KIERAN GILBERT:
Thanks very much for your time, Jim Chalmers. Let’s start with the US. What do you see as the implications globally for the global economy of the prospects of another Trump presidency, which looks most likely right now?
JIM CHALMERS:
Good morning, Kieran. Look, I’m not going to make predictions about the outcome of the US election. It’s obviously a matter for the American people and the Australian Government, the Australian people will work closely with whoever the Americans choose to lead them from the beginning of next year, as the election is in November.
GILBERT:
Donald Trump talks about, and he’s promising tariffs on China though. That has a real world impact on us, doesn’t it, flowing through to inflation? In fact already analysts are saying that the promise of more tariffs is driving up shipping costs right now as exporters are trying to get in before the election is held.
CHALMERS:
Well, certainly there is an international element to the inflation challenge that we have here in Australia. It’s not all international, it’s not all domestic, it’s a mix of both sets of influences and I think you’re right to point to shipping costs as part of that challenge right now.
If you think about, for example, global freight costs I think have more than tripled since November, global oil prices are up about 10 per cent since this time last year and so obviously that flows through to economies right around the world, including our own. We’re not immune from those inflationary pressures or from decisions taken in other parts of the world. And another example, Kieran, which might be of interest, is we understand that when, in those northern hemisphere shipping lanes, when ships have to avoid the Red Sea it adds about a third of travel time, and on average about a million dollars per voyage and so you can see how this is part of the global inflation challenge and indeed part of our own inflation challenge here in Australia.
GILBERT:
Is there more the ACCC can do to keep a lid on those costs at certainly this side of things, at the ports?
CHALMERS:
Yeah, certainly the ACCC is doing a really important piece of work which is due by the end of the year which goes to some of these really key questions around stevedoring and some of the related challenges. There is an element of this in our own inflation challenge, as I said, but also, we’re not waiting for the outcome of that report. I’ve already slashed something like 500 nuisance tariffs to get some of these compliance costs down and put downward pressure on costs in our own system but the ACCC, as you say, is doing more work and we’ll hear about that towards the end of the year.
GILBERT:
We’ve got a lot to get across but just while we kicked off with the United States, I should ask you about their rates outlook. The CPI there is down, and the expectation is that the next move soon will be a rate reduction. That’s happening as pressure remains on our interest rates, possibly a hike in August. Why the disparity there between the 2 nations?
CHALMERS:
Well, a couple of important things about that, Kieran. First of all, in the US their inflation peaked earlier and higher than it did it Australia. Our inflation has peaked lower and later than most countries we compare ourselves with. So that’s the first important point. And the second important point is that our own Governor of the Reserve Bank, indeed the Deputy Governor as well have pointed out that the shape of the moderation of inflation in our own economy is very similar to what we’re seeing around the world. As I’ve said, we peaked lower and later but our core inflation, for example, from its peak to now has dropped quicker than it did in some of those other countries. So overwhelmingly a pretty similar experience around the world. We’ve all got some version of these inflation challenges. The Americans are a little bit ahead because they peaked higher and earlier than we did here in Australia.
GILBERT:
We know you’ve had the back-to-back surpluses, but we’ve just had the financial year wrap up. Have you got a final number for what 23–24 was in terms of the surplus?
CHALMERS:
Well, we’re turning very big Liberal deficits into big Labor surpluses and that’s a really important part of the fight against inflation. Again, the Governor of the Reserve Bank has said those 2 surpluses are really important, and that they’re helping put downward pressure on inflation in our economy. We’ll get the final numbers for the second surplus in September, but we already know enough about it to expect that Labor’s second surplus will be somewhere around the mid-teens, mid-teens billions of dollars. If it is around that level, that could be the biggest back-to-back surpluses on record.
Already we know that those 2 surpluses will be the first back-to-back surpluses in almost 2 decades and half a dozen Treasurers and so this is a really important demonstration of our responsible economic management. We had a $100 billion turn around in our first year, looking something like a $70 billion turnaround in our second year, a surplus in the mid teens when it comes to billions of dollars, turning those big Liberal deficits into Labor surpluses is a really important part of the fight against inflation.
GILBERT:
Yeah, well, that’s the point, isn’t it, because it’s fine to have the number but you need to explain – I’m not telling you this, you know this – that the Governor has said that the surpluses have assisted. That’s the challenge for the government to say this is part of the inflation story as well, although one that’s not completed just yet.
CHALMERS:
Yes, I think it’s important to remember, first of all, that government spending and government policy is not the primary determinant of prices in our economy, it’s obviously not. You think about the year just finished, the net spend of about $12 billion was in the context of a $2.6 trillion economy. So budgets aren’t the primary determinant of prices in our economy or inflation in our economy but they can help, and they can help in 2 ways. We know from the ABS and the ACCC that our policies on energy and early childhood education and rent is putting downward pressure on inflation, and we know from the Governor of the Reserve Bank that those 2 surpluses are helping as well.
We’ll find out more about where inflation’s up to, where it was up to in the June quarter. We’ll get that in the next couple of weeks. We expect the primary drivers of inflation in that quarter to be rent and insurance and petrol – none of those things are about government spending, but we can play a helpful and meaningful role and that’s what we’re doing and the 2 surpluses are a demonstration of that.
GILBERT:
We’ve just got these images, I need to show these to our viewers of Donald Trump being assisted from the stage in Pennsylvania. We’re trying to work out what happened. He’s fallen down, he’s being assisted by Secret Service there. He’s raising a hand and a fist there as he’s being assisted out.
Now this is extraordinary, this situation. He was meant to hold a rally. These are live pictures coming into the newsroom. He’s fallen on the stage and now being surrounded by Secret Service as he has left the rally, his fist raised in the air. Now he obviously looks like he’s okay if he’s able to do that, but they’re rushing him off, no doubt for a medical examination. Now I’m just trying to ascertain exactly what has gone on there because as I say, these are the Secret Service has rushed Trump off the stage and we’re yet to hear exactly what has gone on there but he looked like he was in some state of distress, but his fist was raised in the air, as I said, and he was walking, albeit assisted. Now you can see there the military now coming into that rally in Pennsylvania.
This is quite an extraordinary situation. Another member of the Secret Service near the black vehicle with a gun raised. This is an extraordinary moment in US political history at a time of great uncertainty for the United States.
We just interrupted my discussion with Treasurer Jim Chalmers as this breaking news emerged there at the Trump rally in Pennsylvania, but you can see why the urgency has dictated that for us to do that, because it comes just a few months out from the [residential election. We are just trying to work out what the security incident relates to, but the Secret Service did rush Donald Trump off the stage, and we’re just. Yeah sorry, I just had a message from the studio. What was that? Can you repeat that, please? Okay, yeah. We’ll just get some information as it comes in from the United States from our correspondents there, but huge news in Pennsylvania. And let’s bring in Jim Chalmers, we’ll continue our discussion.
Jim Chalmers, obviously, this is something we had no advance warning of and it’s without notice given the breaking nature of this news but Donald Trump collapsing on stage, the Secret Service rushing him out, quite a concern just 4 or so months out from the presidential election Treasurer.
CHALMERS:
Yes, I was able to watch some of that footage. Your Sky News colleague was playing that for me on his phone. I mean these are extraordinary scenes and I hope that former president Trump is okay. You can see the professionalism with which the Secret Service has responded to that. I think it’s heartening to see that he had his arm up and he was mobile but we hope that he is okay and these are extraordinary scenes, and no doubt you’ll be covering this now through the day.
GILBERT:
Yes. We will indeed and as soon as we have more information on it, we might just keep those images there for our viewers, and as soon as we get more information from the United States, we will get to that and continue.
But let’s turn our attention now, because it’s a related matter in a way, we’re talking about an election there in a few months, also an election due here over the next 6 months.
I just want to ask you, because tax cuts are a big thing for Australians right now, the first lot delivered last week, more to come tomorrow I’d imagine as one of the biggest days with the monthly pay coming in. Is there an argument to say you get to an election sooner rather than later while those matters are fresh in people’s minds?
CHALMERS:
Well, first of all, the election time is a matter for the Prime Minister. I’m working on the expectation that the election will be in the first half of next year and I’ll be ready for it when the Prime Minister calls it.
My focus is on a couple of things. First of all, we’ve got a really substantial legislative agenda, which goes to the future of our economy. I’ve got around a dozen bills in the Parliament at the moment and around a dozen more still to introduce, and they go to some of the core parts of our economic reform agenda, Future Made in Australia, superannuation reform, the financial system as well as Reserve Bank reform. But the big focus in the near term is rolling out these tax cuts to every Australian taxpayer from this month to help with the cost of living.
I’d say to all of your viewers, Kieran, make sure you check your pay slip. These tax cuts have been rolling out through the course of the month. The Tax Office tells us that something like 8.8 million Australians have already received a tax cut this year. Tomorrow, which is the 15th, we expect around 750,000 Australians will get their tax cut because a lot of people who get paid monthly get paid on the 15th of the month. We expect around 2 million Australians will get their tax cut in the next fortnight and don’t forget as well, Kieran, 2.5 million or a little bit more Australians who are on awards, they get a pay rise this month as well.
This is all about ensuring that people can earn more and keep more of what they earn. People should check their pay slips to see how much they’ll benefit from Labor’s tax cuts and the pay rises which people need and deserve to meet these cost‑of‑living pressures and provide for their loved ones.
GILBERT:
Treasurer, Jim Chalmers, thank you as always.