GREG JENNETT, HOST:
Welcome back to our studio. Question one: where is the plan? The demand from Angus Taylor is show us the plan. We're all waiting until October for now, I take it.
JIM CHALMERS, TREASURER:
That's not the case, Greg. And, of course, you know Angus Taylor had been part of a government that had been in charge for almost a decade and so if he had a plan, we would have seen it at some point during that period. We do have an economic plan. The Albanese Labor Government has made that clear since before the election. And it's more important now than ever. It's about responsible cost-of-living relief in a sustainable way. It's about growing the economy the right way and dealing with some of these supply chain issues that we have by investing in skills and childcare and cleaner and cheaper energy. And it's about responsibly trimming the budget of these rorts and all of this waste, which has meant that we've got a trillion dollars in Liberal debt with not enough to show for it.
JENNETT:
On the latter, you must have some idea by now of the scope that you've been able to identify in rorts and waste. But you also have a clear understanding of how much inflationary pressure is in the system. Does one meet the other?
CHALMERS:
Well, what today was all about was bringing Australians into our confidence about the economic situation as the Treasury sees it. And so by releasing those forecasts – a bit unusually for this time of the year – I wanted Australians to get as full a sense as possible of what we're up against as a country, not just as a government. And inflation is obviously a big part of that and people feel that every day when the bills arrive or when they're in the supermarket. When it comes to the budget, we have begun the hard work of going through the budget line by line, Katy Gallagher and I have begun that work with our departments. But the fruits of those efforts will be seen in the October Budget.
JENNETT:
But can it be enough, I mean, even ballpark figures, even if you're only able to identify a few $100 million, or one or two billion, the enormity of what needs to be cooled and calmed in our economy, according to a peak inflation figure of 7 ¾ per cent is huge, you're not going to get there on waste and rorts alone?
CHALMERS:
Well, that's not the only way to deal with these inflationary pressures. You know, part of our task is to take money that has been wasted and rorted on unproductive purposes, and redirect it to where we can get an economic dividend: energy, childcare, skills, infrastructure, a Future Made in Australia, all of those important areas. And so that's part of the task. But one of the big reasons why we've got so much inflation in the economy right now is because our supply chains are clogged. And those are partly the costs and consequences of a wasted decade of missed opportunities. And so we have to responsibly invest there. Managing demand in the economy is partly a job of the independent Reserve Bank, government's role is to not make it any harder for the bank on that front. But where we can have the most meaningful difference is on the supply side of the economy. And that's our focus.
JENNETT:
Just on the Reserve Bank, you did have some remarks, it was only yesterday: a lot of commentary being made about people having buffers in their home loans, which wrongly assumes, you say, that interest rate rises and inflation aren't hurting people, they are. Was that a shot at the Reserve Bank? Because it constantly reminds us through its reviews and measures about those buffers, doesn't it?
CHALMERS:
I don't take shots at the independent Reserve Bank. I've gone out of my way - not just as Treasurer but as Shadow Treasurer - not to do that. The point I was making is that some people have buffers, as the Reserve Bank and the private banks have pointed out, but not everybody does. And when inflation is already higher than 6 per cent, we expect it to go north of 7 per cent by the end of the year, I think it's self-evident that people who live paycheck to paycheck will find it extremely tough to deal with that high inflation. And for homeowners who might be a bit marginal, then obviously, it's difficult for them as well. Everybody's got to find when interest rates goes up, every mortgage holder has got to find that extra dollar to go to servicing the mortgage, which can't go towards meeting some of the higher costs of living and I think that's self-evident. That's not a shot at anyone. That's a fact.
JENNETT:
But I mean they measure some of these buffers down to the last dollar almost. So they have a very clear fix on who went ahead with their mortgages and who didn't. And they seem in all their analyses to still be quite sanguine about the overall picture. Are you for those households?
CHALMERS:
I think that high inflation in particular, and the interest rate rises that are a consequence of that make life harder for people. I speak to the bank CEOs all the time, and they point out to me that a lot of people do have buffers in their home loans because rates have been so low for so long, and the Reserve Bank is reflecting that. I'm not disputing that some people have buffers in their home loans. My point is others don't and the interest rate rises have a broader impact on the economy as well. We need to see it in broad terms. I can make those points without it being some kind of reflection on the independent Reserve Bank. I don't take shots at the bank or the Governor.
JENNETT:
Now, fair enough. Now, as for the upside, I suppose, to the budget and your management of it: you do inherit a better ending point for the financial year just concluded. It was going to be minus $80 billion. Substantially better, a little bit better? What's your description?
CHALMERS:
It will actually be substantially better, Greg. And the reason for that is a lot of temporary factors. The most important being those very high commodity prices that we have been getting - they've come off a bit unfortunately in the last few weeks. We've been getting very high prices - that's puffed up the budget. But the other thing is a lot of promises made by our predecessors, which they couldn't get out the door in time means that that spending gets pushed back.
JENNETT:
Does it have to be? You could discontinue it.
CHALMERS:
Where it's unnecessary spending then obviously we need to continue it. But it's not a permanent structural improvement in the budget. It's a combination of a couple of temporary factors which have got us that outcome.
JENNETT:
And so you don't think that those improvements carry through much into your first budget year?
CHALMERS:
On the contrary, I think the starting point for our budget, particularly in the later years of the forward estimates are likely to be worse than what they were in the pre-election fiscal outlook. And that's because we've got big structural issues in payments. There are some things that weren't accounted for by our predecessors. A whole bunch of pressures, particularly around COVID, which are flowing through to the budget, as well as the impact and the implications of these forecasts for slowing economic growth that I released today.