Jayne Azzopardi:
Well, there is hope this morning that a rate cut could be just a few weeks away, with the Treasurer declaring that he’s seen substantial and sustained progress in the fight against inflation.
Alex Cullen:
But the latest figures from the ABS suggest it’s not all good news, with an increase in headline inflation and food costs. For more, Treasurer Jim Chalmers joins us right now live in Brisbane. Jim, good morning. Thank you so much for being with us. Can we bet the house Australians will see a rate cut as early as next month?
Jim Chalmers:
Good morning, Alex, and good morning, Jayne.
Look, as you know, I don’t make predictions or pre‑empt the decisions that the Reserve Bank takes independently, but I think we did get some pretty welcome and encouraging news yesterday.
We are making substantial and sustained progress now in the fight against inflation.
We’re pretty confident that the worst of the inflation challenge is behind us, but we’re not complacent about that because we know that people are still under pressure and that’s why the cost‑of‑living help that the government’s rolling out is so important.
Azzopardi:
I mean, you really need a rate cut before the election, don’t you?
Chalmers:
I don’t see these things in political terms.
We’ve always said, I think I’ve probably said to you before, Jayne, at least to your colleagues on the program over the last couple of years, that we believe if you take the right economic decisions for the right reasons, the politics will take care of themselves.
Our focus throughout the first 2 and a half years of the government, our ongoing focus is on this cost‑of‑living pressure that we know has not yet gone away. We know that people are still under the pump. That’s why the tax cuts and the energy bill relief and all of the other ways that we’re helping on the cost‑of‑living front is so important.
We’ve also managed to do that in the most responsible way so that we are playing a helpful role in the fight against inflation. The Reserve Bank Governor has herself said that even though public spending is not the main game when it comes to inflation, those 2 surpluses that we were able to deliver in our first 2 budgets are playing a helpful role.
That’s how we see our part of this. We take responsibility for our part of the inflation fight. The Governor of the Reserve Bank and her board will take their decisions independently at the meeting in February and in subsequent meetings throughout the year.
Cullen:
You’ll take responsibility for the inflation fight, but will you take responsibility if no rate cut is forthcoming?
Chalmers:
We made it clear on a number of occasions and I have said repeatedly that I take responsibility for doing everything that we can to get inflation down and to get wages up and to roll out this cost‑of‑living help and strengthen Medicare and all of the things that we are doing.
The Reserve Bank and the government have got the same objective here, to get on top of inflation, but we’ve got different responsibilities. Both myself and the Reserve Bank Governor have made that really clear.
I take responsibility for my part of that. I don’t want to pre‑empt or prejudge or predict or position the independent Reserve Bank. They’ve got important decisions to make throughout the course of the year. I’m focused on my job and they’re focused on theirs.
Azzopardi:
So, those inflation numbers, Treasurer, also saw a drop in the price of fuel and electricity, which are 2 of the biggest feeders that supermarkets say have been driving higher grocery prices. So, when do you think we’re likely to see that drop flow through to our supermarket shop? And is there any pressure you can put on the major supermarkets in that regard?
Chalmers:
You’re right, Jayne, to point out that overall underlying inflation came down. That’s very welcome. Headline inflation was at the bottom half of the band for the third month in a row. That hasn’t happened since 2021. So, overall, a very encouraging picture.
Within that, as you rightly point out, there are some encouraging elements as well. Electricity came off a lot in the year to November, 21 and a half per cent. Food and grocery came off a little bit. Building construction costs came off a little bit as well. All of those things are helpful, and we want to see that flow through to the prices that people get at the supermarkets.
Our objective here is to get a fair go for families and farmers when it comes to the supermarkets.
That’s why we’ve cracked down very substantially on the supermarkets in a whole range of ways, because we want to see those – as inflation comes down in other parts of the economy, we want to see it reflected in the prices that people pay at the checkout.
Cullen:
Headline inflation is up, though, Treasurer and elections usually mean a spending spree. We’ve got out of the blocks pretty early with the spending of $7.2 billion for the Bruce Highway. How much more can you afford to hand out because the other states, they’re demanding more of the same, especially that 80‑20 split, 80 per cent paid by the feds, 20 per cent by the states?
Chalmers:
We’ll continue to manage the budget in a really responsible way.
We’ve helped engineer a $200 billion turnaround in the budget, the biggest nominal turnaround ever in a single term. We’ve got debt down, we’ve delivered those 2 surpluses, we’ve got this year’s deficit down as well.
We’ll continue to manage the economy and the budget in particular in the most responsible way that we can.
The election won’t be some kind of free for all of public spending, but we will make responsible investments.
It’s hard to think of a more responsible investment than making the Bruce Highway safer.
As a Queenslander, I’m here at Lang Park this morning talking with you, and as a Queenslander, I know how important the Bruce Highway is.
That $7.2 billion in extra Commonwealth funding is about making it safer, but also about linking up those really important regional economies and regional communities as well.
We’re proud to back the Bruce with those billions of dollars.
We’ve provisioned most of that in the mid‑year Budget update already and we’ll continue wherever commitments are made, we’ll make sure that the budget can afford them because one of the defining features of this Albanese Labor government has been responsible economic management. That will continue whether there’s an election or not.
Azzopardi:
Ok, Treasurer, thank you so much for your time this morning.
Cullen:
Thanks, Jim.