Karl Stefanovic:
Treasurer Jim Chalmers joins us live from Canberra. Treasurer, good morning to you. How does it feel to get fiscally dacked by the Reserve Bank Governor?
Jim Chalmers:
Obviously, I don’t see it that way, Karl. This will be a really responsible budget because we take this inflation challenge in our economy seriously because we know that people are under pressure. The Governor was asked a hypothetical question about some Budget speculation that there’d be a heap more stimulus in the Budget. There won’t be a heap more stimulus in the Budget. In fact, the Budget will wind back spending overall, and that’s because we recognise that even though the Budget’s not the primary driver of these price spikes that we’re seeing in our economy right now, we can play a helpful role in the fight against inflation, and that’s what the Budget will be all about.
Stefanovic:
You can’t solve, obviously, the issue of government spending by spending more, though.
Chalmers:
We’ll be spending less in the Budget over the 4 years, Karl. We’ll make that clear on Tuesday night. We found a bunch of savings to make sure that we are trimming the budget where we can, making room for priorities like Urgent Care Clinics and Medicare, funding the fuel tax cut, these sorts of really important steps that we are taking. But overall, we’ll be winding back spending. There won’t be a heap of new stimulus in the Budget. The Governor was asked about that Budget speculation in a hypothetical way and gave a hypothetical answer. I think everyone watching your show this morning, Karl, understands that the big reason we’ve had these recent spikes in prices is because we’ve got a major war in the Middle East. We had an inflation challenge before that as well, which the government takes seriously.
Stefanovic:
Do you take responsibility for it?
Chalmers:
I take responsibility for all parts of my job when it comes to the fight against inflation. That’s why the Budget will be a really responsible budget. It will take the inflation challenge seriously because we know people are under pressure. A big reason for that right now is a war in the Middle East. But these inflationary pressures have been hanging around in our economy. And part of the reasons for the budget position that we will take on Tuesday night, part of the reasons why we’re winding back spending overall is because we want to play a helpful role here. That’s what the Budget will be about.
Stefanovic:
So did you tell Michele Bullock about this new tax offset for workers?
Chalmers:
Well, first of all, be careful about the details of the budget speculation that you read. I mean, people will see the Budget on Tuesday night. It’s not that long to wait. You always get this budget speculation in the lead up to budgets and some of it will be right and some of it will be wrong. That happens every year and it’ll happen again this year. The Governor was asked what would happen if the government ploughed in a whole bunch of extra stimulus spending into the economy. And the Governor gave the usual in principle answer to that, but there won’t be a heap of extra stimulus spending in the Budget.
Stefanovic:
So, did you tell her about this offset for workers that may be paid post end of financial year next year? It may be modest 3 billion, but it’s still spending.
Chalmers:
We run the Governor through all of the essential elements of the Budget. We do that quite frequently as the Budget’s being put together. I’ve had a number of discussions with her already, got another discussion with her between now and when the Budget’s handed down. And we try and provide some detail so that the Governor understands where we’re coming from. The Governor herself acknowledged yesterday we’ve got the same objective here, which is to get inflation down. We’ve got different responsibilities. Governments have got to fund a whole range of things. And so, the Governor is quite sensible and upfront about that and acknowledging that. And we talk from time to time about how we get inflation down in our economy at the same time as we discharge our different responsibilities.
Stefanovic:
Okay, if businesses don’t lift prices, they’ll bleed dry and there’ll be a recession. That’s according to Michele Bullock. I’m not sure what choice business will have.
Chalmers:
Well, so far what we’ve seen in pretty welcome ways is businesses have tried to be quite restrained in how they pass on these price increases. But that can’t continue forever. One of the reasons why we think that this inflation challenge, which is primarily about fuel and the Middle East, will spread more broadly in our economy and become an issue in our economy for a little while longer is because of the pass through –
Stefanovic:
Six months is dire. Look, you’ve got National Cabinet today. Are you cooking something up there?
Chalmers:
Well, the Prime Minister and Minister Bowen will be announcing later today after National Cabinet the fuel security package in the Budget. Obviously, the Budget’s got a focus on inflation. It’s got a focus on tax reform and savings and productivity. But there is also a major focus on fuel security and supply chain resilience and funding the fuel tax cut as well. And so, later today, the Prime Minister and Chris Bowen will stand up and outline the fuel security part of the Budget that we hand down on Tuesday night. It’s all about more fuel for motorists and for industry, and more fuel security for our economy, it’s a big emphasis in the Budget, and the PM and Chris will talk a bit more about it later.
Stefanovic:
Treasurer, thank you.
Chalmers:
Thanks, Karl.