PATRICIA KARVELAS:
Jim Chalmers is the Treasurer and he's our guest this morning. Treasurer, welcome.
JIM CHALMERS:
Thanks very much, Patricia.
KARVELAS:
You will spend $14.6 billion in cost-of-living support over the next four years and you're going to claim it will have the net effect of lowering inflation. How can that be the case?
CHALMERS:
Well, this will be a responsible Budget, Patricia, which focuses on people doing it tough. And the centrepiece of the Budget tomorrow night will be this cost-of-living relief that doesn't add to inflation and that's because we recognise that people are under the pump, and so what we've done is we've carefully calibrated and designed this Budget so that it takes pressure off the cost-of-living rather than add to it, and people will see how we've gone about that tomorrow.
KARVELAS:
Is there a risk, though, it could add some inflation to the economy?
CHALMERS:
Well no, what you'll see in the Budget is in areas like the energy bill relief for more than five million Australians is that we have found ways to take the pressure off bills rather than add to these cost-of-living inflationary pressures in the economy and we will be able to show how we've gone about that. Our motivation throughout has been to try and take pressure off the cost of living rather than add to these inflationary pressures on the Budget. The energy bill relief for more than five million Australians is a good example of that.
KARVELAS:
Okay, but if there's a lift in welfare payments, could that be inflationary?
CHALMERS:
Well, you'll see in the Budget that what we've tried to do with this $14.6 billion cost-of-living package is calibrate it in a way that doesn't add to inflation. And obviously, we work closely with the Treasury, obviously, we're conscious as we work through the various options of which ones do and don't add to the inflation forecasts in the Budget. But we're confident what we've done here is provided some cost-of-living relief for people doing it tough, but conscious that we've got this inflationary challenge in our economy, we need to be responsible about what we spend, and that's what we've done.
KARVELAS:
Were you warned about a tipping point, even for welfare increases that getting over a certain level would be inflationary. Can you just talk me through the kind of methodology and the kind of advice you were getting?
CHALMERS:
It wouldn't have been exactly in those terms, but more of a sense of what can we afford to do? What assistance can we provide afford to provide in the most responsible way? And what impact would this have on the inflation forecast in the Budget? And there'll be other examples, but the energy bill relief is the best example because it shows that by getting some of these bills lower than they would otherwise be, that obviously puts downward pressure on the inflation forecasts in the Budget. That's an important objective of ours.
KARVELAS:
So if any economist comes out after you deliver your Budget and says I'm worried this will lead to inflation, would that be a failure of the Budget?
CHALMERS:
No, of course not. You and I have been through a few Budget cycles, Patricia, and there'll be a range of views on Budget night, some of them I'll agree with, some of them I won't, but it's a good thing that people hold the Budget up to the light.
KARVELAS:
So you anticipate that perhaps that might be the verdict of some.
CHALMERS:
No, I'm just making the point that there's always a range of views, there's never unanimity about these sorts of things. But the Treasury advice is pretty clear, the impact on the inflation forecast is pretty clear as well. And really, what it will show is that our three reinforcing priorities - cost-of-living relief targeted towards the most vulnerable, laying the foundations for future growth in areas like cleaner and cheaper energy, and also the way that we've gone about putting the Budget on a much more sustainable footing - all three of those objectives reinforce each other in this fight against inflation.
KARVELAS:
Angus Taylor who's of course the shadow in your portfolio, Shadow Treasurer, says a drover's dog could deliver a surplus. Is he right given the rivers of gold coming in?
CHALMERS:
Well, it's a pretty humiliating line of attack which seems to be that anybody could deliver a surplus except the Liberal Party in office. They are demanding of us something that they weren't able to achieve in office in nine attempts. Jane Hume and others were posing with back in black mugs, but they went zero for nine when it came to this. So if they really think anyone could do it, why couldn't they do it? They had nine attempts in office.
KARVELAS:
Hasn't there been a big shift in actually the country's, the money coming into the country since - they presided over a pandemic.
CHALMERS:
I'll tell you what the big shift has been, Patricia. When we get these welcome upward revisions in revenue which we will get in the Budget tomorrow, our much more responsible approach has meant that we have let most of that flow through to the bottom line so that we can get the debt trajectory a bit lower and pay less interest on it. My predecessors used to spend most of those upward revisions to revenue, I have saved most of it and that's because in order to do what we want to do for people, in order to make the investments we need to make in the economy, we need to get the Budget on a more sustainable footing and that's what we've been doing over two Budgets. Another example of that, Patricia – my colleague Katy Gallagher talking about this morning - there's another $17.8 billion in savings in this Budget, there were $22 billion in the first - $40 billion dollars of savings and redirected spending, reprioritising our spending compared to $0 of savings in the last Liberal Budget and I think that just blows out of the water all of these ridiculous claims that the Liberals are making. They were a failure on the Budget, we are cleaning up the mess that we inherited, that will take more than two Budgets to do.
KARVELAS:
I'll speak to Jane Hume in a moment, so I'll talk to her about that. Looking at another pre-Budget announcement that, of course, will be in the Budget tomorrow night when you deliver it; APPEA, who's the peak body for gas producers has already backed your changes to the Petroleum Resource Rent Tax. Does that show you should have actually gone harder? I mean, if the industry thinks it's good, isn't it because you've low-balled it, you've gone for the lowest amount of tax that you can possibly get from them rather than the other options?
CHALMERS:
No, I don't agree with that conclusion. This is $2.4 billion in the Budget, which wouldn't be there or not for the changes that I announced yesterday. And if you look at the Treasury advice, the report that was released yesterday, for the central case, this is the option that raises the most amount of revenue over the next 10 years. And the reason why we've been able to get an element of agreement from the industry is because we worked with them, we worked closely with them, we consulted them to work out how could we get more revenue for Australians from their resources sooner, to help fund our cost-of-living package and other priorities in a Budget, but in a way which recognises we want to see investment, we want to see supply and we want to make sure that we honour our international commitments. And so the balance that I've struck in this package, delivers billions of dollars to the Budget for the Australian people. At the same time as we recognise that this is an industry which is important to our economy, and important to the net zero transformation that we want to see.
KARVELAS:
They're supporting it on the basis, though, that this ends the pursuit of their industry. Treasurer, does it end the pursuit of getting more tax from this industry?
CHALMERS:
We made it clear yesterday, in responding to the two reports that my predecessors began and we finished, that we consider if this was legislated in the parliament that that would put an end to that process. And that will put an end of the process with billions of dollars of extra revenue sooner for Australians in a way that recognises all of those other considerations. Now, obviously, some people will say we should tax more, some people will say that we should tax less. I think we've struck the right balance here.
KARVELAS:
Yeah, but the economist Chris Richardson who isn't a member of the Greens, says he thinks gas producers will be happy with this and taxpayers could have hoped for more.
CHALMERS:
Obviously, I read and take notice of what Chris writes and what he says, but I don't agree with him on this occasion. I think what we've done here, people need to recognise the billions of dollars here that wouldn't be in the Budget, were it not for these changes. It'll help fund cost-of-living relief and other priorities in the Budget, it means more revenue sooner for the Australian people, and that's a good outcome and the parliament should support it.
KARVELAS:
Okay, so obviously, you've had to make a few changes to pay for your cost-of-living package. There's been a lot of speculation about who gets the rise and where it all happens. Can you just answer this question for our listeners - on JobSeeker, which is incredibly low and hard to live on, is it only those who are over 55 who will see the benefits?
CHALMERS:
Well, I encourage people to tune in tomorrow -
KARVELAS:
Yes, we will be but the question?
CHALMERS:
Well, it's my way of saying I don't intend to pre-empt the details in this cost-of-living package. We've said today that it'll be $14.6 billion over the Budget, it'll have a number of elements. And I've been saying for some days, really since the story about people over 55 first appeared, that the cost-of-living support will be broader than that and it won't all be limited by age. And I think when people see the package in its entirety, they will see that what we've tried to do here is recognise the genuine pressures that people are under, and to do what we can, beginning with the most vulnerable people.
KARVELAS:
Yesterday it was seen that, you know, you slipped and said they'd be a surplus tomorrow night, you can go further than slipping now, you can just tell us - will there be a surplus?
CHALMERS:
We'll make that clear tomorrow night, the final Budget position. But I think I've been equally clear that even though we've had this substantial improvement in the Budget in the near term, a consequence of getting wages moving again, and better labour market outcomes and better prices for our exports, that some of these pressures in the Budget intensify rather than ease over that. That's why our responsible economic management is so important and such a contrast to our predecessors. And it's also clear that had we taken the approach that has been a feature of budgeting for the best part of a decade then you wouldn't even be asking me this question. The fact that we have banked such a substantial amount of the upward revision to revenue, the fact that we found $40 billion of savings over two Budgets, the fact that we've made these meaningful changes to the tax system, means that people are asking whether or not the Budget is in balance or in surplus. You have to tune in tomorrow night and find out.
KARVELAS:
Will people describe your Budget as bold?
CHALMERS:
Well, I don't know how they'll describe it. I hope they describe it as responsible, and I hope they recognise the effort that we've put in to try and look after people doing it tough. But also, there's a lot in the Budget about laying the foundations for future growth in our economy because we need to help people through a difficult period now. But we also need to invest in the future. So the Budget will be about seeing people through a difficult period, but also setting Australia up for success into the future.
KARVELAS:
Treasurer, see you in Canberra.
CHALMERS:
See you here, Patricia.