MADELEINE MORRIS:
Good morning to you, Treasurer, and can I start by saying thanks for getting up early for us? I saw you at the Midwinter Ball last night. What time did you get to bed?
JIM CHALMERS:
It was a relatively early departure last night, Madeleine, and I’m very grateful for that this morning.
MORRIS:
Yes, I bet you are. Well, thanks for coming in. Yesterday you warned us, speaking after those GDP figures, we need to brace for a tough time. What is the next year going to look like for Australian families?
CHALMERS:
First of all, I think we’re up for this challenge. I’m still relatively confident and optimistic about the future of our economy and the future of our country, but we do have some difficult conditions to navigate in the near term. I think everybody watching your show understands that the costs of living are going through the roof. People’s real wages are going backwards.
What we saw in the National Accounts yesterday was a pretty encouraging, pretty solid outcome for the economy but also the beginnings of some of these challenges that we’re dealing with now whether it’s pressure in our supply chains pushing up inflation, whether it’s issues about labour and skills shortages. People are starting to save a bit less as their living costs go up. And the other thing is a lot’s happened since those National Accounts were put together more than 2 months ago now, and what we’ve seen is interest rates have gone up further; the international situation has deteriorated. So, I think it’s possible to recognise that we had a pretty solid, relatively strong June quarter in those National Accounts for the economy, but people are under no illusions about the rocky terrain that we have to climb for the next 6 or 12 months.
MORRIS:
It actually does feel like an age away, that quarter, particularly on interest rates. There’s been some change and we know that’s going to start to bite as people come off their fixed rates in the coming months. You say in the Budget you want to deliver a cost‑of‑living relief budget but in a way that doesn’t make the Reserve Bank’s job harder, reining in inflation. How can you actually do that? How can you do something which – because anything that puts money in people’s pockets is just going to drive inflation, isn’t it?
CHALMERS:
I want to level with the Australian people about the complexity of this challenge, and it’s as you described it. When we provide responsible cost‑of‑living relief in the Budget next month, which I will do, we want to make sure it also delivers an economic dividend. So child care obviously eases people’s cost‑of‑living pressures but also delivers a big economic dividend when more parents, and especially more mums, can return to work if they want to. Making it cheaper to go to TAFE obviously has implications but is also good for the economy. Cutting medicine costs as we intend to do – all of these things are important ways to ease people’s cost of living without adding to those inflationary pressures because it delivers an economic dividend. I want to be up‑front with people. I want to level with people that the job in the Budget is to provide that cost‑of‑living relief without making the task of the independent Reserve Bank that much harder. We don’t want that cost‑of‑living relief to be counterproductive.
MORRIS:
Just on that, doesn’t keeping the fuel excise cut continue that productivity dividend also because it means that people are able to go to work, they’re able to do their jobs, it keeps down the costs of groceries, for example?
CHALMERS:
When you’ve got a trillion dollars in debt that you have inherited from the Liberal Party then you’ve got to make some difficult decisions and again just being up‑front with people about that. We’ve tried to approach these challenges in the spirit of frankness and candour when we talk to the Australian people about the budget constraints we’ve inherited. So to continue that fuel excise relief even for 6 months would cost something like $3 billion. We’ve got to weigh up all of our priorities and I don’t think we can afford to extend that. Right now, petrol prices are somewhere between 30 and 40 cents off the peak that we saw earlier in the year, which is a good thing. But petrol prices are still a big part of the family budget, still putting pressure on households, particularly motorists. So, we know it won’t be easy when that relief comes off but we can’t afford to extend it.
MORRIS:
Can I just put a scenario to you? If a CEO of one of the big four banks said, “we’re not going to put up interest rates for another two years, even three years” and then they went up and put those interest rates up, there would be repercussions, wouldn’t there? Why are there no repercussions for the Reserve Bank board and the Governor of the Reserve Bank for doing just that?
CHALMERS:
The Governor of the Reserve Bank is accountable to the people, to the Australian public, and he has been asked to explain –
MORRIS:
In what sense? He’s explained it, but that’s it. There is actually, at this stage at least, no other repercussions.
CHALMERS:
I think he’s given his account of what happened over that period; in his words, the economy got back on track earlier than he thought that it would and he’s answered that pretty honestly and pretty openly the last few months in particular as he has attracted some of this criticism for some of his language in the past. For me as the country’s Treasurer, it’s not for me to take potshots at Phil Lowe. My interest here is in reviewing the Reserve Bank so we can get the right institutional settings. People will rightly ask the Governor questions about the recent decisions and recent language. My job is to get the system right and also to focus on the things that the Government can have an influence on. So, in my case in the Budget and at the Jobs and Skills Summit last week, it’s all about dealing with these constraints in our economy which are pushing up inflation, whether it’s labour and skills shortages, a lack of training, whether it’s issues in energy, all of these other key investments that we want to make in the Budget are about lifting the speed limit on the economy without adding to those inflationary pressures. That’s my job. I take responsibility for that. The Governor can explain the decisions that the board makes.
MORRIS:
On to another story. Eighteen million dollars in funding for the Future Leaders Foundation has been scrapped. That was a foundation established with the support of the Governor-General but absolutely no tender documents. That money was given in the budget by the last government. Why was that money scrapped?
CHALMERS:
What we’re doing is we’re going right through the budget line by line to make sure that we’re getting value for money for some of the commitments in the budget. And that one didn’t pass muster from our point of view and so we won’t be providing that $18 million or the ongoing funding after that as well. We have to take some difficult decisions in the Budget. There have been some funds committed which will not be proceeding and that’s an example of that. And there will be other examples too which you will see in the Budget.
MORRIS:
Will there be an investigation, a further investigation, into the circumstances in which that money was awarded in the first place?
CHALMERS:
That’s not something I’ve been contemplating. This is a grant that came out of Prime Minister and Cabinet Department so they’ve done the work, the due diligence, along with other departments, Finance and Treasury and others to see if we would get value for money for this grant. The conclusion is that we would not, so we won’t be providing that money. I think Australians know when we’ve got this budget with a trillion dollars in debt that every dollar in the budget’s got to be defensible. We’ve got to ensure that we get value for money and bang for buck. I don’t think you can make that case here, and that’s why we won’t be providing the funding.
MORRIS:
And just really quickly, Treasurer, before I let you go, will you or the Prime Minister be making representations to the Governor‑General about organisations that he supports?
CHALMERS:
That’s a matter largely for the Prime Minister, the relationship with the Governor‑General. We don’t see this in personal terms. We had a hard-headed look at this grant as it was proposed and we couldn’t see that it would provide the kind of value for money that we need to see in a budget which has all of this debt in it, so we discontinued it. I’m not into the personalities of it, I’m into the economics of it, the responsible budgeting around it, and that’s why it won’t be proceeding.
MORRIS:
Treasurer Jim Chalmers, thanks for your time this morning.
CHALMERS:
Thanks for your time, Madeleine.