MARK RILEY:
Treasurer, thanks for joining us.
JIM CHALMERS:
Thanks, Mark.
RILEY:
The $300 energy bill relief, why won’t people just see that as $300 that they’ve got to spend elsewhere, which would be inflationary?
CHALMERS:
Well, it’s $300 to help take some of the sting out of these energy bills, which are part of the cost‑of‑living challenges that people are confronting. We know that people are under pressure. We know that people are doing it tough, and we want to help where we can. The cost‑of‑living relief in the Budget is substantial, but it is responsible. It will help put downward pressure on bills and therefore downward pressure on inflation.
RILEY:
There’s no doubt that people on low or middle incomes need it. Do the rich really need this?
CHALMERS:
Well, once you decide not to provide it just to people on pensions and payments, obviously they are a high priority for us, vulnerable people and people on payments feel these cost‑of‑living pressures particularly hard. But once you determine that you want to go beyond that and to provide this relief to people doing it tough on middle incomes, it becomes much easier and much more efficient to provide it to everyone.
RILEY:
The combination of those two are targeted at bringing inflation down below 3 per cent by Christmas. What if it doesn’t?
CHALMERS:
Well, these are the Treasury forecasts. They’re put together by professional economists that weigh up the impacts and implications of the Budget. And in their best assessment, the combination of our energy bill relief and what we’re doing elsewhere in the Budget, to get the Budget in much better nick, will put downward pressure on inflation rather than upward pressure on inflation. And in their estimation, we could get back to the inflation targeting band sooner than they anticipated in the last update.
RILEY:
But there are a lot of variables that neither you nor they could anticipate, and we’ve seen them in the international community over the last couple of years. Is there any certainty at all that you’re going to achieve this?
CHALMERS:
Well, even in more normal times, forecasts can be uncertain. They can be unpredictable, and especially in volatile times like we are going through. But this is the best expectation of the professional forecasters in the Treasury. We are very confident that our Budget will put downward pressure on inflation, will be part of the solution to these cost‑of‑living pressures in our economy, not part of the problem.
RILEY:
Some economists say that you are subsidising these parts, the energy and rent, to artificially buy down headline inflation in the short term. How do you answer that allegation?
CHALMERS:
I don’t describe it like that, but nor does it surprise me at Budget time that there are lots of opinions and lots of views. Opinions are pretty thick on the ground at Budget time and this year has been no exception. The advice from our experts, our economists, is that we’ve struck a really good balance here.
RILEY:
So, a second consecutive surplus, that’s good news, but there are bigger deficits in the out years.
CHALMERS:
Well, what we’ve tried to do with the way we’ve put together the Budget is to get on top of this inflation challenge without smashing people and without smashing the budget or the economy. We have to strike a balance here, doing what we can to beat inflation, providing cost‑of‑living help, without damaging an economy which is already soft or hurting people who are already under pressure. And so that’s been the task of the Budget. The Budget has got 5 years in it. Two of those years get a little bit better when it comes to surpluses and deficits. Three of those years get a little bit tougher, but not substantially so, and the main explanation for the deficit getting a little bit bigger next year is we’re continuing some health programmes that shouldn’t be ending and we’re providing cost‑of‑living help.
RILEY:
But the message for average families is they’re going to have to ride out some pretty tough times still ahead before things get better.
CHALMERS:
Obviously, you can’t just flick a switch and make all of the cost‑of‑living challenges disappear. But we have done a substantial amount in this Budget in the most responsible way to make life a little bit easier for people who are under pressure, taken some of the sting out of these bills which are causing such stress and anxiety in the community. So, what we’ve tried to do, deal with the near‑term pressures, invest in our longer‑term priorities, but at all stages, make sure that we’re putting people front and centre because we know people are doing it tough.
RILEY:
When do you expect to flick that switch from anti‑inflation to pro‑growth?
CHALMERS:
I think inflation will still be a challenge in our economy for a little while yet. We’ve made really good progress on inflation, when we came to office inflation had a 6 in front of it, it’s now got a 3 in front of it. That’s still too high, but it’s heading in the right direction. We want it to moderate further and faster and the Budget will help in that regard.
RILEY:
Treasurer, thanks for your time.
CHALMERS:
Thanks very much.