MICHAEL ROWLAND:
Treasurer, good morning.
JIM CHALMERS:
Good morning, Michael.
ROWLAND:
Did you see this one coming?
CHALMERS:
I try not to get in the practice of guessing decisions taken by the independent Reserve Bank but certainly the market was surprised by it. The market typically has a reasonable handle on this and they were surprised yesterday. It was a pretty blunt, pretty brutal reminder of the challenges that are in our economy, particularly this inflationary challenge, and a really difficult day for Australians who are already under the pump.
ROWLAND:
Can you understand many Australians did see inflation coming down, it still is at elevated levels but down in the year of the March quarter, and feeling a bit blindsided by this rate rise?
CHALMERS:
Well, inflation is moderating in our economy, but it's still higher than we'd like for longer than we'd like. That's really the defining pressure on our economy at the moment are these cost‑of‑living issues that people are dealing with from a number of fronts. And that's why the Budget that I hand down in less than a week's time, will provide responsible cost‑of‑living relief, which is conscious of these inflationary pressures in our economy, but which also tries to invest in some of the supply side issues in our economy, which have been part of this inflation challenge too, so that we can grow the economy out of this slower period, grow it the right way by investing in energy and some of the other drivers of growth.
ROWLAND:
You were using the words blunt and brutal, and it was a blunt and brutal reminder. You talk about the Budget as well, did that latest rise and the very strong language around it lead you to recalibrate the Budget settings, and perhaps you'll now be less ambitious and the cost‑of‑living measures you can hand out next Tuesday because of fears of further stoking inflation?
CHALMERS:
We won't be fundamentally recasting our strategy. Our strategy is already defined by restraint. In the Budget in October, we banked 99 per cent of the upward revision in revenue. And we'll bank most of it again, once we get the final revenue numbers for the May Budget as well. That's the responsible way to go about it. But within that, there will be cost‑of‑living relief, it will have a number of elements, it will prioritise the most vulnerable, and it will all be made clear to people on Tuesday night.
ROWLAND:
Now the RBA is of course hoping for a soft landing, we're all hoping for a soft landing but of course things can go the other way Treasurer - Deloitte Access Economics is accusing the RBA of playing Recession Roulette, they've got a point haven't they?
CHALMERS:
I think the Reserve Bank has got a difficult balance to strike just like the Government does - and I'm focused on my job. My job is to provide that cost‑of‑living relief in a way that doesn't add substantially to this inflation challenge that we've got in our economy. My job is to help people through a difficult period, particularly the most vulnerable Australians, but also to try and set our economy up for the future, and that's the task of the Budget. Now, whether it's Deloitte Access Economics, the Reserve Bank, the Treasury forecasts that I'll release in less than a week's time, everybody expects the Australian economy to slow considerably. That is the inevitable consequence of a slowdown in the global economy combined with the impact of these rate rises, which began before the election.
ROWLAND:
And we have the real prospect of more rate rises because the RBA says inflation won't get down to three per cent, which is the very top of its two to three per cent band until mid‑2025, so Australians really have to brace for more pain?
CHALMERS:
That remains to be seen, Michael, I think that the impact of these rate rises that are already in the system will be felt over a period of time. And each time the independent Reserve Bank gathers, they weigh up all of the considerations, all the pressures in the economy, including this global uncertainty that we're going through right now, and they'll take that decision independently. They haven't pre‑empted future decisions, and I certainly won't be either.
ROWLAND:
Greens Senator Nick McKim - his words - says the RBA is out of control and he's calling on you as Treasurer to use your powers to step in, will you?
CHALMERS:
Look, I don't typically take my economic advice from the Greens political party. We think that the independence of the Reserve Bank is an important feature of the system. And one of the key conclusions of the Reserve Bank Review that I released not that long ago, was that we can improve the objectives and structures and processes and personnel that make these decisions independently on our behalf. But I won't be intervening in the way that the Greens political party have suggested. I think the independence is a cherished part of the system.
ROWLAND:
Okay, now lots of households are recasting their budgets this morning ahead of the banks passing on that rate rise in the next month or so, you've got a tough Budget coming up, as you say, next week. Treasurer, can you understand that many Australians watching the Prime Minister taking in the pomp and ceremony of the Coronation will find that a bit jarring?
CHALMERS:
I think people understand that this Government led by Anthony Albanese is very focused on the very real cost‑of‑living pressures that people are facing every day. It's why the Budget will have a substantial package of relief when it comes to medicines, it's why we'll have a substantial package on child care, why there'll be a bit of help for people with their energy bills to try and take some of the sting out of that. I think people recognise that Anthony's got a job to do, that that requires from time to time that he represent us on the world stage. It's an important weekend for one of our key partners, he'll also be meeting with the Prime Minister of the UK, and with other important partners. And so I think people recognise that it doesn't prevent us from doing the necessary work, the difficult work of making sure that we can provide some of that cost‑of‑living relief in the Budget. The Prime Minister has been intimately involved in every stage of the Budget preparation. That's something certainly that I welcome and it shows that his focus is on the pressures that Australians are facing here at home.
ROWLAND:
The Prime Minister has confirmed overnight that yes, indeed, he will be swearing the oath of allegiance to the King in Westminster Abbey during the Coronation, will you when you're sitting at home on Saturday night, be doing the same thing.
CHALMERS:
Look, I get other opportunities to do that being sworn in as a minister and being sworn in as an MP. I suspect on Saturday night, I'll be working on the Budget speech.
ROWLAND:
Not watching the Coronation?
CHALMERS:
I probably won't be watching the Coronation, Michael, but that doesn't mean I don't see it as an important day - very important day. And I think it's an opportunity for us to be respectful about it, but I suspect I'll be working on the Budget speech and getting ready for Tuesday.
ROWLAND:
Treasurer, appreciate your time this morning. Thank you.
CHALMERS:
Thanks, Michael.