KIERAN GILBERT:
Welcome back to Budget 2024. The Treasurer has just delivered his third Budget, boasting a second surplus and power rebates for every household, but with some economists warning the extra subsidies will work against the RBA’s inflation suppression strategy. The Treasurer joins me live in the studio. Third one done and dusted. Let me ask you, why does everyone get the $300 energy rebate?
JIM CHALMERS:
Because we understand that people are under cost‑of‑living pressures right up and down the income scale. Our cost‑of‑living package is about recognising those pressures people are under and doing something about it. Some of the cost‑of‑living package is broad – a tax cut for every taxpayer, energy bill relief for every household and some of it is targeted – rent assistance, help with cheaper medicines and more on issues like that. So, we’ve struck the right balance.
GILBERT:
Billionaires get it, Clive Palmer gets it. People on $40 grand a year get it. So, how’s that equitable?
CHALMERS:
Once you go beyond providing it to people on pensions and payments like we did last time, proudly, once you go beyond that, the best and easiest and most efficient way is to provide it to every household to take some of the edge off those energy bills.
GILBERT:
You’re saying that you’re acting on Treasury advice that it’s going to reduce inflation? Let’s say the economy does prove stronger and growth, it bounces back in a big way. Do you accept this as a gamble of sorts by putting those rebates into place because it does give people more dollars to spend?
CHALMERS:
I don’t see it that way. I’m pretty careful, cautious and conservative when it comes to spending public money. In the context of a $2.6 trillion economy, I don’t accept that what we are doing is going to add to inflation – I take the Treasury view and the Treasury advice that says that our Budget will put downward pressure on inflation, not upward pressure on inflation. The way we’ve designed our cost‑of‑living help will take the edge off bills without adding to inflation elsewhere in the economy.
GILBERT:
Three hundred dollars, interestingly $25 more than what you promised to reduce power bills by the last election at $275. Is that symbolism important to you?
CHALMERS:
That hasn’t been what’s determined the sum. We’ve done as much help as we can afford to do in a responsible way. That number you refer to –
GILBERT:
It neutralises a bit of politics, though. When the Coalition say, ‘oh, you haven’t done that’ well, you say, ‘well, we’ve delivered a $300 rebate’.
CHALMERS:
Remember last time when we were delivering help, they voted against it, but the number you’re referring to was a forecast in ‘21, about an outcome in ‘25. We’re providing energy bill relief in the here and now – we did in the last Budget, we are again in the next Budget, but there’ll be more relief for more people in this Budget because of the way that we have balanced responsible economic management, cost‑of‑living help, fighting inflation and investing in the future.
GILBERT:
So, just the number was a coincidence as opposed to the previous promise?
CHALMERS:
We determined the number based on the most help that we could responsibly provide with all of the Budget constraints and all of our other priorities at the same time.
GILBERT:
You’ve had back‑to‑back surpluses. Is it 2 and done now? Because it’s the first back‑to‑back surpluses we’ve seen in nearly 20 years. Do you think another one is possible because we’ve seen revenue upgrades over the years with commodities stronger than Treasury forecasted. Do you still hope you might be able to jag another one in your time as Treasurer?
CHALMERS:
The way I see it is we’re always trying to make the Budget more sustainable, and we have engineered a stunning turnaround in the Budget. The bottom line is more than $200 billion stronger. Debt is much lower. We’ve avoided $80 billion in interest costs over the next 10 because of our responsible economic management. Now, what defines this Budget and what defines this government is the responsible economic management which gets the Budget in better nick, not at the expense of helping people, but in addition to helping people and investing in the future.
GILBERT:
So, you haven’t given up on another surplus in the short to medium term?
CHALMERS:
I’m always looking for ways to make the Budget more sustainable. It is not just an important thing in itself that we’ve got these 2 surpluses, the first back‑to‑back in almost 2 decades, that is important – it’s a demonstration of how responsible we’re being but it is not an end in itself. It’s really about making room to do the things we need to help people doing it tough, to set out this vision for the future of our economy to make sure that we are satisfying all of those priorities simultaneously.
GILBERT:
You’ve got the energy rebate, freezing the cost of medicine, plus the tax cuts that come into play on July 1. What do you say to those, including us on the panel earlier, who were suggesting it’s got the whiff of an election?
CHALMERS:
Was it Clennell that was saying that? That sounds like a Clennell thing.
GILBERT:
Laura as well, myself, all 3 of us actually. Got the trifecta.
CHALMERS:
He’s shopping everyone. Look, it’s a Budget, which is about the economic cycle, not the political cycle. My job is to really try and make, working with Katy Gallagher and our team, to make the right decisions for the right reasons, primarily economic reasons, and the politics will take care of themselves.
GILBERT:
So, you look at page 51 of Budget Paper one, the cash rate assumed to gradually ease from the middle of next year. It sounds like there’s no point waiting for a rate cut, so why not go to the polls?
CHALMERS:
The assumptions in the Budget are just informed by a survey of market economists, I think the Bloomberg survey of market economists and, so, they have to put an assumption in there. They don’t really apply judgement to that, they’re not coming up with that assessment from scratch. They’re informing and applying the views of market economists because you need to put some kind of assumption in there.
GILBERT:
The Future Made in Australia, $2 incentive per kilogram of renewable hydrogen. It just jumped out at me that because it looks like this incentive is really to try and make hydrogen competitive and commercial. Is that what that’s about? And how much did your time and energy putting this Budget together go to, that issue of the Future Made in Australia? Because it’s upwards of $22 billion, the outlay.
CHALMERS:
Yes, that’s over 10 years. It’s a substantial amount of money, but a responsible amount of money. The reason why your question is so important and so welcome is to recognise that of that almost $23 billion over 10 years, the majority of it is in the tax system. It’s actually tax breaks, like $2 a kilo for renewable hydrogen. What we are trying to do there is we’re trying to corral and attract and deploy private investment in the industries that we know will be a central part of our economy in the context of the global net zero future.
GILBERT:
Will that get it done? That incentive?
CHALMERS:
There’s that, there’s also the Hydrogen Headstart program and there are other incentives in there, for example critical minerals has also got a production tax credit for refining and processing critical minerals. It’s broad, it’s comprehensive, but it’s responsible. We think the Future Made in Australia agenda will help us become a renewable energy superpower and an indispensable part of the global economy of the future.
GILBERT:
You’ve said to – you’ve said to us many times that when people hit you up as to where’s the reform agenda that your reform and the government’s reform is about the transition in the energy space, that that is the huge structural shift that you’ve got to navigate. Is this Future Made in Australia – is that where this sits?
CHALMERS:
This is our vision for the future economy, and this is about recognising the vast industrial and economic opportunities which come from global net zero. It requires us, it demands of us, that we reform our economy to take maximum advantage so that our people benefit from this churn and change in the global economy. It is a centrepiece of our reform efforts in this Budget, but not the only bit – we’re reforming universities, there is a whole bunch of microeconomic reform across the Budget.
GILBERT:
Now, I just want to show our viewers, if they missed it earlier, you had a special team of advisers arrive with you at the Chamber today, walked with you from your office to the House of Representatives. A couple of the little ones. One missing in bed, was he?
CHALMERS:
Yeah, little Jack is at home in Brisbane with his Nan and with John and these 2, I’m so proud of them – they behaved, they dressed up, Leo brushed his hair and I just couldn’t be prouder of those 2 little maniacs for coming to the Budget and I couldn’t be more grateful to Laura for being there and for bringing them.
GILBERT:
Yeah, I tell you what, that wonderful achievement, getting them to sit there and listen in and because my kids are a little bit older and they think everything we do is boring.
CHALMERS:
I think if you ask them, they might have a similar view, but they were very well behaved and I’m very proud of them.
GILBERT:
Good on you. Appreciate it. We’ll talk to you soon.