cent and we've made it 10 per cent. We've taken 25 or more, when you account for rounding, of the percentage point off the projected electricity price increase.
SPEERS:
So my question is, when will we start to see those electricity prices fall?
CHALMERS:
Well, in the current Budget, we only forecast in this Budget one year ahead, and that's the 10 per cent number that you are mentioning; there aren't forecasts beyond that for good reasons. But these electricity prices are much lower than they would otherwise be because of the combination of the energy plan that we put in place, the gas and coal caps and the energy bill relief.
SPEERS:
So, you're not sure when they'll start to fall?
CHALMERS:
Well, the Budget doesn't forecast beyond this year. The forecast was 36, now it's 10. That says to me that our policy's working.
SPEERS:
The big new measure tonight is this effort to make going to the doctor more affordable. You're tripling the bulk billing incentive for GPs. How many more doctors are likely to bulk bill as a result?
CHALMERS:
Well, what we're expecting is something like 11.6 million Australians will be able to access this really quite historic investment in Medicare in the Budget tonight, $3.5 billion, a bigger program, more than $5 billion to strengthen Medicare. Obviously, our intention there is to try and get more doctors incentivised to stay bulk billing; too many people can't find a bulk billing doctor.
SPEERS:
Let's look at those really struggling; those on JobSeeker, those on unemployment benefits. The government, the Morrison Government actually gave them an extra $50 a fortnight, you've decided to give them an extra $40 a fortnight, or just under $3 a day. It is well short of what was recommended by your Economic Inclusion Advisory Committee. Why is that?
CHALMERS:
Well, we've done what we can afford in this Budget. We've tried to be as responsible as we can, recognising that people on JobSeeker are doing it particularly tough, so we ‑‑
SPEERS:
Why is this figure responsible? Just explain to me why you've landed here.
CHALMERS:
Well, we have to strike a series of fine balances, and we understand that there will be people who are saying $40 a fortnight is not enough; there will be some who will be saying it's too much, frankly.
SPEERS:
So why do you think this is the right balance –
CHALMERS:
Well, we think we struck the right balance between what we can afford and taking into consideration all of the economic pressures in the economy, as you and I were discussing a moment ago, we think we've landed on –
SPEERS:
So you can't afford any more; is that the issue?
CHALMERS:
Well, largely, but also the $40 a fortnight, some people on JobSeeker will also be able to access the energy bill relief, they'll also be able to access the Commonwealth Rent Assistance. So, I'd encourage your viewers not to just see one of these payments in isolation.
SPEERS:
The rent assistance, an extra 15 per cent, what assurance can you give that landlords won't simply bump up the rents they're charging as a result?
CHALMERS:
Well, the reason that rents are going up in this country is not because people are getting too much Commonwealth Rent Assistance; the rents are going up because we've got vacancies too low and rents are too high, and that's because we don't have enough homes. And we're trying to build more homes, more affordable rental properties; there's a new tax break for build to rent, and we're trying to get our Housing Australia Future Fund through the Parliament, but as well as that, we're trying to take some of the sting out of these rent rises as well, and that's why the biggest Commonwealth Rent Assistance increase in I think 30 years or so, we hope, will make a bit of a difference.
SPEERS:
Why are you giving politicians $159 million, more electorate staff and travel?
CHALMERS:
This is in recognition of the really quite extraordinary workload that the offices are under. I think we've seen some recent well‑publicised court cases, for example, which go to how hard our staff work ‑
SPEERS:
So this is a response to that?
CHALMERS:
Well, not entirely, but I think that really shone a light on some of the issues.
SPEERS:
A lot of people doing it tough though. How do you think they'll feel about pollies getting more?
CHALMERS:
Well, it's about serving the community better; it's about serving the community better, and taking some of the pressure off people who are working around the clock to serve the community I think is a good thing.
SPEERS:
Hydrogen. You're putting $2 billion into a new program called Hydrogen Head Start. Andrew Forrest has been lobbying for something like this. Is he potentially one of the biggest winners of this Budget?
CHALMERS:
Well, I don't want to pre‑empt who will receive these production credits. There will be a competitive process when the scheme is designed and up and running, and it's all about encouraging more hydrogen production. I think this is the big opportunity for Australia to get a bigger slice of the action in the global transformation, net zero transformation. This is a big part of our plan to grow the economy. Hydrogen's going to be key to our future. And so this $2 billion Hydrogen Head Start is all about incentivising that.
SPEERS:
Treasurer, you're set to post a small surplus, the first in 15 years, but it is short‑lived; we then go back into deficit, so over the coming four years, more than $100 billion worth of deficits. Have you missed an opportunity here to make some bolder decisions on things like capital gains tax, trusts, the stage 3 tax cuts, the sort of things that Danielle Wood and Chris Richardson, we saw there, have been urging you to do?
CHALMERS:
Well, we've got a tax reform program in this Budget which is a meaningful one; PRRT, multinationals, high superannuation balances, tobacco tax –
SPEERS:
It's obviously not enough though to fix this structural deficit?
CHALMERS:
I think it's ambitious, and I think it's meaningful, and makes a difference to the structural position of the Budget.
SPEERS:
So those other ideas, are they too politically risky?
CHALMERS:
Well, frankly, I'm a little surprised, because no government that I can remember has made such a big difference to the structural position of the Budget than we did tonight. We banked that upward revenue surge, we had tax reform, and we found ‑
SPEERS:
The point is economists are ‑ it's not enough. And the figures show that.
CHALMERS:
– and we've found $18 billion of savings. Do you know how many savings were in Josh Frydenberg's last Budget? Zero dollars.
SPEERS:
You're here now though, Treasurer.
CHALMERS:
Yeah, and $40 billion over two budgets, remarkable spending restraint, meaningful tax reform, has improved the structural position of the Budget, and it's let us forecast the first surplus in 15 years.
SPEERS:
Could you return to some of these other ideas?
CHALMERS:
Well, I've just handed down the Budget for tonight. I'm not contemplating the May 2024 Budget, I'm talking about tonight's Budget. But honestly, I mean I don't think any objective observer looking at what we've done tonight can conclude anything other than we have made substantial progress on repairing the Budget, not as an end in itself, but so we can help people through difficult times and invest in their future.
SPEERS:
Let's finally look longer term. Your Budget does suggest that structural deficit over the coming 10 years will actually narrow. I've got a graph from your Budget I just want to bring up here and get you to explain it for me. Total receipts, the orange line at the bottom there, you can see over the coming 10 years, that really starts to climb. Is that bracket creep that's lifting those tax revenues?
CHALMERS:
It is partly a consequence of people working more and earning more. That's even driving some of the near‑term improvement as well, but the structural position is improved by a whole range of things. The changes that we're making to the Budget mean that we're paying less interest on our debt; that's making a difference.
SPEERS:
But if that graph is right, we'd be paying more tax as a percentage of GDP than we have for 50 years?
CHALMERS:
But that assumes no tax changes for 10 years. You know, that assumes –
SPEERS:
So that won't happen?
CHALMERS:
Well, I don't know if I'll be here in 10 years' time to explain it to you, David.
SPEERS:
It's your Budget, it's your Budget.
CHALMERS:
I'm pleased that you put that graph up, because I'm proud of the structural improvements that we made in the Budget, but there is more work to do, there is a structural challenge in the Budget that we've been addressing, but there is more work to do. But tonight we've made some substantial progress.
SPEERS:
And finally on that payments side, you do see it flat lining there over the coming 10 years. A lot of that has to do with interest payments on debt being lower, but also the NDIS. This 8 per cent target to limit the growth to 8 per cent in the NDIS. It's meant to save $59 billion, I think, over the decade. You haven't worked out how to do that yet?
CHALMERS:
Already we've got ‑ instead of the program blowing out by $17 billion, we found, or Bill Shorten found $15 billion of improvements even over the forward estimates, and so we've shown; we want every dollar to go to the people who deserve our help and support. That's our overwhelming and overriding ambition here, to help people who need that support. That means moderating the growth in costs. We've made a start on that, and there's more of that to do in the medium term, working with the sector and the states and territories. It will still grow very quickly. 8 per cent is a decent clip, and we want to look after people, but we've got to make sure it's sustainable.
SPEERS:
Treasurer Jim Chalmers, really appreciate you joining us tonight. Thank you.