PATRICIA KARVELAS:
The Treasurer, Jim Chalmers, joins me in the RN Breakfast studio. Treasurer, welcome.
JIM CHALMERS:
Nice to see you, Patricia.
KARVELAS:
Economists are saying interest rates will need to be higher for longer as a result of your Budget. Are you prolonging the inflation problem?
CHALMERS:
Of course not, and that is not the unanimous view of the economists. I mean Bill Evans from Westpac says, "I don't expect them to put upward pressure on interest rates," Alan Oster from the NAB, “broadly neutral over coming years”, Stephen Halmarick from the CBA says “the move to surplus represents a fiscal contraction for this year that will be helpful in moderating the inflation pulse”. And so I think we need to be careful not to take an economist or two and pretend that there's a unanimous view about it. Certainly, the very clear advice from the Treasury is that my Budget that I handed down on Tuesday night will take some of the edge off these cost‑of‑living pressures without adding to inflation.
KARVELAS:
Okay, you're right, there are mixed views and there are some economists not saying that. But you mentioned one there who's Westpac’s Chief Economist, Bill Evans, and you quoted him also in parliament. But on this question, he's quoted in The Australian as saying, "Do I believe it [the Budget] will trigger a rate hike? No. Do I believe the rates relief I thought we would get in February could be delayed? Yes."
CHALMERS:
The point that he's making is that the Budget doesn't put upward pressure on interest rates, I think he's been really clear about that.
KARVELAS:
But the idea of prolonged rates, like actually that this will prolong the situation, is the claim that is being made.
CHALMERS:
Well, I mean obviously I don't speak for the independent Reserve Bank, obviously they weigh up a range of factors and not just governments' budgets when they come to these decisions, but it is really clear that the Budget we handed down takes the pressure off the cost‑of‑living without adding to inflation. Let me tell you why that's the case: the $14.6 billion cost‑of‑living package is designed ‑ excuse me for a second –
KARVELAS:
Just have a swig, that's what I do.
CHALMERS:
I'm running out of voice after the last couple of days, Patricia.
KARVELAS:
That makes sense.
CHALMERS:
The $14.6 billion cost‑of‑living package doesn't all hit the economy at once. It's spread out over four years. A big amount of the spending in the coming year is actually funding ongoing programs, some of it is the small business tax breaks, the impact of that on the budget. And so what the economists, what the Treasury are saying, is that at worst the Budget is broadly neutral over that period, but you see in the inflation forecast that the energy relief plan, for example, is taking three quarters of a percentage point off the inflation forecast in the coming year. So, the arguments that the Opposition are putting, I don't think stack up, nor does the Treasury. I am very, very confident that the Budget takes the pressure off people without adding to inflation, and that's our objective.
KARVELAS:
If the RBA does raise rates again next month, do you accept that you'll be blamed?
CHALMERS:
The Opposition will say all kinds of things. In the parliament yesterday they seemed to be saying at the same time, Angus Taylor was saying, "You're spending too much", Sussan Ley was saying we're spending too little. They are, as usual, all over the shop on this. We have worked through this Budget in a careful and considered and methodical way. We think it's important that we provide a bit of cost‑of‑living help to get people through tough times ‑ people are under the pump. If the Opposition doesn't think we should be spending this money, then the Leader of the Opposition should say so tonight in his Budget reply. If he thinks people need no help with the cost of living, he should say so, instead of pretending that he can make all of these arguments simultaneously. We think there is a case to provide responsible cost‑of‑living relief to people over the four year period, and it won't add to inflation.
KARVELAS:
What they're essentially saying is that the most vulnerable, you know ‑ people on welfare payments are going to see a lift, but that ultimately that lift that they'll see will have an impact on middle‑class Australians with jobs in the form of higher interest rates, and that you're dividing Australians.
CHALMERS:
No, I think the divisive commentary is coming from the Opposition, I mean very clearly. Peter Dutton is a divisive figure, but he's not a credible figure. He takes his cues from Tony Abbott and Scott Morrison. The rest of Australia has moved on from Abbott and Morrison, but he hasn't, and we'll see that tonight in his Budget reply. He is trying to divide people against each other in this Budget. This Budget is about bringing people together. It's about recognising that some people are doing it especially tough and to try and provide a bit of help for them at the same time as we provide substantial help in middle Australia as well ‑ tripling the bulk billing incentive; making medicines cheaper; relief from energy bills that come from the gas price caps.
KARVELAS:
I just want to take you to some of that detail, because does middle Australia really benefit from the tripling of the incentive for people? It's concession card holders –
CHALMERS:
And under 16s, kids under 16. There are kids right throughout middle Australia, Patricia, and they will benefit substantially. But also making medicines cheaper, also the fact that we've put these caps on gas and coal, and that's the big reason for the moderation in the electricity price increases, the household energy upgrades funds, and the Home Guarantee scheme, the TAFE and training places, the fact that we've got wages moving after a decade of deliberate wage suppression and stagnation. All of this is for middle Australia, at the same time, it hasn't prevented us from looking after the most vulnerable.
KARVELAS:
Are you worried, though, that this narrative that you're not helping middle Australia ‑ and they're clearly feeling the pinch ‑ and that you are, you know, singling out people on welfare, will hurt you?
CHALMERS:
No, I think this predictably divisive language from the Coalition, they only have one speed, and that is to try and set Australian against Australian in this kind of downward envy, which I think is poisonous in our society. They want to feed that, they see a political dividend in that. I think Australians are bigger and better than the divisive political rhetoric we hear from Peter Dutton. They recognise that we can help middle Australia at the same time as we don't neglect the most vulnerable.
KARVELAS:
I want to go to some specifics in the Budget ‑ $74 billion in savings in the NDIS over the next decade. This is a multi‑billion dollar saving that you want to achieve, it's huge that amount of money. Fraud can't deliver that alone, there's no way that cracking down on fraud's going to deliver that. You need to level with people. Will eligibility ultimately change for the NDIS?
CHALMERS:
Well, our motivation here is to make sure that the scheme delivers for people it was designed to help, and that's why I devoted a chunk of my Budget speech on Tuesday night to talking about our commitment to the NDIS, and part of that commitment is to make sure that the money reaches people who need it, who need our support. That is not in any way at risk. What we need to do is moderate some of the increases in these costs. We're still talking about a scheme growing at 8 per cent over the next decade, which is a substantial growth in costs still. But what Bill Shorten and the government have been able to show, is there are ways that we can moderate the growth in costs without jeopardising the care that people with a disability need and deserve and will get from this government.
KARVELAS:
But inevitably some people will no longer be eligible?
CHALMERS:
Well, the way that the scheme is designed is to provide for people who need our help, and that will continue. And the task for the government, task for the Minister, working closely with me and others, is to try and make sure that we get genuine value for money in these areas, and fraud is part of it, a big part of it. So is the cost of some of the services and some of the equipment. These are all important issues. And nobody who looks at this scheme, who believes in it as I do, and as Bill and others do, could come to any other kind of conclusion that our responsibility is to make sure we get value for money so that people get the support they need.
KARVELAS:
I know there are lots of people who are very nervous, who use the NDIS. What is your message to them, Treasurer?
CHALMERS:
Well, I understand that, and that's why I've gone out of my way on Tuesday, and Wednesday, and again today giving people an assurance on behalf of the government that they are our priority. People with a disability and the NDIS are our complete priority, and in order to serve them as they need and deserve, we need to make sure that we can get a handle on these costs and that's what we intend to do.
KARVELAS:
Migration is another key impact on the Budget. The Budget papers expect around 715,000 migrants over the next two years. Now, we heard from the Opposition a real zeroing in on this ‑ in fact the first question in Question Time yesterday from the Opposition.
CHALMERS:
You can set your watch by it, Patricia, this kind of stuff.
KARVELAS:
But you know what, I think there's a reason for it, and I see it on the text line every day, people are worried that these high levels of migration are affected because there's not enough housing, rents are so high, people feel under pressure. What is your answer on that, because infrastructure cannot possibly keep up with these numbers?
CHALMERS:
Let me give you and your listeners two numbers which put this into perspective. So, yes, the students are coming back, yes the long‑term tourists are coming back, and fewer Australians are leaving, and that's feeding the number as well. On our current forecasts in the Budget, net overseas migration will still be cumulatively 315,000 people lower than the pre‑pandemic forecasts by the middle of this year, and 215,000 people lower by the middle of next year. And what that means is, because during COVID we didn't get the growth in migration that we anticipated, even with this rebound in students and tourists, we still haven't caught up with what the previous government was forecasting in their budgets. And I think that completely torpedoes this ridiculous campaign from Peter Dutton and others about migration. They were forecasting a much bigger Australia in their own budget than I did on Tuesday night.
KARVELAS:
I think you might be ‑ okay, let's accept the numbers that you provide, because I've seen them in the Budget papers as well, but the question is, even if you just park that, can infrastructure possibly keep up with these numbers over the next two years, divorced from what numbers could have been, just that fact alone?
CHALMERS:
Well, this is a key reason why we're trying to pass through the parliament legislation which will build more homes in Australia, tens of thousands more homes, and the Liberals and the Greens have teamed up in this unholy alliance to reject that. We need to build more homes. We've got a $120 billion 10 year infrastructure pipeline, we want to provide services in the cities and suburbs and towns to make sure that people can access the infrastructure and the services that they need and deserve to go about their daily lives. But we need to put these numbers into perspective. There will be a political campaign about them ‑ you can set your watch by that, as I said a moment ago ‑ but the population forecasts are smaller than what they were a couple of years ago, pre‑pandemic, and that's an important perspective.
KARVELAS:
Will you have to revise your strategy given there are so many concerns in the community about this?
CHALMERS:
Well, obviously we need to ‑ we are already putting a lot of effort into making sure that we build more affordable properties, for example. In the Budget on Tuesday night there was a new tax break for build to rent properties, because we need to build more affordable rental properties, supply is the issue, and we've been conscious of that. And the Housing Australia Future Fund, the build to rent tax breaks, the Commonwealth Rent Assistance, all of these things are designed to try and help people in the housing market in particular.
KARVELAS:
I've got two questions I'd love to do quickly, if we can. There are some backbenchers who are continuing to push for more increases in JobSeeker. What is your message to them? Is the job done on JobSeeker, or is there more to do?
CHALMERS:
Well, first of all, I think the colleagues, and more broadly, recognise that we took meaningful steps on this front ‑ base rate of JobSeeker, Commonwealth Rent Assistance, single parents ‑ and those are important steps, and I think everybody recognises that. I'm not going to write the 2024 Budget two days after the 2023 Budget, of course you're not expecting me to do that. But what I will say is what the Prime Minister and others have said, which, as the Labor government, we will always try and do what we can to help people, subject to the budget pressures and the economic pressures of the time.
KARVELAS:
Do you see this as part of a staged process?
CHALMERS:
I see it as part of the ordinary work of a Labor government that cares about vulnerable people.
KARVELAS:
And so there is more work to do?
CHALMERS:
In every budget, what we try and do in every single budget is to work out what we can afford to do, how that aligns with economic objectives, and if we can do more to help people, obviously we try to.
KARVELAS:
Australia is heavily dependent on income tax. Bracket creep was a big factor in this year's surplus too, where basically, there's more people in work and there's more people paying tax, and –
CHALMERS:
And earning more, because we've got wages growing again.
KARVELAS:
All right. When you look at the stage three tax cuts that you say are legislated and are there, do you think they need to stay there because they deal with this issue of bracket creep?
CHALMERS:
What I've tried to say in the last couple of days, is to remind people that it is a worthy objective to try and return bracket creep, when you can, in the budget. And it is a function of people working more and earning more, and that is helping the budget, but much more importantly than that, people earning more makes it more likely that they can provide for their loved ones, which is obviously the most important thing.
KARVELAS:
But taking you to stage three tax cuts, is that some of the work is does?
CHALMERS:
Well, it kicks in at $45,000, and so yeah, it does return some of that bracket creep, particularly for well, including for low and middle income earners, and I think that's important.
KARVELAS:
And do you see any case for perhaps changing the framing of that tax?
CHALMERS:
Well, it's not something we've been considering in the context of this Budget, we haven't changed our position. Obviously these are contentious, people have views on both sides of the argument, frankly, but our focus in this Budget has been helping middle Australia and helping the most vulnerable through a difficult period at the same time as we invest in their future. These tax cuts were legislated some time ago, and they weren't changed in this Budget.
KARVELAS:
Treasurer, do you think you're going to get a Budget bounce, or do you think that that’s unlikely to happen?
CHALMERS:
I haven't given it a moment's thought.
KARVELAS:
Oh, come on.
CHALMERS:
I haven't given it a moment's thought.
KARVELAS:
You don't think about the politics?
CHALMERS:
I think about how we get things through the parliament, and I care about how the community views our Budget, I'm not going to pretend I don't. But I haven't, I don't think Budget bounces are kind of - if you try and put a Budget together for a Budget bounce you're probably going to be disappointed. I try and put the Budget together for the right and responsible reasons, and I will always do that. My commitment to your listeners is to always try and do the right thing, not everyone will agree with it, but always try and do the right thing, and let the political cards fall where they may.
KARVELAS:
Treasurer, many thanks for coming into the studio and having this chat.
CHALMERS:
Appreciate it, Patricia, thank you.