KIERAN GILBERT:
Let’s go live to the Treasurer Jim Chalmers who joins us from Melbourne today. Treasurer, thanks for your time. Does the result at the weekend, does it give you a sense of vindication on your push for those tax changes?
JIM CHALMERS:
Good morning, Kieran. A couple of things about that. I mean, first of all, we’re not complacent or getting carried away by the really great outcome that we saw in Dunkley on the weekend. We learn from every election and every by‑election, and we’ll make sure that we do that too.
But we are heartened, we are encouraged, and we are grateful, frankly, for the support that so many of those working communities showed for Jodie Belyea and for Anthony Albanese and his team, but also for the tax changes that we announced in January. I think the Dunkley by‑election was a vindication of the leadership that the Prime Minister showed in making sure we could provide a tax cut to every Australian taxpayer but with a bigger emphasis on middle Australia.
What the outcome showed in Dunkley was that people were prepared to see through the, frankly, absurd scare campaigns and culture wars and to vote for our cost‑of‑living tax cuts which provide more help for more people via the tax system. So heartened and encouraged, but not carried away, not complacent certainly but I think it was a very good result for us and a big endorsement of our efforts to help people with the cost of living.
It showed that only really one major party cares about the cost of living – and that’s Labor. The other mob more or less vacated the field. And it showed as well that Peter Dutton’s nasty activity is no substitute for economic credibility or an alternative plan to deal with these cost‑of‑living pressures that we know people are confronting.
GILBERT:
Does it embolden you to undertake more cost‑of‑living relief in the upcoming May budget?
CHALMERS:
Well, I think we’ve said for some time – the Prime Minister has, I have and others certainly have – that if we can afford to give additional and meaningful cost‑of‑living help in the budget in May, of course we will consider doing that. I think what people will see in the budget is we will fund these cost‑of‑living tax cuts which come in on the 1st of July for every taxpayer, and if there are other initiatives we can take in the usual methodical, responsible, meaningful way, then we’ll look to do that as well. But the major centrepiece of our cost‑of‑living package passed the Parliament in the course of last week, and that was the cost‑of‑living tax cuts and every taxpayer will feel the benefit of those from the 1st of July as a consequence.
GILBERT:
Is there possible scope for further tax reform before the election given how this was received at the weekend?
CHALMERS:
Kieran, our focus here is on legislating some of the big tax reforms that we’ve already announced – the PRRT changes are before the parliament, the superannuation tax concessions are before the parliament, we’ve got a lot of effort on multinational tax reform which I discussed with my G20 colleagues in Sao Paulo last week, so there is already a big, ambitious agenda when it comes to tax reform.
In addition to those that are before the parliament and in addition to our cost‑of‑living tax cuts, we’re also providing tax breaks for small business and energy efficiency and EVs and the like and build‑to‑rent properties, and that’s because we have shown a willingness to reform the tax system in the interests of the Australian people, and particularly in the interests of middle Australia. We’ve still got some unfinished business before the parliament right now, and that’s our focus.
GILBERT:
You foreshadowed the growth figures, the GDP figures, which are due this week, that they could be quite weak. That’s what – the way you put it last week at that G20 summit you referenced. The Westpac Chief Economist said you couldn’t actually rule out the initial print being negative. That’s what Luci Ellis has said, the Westpac Chief Economist. Is that a chance that we see a negative number come Wednesday?
CHALMERS:
Obviously it remains to be seen and I’ll have much more to say about that number when it’s released on Wednesday morning. It’s important to remember, I think and one of the reasons why I was upfront with people at that gathering and, indeed, in Australia as well, it’s important to remember that in that quarter the UK and Japan both went into recession. We also had an interest rate hike in that quarter. And so obviously the consequence of global economic uncertainty, higher interest rates, inflation which is moderating but still more persistent than we’d like, we expect that to slow our economy considerably.
Now, the market always has a view about these numbers. They make their predictions in advance of these numbers. Right now I think the market is expecting anything from a very small negative to a small positive. Most people think that the December quarter was quite weak in our economy, I think that too, but it remains to be seen how weak.
GILBERT:
Inflation is still a major concern. Again, this is something you said last week. But the balance of risks in our economy and in the global economy are going to shift from inflation to growth. What sort of timeline are you expecting on that?
CHALMERS:
Well, I think there are a couple of important elements to that. I do believe that inflation remains the main game for us. Certainly the primary focus of our economic plan is on putting downward pressure on inflation but I think whether it’s here in Australia or, indeed, around the world, the balance of risks is shifting from a primary focus on inflation before long to a focus on growth. I think that combination of global economic uncertainty and conflict combined with higher interest rates around the world and at home and the consequences of these pressures that people are under that we’re trying to do something about, all of that means that our economy is slowing.
We’re maintaining that primary focus on inflation, but we also need to be conscious that in every budget, including the upcoming budget and certainly the first two that we’ve already delivered, you try and take into consideration the economic circumstances that we confront. And I think as we get further down the track, inflation will moderate further. That’s encouraging. That’s welcome. We’re making really good progress on that front but the economy has slowed considerably as well. And so we need to balance all of those considerations, and that’s what we’ll do in the May budget.
GILBERT:
And so we have the potential for more spending, I guess, in the lead‑up to the next election. Let’s just finish with ASEAN, because this is a major economic story. I know the Prime Minister in September of last year when he was in Indonesia announced the potential two‑way trade. The plan was to grow it from $178 billion in 2022 to over $500 billion by 2040. That’s with South East Asia, with this region. Is that achievable? Because traditionally our relationship with Indonesia and other nations in the region has been underdone.
CHALMERS:
Well, we need to hit those kinds of targets and we need to be ambitious about it, and we are. ASEAN in so many different ways is really the hope of the side when it comes to two‑way trade. It’s already the second biggest trading partner – as a block bigger than the US, bigger than Japan, bigger than the EU, second only to China. So this is where the action is – in ASEAN. And we want to get a bigger slice of that action, and that’s why the focus of the work that Nicholas Moore did for us, the focus of the Prime Minister and Don Farrell and Penny Wong and myself and others is on trying to make sure that we get the two‑way investment flows right.
You’ll see from us this week a really big emphasis on investment. I’ll be speaking tomorrow to really quite a big group of investors involved in ASEAN countries and here in Australia and that’s because we really believe we can turbo charge these relationships with ASEAN countries. We do see ASEAN as the hope of the side. We think investment is a really big part of that in both directions, and that’s why you’ll see a really big focus on investment from all of the cabinet ministers involved in these really important discussions this week.
GILBERT:
Treasurer, thanks for your time. Appreciate it.
CHALMERS:
Appreciate your time, Kieran. All the best.