MONIQUE WRIGHT, HOST:
Here's Seven News political editor, Mark Riley, one-on-one with Treasurer Jim Chalmers.
MARK RILEY, POLITICAL EDITOR:
Treasurer, thanks for joining Weekend Sunrise.
JIM CHALMERS, TREASURER:
Thanks, Mark.
RILEY:
A family friendly Budget with paid parental leave at the centre.
CHALMERS:
This will be a family friendly Budget because we recognise that even though the pressures on our economy are coming from around the world, the pressures are felt around the kitchen table. And so childcare, cheaper childcare, more paid parental leave for mums and dads - these will be central features of the Budget I hand down on Tuesday. The biggest on-budget commitment to Australians in the Budget on Tuesday will be cheaper childcare.
RILEY:
And lifting the income threshold and combining the incomes, what's the point of that?
CHALMERS:
We think it's a sensible move. We want as many people as we can responsibly involve in these programs to be part of it. We don't see cheaper childcare or paid parental leave as some kind of social security or welfare payment. This is good for families and good for the economy because it makes it easier for people to work more and earn more if they want to, makes it easier for Australian families to juggle the pressures of work and family.
RILEY:
And can we afford this?
CHALMERS:
We can, because we're taking responsible decisions elsewhere in the Budget. This Budget is all about a more responsible approach to spending and more resilience in the economy. It recognises when you've got all this global uncertainty around the world, you need a responsible Budget at home. That's how you make room for priorities like supporting Australian families.
RILEY:
Good for families but inflation is smashing all household budgets. What can you do for pensioners in this Budget?
CHALMERS:
Well, inflation is the primary influence on the Budget that we've put together. It guides our approach to cost-of-living relief, to our targeted investments in a stronger, more resilient economy and it guides our approach to trimming spending in wasteful areas as well and part of all of that means making room for what will be $33 billion in extra funding for pensions and payments. About a third of that will be age pension and support for seniors. That reflects the fact that when you've got inflation rising as it is for as long as it is, you need to make sure those payments keep up with the cost of living. That's what the indexation is about, that's what the extra $33 billion is about. And we've made room for that.
RILEY:
Sure, that's indexation, but when you have things like electricity being predicted to rise by 35 per cent next year, that's a lot of money for a pensioner. Previous Budgets have had energy supplements. Any chance of that?
CHALMERS:
There won't be something of that nature in the Budget, but there will be a cost-of-living package for Australians and what it recognises is we've got inflation, which is higher than we'd like, for longer than we'd like. Electricity will be a big part of that as a function of the war in Ukraine and the fact that we have had a decade of energy policy chaos and so, these are the costs and consequences of those two things. The worst thing that we could do as an Australian Government would be to spray money around in an indiscriminate way that would actually make our inflation problem worse, would make things counterproductive, it would push interest rates up even further than they need to go and we're very conscious of that. That's why the emphasis in the Budget, the premium in the Budget is on what's responsible and what's affordable. It will be solid and sensible and suited to the times.
RILEY:
And you're predicting that inflation will stay higher for a bit longer. That means interest rates will also stay higher for a bit longer. What's the outlook for homeowners?
CHALMERS:
I think the Reserve Bank itself has made it very clear in an independent way that they think interest rates will go up a bit more. Our job in the government is to make sure we're not making the hard task of the independent Reserve Bank harder by adding unnecessarily to inflation and so that's why the Budget is so responsible, that's why there is so much restraint in the Budget. Inflation will be higher than we'd like for longer than we'd like. Electricity will be part of that. The natural disasters will push up the price of groceries as well. We understand the pressures that people are under and we've levelled with people and said we'll provide support where we can, but we'll do it in a really responsible way that has an economic dividend so we don't make the inflation problem even worse.
RILEY:
And the natural disasters, there'll be more support here for people who are in the floods at the moment. What's that entail?
CHALMERS:
Well, my colleague Murray Watt’s done a terrific job in making sure that we can declare these disaster areas as quickly as we can so that we can get those payments flowing. This is primarily a human tragedy, what's happening in these flood-affected communities right around Australia, but it will have economic consequences as well, and consequences for the Budget. It will add to the cost of living, it will slow the economy in the near term. And what we've done in the Budget is we've made room for another $3 billion of support. We think we're likely to need that at least, and so we've provisioned for that in the Budget. Australians are there for each other when times are tough and natural disasters hit, and the government will be there for them in the Budget, too.
RILEY:
How much more tax will multinationals pay after your Budget?
CHALMERS:
Well, the numbers will be in the Budget, but an important part of putting the Budget on a more sustainable footing will be multinational tax reform. We've been flagging that for some time and we will say in the Budget what we expect to raise from that. We've done a heap of consultation. We've been working with our partners around the world to try and bed down a multinational tax regime. We want multinationals to pay a fairer share of tax here in Australia, and you'll see the beginnings of that effort on Tuesday.
RILEY:
Will it be substantial?
CHALMERS:
It depends on your definition of substantial. It will make a contribution to making the Budget more sustainable over the medium term and it will keep faith with what we've been talking about for some time.
RILEY:
So the UK is probably in recession, the US is heading that way. Who knows what happens with the rest of Europe? If Australia follows them, will that be a failure of economic policy?
CHALMERS:
We don't expect to follow some of those big economies into recession, but we do have very substantial concerns for the UK, for Europe. Obviously, there are issues in the American economy and China is slowing as well, and so we won't be completely immune from that. We do have things going for us - low unemployment, we're getting good prices for our commodities. I think Australians have proven themselves very resilient, so we've got a lot going for us, but we won't be completely spared another global downturn, and the Budget will account for or forecast the impacts of that.
RILEY:
So, commodities, something like $100 billion plus over four years of extra revenue coming from fossil fuels. A little bit of an irony in there of a Budget that's focused towards the clean energy future. How much of that will be spent and how much will be saved?
CHALMERS:
One of the differences between how we will approach this very welcome increase in revenue from high commodity prices and how our predecessors approached it is we will take a much, much more responsible approach. We recognise that this boost to revenue, this welcome boost to revenue, is in the near term, it is substantial, but it will fall and fade over time at the same time as some of these big, persistent structural pressures on the Budget intensify and so, we'll take an incredibly responsible approach to upgrades.
RILEY:
Will you bank a lot of it?
CHALMERS:
We will bank a lot of it, and you'll see in the Budget how that distinguishes us and differentiates us from our predecessors.
RILEY:
Another outlook, unemployment predicted to rise to 4.5 per cent now. That means somewhere between 125,000-150,000 more Australians out of work. What can you do about that?
CHALMERS:
First of all, we do expect unemployment to tick up a little over the course of the next year or so, year or two and it will settle, we think, at a level which is still lower than what it was before the pandemic. What we'll expect to see with unemployment is the natural consequence of a slowing global economy, the impact of interest rate rises here at home. We will forecast for a slower Australian economy, particularly next year, as some of those pressures collide and intensify and bite. We'll see that in the numbers.
RILEY:
You don't like the fact that the coalition claims to be the superior economic managers, do you?
CHALMERS:
I hate it. I think it's complete rubbish and I think the last decade which has been a wasted decade of missed opportunities and messed-up priorities has really laid that bare. We've got a lot going for us in this country, but we've inherited energy chaos and aged care crisis, labour and skills shortages, stagnant wages, and not enough to show for a trillion dollars in debt. I think that speaks to their failures as economic managers and we can do better.
RILEY:
Okay, you've called this a bread-and-butter Budget. A workmanlike budget, no frills, sounds pretty dull. What's the latest?
CHALMERS:
I don't mean it too, Mark.
RILEY:
What's the latest description?
CHALMERS:
It'll be solid, it'll be sensible, it'll be suited to the times, and it will do more than just batten down the hatches against all of this uncertainty. It will back in families, it will build a better future and I hope it brings Australians together around this recognition that we can have a better future. But first we've got to navigate some pretty tricky territory.
RILEY:
Treasurer, good luck on Tuesday night in your first Budget.
CHALMERS:
Thanks so much, Mark.