Deborah Knight:
This is a special Budget edition of Money News. Deb Knight here, joined by my Nine radio colleagues, John Stanley and Ollie Peterson, and with us now from our Parliament House studio, the man at the moment, federal Treasurer Jim Chalmers. Treasurer, welcome.
Jim Chalmers:
Thanks, Deb, how are you?
Knight:
I’m good, how are you? How are the nerves tonight? Your fourth Budget. But with this election looming, it would have to be the most important one you’ve ever delivered, wouldn’t it?
Chalmers:
I think the combination of them have been big opportunities, good opportunities for us to lay out our economic plan. In our case tonight, giving every Australian taxpayer a tax cut, helping with the cost of living, but also making our economy more resilient in the face of all of this global economic uncertainty that we’re all seeing.
Knight:
It’s all about buying votes, though, isn’t it? I mean, the Opposition’s right. They say this is a Budget for the next 5 weeks, not the next 5 years. Is 70 cents a day really going to make a big difference in this tax cut for people grappling with cost‑of‑living pressures?
I’ve got a listener here, Dave the bus driver, on the text line saying his insurance has gone up 40 per cent, fuel’s all over the place, and his gas and electricity’s up 40 per cent. And he says, have you purchased a pork roast recently? Is 70 cents a day going to cut it?
Chalmers:
Those are the Coalition talking points. The Coalition –
Knight:
Well, this is a listener who’s texted me.
Chalmers:
No, but the numbers that you’re quoting are straight from Angus Taylor’s press release. And what his position that he’s taken tonight means is that Australians will get less help with the cost of living. This is what happened last time we tried to give every Australian taxpayer a tax cut. They were angry about that as well.
If they’ve got alternatives, let’s hear them. Let’s hear how they’ll pay for them. They’ve got to find $600 billion for these mad nuclear reactors and they can’t do that without coming after Medicare. So, let’s hear what their alternative is.
They’ve had 3 years, and they haven’t come up with a costed, coherent or credible economic policy. They haven’t come clean on their secret cuts and that’s because they will make Australians worse off.
John Stanley:
Treasurer, it’s John Stanley here. Just in relation to that, because the people listening to us have been doing it really tough, as you’ve acknowledged. So, why it’s $5 initially, but why do they have to wait till the middle of next year?
So, they’re sitting here trying to work out how to make ends meet and they’ve got a cost‑of‑living crisis and you’re saying you’re trying to help them, but they’ve got to wait till the middle of next year to get even the $5.
Chalmers:
We’ve got to do this in the most responsible way that we can. The additional benefit is $10 bucks a week on average. But that’s in addition to the tax cuts which are already rolling out. And so, the way I’d encourage you, John, and all of the listeners to think about these tax cuts is what we’re doing here is we’re topping up the tax cuts which are already rolling out.
We acknowledge in isolation, they are relatively modest, but in combination, we think they’re meaningful. About $50 bucks a week is the average tax cut when you put all 3 stages together – and also, it’s not the only thing we’re doing with the cost of living.
We do more than acknowledge the pressures that your listeners are reflecting to you on the talkback line and on the text line. We know that people are under pressure, and that’s why really the most important feature of this Budget tonight is cost‑of‑living help.
The tax cuts are part of that, but not the only part of that. Strengthening Medicare, cheaper medicines, energy bill rebates, cutting student debt, all of this in the most responsible way that we can, and that Budget responsibility explains why we have to sequence it.
Stanley:
I know there are budgeting constraints and you’re trying to reform the system with, of course, the thresholds, but Deb doesn’t need the $5. I speak for her. I don’t need the $5. You don’t need the $5. There are plenty of people who do, jobseekers, people who are age pensioners. Couldn’t you have targeted this better than those who are doing it really tough?
Chalmers:
What this does is it means that proportionately, as a proportion of your income, the biggest beneficiaries are the people on the lowest incomes. That’s deliberate. We’ve gone for this tax rate. We’ve taken it down from 19 to 16 in the first instance, now down to 14.
And that’s because we want to ensure every Australian taxpayer gets a tax cut but that it disproportionately benefits people who need it the most, which is primarily, in this case, younger workers or people we’re trying to encourage off social security and into work. We’ve also increased social security payments over the life of this government.
We know that there are a number of ways we can help with the cost of living and over our 4 Budgets, really the common feature of all those Budgets has been cost‑of‑living help. From Budget to Budget, that cost‑of‑living help sometimes takes a different form. And the major new cost‑of‑living help in this Budget is tax cuts, but it’s not the only way that we’re helping people.
Knight:
I’ll bring in Ollie Peterson now from 6PR in Perth, your question to the Treasurer Ollie.
Oliver Peterson:
Treasurer, total expenses are increasing over 17 per cent over the next 5 years. Wages only expected to increase by about 3 per cent. So, that means the money isn’t going to new programs, it’s going to tax cuts and welfare payments. Isn’t this just good old‑fashioned tax and redistribute?
Chalmers:
I don’t believe so, Ollie. It’s nice to hear from you from out west. Hello to all of your listeners as well.
First of all, I think you’re comparing annual wage increases with a 5‑year number for spending. But leaving that aside, I might be wrong and if I am, I apologise, but I think that’s what you’ve done. What we’ve done with this spending in the Budget is the best way to understand that is about $35 billion in what’s called net policy decisions.
Half of that’s the tax cuts, and a big chunk, about $8 billion of it, was already provisioned in the Budget. So, in terms of additional spending in the Budget, there has been some meaningful investments, but not as bad as what you might read in some of the newspapers. We’ve tried to be as responsible as we can.
The other thing when it comes to tax, which is part of your question, is tax to GDP. Tax as a proportion of the economy goes down this year, and we’re getting average tax rates down because of these tax cuts, and we’re boosting participation. And so, there’s a reform element to what we’re doing.
We’re strengthening the economy, we’re providing that cost‑of‑living help because those 2 things together are the best way to ensure ourselves against all of this uncertainty which is coming at us from the global economy.
Knight:
Now the Budget papers show the debt close to a trillion dollars. Have you given up on getting the country out of debt? Because it is deficits as far as the eye can see. Can you tell us when you’re aiming at least to get us back into surplus?
Chalmers:
First of all, I was the first Treasurer in almost 2 decades to deliver back‑to‑back surpluses, and when we came to office there was a deficit every year, huge deficits. And we turned 2 of those into surpluses –
Knight:
And they’ve now been squandered.
Chalmers:
I wouldn’t agree with that. They’re making a structural difference to the budget. One of the reasons why debt is $177 billion lower this year than what we inherited is because we delivered those 2 surpluses and we got this year’s deficit almost half of what it was when we came to office.
We’ve made a lot of progress. We’ve actually, in nominal terms, in dollar terms, engineered the biggest ever positive improvement in the budget in a single parliamentary term. That’s a fact.
We know that there’s more work to do, we know that there are structural issues in the budget, but we have been chipping away at those. And because we’ve done that, we’ve been able to find room to strengthen Medicare and bulk billing, invest in cost‑of‑living help and also invest in strengthening our economy more broadly.
Knight:
So, when have you got at least a year that we can look towards? Or is it just a decade of debt?
Chalmers:
What the Budget papers make clear, and obviously the further out you go, the less reliable the forecasts are. But the Budget papers make clear that the budget is expected to come back to balance at the end of the 10 year period. But again, compare that with what the situation was 3 years ago. There were only deficits, now there’s 2 surpluses in there for the first time in almost 20 years.
I don’t think we should lightly dismiss or diminish the very substantial progress that’s been made in the budget. That’s why debt is so much lower this year than it would have otherwise been, and that’s saving Australians tens of billions of dollars in debt interest, which is better spent strengthening Medicare or in other ways.
Knight:
Do you really think we’re going to get spending growth falling from 6 per cent this year to 3 per cent next year and only down to half a per cent the year after that?
Chalmers:
Yeah, that’s the expectation.
Knight:
Well, off the back of which cuts and the fact we’ve got huge outlays with the NDIS, with welfare payments and beyond?
Chalmers:
First of all, we found $94 billion in savings, including $2 billion in this Budget before an election. There were precisely no savings in the last Budget of our predecessors. So, we found more savings than is the historical norm. We shouldn’t dismiss or diminish that either, almost $100 billion in savings to the budget. That’s an important point.
Now, you asked me about the NDIS. Some of the big structural pressures on the budget, the NDIS aged care and interest costs have been substantially improved because of our reforms and because of our efforts and the budget would be in a much structurally weaker position if we hadn’t taken some of the steps that we’ve taken.
Stanley:
Yeah. Correct me if I’m wrong. I think it’s a billion dollars listed as these are decisions taken but not yet announced. Is that right in the Budget?
Knight:
$1.53 billion I think.
Stanley:
Yeah, so it’s over a billion dollars. I mean, we’re about to go on an election campaign, and people listening to us might be thinking, well, are there any moves to further deal with, say, the cost of energy? So, why shouldn’t all that stuff be put out tonight rather than wheeled out during the election campaign?
Chalmers:
First of all John, and this isn’t your fault, because not everyone pores over the Budget papers like some of us, but that is an incredibly small number by comparison.
Stanley:
Oh, I’m aware of that. Yeah. Yeah, but still.
Chalmers:
That’s very small, and so some of those decisions taken but not announced are about, there might be a commercial negotiation, there might be other reasons why we can’t put it out yet, but that’s a very small number.
Knight:
Come on, be upfront. It’s just about having some sweeteners during the campaign.
Chalmers:
Deb, it’s a very small number and to be honest with you, I don’t remember our predecessors getting a lot of grief for much bigger numbers than this. It’s a very small number and there are good reasons to have that line item in the Budget. It’s been a line item in the Budget for as long as I –
Stanley:
Yeah, everyone’s had one. But I’m just asking because people listening, for instance, on energy policy and saying, all right, well, how are we going to stabilise and reduce, particularly reduce businesses and others who are saying, well, we’re getting this subsidy, but how are we going to get substantial reductions in energy policy? Can you point to where that’s coming?
Chalmers:
I can point to our record over 4 Budgets of investing in cleaner and cheaper energy, including in tonight’s Budget, the Innovation Fund, which is all about getting energy costs down and investing in our industrial capacity in the context of the global net zero transformation. There are investments in all 4 Budgets, including tonight’s Budget, to meet that objective.
And when it comes to things we might say down the track, obviously, in the course of an election campaign, parties of both political persuasions make announcements. But we’ve laid out our plan tonight.
Knight:
Now, the one word or name that hasn’t been mentioned specifically in this Budget is Donald Trump. But you do speak of the uncertainties in global markets. And the biggest uncertainty of all, of course, would have to be Donald Trump’s tariffs. Do you think that encouraging us to buy Australian will make up for the impact of US tariffs?
Chalmers:
I’ve been really upfront in saying that these escalating trade tensions are a big concern to us. We’re not uniquely impacted by these tariffs or threats of tariffs, but we do have a lot of skin in the game. It’s very concerning to see the way things have developed.
But this is not the only uncertainty in the global economy. China is slowing. We’ve got a war in Eastern Europe. The ceasefire is breaking down in the Middle East. We’ve had political dislocation and disruption around the world, and so there’s a lot of sources of this uncertainty, but a big part of it are these escalating trade tensions.
And only one part of our agenda to make our economy more resilient, but an important part, is the campaign to encourage people to buy Australian. But we’re also investing in other ways in making our economy more resilient.
The world is changing. This is a new world of uncertainty. We don’t pretend otherwise. And that’s why a big motivation and a big influence on the Budget is making our economy more resilient, more competitive, more dynamic, to make the most of the way that the world is changing rather than fall victim to it.
Knight:
Our steel and aluminium exports to the US are already being taxed by Trump’s tariffs. Are our beef and pharmaceuticals next to be hit? Because Liberation Day is only a week away, as Donald Trump is calling it, and there’s been a lot of pressure on him from various interest groups in the US to go after those 2 industries in Australia.
Chalmers:
That’s right. I mentioned in my Budget speech tonight, we’re strengthening the PBS. Some of the American multinationals have said that they want us to weaken that. We won’t be doing that. We will be speaking up for and standing up for the things that make Australia a great country, including the PBS. But you brought a question about other tariffs. It remains to be seen.
Knight:
Are you hopeful?
Chalmers:
Well, we take no outcome for granted. I think it will be an uncertain few days as we wait to hear for any additional steps being taken by the newish administration in Washington, D.C. We’ll continue to engage where we can. We’ll speak up for and stand up for Australia’s interests, and we’ll do the best we can.
Knight:
And just a quick question from Rob on the text line, wondering to know why a household who earns up to $530,000, why should they receive the subsidy for childcare? He says surely if a household is earning over $300,000, they can afford to pay.
Chalmers:
Partly because we see early childhood education as education, not just childcare, not just babysitting. We think it’s got an important benefit for families and for children and we recognise that there’s pressure on people right up and down the income scale, and so we’ve deliberately seen childcare as education and that’s reflected in our policy.
There are some new elements in the Budget funded tonight, including the 3‑day childcare guarantee, building more childcare centres and early education centres in areas where there is a shortage. That’s because we see early education as a game changer for our economy for families, making it easier for people to work more and earn more if they want to, but also giving our kids the best start in life.
Knight:
Treasurer, we thank you for your time.
Chalmers:
Appreciate it. Deb and John and Ollie, all the best.
Knight:
Good on you. Federal Treasurer, Jim Chalmers there on what is his election eve federal Budget night.