Loretta Ryan:
As we clean up after Alfred, we’re only just now realising how hard of a punch this cyclone has packed. Financial forecasts are predicting the impacts will amount to more than $1.2 billion.
Craig Zonca:
Yeah, it’s not just fixing the mess it made, it’s the flow on effects that could be felt for some time. The federal Treasurer is Jim Chalmers. Treasurer, good morning to you.
Jim Chalmers:
Good morning, Craig. Good morning, Loretta.
Zonca:
$1.2 billion, that’s quite the economic hit.
Chalmers:
It is a pretty hefty hit. We’ve said all along that our main focus here is obviously the human costs, but there’s going to be a very substantial economic cost as well, and we’ll account for that in the Budget. It’ll be one of the key influences on the Budget.
The best way to think about the economic impact is that around 5 million people were in harm’s way of this cyclone. Almost 2 million homes. I think we lost something like 12 million work hours out of the economy. What Treasury does as we finalise this Budget is it provides its best initial estimates of the economic fallout. So, a hit to our economy of about $1.2 billion, that’s about a quarter of a percentage point off growth. We’re also assessing which of our food growers were impacted, and what does it mean for building costs – because there is a risk as well that there’ll be some impact on inflation.
Zonca:
Well, you stand up next Tuesday, 25th March, with your Budget speech, how does it now change because of Alfred?
Chalmers:
I’m going to provision an extra $1.2 billion in the Budget for the recovery. Australians are there for each other when these difficult natural disasters occur, and the government will be there for them as well, so we will put an extra $1.2 billion in the Budget. That means there’ll be about 13 and a half billion dollars all told, when it comes to budgeting for rebuilding communities.
Remember, it wasn’t that long ago that our friends to the north of here were getting very substantial flooding as well. We’ve had a series of natural disasters. So, there’s about 30 and a half billion in the Budget, but $1.2 billion of that is new money which we’re putting in the Budget to account for the recovery and the rebuild after ex‑tropical Cyclone Alfred.
Zonca:
And is that paid by cuts elsewhere or new borrowings?
Chalmers:
It’s off the bottom line – and the budget overall will have some savings in it. It will have some responsible measures to get the budget in better nick, but it will have some investments as well, including this one. This brings us to an important point, unfortunately at this time of the morning, a bit of a political point, but you’ll hear our political opponents talk about wasteful spending and they talk about hundreds of billions in wasteful spending.
When they say that, remember that part of that figure they use is actually funding for natural disaster recovery. What we’ve been able to do is manage the budget very responsibly. Two surplus budgets for the first time in almost 2 decades, we’ve engineered something like a $200 billion improvement in the budget. And because we’ve done that, because we’ve managed the budget responsibly, we can afford to pay for things which are really important, like rebuilding communities after natural disasters.
Ryan:
On 612 ABC Breakfast, federal Treasurer Jim Chalmers with us for the families who are listening, Treasurer, and who have been hit hard with this. Will that money go towards recovery payments for them? I know there are payments for people affected. How does that all work?
Chalmers:
It is part of it. So, it’s partly rebuilding bridges and footpaths and local infrastructure. I think a lot of people would have seen on the TV the destruction on the Gold Coast, for example, and further out west and in my neck of the woods in Logan and Brisbane and elsewhere. So, part of it is to help the state government and local governments rebuild that local infrastructure. But a significant part of it is these hardship payments as well. Whether it’s the Hardship Assistance Payment or the allowance for people who are put out of work for a substantial period of time, there is a significant cost to that as well.
I’ll actually be standing up with my terrific colleague, Jenny McAllister, who is the responsible Minister in this area. We’ll be saying a bit more about this later today, because what we’re making sure that we’re doing is making sure that people are eligible for these payments, that they can access them as quickly as possible, and the total cost of that will be included in the Budget.
Ryan:
Is this on top of what I think the Prime Minister did announce last week when the storm was happening?
Chalmers:
That was part of it. The Prime Minister was talking about these payments for people who are very substantially impacted. And what the government does, via Jenny McAllister, but also working closely with the states, is we determine the eligible areas for those payments. And so, as the natural disaster evolves, more and more local communities get added to the eligibility for those payments that the Prime Minister was talking about. That always evolves in days after a disaster to make sure that we are making everyone eligible who needs to be eligible, so that they can get the payments they need to get back on their feet.
Zonca:
Just on those payments, Treasurer, has there been any discussion about increasing those? Because I look at the amounts on offer and we’ve seen costs of everything go up substantially over the past decade. I don’t think those hardship payments, those disaster payments have increased in 10 plus years.
Chalmers:
I think we keep them under constant review. If your question is, you know, would people like a little bit more, I think I would understand if they did. We’ve got to be as responsible as we can. But they’re not insignificant amounts of money. In some cases it’s $900 or $1,000 a family, depending on how impacted people are and whether they’re eligible. It is a significant payment for people just to help them get back on their feet. There’s also the income replacement payments for people who are out of work for a substantial period of time.
We keep these totals under constant review. If we can do more, we’ll do more in the future, but it is a relatively significant payment already.
Zonca:
19 past 7 – the federal Treasurer, Jim Chalmers, with you as you talk about those impacts you mentioned on fruit and veggies and so on. Already we have seen substantial increases every time we go to the grocery store or our local greengrocer. What sort of further increases are likely post Cyclone Alfred?
Chalmers:
One of the most encouraging things that’s been happening in our economy is, you know, a couple of years ago when we came to office, inflation was multiples of what it is now, and it was rising quite quickly. What we’ve been able to do together as a country is to make some really encouraging progress on that inflation. And people are still under pressure. I know at the supermarket checkout, people are still feeling the pinch. We don’t pretend otherwise. That’s why our cost‑of‑living help that we’re rolling out is so important. But inflation is coming down.
If you think about food inflation in particular, that was 5.9 per cent when we came to office and now about half that at 3 per cent. And so that gives you a bit of a sense of the progress that we’re making. We’re not complacent about that because people are still under pressure and that’s why that cost‑of‑living help is so important.
Zonca:
Well, you talk up the economic management there, but I think most Australians would probably say they feel like they’re worse off since you started in government, Jim Chalmers?
Chalmers:
I think I acknowledged in the answer a moment ago, Craig, that we know that people are still under the pump. You know, we don’t pretend otherwise. But what matters there is, once you acknowledge that, whether you’re prepared to do something about it. We have been prepared to do something about it, and our opponents voted against that cost‑of‑living help.
We’ve been rolling out tax cuts for every taxpayer, energy bill relief, cheaper medicines, cheaper early childhood education, Fee‑Free TAFE, rent assistance. We’ve been getting wages moving again. And these are all of the ways that we’re not just recognising people are doing it tough, we’re trying to take the edge off these cost‑of‑living pressures where we can in the most responsible way that we can.
Ryan:
Treasurer, it looks like Queensland is tipped to lose a lot of the share of the GST pie. So, the Commonwealth Grants Commission proposing a $5 billion cut to GST revenue. So, we’re potentially looking at $2.4 billion next year alone. Surely this is something that you won’t let happen.
Chalmers:
I think as you rightly kind of intimated in your question, Loretta, this is an arm’s length process. It’s an independent process managed by the Commonwealth Grants Commission. It’s not a decision of the federal government to carve up the GST. That’s done by the Commission. And every year or every time that these relativities are calculated, some states are happy, and some states are less happy. Queensland’s done quite well over recent years from the Commonwealth Grants Commission. And what this new number recognises is the substantial amount, extra amount that Queensland is getting in coal royalties. And so, this calculation is not done by the government. I know it’s not unusual for state governments to want more money from the federal government. It’s not unusual for states to blame the feds for pressures on their budget. But this is not a process that’s done by politicians in the Commonwealth government. It’s done by this independent organisation.
Ryan:
Are you disappointed, though?
Chalmers:
I think over time it all works out. You know, for example, the last time this was done, NSW was unhappy. This time it’s Queensland. But over time, if you look at this over a period of time, it generally smooths out. On this occasion, it recognises that Queensland’s doing well or expected to do really well out of coal royalties. On other occasions, Queensland’s done incredibly well. Over a period of time, not just from year to year or update to update, it generally smooths out. From time to time, states are unhappy. Obviously, I care about that. As a Queenslander, I have a respectful working relationship with the Queensland government. I have a respectful relationship with governments of both political persuasions around Australia. It’s not unusual for them to want more and that’s what we’re seeing here.
Ryan:
But we need more because of the Olympics, don’t we?
Chalmers:
We’re kicking billions of dollars in for the Olympics. I think that’s a really important point. We’re providing $3.5 billion as a Commonwealth government for the Olympics. We haven’t been shy about that. We haven’t been pinching pennies when it comes to our commitment there. We think the Olympics are going to be terrific. We want to work closely with the state government to deliver something that we can be proud of and our $3.5 billion is part of that effort.
Zonca:
So, giving us $3.5 billion for Olympic infrastructure but taking $5 billion in GST revenue, that still leaves us $1.5 billion down overall.
Chalmers:
No, because there’s a big recovery in coal royalties, as I keep pointing out. Secondly, you need to look at these calculations by the Independent Commission at arm’s length from us over a period of time and not just from update to update. Queensland’s done well over the years. I know that people are not happy about this one. I do genuinely understand that you do genuinely care about that. But you need to look at it over a period of time, not just from one update to the next.
Zonca:
I appreciate your time this morning, Treasurer. Thanks so much.
Chalmers:
Thanks to both of you. All the best.
Zonca:
Federal Treasurer Jim Chalmers.