NEIL MITCHELL:
On the line is the Federal Treasurer, Jim Chalmers. Good morning.
JIM CHALMERS:
Good morning, Neil. How are you?
MITCHELL:
I’m okay. Thanks for your time, I know you’re flat out. The cut to health funding in Victoria compared to what the Coalition’s last Budget is, is $810 million. On what basis do you cut health to Victoria?
CHALMERS:
Well, there are some elements of the health Budget which are demand driven, for example, there’s a variation for Medicare which comes from the fact that people are finding it harder to find a bulk‑billing doctor and the situation with COVID is evolving. And so what we’ve tried to do in the Budget is to plough a lot of money into strengthening Medicare, particularly by tripling that bulk billing incentive. So we’re making big investments in health in Victoria and around the country.
MITCHELL:
But we can’t get into hospitals. There are huge waiting lists. The emergency departments is full. Why $810 million out?
CHALMERS:
Well, we’re putting billions of dollars in, Neil. And the reason we’re doing that is because, as you rightly identify, we want to try and take some of the pressure off hospitals. And one of the reasons why there is pressure on hospitals is because it’s so hard to find a bulk billing doctor. And that’s why we’re putting more than $5 billion into strengthening Medicare.
MITCHELL:
But the crisis is now. Do you accept that you’re cutting $810 billion out of health in Victoria compared to the last Liberal Budget?
CHALMERS:
No, I accept that we’re making big investments in health in Victoria. And sometimes that involves variations in spending. Sometimes it means reprioritising spending. Sometimes it means making sure the money can go where it’s most valuable. But if you look at our Budget, Neil, I don’t think any objective observer would conclude anything other than this Budget is a huge investment, particularly in Medicare but in health more broadly too.
MITCHELL:
So is that $810 million being reprioritised?
CHALMERS:
What I’m saying, Neil, is we’re putting a heap of money into health. And from time to time, the health budget changes, responds to need. In lots of cases it responds to priorities. And in our case, we’ve said that a big, big priority in this Budget is Medicare, and that’s why we’re putting billions of dollars into it.
MITCHELL:
Victoria does look a bit dudded. I mean, we’ve debated that. Road funding is cut too. The bridging renewable program is cut from about $19 billion to five. Infrastructure spending in Victoria is about 5.8 over five years; New South Wales gets 10 billion. Why is Victoria not getting money spent on the roads?
CHALMERS:
Well, it is. I mean, I’m looking at –
MITCHELL:
Well, not as much.
CHALMERS:
Well, it’s getting $3 billion in ’23‑’24, and that increases to $3.6 billion by ’26‑’27. We are prepared to kick in substantially into Victorian infrastructure.
MITCHELL:
But, once again, that’s a cut on what the previous government had in place.
CHALMERS:
Well, what we’ve got to do with the infrastructure budget is make sure that we can get the money away and that we can recognise that there are cost blowouts because of the prices of materials and labour at the moment and all of these sorts of things. And so what we’ve said to the states and territories, including the Victorians, is the $120 billion pipeline over 10 years for infrastructure is safe and we need to work out the best way to spend from that pipeline. And that’s why my colleague Catherine King and others in the Cabinet are working with the Victorian Government and other state governments to make sure we’re getting maximum value for money for that.
MITCHELL:
Okay. On the figures I’ve seen, though, the bridging renewable program alone goes from 19.3 billion down to 4.5 billion.
CHALMERS:
We’re kicking in a heap of money for infrastructure, Neil. And from time to time our priorities shift in the infrastructure budget. But Victoria will always be – will always be – front and centre when it comes to our investment.
MITCHELL:
So you’re saying Victoria has got the best possible deal?
CHALMERS:
Well, I’m saying we’re pouring billions of dollars into infrastructure in Victoria, and that’s going up over the life of the forward estimates of the Budget I handed down.
MITCHELL:
Okay. You say there’s difficult decisions ahead. Does that mean there are tax rises ahead?
CHALMERS:
Well, what I mean by that is that in every Budget inevitably you’ve got to try and make the Budget as responsible and sustainable as you can. And what we’ve tried to do in the two Budgets now that we’ve handed down is to have a combination which is largely spending restraint, so if you get upward revisions in revenue you let it flow through to the bottom line so you’ve got less debt and less debt interest to pay. Also you make cuts to spending where you can and where you can reprioritise money – something like $40 billion in savings and reprioritisations in the first two Budgets. But there is a role for modest but meaningful tax changes, and in the Budget I handed down last night we changed multinational taxes, we’ve got the change to the PRRT, high‑balance superannuation, tobacco and some compliance measures, and that will all help the structural position of the Budget.
But the bigger part of our story when it comes to responsible economic management is the spending restraint that we’ve shown.
MITCHELL:
Before the election you told me about the multinational thing and said no more tax rises. For the remainder of the period of this government will there be no more tax rises?
CHALMERS:
Look, we’ll always try and do what’s responsible, Neil. We’ve said what we’re not intending to go near and we’ve made it clear, for example, on capital gains and the family home and those sorts of things that there are no‑go areas. But we’ve also indicated in areas like the PRRT change that if there is a case to make a change then we are prepared to make it. And that’s what we did with the PRRT. That’s what we did with high‑balance super and in some other areas. I think people expect us where we can make the Budget more sustainable that the highest priority is spending restraint and then savings, but then –
MITCHELL:
But they probably expected when you told them before the election no tax changes other than the multinationals, but now we’re talking about more tax changes in the two years ahead that we don’t know about yet. Is that right?
CHALMERS:
Well, first of all, we said in the election campaign that, as you mentioned a moment ago, that multinationals were our priority, and they are. There’s more movement on that in the Budget. We said when it comes to tobacco that’s essentially a health policy with a tax benefit rather than a tax policy with a health benefit. But I accept that that’s a new one. On the PRRT, there was a process that was kicked off years ago by my predecessors which people were aware was coming –
MITCHELL:
But what is on the table for the next two years?
CHALMERS:
Well, I just handed down a Budget last night, Neil. I’m not –
MITCHELL:
No, no, no, but in the Budget you talk about difficult decisions, and for that you read tax changes or cuts presumably – presumably. And you’ve already said, yeah, we will make changes if necessary. So there are tax increases ahead.
CHALMERS:
Well, when I’m talking about hard decisions, Neil, I’m talking about the fact that we got this upward revision to revenue. My predecessors used to spend most of it. I’ve saved most of it, and that will make a meaningful difference to the Budget. That’s a hard decision. And it’s been insufficiently recognised in the coverage that in saving 87 per cent of these revisions to revenue over two Budgets, we’ve made a meaningful difference to how much interest people pay on the debt that we inherited.
MITCHELL:
But can you promise this will not put extra pressure on interest rates? If the inflation figures seem stuck for the next – well seem too high for the next year, so the higher rates are with us for another year, aren’t they?
CHALMERS:
First of all, I don’t pre‑empt the interest rate decisions taken independently by the bank. But certainly when we put this Budget together with the best available advice - the advice was and is that our Budget will help address cost‑of‑living pressures without adding to inflation, and that’s because not all the money hits the economy at the same time. We’re investing in areas where we can actually take the edge off some of these price increases, whether it’s energy or out of pocket health costs or rent. And that’s been our priority. So our expectation is that the Budget will be helpful when it comes to inflation, not harmful. And that’s our intention.
MITCHELL:
So – but we are struck, even on the forward estimates, we’re stuck with higher interest rates for at least another year, aren’t we?
CHALMERS:
That remains to be seen - again, decisions taken by others. My job is to focus on what I’m responsible for, and that is a Budget which takes some of the edge off these cost‑of‑living pressures without adding to inflation, and I’m confident that what I handed down last night will do that.
MITCHELL:
There’s nothing here for middle Australia, and arguably that’s right. Is that just the price middle Australia has to pay to help people –
CHALMERS:
I don’t agree. I don’t agree with that at all, Neil.
MITCHELL:
Yeah, fair enough.
CHALMERS:
I very, very, very strongly reject that idea, and let me tell you why.
MITCHELL:
Yep.
CHALMERS:
For middle Australia, the big priority for this government, we got wages moving again, which is what we said we would do. We are tripling the bulk billing incentive for families with kids under 16. We’re making medicines cheaper. We’re making early childhood education cheaper from the 1st of July. We’ve changed the way that the home guarantee scheme works so that more people can get into home ownership. There is a bunch of stuff in this Budget – concessional loans for people who want to make their homes more energy efficient. There is a heap of stuff in here for middle Australia.
We’ve obviously tried to provide help to the most vulnerable and people doing it toughest, but that doesn’t mean that we’ve neglected middle Australia. There’s a heap in there for middle Australia, and I’m proud of the way that we are providing support for people who are under the pump, not necessarily just the most vulnerable but those on middle incomes in the suburbs and towns of this country as well.
MITCHELL:
How have you improved productivity?
CHALMERS:
The best way to improve productivity in our economy is to get the energy system right.
MITCHELL:
Okay.
CHALMERS:
And the big priority when it comes to growth, the big part of the growth plan I released last night, was about how do we grab the industrial opportunities that come from cleaner and cheaper energy.
MITCHELL:
And just finally, can we really cope with 1.6 million extra people in the next four years? I know you’ve said that it’s not really in the government’s control, but 1.6 million people in four years? How do we cope with that?
CHALMERS:
We’ve got to build more homes, and that’s why we’re trying to pass through the Parliament this Housing Australia Future Fund. That’s why I had a new tax break in the Budget for build to rent, because we need more affordable rental properties. It’s why we’ve got this $120 billion infrastructure pipeline we were talking about a moment ago. But the other really important thing, Neil, that I want your listeners to understand is that even with this return of the tourists and the students which is what’s driving that bigger number, and even with fewer Australians leaving Australia to work, which is the other thing factoring into that number, we still don’t expect to make up for what we lost during COVID. And so compared to our expectations a couple of years ago, what we’re seeing over the next decade means that the population will be smaller than what we were anticipating a few years ago because COVID made a big difference. And even with these bigger numbers now, we’re still not making up the ground that we lost.
MITCHELL:
So you’re happy with 1.6 million over four years?
CHALMERS:
Well, I think we’ve got to make it work. The big part of it is students, right? It’s good for our economy to have students here. It’s good to have tourists here. These longer term tourists on working visas are a good thing for Australia. But we’ve got to make sure that the migration system works in our interests. My colleague Clare O’Neil is putting a heap of work into that. The permanent migration number in the Budget – which is a government policy, it is a government lever – that’s actually been brought down from 195 to 190. So we’re conscious of the pressures. We’re doing what we can.
MITCHELL:
Okay.
CHALMERS:
But that bigger number that people are referring to is not a target or a policy of the government.
MITCHELL:
Thank you very much for your time.