PATRICIA KARVELAS:
Treasurer, welcome to the program.
JIM CHALMERS:
Thanks very much, Patricia.
KARVELAS:
Can you provide an example of a risky project that's not in Australia's national interest? I mean for people listening what do these changes mean?
CHALMERS:
We want to maximise the right kind of investment and that means minimising the risk. The sorts of risks that our Foreign Investment Review Board are especially attentive to are where a supply chain might be dominated by a foreign investor, where there's the capacity to manipulate that supply chain or to interfere with it in one way or another.
So these are pretty familiar features of the screening in our system, but I want to make them much stronger, much more robust and that's what these changes are all about.
KARVELAS:
So how are they currently not strong enough?
CHALMERS:
At the moment what happens is we treat most investments more or less the same; the less risky ones and the more risky ones, and that gums up the system.
So what I want to do is I want to streamline the process for investments which are less risky so that we can devote much more time, much more effort, energy and resources to screening investments, whether it's in critical infrastructure, critical minerals, critical data, and some of those more sensitive areas.
KARVELAS:
Is this ultimately about curbing investment from China?
CHALMERS:
No, our foreign investment regime is non‑discriminatory. We apply pretty tough tests to certain kinds of investments no matter where they come from, from around the world. We want to look very closely at who's making the investment, what the structure of the investment is and what kinds of industries people are proposing to invest in. And those pretty tough tests, which will be even stronger after the reforms I announce today, they will apply equally to investment from China as from other parts of the world.
KARVELAS:
You say it will look at sensitive sectors and assets. Canada introduced tighter investment laws for artificial intelligence, for critical minerals, space technology and also the video game industry. Are they the same sectors you're looking at?
CHALMERS:
Similar, and I work closely with my Canadian counterpart, the Finance Minister and Deputy Prime Minister of Canada. We focus a lot on what's happening around the world. Our efforts are similar but not exactly the same.
My efforts are really focussed on those critical industries I mentioned a moment ago and making sure that we can robustly screen them to make sure that they're in our national interests. But also when we impose conditions on those investments to make sure that people comply with them as well.
KARVELAS:
Do you expect that you're going to get any push back from countries, including China?
CHALMERS:
I wouldn't have thought so. I mean we've communicated before now and certainly in the context of this announcement that our foreign investment regime, as I said, is non‑discriminatory. We want to make it stronger where it needs to be stronger and more streamlined where we can afford to make it more streamlined. That applies to investment from wherever it is around the world.
KARVELAS:
You're delivering your budget in 2 weeks, well it's the nation's budget but you're chiefly in charge of delivering it, but it's all of our budget. Soaring tax revenue is expected to produce a $14.5 billion budget turnaround according to the latest budget monitor by Deloitte Access Economics.
Now the consulting firm expects the government to report an underlying cash surplus of $13.5 billion. Is that what we should expect?
CHALMERS:
Well in short, no. I mean that report today dramatically overstates the revenue upgrade in the Budget. We won't be getting anything like the sorts of revenue boost that they are guessing at in those reports today, and as a consequence of that if we can get to a surplus in this year, it won't be as big as what they are suggesting.
Indeed, the deficits after that will be bigger than they are suggesting. And that's because the pressures on our budget intensify rather than ease. We want to get it in a much better nick. The big focus is on the new term in particular to take pressure off inflation. If we can land that second surplus we will. But that report today really quite dramatically overstates the sort of revenue bump that people can expect to see in 13 days' time.
KARVELAS:
We know that annual growth in retail sales has fallen to its lowest level since the pandemic. Households are clearly tightening their belts. Are you alarmed by this?
CHALMERS:
This is what happens when interest rates have increased, and the economy is slowing and it's no surprise to us because we know that people are under pressure. We saw that in those very weak retail figures. We've seen it in consumption figures, we've seen it in the growth figures.
And that's why in this budget there'll still be a primary focus on the fight against inflation, but also a focus on how we grow the economy, how we focus on economic security in ways that we just talked about, to make sure that we are striking the right balance, fighting inflation in the here and now but laying the foundations for future growth in our economy. There's no shortage of challenges and what we've demonstrated in the first 2 budgets, and we'll demonstrate again in the third is a willingness to fight inflation as the primary focus but not the sole focus. People will see that in the Budget.
KARVELAS:
Okay. Warren Hogan is kind of one of the nation's leading economic forecasters. He says that it worries him that there's been this pivot in the narrative that inflation is still the priority but that you're sort of focussing on growth too. Are you sort of moving away from the inflation fight?
CHALMERS:
No. I respect Warren. There's no shortage of opinions at this time but everything that you read in the paper is not necessarily right. Often it's wrong this sort of commentary you get at budget time. And I thought there was a pretty big overreaction, frankly, to the inflation number last week. Inflation has almost halved since we came to office. It moderated substantially in the quarter. In annual terms we're still ahead of the MYEFO forecast for inflation so we need a bit of perspective here.
We all want inflation to moderate further and faster. A big part of the reason why it has come off so substantially is because we've run a tight ship with the Budget, and we've provided cost‑of‑living relief that takes the edge off inflation rather than add to it. We're making progress, we'd like to make more, and that's why the Budget will have a primary focus on inflation but not sole focus on inflation because there are other challenges too.
KARVELAS:
Is this Future Made in Australia the centrepiece of your budget, is that how you'd describe it?
CHALMERS:
It's really a budget in 3 parts. First of all, primarily, the fight against inflation. Trying to provide cost‑of‑living help in a way that doesn't make the inflation challenge worse, that helps people who are under pressure.
Secondly, a Future Made in Australia, which is about how we grow our economy into the future, how we make sure our workers and businesses get a slice of the action as the world churns and changes and the global economy focuses more exclusively on the net‑zero opportunity.
Thirdly, fiscal discipline, budget responsibility, responsible economic management. We're not sure yet about the second surplus but if we can get there it will be an important demonstration of our willingness to fight inflation by having a budget which is balanced for the second time in 2 years. But also the way we design that cost‑of‑living help so that it doesn't add to inflation.
KARVELAS:
In the speech today you talk about the Made in Australia policy. Of course it's been criticised by many, former Prime Minister John Howard even speaking out against it. There have been of course, many others. You talk about strict rules. There are concerns about value for money and waste. How strict are your rules going to be to ensure that that doesn't happen?
CHALMERS:
We'll be legislating a framework which is very strict and very robust which will guide the investment that we will make, public investment. But we need to remember that this public investment is not about replacing private investment, it's about attracting it. One of the tests is to make sure we involve the private sector, and we get value for money. But we also are attentive to our national security needs, making our economy more competitive and more productive, getting us along the path to net zero. All of these important considerations which we want to legislate because it's not going to be some kind of free‑for‑all of public money. It's going to be very strictly governed and robustly applied so that we make sure that we get value for money for people. But most importantly so that our workers and businesses benefit from the way that the global economy is changing rather than fall victim to it.
KARVELAS:
Treasurer, today the National Cabinet will meet to look at ways to end violence against women perpetrated by men. Ultimately the violence prevention sector says it needs more money. They're asking for a billion dollars a year for prevention response and recovery services. You're the Treasurer. Are you willing to spend to stop violence against women at that level?
CHALMERS:
I think our whole government recognises that we need to do better, and we need to do more. This is genuinely a national crisis, and women are not safe in our community, and we are very cognisant of that and very focussed on that, that's why there's a National Cabinet meeting today.
I think this is partly a story about government investment but not solely a story about government investment. And if there are ways that we can provide more investment or invest differently in these really important services to keep women safe, then obviously that's something that we're prepared to consider and that's one of the reasons why the leaders from around Australia are gathering today.
KARVELAS:
And do you concede that we are just under investing in helping women who are fleeing violence?
CHALMERS:
I understand we need to do more, and we need to do better and there are billions of dollars that we've invested over 2 budgets in trying to keep women safe, but women still aren't safe in our community, in our society.
As I said, there's a willingness I think across the government, I think across the country, to consider ways that we can invest more or invest differently.
KARVELAS:
Thanks so much for joining us, Treasurer.
CHALMERS:
Thanks Patricia.