KIERAN GILBERT:
Treasurer Jim Chalmers. Thanks for your time. You're reporting today it's the worst global growth forecast in three decades. Are we expecting something worse than the COVID downturn and the GFC?
JIM CHALMERS:
Well, those are the forecasts of the International Monetary Fund and what they're saying is that they expect the combination of the impacts of higher interest rates, higher persistent inflation, the war in Ukraine and all of these things will create, in their view, the weakest five‑year period for more than 30 years which is obviously very troubling to us here in Australia. We do have a lot coming at us from around the world, we've got a lot going for us here in Australia as well. And this week, I'll have the opportunity to confer with my colleagues and counterparts in the G20 and the International Monetary Fund and the World Bank to take the temperature of the global economy as we put the finishing touches on the Budget which will be handed down four weeks from now.
GILBERT:
Given the few years that we've had, though, or in fact, decades, when you factor in the GFC, but particularly COVID, to say it's going to be worse than that, you can see why a lot of our viewers would be concerned hearing that.
CHALMERS:
Obviously, it's a concern. The global environment is more complex and more challenging than it was even a few months ago. We do have that complex combination of pressures coming at us from around the world. And so what the IMF has done is they've seen some of the turbulence on global markets, they've seen what higher interest rates have done in parts of the international banking system, they've seen the prolonged impact of the war in Ukraine, particularly when it comes to energy prices and they have come forward with this forecast. And what it means for us is we won't be completely immune from these pressures that are coming at us from around the world but we do have some big advantages including low unemployment, the beginning of wages growth, and some really good prices for our exports. And so what I need to do and what I will do is take the temperature of the global economy in these meetings in Washington DC and make sure that we are carefully calibrating the Budget four weeks from now so that it's providing some near‑term cost‑of‑living relief for Australians without adding to this inflationary challenge. We're laying the foundations for future growth in our economy but we're also making sure that our economy is more resilient to these kinds of international shocks, which, as you rightly point out have been a feature of the global economy now for at least a decade and a half.
GILBERT:
And one of the things that you've touched on is that inflationary interest rate environment. I noticed at the weekend reporting along the lines of the government continuing on with a policy that was put in place, in fact, by your predecessor, Josh Frydenberg, that is to pause or end what's known as the low and middle income tax offset. Essentially, it was agreed by both parties before the election that that would end this year. This is the sort of move the RBA would welcome wouldn't it to take government dollars out of the economy right now?
CHALMERS:
Well, two things about that. First of all, we are cognisant that when we provide this cost‑of‑living relief in the Budget, whether it's for energy bills or for some other purpose, we do need to make sure it's not counterproductive, that it's not actually adding to this inflationary problem that we're dealing with right now. Inflation will be higher than we'd like for longer than we'd like, more persistent than we would like and so we're very conscious of that. But when it comes to that low and middle income tax offset, it's quite a bizarre story, I think, over the weekend, because as you say in your question ‑ the low and middle income tax offset was ended two Budgets ago by my predecessor Josh Frydenberg who said at the time it wasn't a permanent feature of the tax system. We confirmed before the election and after the election that people shouldn't expect that to continue and so it ended last year as it was intended to by my predecessors. And so I thought it was shamefully dishonest, frankly, for Angus Taylor to pretend that there had been some kind of new announcement about the LMITO. There hasn't. He actually sat in the Cabinet room that decided that last year's payment would be the last one. So it's either another humiliating gaffe for Angus Taylor or it's deliberate dishonesty from Angus Taylor but in either case, this just shows why he's not taken very seriously anymore.
GILBERT:
The government and your Prime Minister, yourself, you campaigned on improving living conditions, wages and so on for low and middle income earners. It was a massive part of the campaign. Is it hard as a Labor Treasurer to make a call like that? I know that it was a decision made by the former government but you have decided that you'll stick with that. Is that a tough call because the net result is it does take dollars out of what otherwise would be going to low and middle income earners?
CHALMERS:
There are no easy decisions, frankly, when you've got the global environment such as it is and when you've got this persistently high inflation challenge in our economy brought about by a war in Ukraine and other global pressures combined with a wasted decade which has left our supply chains unprepared for these kinds of global shocks. And so there's no easy decisions but when it comes to this one, in particular, or specifically, this was a decision taken last year by our predecessors, confirmed by us. Last year's payment was the last one, we're looking for other ways to provide responsible, targeted cost‑of‑living relief ‑ energy bills is a good example of that. And what that means is that we can take some of the edge off these high costs of living that people are experiencing. We understand that people are under the pump and I think they understand that we will try and do what we can within the constraints of a Budget full of pressures from the interest costs on a trillion dollars of Liberal debt, from the NDIS and aged care and health care and the costs of national security ‑ there are a lot of pressures on the Budget and within those constraints, we will do what we can to provide that cost‑of‑living relief, but we'll do it in a targeted and methodical and responsible and affordable way.
GILBERT:
On another issue I've had raised with me by public health officials and advocates is the explosion of vaping among young Australians. But what it's done apparently as well is help drive another hole via the less tobacco excise in the federal Budget. Is that something you've picked up from your officials?
CHALMERS:
Well, I'm incredibly concerned about this explosion in vaping, not just as the country's Treasurer but as a parent and as an Australian. And I think it will have an impact on the Budget but much, much more importantly than that, it will have an impact on our communities and on the health of our people and particularly our young people. I'm sick and tired of driving past bus stops in my own community and seeing particularly teenagers vaping. I think this is a huge public health challenge and I wanted to commend Mark Butler who is doing work with his state and territory counterparts and with the health experts to see what can and should be done here. But the status quo when it comes to vaping is absolutely unacceptable, clearly. All options should be on the table and are on the table. My colleague Mark Butler is doing work with his counterparts and with the health experts to see what can be done but from a Treasury point of view, but from the point of view of a very, very concerned Australian and parent, we've all seen the explosion in vaping, it will have consequences for the Budget but we are much more concerned about the consequences for our people and particularly our young people.
GILBERT:
Finally, I know we're focusing on your trip to the US and so on, in the economy, the Budget, but I do want to ask you about the Voice to Parliament because it's the big issue this year. The Prime Minister told me at the weekend that he's still confident that you can win the referendum even in the face of the Liberal Party opposition to it. He says we live in different times from past referendums. This is the first referendum this century, the time has come ‑ that was his language when he spoke to me. What's your sense? You live in Queensland. It's obviously, the polling suggests it's got a harder ask in your home state. Do you share the PM's optimism?
CHALMERS:
I really do, Kieran. And I think there's an appetite right around Australia and here in Queensland as well for people to grab this opportunity to move forward in a spirit of unity. At the end of the day, it's really just about recognition and consultation and I think Australians are big‑hearted, forward‑looking people and they will reject the kind of backward‑looking, divisive politics that some people want to inflict on our society. Now, we're not naive about it, we're not complacent about it, it will be difficult, it won't be unanimous. There will be people who will make arguments against the Voice and some of those arguments will be dishonest arguments. We're aware of that and we are prepared for that but this is Australia's big chance to do something in the spirit of unity and respect, to move forward together. And we have seen, I think ‑ and I commend the Prime Minister for his leadership on this front ‑ typically when you give Australians the opportunity to be part of something bigger than themselves, there is an appetite to grab that opportunity and that's what I think we'll see later this year.
GILBERT:
Treasurer Jim Chalmers, safe travels to the US. Appreciate your time. Thanks.
CHALMERS:
Thanks Kieran.