14 May 2023

Interview with David Speers, Insiders, ABC

Note

Subjects: May Budget, investments in the budget that benefit middle income earners, JobSeeker, Housing Australia Future Fund, extra funding in the budget for social and affordable housing NDIS, tax, stage three tax cuts, GST

DAVID SPEERS:

Jim Chalmers, welcome to the program.

JIM CHALMERS:

Good morning, David and Happy Mother's Day to all of the mums, but especially Laura, Carol, and Barbara.

SPEERS:

Well said, well said. Now, what do you think of this line and this concept of a working poor in Australia that we've heard from Peter Dutton? Is that a fair description?

CHALMERS:

Of course not. This is just a predictable combination of division and dishonesty that Peter Dutton learned at the feet of Tony Abbott and Scott Morrison. This was a Budget for middle Australia with help for people doing it the toughest and big investments in the future of our economy at the same time as we were able to put the Budget on a much more sustainable footing.

SPEERS:

So you don't think there's a working poor in Australia?

CHALMERS:

Certainly there are people doing it tough, and they are the motivation behind all of our efforts to get wages moving again after a wasted decade of wage stagnation and deliberate suppression by our predecessors. So getting wages moving again, helping people with the cost of early childhood education, payday super, paid parental leave, skills and training, all of these agendas and all of these policies which were in the Budget on Tuesday night are about helping all Australians where we can. There is also, of course, some help for the most vulnerable in our society and we're proud of that.

SPEERS:

Well, just on that, what do you think of Peter Dutton's idea to let those on JobSeeker work an extra 10 hours a fortnight before they lose their payments.

CHALMERS:

Getting more people into work was already a central feature of our economic plan before Peter Dutton started scratching around for something to say in Budget week. We've got 339,000 jobs created under the life of this Albanese Government – not yet 12 months old – and we know we need to do a much better job of hooking people up with the opportunities of a job creating economy and that's the motivation which sits behind our efforts – whether it's early childhood education, whether it's skills and training, particularly foundational skills and apprenticeships, whether it's our efforts in communities where there has been intergenerational unemployment. All of this is about making sure that we can get more people into work, so that they can earn a decent wage and provide for their loved ones. That was our focus before budget week, during budget week and it will be after budget week as well as we move towards the Employment White Paper that I'll be releasing later in the year.

SPEERS:

Okay, understand the things you announced in the budget but what do you think of that idea from Peter Dutton?

CHALMERS:

We already said that these sorts of issues are the sorts of issues that we would ordinarily contemplate in the usual business –

SPEERS:

So you will consider it.

CHALMERS:

Whether it's the Employment White Paper or in other ways, what we've said since Peter Dutton came out with this on Thursday night, is we've already got a substantial agenda when it comes to workforce participation. We are proud of the low unemployment that we've got in our economy. We are proud of our efforts to get more people into work and just as importantly, when people are working to get them to earn more so they can provide for their loved ones. That's been a central feature and a central achievement, frankly, of the first year of this Albanese Government.

SPEERS:

Okay, sorry, I'll just ask one more time, though. Will you look at this, were you already looking at it? How should we interpret the answer here?

CHALMERS:

We are always looking for ways to make it easier for people to participate in work. We were doing that before Peter Dutton was scratching around –

SPEERS:

This idea though? This this idea for job seekers, you were looking at this already?

CHALMERS:

We're looking at the workforce more broadly in the context of the Employment White Paper and all of the policies that we've already put in place so that people can work more and earn more and provide for their loved ones.

SPEERS:

I want to ask you about housing, many would agree there's a crisis when it comes to housing in Australia at the moment. Now, your budget does say migration will increase by one and a half million over the next five years. Your housing affordability future fund aims to build an extra 30,000 homes over that same period. Is it going to be enough?

CHALMERS:

Well, it's not the only policy that we've got for housing, but it's an important part of it. It's time to end the political games and the ambit claims in the Senate and get this key piece of legislation passed. Labor and a number of the crossbenchers are trying to build more social and affordable homes in our communities and some parties – the Liberals and the Greens – are saying that they will vote to prevent that. Now, we need to make sure that we put in place this key part of our policy but in addition to that, we've got new tax breaks for build‑to‑rent properties to build more affordable rental properties. We've got an increase in Commonwealth Rent Assistance – the biggest for 30 years, we've got changes to NHFIC, we've got an agreement to extend the $1.6 billion housing and homelessness agreement with the states. We've got a whole range of elements of a really comprehensive package for housing, it's time to get the Housing Australia Future Fund passed through the Senate so we can build more social and affordable homes.

SPEERS:

So when you put together that whole range of package that – all the items you mentioned in various programs – what will that mean for the housing stock over the next five years? Do you have any sort of number?

CHALMERS:

Each element of the policies have got different numbers associated with them. You mentioned the 30,000 associated with the Housing Australia Future Fund, the Housing Accord that I've worked up with the states and territories, the investors and the industry is about a million homes between next year and 2029, so each of the policies have got different numbers associated with them. But they're all designed in one way or another to deal with the main issue in the housing sector which is supply. We don't have enough homes. And so, whether it's the build‑to‑rent tax breaks, the Housing Australia Future Fund, or the Housing Accord or some of these other measures, it recognises that if we're going to make housing more affordable, we need more supply, we're trying to do that in the Senate. It's time for the Senate to end its political games and get on board.

SPEERS:

You mentioned the national housing and homelessness agreement with the states, that's $1.6 billion from the Commonwealth for social and affordable housing. One of the Greens' demands is that you double that funding for the states in return for them freezing rents for two years. Is that a good idea?

CHALMERS:

Well, first of all, your question is right to acknowledge that rent freezes and those sorts of policies are essentially a matter for the states and territories. But Anthony Albanese to his credit, has shown leadership at the National Cabinet level to see how we can work with the states and territories on issues like renters' rights and that's really important. When it comes to the agreement with the states and territories, we will do what we can. Obviously, we have made housing and homelessness a huge priority of our first year in government, that's why I could rattle off that long list of housing policies.

SPEERS:

So will you double the funding as the Greens suggest under this agreement with the states?

CHALMERS:

Obviously not going to pre‑empt the conversations that we have with the states and territories or to nominate a number today. We've indicated that we will be extending it. We'll work in the usual collaborative and cooperative way with the states and territories to get a good outcome here. But again, that's not the only element of our housing policy, there are a range of others –

SPEERS:

But you're willing to go above the $1.6 billion.

CHALMERS:

Well, it wouldn't be the best negotiating tactic, David, to nominate a number today. But we've said we're prepared to extend it. Julie Collins is doing a magnificent job working with her state and territory counterparts. She got them together, I think in the course of the last week or two, this is absolutely central to our agenda and the funding will reflect that.

SPEERS:

And when it comes to rent freezes, I mean, yes, it is the states that would have to do it. But what's your view, in principle? Do you think it's a good idea at the moment for a short period of time? Or do you worry about landlords – the impact on them?

CHALMERS:

It's more a sense of we've got other things that we can do at the national level and they've been my focus. I haven't been especially focused on that element of it because it's the state and territories’ responsibility, and because the Prime Minister and the Housing Minister have carriage of that, and they've been interacting with National Cabinet on it. My job is to –

SPEERS:

But you're the Treasurer, you don't have any thoughts on whether a rent freeze is a good or a bad idea for the economy?

CHALMERS:

Well, my thoughts are ‑ we're better off trying to encourage supply and while we do that, we're better to try and take some of the edge off these rental pressures that people are feeling. And that's why I funded on Tuesday night, the biggest increase in Commonwealth Rent Assistance in three decades.

SPEERS:

Let me turn to the biggest savings measure in your Budget – curbing the growth of the NDIS. The Prime Minister said this week, when it comes to how this Government governs, one of the defining features is how you go about reform. You get a report, he said then you respond, you get a report, then you respond. How have you gone about finding this huge $74 billion NDIS saving?

CHALMERS:

Well, a couple of things about that, David, the two fastest growing areas of government spending are the NDIS and the interest costs on debt and we made progress on both of those in the Budget. But our overwhelming priority when it comes to the NDIS, is to make sure that people who the scheme was designed to serve get the right services and programs to help them. That is our number one priority, daylight second. And then in order to do that, we need to make sure that we moderate some of the growth in costs. And so what we've been able to do, and I acknowledge the work of Bill Shorten and Anthony Albanese working with the states and territories to do this, is to try and moderate the cost. It's still a demand driven program. It still will be growing very quick, the quickest growing in the Budget, but we need to moderate some of these costs. So in the near term, that's about cracking down on fraud and money going where it's not supposed to be going. We also need to be making sure that we are moderating our growth in costs in services and equipment. For example, there is a review underway. There's lots of engagement with the reviewers and with the sector and with the people that the scheme was designed to serve, and that work will be ongoing. The eight per cent in the Budget –

SPEERS:

Sorry, I'm just going to come to the question, though, which was – how did you arrive at this number, the $74 billion over a decade? It's huge.

CHALMERS:

Well, the first 15 of that is a consequence of our efforts to rein in fraud and wasteful spending in the scheme, that's at the front end. The eight per cent target that I was about to refer to kicks in from 2026. And that is the best balance of recognising that the scheme needs to grow. We're not talking about winding back growth in the scheme, we're talking about moderating it at eight per cent, rather than at a number a bit higher than that. And that reflects the best balance and our best understanding of what we need to do to fund the services that people need and deserve, while winding back on areas where that spending has been unnecessary or wasteful.

SPEERS:

Treasurer, where does this number come from? Did the Expenditure Review Committee have a good look at this number?

CHALMERS:

Well, obviously, we come to these sorts of decisions based on the advice of the agencies and working closely with the sector and others –

SPEERS:

What about Treasury, did Treasury have a look at this number?

CHALMERS:

Of course.

SPEERS:

And they're comfortable with this? They're comfortable that you can save $74 billion?

CHALMERS:

Obviously, otherwise, it wouldn't be in the Budget, David. This is a lot of collaboration – Treasury, Finance, the NDIA, the Minister, the Expenditure Review Committee, more broadly. And what it recognises is it's a demand driven program, the costs will continue to grow. There are ways that we can moderate that cost in a collaborative way and that's what we intend to do.

SPEERS:

Can you put the detail out for the sector, the disability sector to have a look at?

CHALMERS:

Well, there's obviously already a bunch of detail out there, we've put numbers against what we're proposing to do. As you say, there's an ongoing review in addition to that, and the eight per cent target doesn't kick in till 2026 –

SPEERS:

But it’s a lot of saving, and all I've seen is a one page document, is there more that you could release so that the sector can see where you plan to make these big savings?

CHALMERS:

Obviously, in the course of working with the sector and working with the agency, and working more broadly across government, in the context of the review and in the context of the work that happens between now and 2026 when the target comes into place, there will be a lot of information that people can interact with.

SPEERS:

Let me ask you about tax over the next decade. The budget suggests the structural deficit will actually tighten up and almost close over the next 10 years. A lot of that’s because of higher tax receipts – bracket creep, in other words. Are you expecting workers to pay more tax to fund the sort of services, defence spending and so on, that's going to be required?

CHALMERS:

First of all, we're really pleased with the progress we've been able to make on the structural position in the budget, but the work isn't finished there. We made a heap of progress showing restraint in the near term, but also finding almost $18 billion in savings and reprioritisations, plus some modest but meaningful tax reform. The fruits of all of that is a structural position which is better than what we inherited, but there are still structural issues in the budget. And one of the reasons why we saw some of that near‑term improvement in the budget is because people are working more and earning more, and that's a good thing.

SPEERS:

And paying more tax. And is that the plan over the decade for people to pay more tax?

CHALMERS:

Our plan over the decade, David, is to strike the best balance between what we need to do to fund the services and programs and investments in the future that people expect of a good government like ours at the same time as we do modest but meaningful tax reform, like what you saw in the budget – whether it's the PRRT or multinationals or superannuation balances more than $3 million or tax compliance or changes to the tobacco tax. What we've demonstrated is that we can strike the right balance between supporting people in middle Australia, and more broadly, at the same time as we make these changes to the tax system to put the budget on a much more sustainable footing.

SPEERS:

On the stage three tax cuts, I'm sure everybody watching will have heard your line that your position has not changed on the stage three tax cuts. You didn't look at it in this budget. I've heard it once or twice. I'm just wondering if you could unpack – why has your position not changed? Why was it not a factor in this Budget?

CHALMERS:

Because we had other priorities, David. We wanted to make sure that we could take some of the edge off these cost‑of‑living pressures without adding to inflation. We wanted to make sure that we could invest in the foundations of future growth in our economy in areas like the vast industrial opportunities of cleaner and cheaper energy.

SPEERS:

Just coming back to stage three though, why do the stage three tax cuts need to stay?

CHALMERS:

As you confidently predicted a moment ago, David, and we haven't changed our position.

SPEERS:

And I'm asking why?

CHALMERS:

It hasn't been a priority in the context of these budget deliberations, because we found other ways to make meaningful changes in the budget to help people through difficult times and invest in their future.

SPEERS:

But why are these important? Why do you want to keep them?

CHALMERS:

We've said in principle that returning bracket creep is a worthy objective of governments of both political persuasions, frankly. We've always said when we can afford to give tax relief, particularly to low and middle income earners, then that's a worthy objective as well, and governments of both persuasions have done that over time. These tax starts kick in $45,000 – that's a fact, which is sometimes lost in the conversation.

SPEERS:

Because they get very, very little at 45,000. Those on more than 200 grand get the bulk.

CHALMERS:

I understand, David, I understand the structure of the tax cuts, I'm trying to explain to you that when it comes to returning bracket creep, that is a worthy objective. And as you rightly said a moment ago, it hasn't been a focus of this Budget, they don't come in for more than a year now, and there are other things we want to do in the interim.

SPEERS:

Just a final one, Treasurer, according to the budget, the special deal to protect Western Australia's GST share continues to rise. It's billions of dollars every year now. Obviously, Labor won four seats in WA, you'd like to hold on to those, I understand it. But is there really any justification for this deal now?

CHALMERS:

I think there is David. This is in recognition of the really quite remarkable contribution that the people and industries of WA make to our economy nationally and to the national budget as well. And I think it is a good thing that we guarantee the floor of GST revenue out west, at the same time as we have said and we have honoured a deal that says none of the other states are worse off as a consequence of that deal.

SPEERS:

It's the only state surplus now, WA, right? Every other state is struggling in deficit and every state makes a contribution. I mean, Queensland I'm sure you know, would argue they do a lot with coal exports and tourism, New South Wales, Victoria, they do a lot with tourism and international students. Everyone does their bit, right?

CHALMERS:

Yes. And that's why we have guaranteed that no state is worse off as a consequence of this deal. We've got some other state budgets to come, David, and that remains to be seen whether some of them are in surplus as well, but the other states aren't worse off as a consequence of this deal. I think it's entirely reasonable that WA gets the floor that has been agreed.

SPEERS:

Alright, Treasurer Jim Chalmers, thank you very much for joining us this morning at the end of a very busy Budget week. We appreciate it.

CHALMERS:

Appreciate it, David, thank you.