Kieran Gilbert:
Treasurer Jim Chalmers, live with me for the 2026 Budget. Thanks for your time. Now it’s out there in public, why didn’t you just take it to an election? This is a flat out broken promise?
Jim Chalmers:
Well, the policies that we took to the election reflected the government’s almost singular focus on supply. It’s become increasingly clear to us that even though supply is still the main game when it comes to problems in the housing market, and we’ve invested in more supply in this Budget – the problem begins there, but it doesn’t end there. So we’ve taken some additional steps. We know that they are contentious. We’re up front in saying that the government has come to a different view to the view that we held 12 months ago.
Gilbert:
A different view? You’ve broken your promise?
Chalmers:
We’ve changed our policy. When a government changes its policy, when it changes a view on some really important areas like these, the onus is on us to front up and explain why, and that’s what we’re doing.
Gilbert:
How do we then believe you at the next election, then?
Chalmers:
Well, I think the most important thing is that people understand that we don’t take these decisions lightly. Of course, people will focus on the difference between the policy that we took to the election and the different view that we’ve come to in recent times. Of course, people will focus on that, we understand that. But more important than that, most important of all is that we reach the right conclusion and we make the right decisions, even if they’re difficult.
Gilbert:
Would you consider taxing the family home? It seems a logical step after the capital gains tax?
Chalmers:
No. And I know that our opponents will say that because of the changes that we’ve made tonight. But we’ve never thought about, never considered, never looked at whether it’s –
Gilbert:
So, you ruled that out?
Chalmers:
Yes, of course. The family home, changes to inheritance taxes, all of these things are off the table for any responsible government.
Gilbert:
And a wealth tax?
Chalmers:
Yes. All of the things.
Gilbert:
Inheritance, all off the table?
Chalmers:
All of the things. All of the scare campaigns that our opponents will run.
Gilbert:
But we can rule it out right now. You rule all those things out? Capital – sorry, family home?
Chalmers:
Family home, inheritance taxes. Yes.
Gilbert:
Inheritance, wealth?
Chalmers:
These are just – we’ve never considered any of these.
Gilbert:
But you rule those out categorically?
Chalmers:
Yes and we’ve never considered them. These are just things that live on social media and elsewhere, peddled by our political opponents. We’ve explained the tax changes that we are making. I encourage people to focus on the tax changes we are making, not the ones that we aren’t. This tax reform package –
Gilbert:
I will. I do want to get into that in a second. But just to clarify, what about on family farms? Because the UK Labour government wants to tax those inheritance on family farms. Do you rule that out?
Chalmers:
We’re not changing any inheritance arrangements.
Gilbert:
Okay, right.
Chalmers:
Even when it comes to farms, there’s more generous treatment of farms. For example, in the changes that we’re making to trusts we’re exempting farm income. So, we understand and prioritise farms in the tax changes that we’re making.
Gilbert:
Previously you’ve said you don’t have plans to change capital gains and negative gearing. You didn’t have plans to change stage 3 tax cuts – you changed those. But this one, these other ones, you’re ruling out 100 per cent flat out?
Chalmers:
We’ve never considered them, we’ve never thought of doing it. We won’t do it and they won’t happen. I know that our opponents will run all kinds of scare campaigns because they don’t want to engage on the substantive issue that we’re trying to fix here.
Gilbert:
Are you going to boost supply though, with this change?
Chalmers:
The overall tax package will. So, you have to look at our tax package in its entirety in the Budget. Overall, with the investments we’re making in supply and the tax changes, the net impact of our housing policy is to increase supply.
Gilbert:
This is super complicated trying to get your head into this. Are you hoping that a lot of people are confused by it all and say, ‘Well, it’s not going to change my setup?’ You’re grandfathering most of it?
Chalmers:
I’m hoping that people understand.
Gilbert:
Are people going to understand a lot of the changes?
Chalmers:
I think so.
Gilbert:
Because you’re shifting from 50 per cent discounts to inflation‑based capital gains. How do you monitor all of that?
Chalmers:
Well, a couple of things about that. First of all, we are recognising and respecting decisions that people have taken already. This is a set of tax changes which is fundamentally prospective rather than retrospective. I think that’s an important principle here and so that’s why some of those arrangements are in place. But I’m confident that people will understand what we’re trying to do here. First of all, we’re trying to better align the way that we tax people who work with the way that people earn their income in other legitimate ways. The tax system is out of whack and we’re trying to fix it.
Gilbert:
Does that address it now?
Chalmers:
Second thing. It addresses it, yes. The second thing is we’re trying to make it easier for more Australians – particularly young Australians – to get a toehold in the housing market. The interaction of the housing market and the tax system has locked too many Australians out for too long, particularly young people. The third thing we’re doing in our tax package is we’re incentivising investment and innovation. There’s actually a big tax reform package for business in this Budget as well. The extra money that we raise from capital gains and negative gearing and trusts is being returned to workers and business in a broadly neutral package.
Gilbert:
On the document though, the Budget – it says that you’re going to continue to consult with the tech and startup industry.
Chalmers:
Yes.
Gilbert:
Is this half‑baked?
Chalmers:
No, of course not.
Gilbert:
Did you not consider the impact on them?
Chalmers:
We’ve been engaging with them –
Gilbert:
They’re not going to run off to Singapore and the United States and elsewhere, where they don’t pay capital gains?
Chalmers:
I don’t believe so for a couple of reasons. First of all, the Budget is very pro‑startup and venture capital. There’s a whole bunch of tax incentives to encourage that sector. We see it as really important. It’s really dynamic, it’s going to make a bigger and bigger contribution to our economy over time. So we’re big supporters. We’ve been engaging privately with the sector even before tonight to recognise that the cost‑based calculation for startups is different. This affects the tech sector more than any other sector. We’ve been in a conversation with the sector. There’ll be more of that consultation because we recognise that they’re different.
Gilbert:
So, we won’t be seeing a flee of capital or investment?
Chalmers:
No, I don’t believe so.
Gilbert:
Due to that?
Chalmers:
No. On the contrary, I think people should understand that the Budget is very pro‑investment, pro‑innovation, pro‑venture capital, pro‑startups, pro‑small business.
Gilbert:
On a few of the specifics. New builds can still – if you have a new build, and so an investor buys a new apartment or whatever, house, you can negatively gear that and you can get the 50 per cent discount on capital gains tax on a new build?
Chalmers:
Yes.
Gilbert:
What about a knock down rebuild? If you have a house and you knock it down?
Chalmers:
No, if it doesn’t genuinely add to housing supply, it doesn’t qualify.
Gilbert:
What about a duplex?
Chalmers:
Yes, we make it clear in the documents. We make it clear in the fact sheets what is and isn’t. There’s some existing rules that the states use around stamp duty and the like around this. So, the sensible principle that we’re applying is if you’re genuinely adding to housing supply, then that qualifies. But if you’re knocking down one home and building one in its place, you wouldn’t.
Gilbert:
But if you build 2 duplexes or whatever then you can?
Chalmers:
If you’re adding to supply, then that is.
Gilbert:
You’re adding to the stock. All right. Now, on inflation, you’re actually adding to public demand in this year, 2026–27. $18.3 billion tipped into the Budget since MYEFO, since the mid‑year Budget update. Are you hurting the RBA’s efforts here?
Chalmers:
Of course not, on the contrary. If you look at the Treasury advice that we present in the Budget papers, they make it really clear we’re taking the pressure off inflation. We’re finding an historic amount –
Gilbert:
Not this year?
Chalmers:
We’re finding an historic amount of savings. We’re getting the Budget bottom line in better nick in every year, including this year. We’re getting spending as a share of the economy down from close to 27 at the start of the forward estimates to close to 26 by the end of the forward estimates –
Gilbert:
But this year, public demand is higher this year. This is the year we’ve got high inflation?
Chalmers:
Well, it’s broadly neutral but even with that we’ve got things like the PBS. Some of the sorts of things that you wouldn’t consider to be inflationary. The Treasury’s advice very clearly is that we’re not adding inflationary pressures in the economy. We’re playing a helpful, not a harmful role in the fight against inflation. We take this inflation challenge very seriously. The Budget is built around –
Gilbert:
I looked at page 98 of Budget Paper 1. The number says $18.3 billion in this graphic since the MYEFO update has been tipped into the Budget. So how is that not adding to public demand?
Chalmers:
No, the net impact of policy decisions is more like $3 billion over that period. And some of it is the sort of spending that I’ve just described to you –
Gilbert:
So a pharmaceutical benefit, so it’s not inflationary – is that what you’re saying?
Chalmers:
No, but also the Budget has improved every year since the mid‑year Budget update.
Gilbert:
It might be improving, but you’re still putting public demand out there? I mean, it’s still government spending?
Chalmers:
We’re saving every dollar of the revenue upgrade. We’re getting the underlying cash balance in better condition every year. We’re getting the debt down in every year. We’re getting spending as a share of the economy lower by the end of the forward estimates than it is at the start of the forward estimates. By any objective measure Kieran, this is an historically responsible budget. The gross savings are very high. The net impact of our policy decisions is positive $26.1 billion. And this kind of responsibility would be absolutely unrecognisable to our predecessors.
Gilbert:
Now, on the overall numbers – why is the RBA less optimistic than Treasury? Because on the economic growth number, it’s lower than Treasury on the dwelling investments?
Chalmers:
Yes it is. Primarily that reflects that they think the interest rate rises in the system are going to have a bigger impact than the Treasury thinks. I mean, overwhelmingly the direction of travel with the Reserve Bank’s forecast and the Treasury’s forecast, they’re both expecting slower growth, they’re both expecting higher inflation. So, the direction of travel is very similar. But there are key differences. And the main way to understand those differences is the Reserve Bank thinks that the interest rate rises in the system will bite harder than the Treasury thinks.
Gilbert:
This is your fifth Budget. If this goes pear shaped, does it destroy your leadership prospects?
Chalmers:
I don’t see it in those terms. I take responsibility for the Budget, of course I do. You and I have known each other for a long time. You know that that’s how I operate. This is a budget that I’m proud to hand down. It will be contentious. There will be –
Gilbert:
But you’re happy, it rests on your shoulders?
Chalmers:
Yes, I’m very happy with that.
Gilbert:
You’re going to take it on?
Chalmers:
I’m very happy to take responsibility for this Budget. Every Budget is a team effort. Obviously, I’m not taking the credit.
Gilbert:
But there’s a lot at stake for you personally, isn’t there? I mean, I don’t want to make it all about Jim Chalmers, but there is a lot at stake?
Chalmers:
Oh, nor do I. Nor do I.
Gilbert:
But there is a lot about this at a personal level. If this stuffs up, I mean, you want to be Prime Minister one day, you’ve got to land this thing?
Chalmers:
Well, first of all, I’d be very happy doing this job till the end of the government. Very, very happy with that. That’s the first point. Second point is, I don’t see it in personal terms. I take responsibility for the decisions in the Budget. I’m proud of the decisions that we’ve taken in the Budget. This is about lifting living standards for every Australian. It’s not about me or anyone else.
Gilbert:
Appreciate your time.
Chalmers:
Thanks Kieren.