James Glenday:
We're joined now by the federal Treasurer, Jim Chalmers. Jim, welcome back to News Breakfast.
Jim Chalmers:
Thanks for having me back on, James.
Glenday:
No, it's our pleasure.
Now ever since the Coalition abandoned net zero there has been some speculation and some attempts to guess or work out what exactly it might cost to keep coal‑fired power stations running beyond the end of their lives. What have you worked out, and how did you do it?
Chalmers:
Well, one of the reasons that the Coalition's approach to the net zero energy transformation is insane in economic terms is because it would cost the Budget billions of dollars to extend the life of the least reliable parts of the energy system.
What they're proposing would swing a wrecking ball through the Budget, through the economy, and push power prices up, not down. And that's because it would require billions and billions of dollars of subsidies to extend the life of these coal-fired power stations which have been slated for some time to come out of the system.
Any reasonable, rational person who cares about responsible economic management knows that these power assets are coming out of the system, and so the onus is on governments to work out the best way to replace that energy which is coming out of the system. The rational economists and experts and analysts in the energy system know that the best way to do that is with cleaner and cheaper renewable, more reliable energy. And that's why it makes no sense in economic terms what the Coalition is proposing. They've got this harebrained position on net zero which is driven more by the internal politics of their Coalition party rooms than it is by the national economic interest.
Glenday:
Can I just take you back to the question though? The Coalition rejects these figures, it says it's still working out its policies in this area as well. I mean how did you work this out? Did Treasury try to model the cost of this?
Chalmers:
What we've done here is we've taken what it's cost to extend power plants in the past, and we've applied it from 2028 to the power assets which are slated to close.
I think as your viewers would understand, for a long time now, and a long run‑up, some of these power assets – coal-fired power assets – are going to come out of the system, and so in order to extend them, it requires very substantial, billions of dollars in government subsidies. The Coalition hasn't told us how they intend to go about that or how much that will cost and so we've done a calculation for them which recognises that if they want to extend the life of these power assets, it will smash the Budget, and will also smash the economy, and it will push power prices up, not down, and that's why what they're proposing to do on net zero and the energy transformation is an act of economic insanity.
Glenday:
All right. I just want to jump in there, Jim. I'm sure there will be lots of debate about that over the final few sitting days of parliament. I want to take you something that's happening now, it seems. What are you proposing for public service funding? Are you proposing trimming it by 5 per cent?
Chalmers:
Well, what we're doing here is what we do before every budget. Katy Gallagher and I, as Treasurer and Finance Minister, we ask departments and ministers and agencies to identify their lowest priority areas of spending so that we can decide whether to redirect that to higher priority areas.
And so that hasn't just been part of our work in the lead‑up to our fifth budget in May next year, it's been part of our work in every budget. We've actually found $100 billion in savings already, and that's helped us make the room that we need in the budget to strengthen Medicare and lift bulk billing and build Urgent Care Clinics and cut income taxes 3 times. It's actually a responsible way to go about things.
Now we're not proposing that every department cut their staff or cut their programs or their budget by 5 per cent across the board, we're doing what we always do, which is we ask for suggestions and ideas for areas where we could redirect lower priority spending to higher priority areas, including in some cases providing more people to process veterans' claims as we've done in recent budgets.
And so this is just the normal part of putting budgets together, it's part of us being a very responsible government when it comes to managing the budget, seeking lower priority areas to redirect spending if we need to and if we want to.
Glenday:
Sorry, Treasurer. I mean, yeah, this has created some concern though, because it's not just a per cent or an efficiency dividend. The reports are up to 5 per cent and that has sparked fears of some pretty substantial job losses, especially here in Canberra. Are those fears misplaced?
Chalmers:
Well, first of all, you're right that it's not an efficiency dividend, and it's also very different to what our opponents were proposing in the lead‑up to the last election, which was to slash tens of thousands of jobs.
As I said to you a moment ago, we're not asking every department to cut their staff by 5 per cent, we're not asking them all to cut their budgets by 5 per cent, we're doing what responsible governments do, which is in the lead up to budgets we say where is your lower priority spending, and do we need to redirect that to higher priority areas? We've been doing that now for 4 budgets, and it will be part of our efforts in the fifth, because there are very substantial pressures on the budget. We are cutting taxes, providing cost‑of‑living relief, strengthening Medicare and doing all of the things that we said we would do, and in order to do that you need to make room in budgets. We've been doing that for 3 and a half years now, and people should expect that to continue.
Glenday:
Jim Chalmers, we appreciate you joining our show this morning.