Kieran Gilbert:
We’re joined live now by the Treasurer, Jim Chalmers. Breaking news across the ditch – any thoughts on that? I know your focus has been on our RBA, but the Central Bank across the ditch having some change there at the top.
Jim Chalmers:
Yeah, I’ve spent some time with Governor Orr. I wish him well. I don’t know the circumstances, obviously, and I haven’t been focused on it but I wish him well. As you rightly point out in your question, my focus has been a bit closer to home.
Gilbert:
It has, indeed. We’ve got the growth number today. You’re saying you think that this is more evidence of the soft landing being achieved?
Chalmers:
Well, these numbers show that the Australian economy has turned a corner and it looks more and more like the soft landing that we’ve been planning for and preparing for because we’ve got that enviable combination now – inflation coming down, real wages up and incomes up, unemployment very low. We’ve got the debt down, interest rates have started to come down, and now we’re seeing a solid rebound in growth as well. And most countries have had to choose between one or other of some of those elements and we’re experiencing that all at the same time.
And so these National Accounts were very encouraging. They do show a solid rebound in growth and I think the most heartening thing, from my point of view, is that it’s not just public final demand doing the heavy lifting, we’re seeing a solid rebound in the private sector and that’s very welcome as well.
Gilbert:
Yeah. You’ve copped flak for that public spending and I want to get your thoughts on that because looking at this number, the Commonwealth final public demand from what I can read – is down, is down 0.1 per cent for the quarter. And yet you’ve – as I say, you’ve copped some flak, saying that this is the biggest spending increase as a share of the economy of any first‑term government since Whitlam, and climbing to 27.2 per cent of GDP by 2025–26. Yet in this quarter, the Commonwealth contribution to spending is down. Are we seeing a turnaround? Are you listening to some of that criticism that the government is spending too much?
Chalmers:
I think the fact that Commonwealth public final demand has gone down is a really important element of these National Accounts. Every cent of the public final demand growth in these numbers is from the states. As you rightly point out, the Commonwealth has gone backwards in this quarter. But over the last couple of years, public final demand has played an important role in keeping the economy ticking over. Some of our critics – that you referenced in your question – would have preferred Australia go into a recession. We would prefer to help engineer a soft landing in our economy than clean up after a hard landing, we’ve made that clear. But we’re really encouraged because at the end of last year, what we can see in these numbers is that the private sector is beginning to take its rightful place as the driver of growth in our economy. That’s been our preference all along. The best kind of long‑term, sustainable growth in our economy is private sector‑led and we’re seeing the beginnings of that in these numbers. And so it’s encouraging overall to see growth in the December quarter twice as fast as the quarter before. It is a solid rebound in growth but the private sector element of it is especially encouraging.
Gilbert:
The mid‑year budget update, just before December, had that forecast of government spending at 27.2 per cent by 2025–26. If you win the – if Labor wins the election, would you like to see that number down? Is it going to be a priority for you with the private sector, as you say, picking up more of the slack? Would you like to see that shift of Commonwealth spending down even further?
Chalmers:
Well, it’s important to remember that we’ve managed that down from – it was almost a third of the economy during COVID, we’ve been managing that down. And I think, from memory, we got it down to about almost a quarter of the economy in our first year. We’ve got to be realistic about it, there are increasing demands on Commonwealth spending in areas like the care economy, defence spending, and some of these other areas of spending and so ideally you get the budget in as responsible a position as you can. That’s what we’ve been doing. Those 2 surpluses in the first 2 years, getting the deficits down for this year, smaller than what we inherited – that’s all part of that effort. Because of our efforts, we’ve actually engineered an improvement in the budget of something like $200 billion. It means much less debt in the budget, it means much less debt interest, and that makes room for investments in really important areas, including Medicare and some of the other announcements that we’ve made in recent weeks.
Gilbert:
I know where you are right now, there’s quite a lot of nerves, I guess, in south-east Queensland. We don’t know what Cyclone Alfred is going to deliver over coming days. If there isn’t the start of an election, as many thought there would be, you could be at the dispatch box and delivering the budget. You heard some of the commentary – David Gazard, who worked a long time for Peter Costello and John Howard – he says you’ve been in the US recently, you wouldn’t have done that if you were working on a budget. Do you have a budget ready to go?
Chalmers:
Well look, David, with respect, seems to have forgotten that treasurers usually go to the US in the few weeks before the Budget. That’s actually normal. I’ve done that on earlier occasions as would have Peter Costello, as did other treasurers in between myself and Peter and so that’s not especially unusual.
But thanks for asking me about Cyclone Alfred because, as a Queenslander, I can tell you there is a lot of anxiety, there is a lot of fear about the difficult days ahead. There is an expectation that we need to brace for some very heavy weather and so we’re preparing for the worst but we’re hoping for the best. But what that means for the budget, what that means for election timing is not really front of mind for us right now. We’re focused on what it looks like here in south-east Queensland and in northern New South Wales over the next coming days and weeks, and we’re focused on some of these outcomes that we’re seeing in the economy.
Gilbert:
There have been some speculation, sources, you know, quoted out of the public service and elsewhere that there wasn’t a Budget – you know, there were no moves towards a Budget, it wasn’t happening as normal. You’re saying that’s not correct, that you are working towards – via the ERC and elsewhere – to deliver a Budget on March 25, if you’re called upon?
Chalmers:
Yes, that is what we’ve been doing. We’ve actually been meeting the ERC for hours and hours on end. Katy Gallagher and I, the Prime Minister, the ERC colleagues, we’ve locked ourselves away in the Cabinet Room for a number of hours, putting the Budget together and we understand and acknowledge that calling the election is a matter for the PM, in consultation with us as his senior colleagues, but we’ve said countless times now that we’ll be ready for a Budget if we need to deliver one. We’ve certainly been doing the work to that end, hours and hours of Expenditure Review Committee meetings have been a big part of that effort.
Gilbert:
Kevin Rudd – and this is in the context of the election campaign – you will recall, I certainly remember, Kevin Rudd saying, ‘the reckless spending must stop.’ Was he referring to the level of spending that we’re seeing now, you know, from the Commonwealth as well in terms of the promises this year upwards of $30 billion? Isn’t that the sort of spending he was referring to? Are you cognisant of that heading into this campaign as well?
Chalmers:
Well, I think the defining feature of this Albanese Labor government has been responsible economic management and the way we’ve managed the budget is a big part of that. Two surpluses in the first 2 years, smaller deficit this year, a $200 billion improvement, $170‑odd billion less Liberal debt means savings on interest repayments. Most of the announcements that we’ve made since the mid‑year budget update were already included in the mid‑year budget update. We’ll continue to make commitments which are responsible. We’ve managed the budget in the most responsible way that we can. The sorts of fiscal outcomes, budget outcomes, that we’ve seen under this Labor government would have been unrecognisable to our predecessors –
Gilbert:
So, you’re saying it’s all sort of unavoidable spending –
Chalmers:
Who promised a surplus in every year after –
Gilbert:
Like aged care and that sort of thing?
Chalmers:
Oh, obviously aged care is a big pressure on the budget but we’ve taken steps to make that more sustainable. Similarly, the NDIS – we’ve got the interest cost down as well so we’ve attended to the budget in the near term with that $200 billion improvement but we also haven’t ignored those structural issues including aged care, the NDIS, and interest on public debt and that’s because we’re getting the budget in much better nick to make room for these important investments like strengthening Medicare, which is an important way that we can help take some of the pressure off household budgets.
Gilbert:
I know you’ve got to go. Just quickly, March 12 is when that tariff is meant to kick in. Do you know, has the Prime Minister got another call scheduled with Donald Trump? Has he tried to? I know you met with your counterpart just days ago, but has the Prime Minister sought a one‑on‑one with President Trump? We know what those personal, how important those personal connections are when it comes to this President.
Chalmers:
I think that’s a matter for him to talk about publicly. Obviously we have been engaging at every level – Minister Wong, Minister Marles, myself, the Prime Minister has already had a productive conversation with President Trump. And so we engage and we speak up for Australia’s national interest. We’ve got a good story to tell about why Australia is different in comparison to some of these countries that have been the focus of President Trump. We’ll continue to make that case wherever we can and obviously the President and the Prime Minister will talk at some point. They’ve already had a –
Gilbert:
Has he been unable to get him on the phone? Because that was February 10, a few weeks ago now.
Chalmers:
I’m not going to talk about that publicly. Obviously, the Prime Minister seeks to have a conversation with President Trump when that’s appropriate but the engagement has been right across the board. A number of senior ministers in the government including the Prime Minister have had discussions with our relevant counterparts in the US. We’ve made our case when it comes to tariffs.
Look, we know that there’s a lot of uncertainty in the global economy. We’re seeing that in the share market, we’re seeing that around the world, we’re seeing it in China and elsewhere. And that’s why these National Accounts today are so important, Kieran, because they do show that we are building together as Australians a decent foundation to confront the uncertainty which is coming at us from offshore here in south-east Queensland but also from around the world when it comes to the economy and Australians should be proud of the progress that we’ve made together.
Gilbert:
Before you go, Peter Dutton recently said to Andrew Clennell that he would look at divesting, divestiture rules around insurance companies and, in fact, they’d be open to that. Today, Angus Taylor said to Phil Coorey at the AFR event, ‘we’ve said we’ll keep it confined to supermarkets only, not insurers. No, we’ve been clear on that.’ Do you welcome the fact that the Coalition is moving away from suggestions of divestments within the insurance sector?
Chalmers:
Well, this is real slap stick stuff, isn’t it? They’re making it up as they go along. One says one thing, another says something completely the opposite. They’ve had 3 years now to get their story straight on the economy. They don’t have a single costed, coherent or credible policy when it comes to the economy and that’s because they’re making it up as they go along. They’re hopelessly divided on such a simple question of whether or not they’d intervene in this market. They can’t get their story straight, that’s why I think nobody really takes them seriously on the economy. It’s why Peter Dutton is always going to try and pick fights and start culture wars because all they’ve got are secret costs and secret cuts, lower wages for workers, longer lunches for bosses and higher electricity prices from nuclear reactors. And you’d think, after 3 years, that they could come up with something better than this horrendous contradiction that we’re seeing today.
Gilbert:
Treasurer, thanks for your time. It is a potentially difficult few days. We wish everyone in Brisbane and in south-east Queensland all the best over coming days. Let’s hope it’s not as severe as some are fearing at the moment.
Chalmers:
I really appreciate that, Kieran. Thanks very much.