MICHAEL ROWLAND:
Good morning. I’m Michael Rowland coming to you live from the lands of the Ngunnawal people in Canberra this morning, where last night the Treasurer, Jim Chalmers, delivered his third Federal Budget. At the heart of it, cost of living relief for all Australians. Let’s drill down to some of the key issues.
As we know, the Treasurer last night confirmed the key cost of living relief measure, those reworked stage 3 tax cuts taking effect from July this year. He also unveiled new measures, revealed new measures totalling nearly $8 billion. The government hopes to take the edge off power prices with households to get a $300 annual cash bonus, a cash rebate paid quarterly. Small businesses will also benefit, they’ll get $325. Renting is about to get easier for some people, too, with the Commonwealth Rent Assistance lifting by 10 per cent. The key measures from the budget last night.
Let’s bring in the Treasurer now, Jim Chalmers, a very good morning to you.
JIM CHALMERS:
Good morning, Michael.
ROWLAND:
Now the government’s hoping a combination of the Energy Bill Relief and the increase in the Commonwealth Rent Assistance will decrease interest rates by half a per cent next year. Isn’t the government effectively trying to buy rate cuts?
CHALMERS:
No, of course not. But you’re right to say a moment ago that the big focus in our budget is helping people with the cost of living. And we found a way to provide substantial help, but also responsible help. And the combination of providing a tax cut for every taxpayer, energy bill relief for every household, rent assistance for people who receive rent assistance collectively, we hope that takes some of the pressure off people and it will put downward pressure on inflation.
ROWLAND:
It is a very big economic and political gamble we’re talking about here. You’re hoping those rates, the official rates, come down to the top of the target band by Christmas.
CHALMERS:
Well, Treasury is now forecasting that we get inflation to moderate a bit faster than they were anticipating at the end of last year. And that is because the budget is designed to put downward pressure on inflation. The Reserve Bank will take its decision about interest rates independently. They’ll weigh up a whole range of factors, not just the Commonwealth Budget.
But what we’ve shown again in the budget last night is a willingness to be part of the solution to high inflation rather than part of the problem. We’ve made good progress. Inflation had a 6 in front of it when we came to office, it now has a 3 in front of it and the budget will help it get lower.
ROWLAND:
But if inflation doesn’t come down to the top of that band, close to 3 per cent. You’re in a bit of political trouble by the end of the year, aren’t you?
CHALMERS:
I don’t see it in political terms, primarily the motivation of this budget is to help people who are doing it tough. More help is on the way for people who are doing it tough via the tax system, via their energy bills and with rent assistance and cheaper medicines and in other ways as well. That’s our primary motivation.
ROWLAND:
Why do wealthy Australians deserve a $300 a year tax – energy bill rebate?
CHALMERS:
We think people are doing it tough beyond those who are on pensions and payments. Obviously, people on pensions and payments are a very high priority for us. They were last year with the energy bill rebates and they will be again this time. But some of these pressures are being felt up and down the income scale, including, you know, millions of people in middle Australia are under pressure as well.
ROWLAND:
Millionaires, millionaires don’t need this money surely.
CHALMERS:
Once you go beyond providing this to people on pensions and payments, you have to design a whole new system in order to create a new distinction. We are providing this energy bill relief to every household. We think that’s a good way to help make things a little bit easier for people. Some of the other measures are more targeted.
ROWLAND:
But why didn’t you create that new system? You’ve got all the best people in the Treasury there that could have come up with a system that means tested this payment.
CHALMERS:
Well, because this relief is delivered via the retailers, that they don’t have information about people’s incomes. And so, you would have to take a long time and spend a lot of money and a lot of effort to design a system where the retailers have access to people’s income information that doesn’t exist right now. This is the best way to provide help to more people who are under pressure and it is an efficient way to provide that assistance. Some of the other measures are more targeted.
ROWLAND:
How will it work in practise?
CHALMERS:
What it means is if you pay your energy bill quarterly, you will get a $75 credit on your 4 bills next financial year. And that means that we are taking some of the edge off these bills and that’s why it puts downward pressure on inflation.
ROWLAND:
Ok, let’s talk about the Commonwealth Rent Assistance increasing by 10 per cent. How will that help people? And did you consider going further? Because we do know so many low‑income households suffering acute rent strain at the moment?
CHALMERS:
Absolutely. This is not the first time we’ve increased Commonwealth Rent Assistance. It’s actually the first time in a really long time that there have been back‑to‑back increases. 15 per cent last budget, 10 per cent this budget. We hope that makes things a bit easier for people who are renting at the same time as we build more homes to try and create more rental properties in our communities. So, a bit more help. We know that there will always be an appetite for even more help beyond that, we try and provide substantial cost of living relief, but in a responsible way, cognisant of all of our other priorities and pressures.
ROWLAND:
Let’s talk about Australia’s pivot eventually to green energy. You fleshed out further details of the Future Made in Australia package last night, including production tax incentives totalling $14 billion for green hydrogen and critical minerals. How can taxpayers be assured their money won’t be wasted here?
CHALMERS:
Because the answer to that is in your question. Overwhelmingly that big investment, $22.7 billion investment over 10 years, is production tax credits. And that will reward businesses who produce the energy of the future to help the world get to global net zero and to create good, secure, well‑paid jobs in our local communities. And so by using the tax system, by paying on scale and success, we’re making sure that that money’s not wasted.
ROWLAND:
Ok. Lots of focus now on what the RBA board does. Has Michele Bullock been in touch with you last night, this morning to say either good job, Jim, or ‘yeah, nah, Jim’.
CHALMERS:
I haven’t spoken to her since the budget came out, but I’ve spoken to her about the budget before the budget. I briefed the Governor as you’d expect me to do on the budget. I did that in the course of the last couple of weeks. We speak about these things all the time. We compare notes all the time. And I don’t speak for her. She’s got lots of opportunities.
ROWLAND:
She’s quite open about the private conversations she had with you. She said so at the press conference recently.
CHALMERS:
And that’s appropriate. I think governors and treasurers should speak. We’re on the same page when it comes to trying to get this inflation down in our economy. I did my bit last night and –
ROWLAND:
So, it’s over to the RBA board now.
CHALMERS:
No I don’t mean that for 1 second. What I mean is they will take their decisions independently. They’ll weigh up a whole bunch of things, not just the Commonwealth Budget.
ROWLAND:
Ok. But what will they think the board think of the increased spending next year, next financial year? Nine and a half billion dollars in new government policy decisions, deficits as far as the eye can see. How is that not expansionary and putting greater pressure on the RBA too, either keep rates where they are or certainly potentially raise them?
CHALMERS:
Two things about that. First of all, the spending next year is driven largely by extending things like health programs and the cost‑of‑living package, which will put downward pressure on inflation, that is next year. In terms of the deficits, we inherited deficits as far as the eye can see. We turned those deficits into surpluses and we’ve got the deficits down over the forward period too. We’ve made something like $215 billion in budget improvements, saving us a mountain of interest on the debt that we inherited from the Liberals and Nationals. And so, we’ve made really good progress and I think any objective observer would acknowledge that.
ROWLAND:
Very busy morning for you, Treasurer. I appreciate you making the time for us. Thank you so much.
CHALMERS:
Thanks, Michael.
ROWLAND:
Jim Chalmers there, the Treasurer.