MICHAEL ROWLAND:
The Treasurer, Jim Chalmers, joins us now. Treasurer, good morning.
JIM CHALMERS:
Good morning, Michael.
ROWLAND:
A $4.2 billion surplus forecast for this year, the first surplus in 15 years. To quote your political idol, Paul Keating, has a rainbow hit you on the backside?
CHALMERS:
I don't see it exactly that way. I see that complex balancing act that you described, I think rightly, in your introduction. We've got this big improvement in revenues in the near term, and we've taken the most responsible approach to that, and that's why we're forecasting a surplus for this year. But we've got some structural challenges in the Budget. We made a heap of progress on those last night but there will be more work to do. And again, as you said before, what we've been able to do on the foundations of a much more responsible, much stronger Budget is to provide help for people who are doing it tough at the same time as we invest in the future.
ROWLAND:
Going back to the inflation challenge, there is more than $20 billion worth of new spending. How is that not inflationary?
CHALMERS:
Well, first of all, it’s over a four year period -
ROWLAND:
But the bulk of it is next financial year, right?
CHALMERS:
But it doesn't all hit the economy at once. And even next year, if you take next year, for example, part of that is having to fund ongoing programs that were left unfunded by our predecessors, there is some cost of living help in there but carefully targeted, there's the impact of the small business tax breaks that we announced last night as well. And so broadly, across the economy, we don't expect to be adding to these inflationary pressures, in fact our energy bill relief combined with our price caps to get those price rises a bit down in the energy market - they're actually taking some of the sting out of inflation next year.
ROWLAND:
But they're rebates. It's not a cash splash, so to speak, but it's $500 a year for people who get those concessions. They will still have $500 extra to spend, therefore potentially fuelling inflation. Is that a concern?
CHALMERS:
When we sat around the Cabinet table and put the finishing touches on this Budget, the defining influence on the Budget was inflation. It guided the way that we designed and carefully calibrated the cost‑of‑living package, the way that we're investing in the supply side of the economy, and the substantial restraint and discipline that we've exerted on to this Budget. And so what we've been able to do is hand down a Budget which is designed to take some of the sting out of whether it's energy prices, rent, with the rent assistance, or out-of-pocket health costs. Those are the three most problematic areas when it comes to inflation. We've dealt with them in a targeted way, in a way that takes some of the edge off cost‑of‑living pressures rather than add to them.
ROWLAND:
JobSeeker, $40 extra a fortnight, $2.85 a day. Is that really the best a wealthy country can do for its most vulnerable people?
CHALMERS:
Well, I think it's important that we increase the base rate of JobSeeker in the Budget, but in addition to that, extra money for the max rate of Commonwealth Rent Assistance, energy bill relief that we were just talking about. And so what we've tried to do is do as much as we can without blowing the budget, without adding substantially to these inflationary pressures in the economy. And I understand and respect that there will be people who say that we should do more, there will be people who say we shouldn't have done any of this. We've done what we can, and also, a lot of people who are eligible for one of these payment increases in the Budget would be eligible for two or more of these increases as well, so you need to look right across the cost‑of‑living package.
ROWLAND:
Okay. Now, you've brought down the age threshold where the higher JobSeeker rate kicks in from 60 to 55. Why have you done that?
CHALMERS:
That's a really important change. One of the most concerning parts of the community of Australians who can't find work is over 55s, and particularly women over 55, and the advice that we received from the expert committees we set up is that this is a really big and growing challenge for us. It is harder and harder, particularly for women over 55 to get back into work, big increases in homelessness and the like, and so we've tried to provide some extra help there.
ROWLAND:
Now, you've revealed last night the cost of the stage three tax cuts will be $69 billion over four years. That is four times the $15 billion cost‑of‑living package. What is right about that picture?
CHALMERS:
Well, I was asked yesterday how much they cost, and because there's an extra year of these tax cuts in the forward estimates, then it's a bigger number than it was last time, and ‑‑
ROWLAND:
You can see the disparity though between those figures, and how that would be viewed by people?
CHALMERS:
Well, first of all, those tax cuts kick in at $45,000, and I think it is important that we give back some of the bracket creep in the jargon, particularly to people on low and middle incomes, but we haven't changed our position on the stage three tax cuts. What we have done in the Budget last night is to provide some help for people who are doing it toughest, the most vulnerable people in our community, and that shows where our priorities lie.
ROWLAND:
So they're here to stay?
CHALMERS:
Well, we haven't changed our position. They don't come in for more than a year now. They haven't actually been a focus of the deliberations for this Budget at all.
ROWLAND:
Just very quickly, you talked about the difficult decisions potentially in the year ahead. We do know that the structural deficit is still a big issue. Two questions: did you miss an opportunity on that front last night, and what pain potentially is coming up for Australians in the next Budget?
CHALMERS:
Well, first of all, we made big progress on the structural challenge in the Budget last night. If you look at the 10‑year profile of our debt, for example, we're avoiding hundreds of billions of dollars in debt and something like $83 billion just on interest payments alone on that debt because of our responsible economic management. So, we made some progress, but there is more to do. We dealt with, one of the biggest growing costs in the Budget was actually how much interest we pay on that debt we inherited, and so that's made a meaningful difference, but inevitably in every Budget there will be difficult choices. We came up with $40 billion in savings in the last two Budgets, for example, in addition to this spending restraint, and that will put us on a much more sustainable footing, not for its own sake, but so that we can help people in our community and invest in their future.
ROWLAND:
Jim Chalmers, appreciate your time this morning. Thanks for joining us on News Breakfast.
CHALMERS:
Thanks, Michael.