KIERAN GILBERT:
Let’s go live to the Treasurer, Jim Chalmers. Let me start with this. We’ve got this graph of the RBA forecast on household consumption. They predicted consumption of 1.1 per cent. You can see it there. Our viewers can see it – 1.1 per cent. The actual numbers less than half of that. Has the RBA – are they missing the mark when it comes to the state of the economy right now, Treasurer?
JIM CHALMERS:
Hi Kieran. As you know, I don’t sort of quibble with the Reserve Bank’s forecast or try and second guess their public commentary. I think it’s clear from the numbers that consumption came in a bit softer than they were expecting. Forecasting is difficult at the best of times but especially when the economy is as volatile as it is right now. Really the main take‑out out of today’s National Accounts was weakness in consumption and this is the inevitable consequence I think of inflation which is persistent but moderating combined with those higher interest rates and not helped by global economic uncertainty. It’s really clear from the numbers today that households in particular are under pressure, we knew that already and that’s why our cost‑of‑living help is so important.
GILBERT:
Do you feel vindicated on your budget approach given without government spending we’d be in recession?
CHALMERS:
I think it’s really clear from these numbers today that the approach we took in the Budget was justified. We found savings in the budget, we delivered a second surplus, we were very responsible and restrained with our spending but we resisted the kind of free advice that we got from a lot of people including our political opponents who said we should slash and burn in the Budget and deliver some kind of scorched earth austerity – that would have been absolutely disastrous for the economy, we now know that’s the case. We struck exactly the right balance in our Budget and these numbers do vindicate the balanced approach we took in the Budget which was all about fighting inflation as our primary focus but recognising people are doing it tough and the economy is already soft and subdued, that’s what we saw in today’s numbers.
GILBERT:
Well, in your words, you’ve said the economy is being smashed by rates. Is there any real difference between a per capita recession which we’ve got and a technical recession?
CHALMERS:
Well, obviously there’s a difference in the definition, but again, I don’t want to quibble with that. I think I’ve been really upfront with people. We understand people are doing it tough and that’s why we’re rolling out this substantial and meaningful and responsible cost‑of‑living relief via the tax system, energy bill rebates, medicines, rent, early childhood education and getting wages moving again. And again, these numbers, particularly what they say about consumption and especially discretionary spending but also household savings, mortgage interest costs – people are really under the pump which is why our Budget is so important, it’s why we’re striking the right balance, it’s why we’re rolling out this cost‑of‑living relief which people desperately need in order to get by in an economy where growth is really soft and subdued.
GILBERT:
The negative result in productivity down ‑0.8 per cent for the quarter. How worrying is that to you? And how do you turn it around? What’s caused that poor result?
CHALMERS:
Productivity is an ongoing challenge in our economy. Again, we’ve got a real focus on boosting productivity, whether it’s the energy transformation, whether it’s technological change or human capital, particularly skills trying to make our economy more productive but this challenge didn’t just arrive on the day that we were elected. This is a challenge of longstanding – some decades. The weakest 10 years for productivity growth I think was the decade before we came to office and so, there’s no quick fixes when it comes to productivity. It’s a big focus for us but we don’t pretend that we can turn it around overnight. There have been some quarters recently where it’s ticked up a bit in welcome ways but we didn’t get carried away then, we’re not carried away now as it’s ticked down a bit. It’s a long‑standing challenge and it will take a little while to turn around.
GILBERT:
The former Prime Minister said, well, he’s had a crack at you. He said you’ve lost control of expenditure, being disloyal as well in having a crack at the RBA. That, of course, is John Howard. You woke to that today. What’s your response to someone who you’ve said you respect in terms of his service to the nation?
CHALMERS:
I do respect John Howard and I think he certainly earned the right to express a view about some of these sorts of things. I think, frankly, John Howard deserves better than to be rolled out every time that Peter Dutton and Angus Taylor can’t carry an economic message. And John Howard, to his credit, wouldn’t have vacated the field on the economy the way that Peter Dutton and Angus Taylor have now. We need to remember, of course, John Howard is a Liberal warrior. He’s not exactly an objective observer, he’s a partisan warrior, and that’s fine. But if he was an objective observer, he would have acknowledged that we have turned 2 big Liberal deficits into 2 big Labor surpluses, we’ve banked almost all the upward revisions to revenue – he used to spend most of it, we found $80 billion almost in savings – the last Liberal Budget had $0 in savings, and our first‑year consolidation in the Budget was actually bigger than what he and Peter Costello managed. I don’t have any problem with John Howard expressing a view, I genuinely respect him but he’s not an objective observer. If he was an objective observer he would understand and acknowledge and recognise the substantial progress that we’ve made on the budget, cleaning up the mess that we inherited from his Liberal Party.
GILBERT:
And we’re almost out of time. I know you’ve got to go but the election due in the next 9 months, are you preparing, are you planning to do and deliver a Budget before we go to the polls?
CHALMERS:
I am, yes. There will be a mid‑year Budget update towards the end of the year. The Budget will be handed down at the start of the following year at some point. There’s been some speculation I think around March or something to allow for a May election. I’ll deliver a Budget when the Prime Minister wants me to do that. Katy Gallagher and I will work together very closely and we’ll continue to manage the budget in the most responsible way that we can.
GILBERT:
So, is that a mini‑Budget? Will it be a full Budget in March? What’s your expectation on that?
CHALMERS:
I’ll be ready to deliver a full Budget, Katy and I will be ready for that but we’ve got a mid‑year Budget update to deliver first. We do that towards the end of the year, a bit closer to Christmas, and we’ll be ready to deliver a Budget the following year when we agree the date with the Prime Minister.
GILBERT:
Treasurer, thanks as always. Appreciate it.
CHALMERS:
Thanks Kieran.