Peter Stefanovic:
Well, 3 days into the job and new Opposition Leader, Angus Taylor, has reached out his hand in the name of bipartisanship and asked the government to work together to rein in spending.
Joining us live this morning is the federal treasurer, Jim Chalmers. So your old sparring partner has got his hand out, Treasurer; are you at all open to that?
Jim Chalmers:
Good morning, Pete. Look, this is just the same old predictable stunt from the same old predictable Liberal Party. The Liberal Party hasn’t changed a bit, hasn’t learned a thing.
Angus Taylor is the architect of the Liberal Party’s policy for higher taxes on workers, bigger deficits and more debt. After the way he failed as Shadow Treasurer, he should be let absolutely nowhere near a budget. He is the last person that anyone should be taking advice from or lectures from when it comes to the budget position or spending restraint given how badly he failed as Shadow Treasurer.
Stefanovic:
The point remains though record spending must be reined in, and the IMF has its own friendly advice this morning, Treasurer, suggesting a raise to the GST, CGT changes and cuts to company tax.
Now you’ve knocked back an increase to the GST before, but given you’ve got this massive majority now and the lack of an Opposition, could the door be ajar to that now?
Chalmers:
Well, a couple of things about your question, Pete. I mean, first of all, we got spending as a share of the economy down from almost a third of the economy to closer to a quarter of the economy; we know that there’s more work to do. But that spending restraint is one of the reasons why we’ve delivered 2 surpluses, the biggest ever positive turnaround in the budget since federation and got the Liberal debt down by $176 billion. So that’s on the spending side, on the fiscal side.
Now when it comes to the recommendations of the International Monetary Fund, that IMF Report overnight was a stunning endorsement of Australia, but also the government’s economic plan. Whether it’s our management of the budget or our reform agenda as well, you know that we’re not in the cart to increase the GST, the Prime Minister and I have made that clear.
We’ve got a tax policy already, it’s all about cutting income taxes for $14 million Australian workers, those tax cuts that Angus Taylor opposed, but also we’ve got an agenda on multinational taxes, we’re boosting the low income offset in the superannuation system. So we’ve already got an ambitious tax agenda. Any steps beyond that obviously would be a matter for Cabinet in the usual way.
Stefanovic:
When do you expect to cross over a trillion dollars in debt, because there was a report last week suggested that that might come sooner rather than later?
Chalmers:
Well, the Budget lays that out, Pete, and it depends on the timing of the borrowing of the relevant authorities. But the point that needs to be made here is that in the budget that we inherited, we would have already crossed over a trillion dollars a couple of years ago. This is the trillion dollars in Liberal debt that was left to us. We’ve put a lot of work into cleaning up the mess in the budget that Angus Taylor and others bequeathed us.
And so the budget – the debt trajectory is in the Budget. For the last financial year we are $176 billion lower than where we were in 2022; that’s saving the Australian people in debt interest. More work to do, as I said before, much more work to do to make the budget more sustainable, but we’ve made some very encouraging progress so far.
Stefanovic:
Right. But when you talk about the Liberal debt, that’s your debt now, isn’t it?
Chalmers:
Well, that debt was more than doubled, or around doubled before COVID, so when we came to office there was that trillion dollars in Liberal debt, it was actually forecast to be much, much higher than what it is now, and that’s because we delivered those 2 surpluses and showed that spending restraint, got real spending growth down and got spending as a share of the economy down.
We’ve been able to do all of those things, and the job’s not finished obviously, there’s much more work to do including in the budget in May. But let’s not lightly dismiss the progress that’s been made in the budget, and one of the ways that we can see that progress is in the budget that we inherited we would have crossed a trillion dollars a couple of years ago.
Stefanovic:
So you don’t think still that you’ve got a spending problem?
Chalmers:
Pete, I think I’ve said at least 2 or 3 times just in this interview, but many more times before that –
Stefanovic:
Many others would argue that you do.
Chalmers:
– we know that there’s more work to do on the I’ve said on a number of occasions today, Pete, that there is more work to do on the spending side to make sure that we make the budget as sustainable as it can be, and if you look at that International Monetary Fund Report overnight, it said that our fiscal policy is effective, and it said that our agenda for productivity is bold, and so any objective observer of the budget over the last couple of years would conclude as we do that good progress has been made, but there is more work to do including on the spending side.
Stefanovic:
On the capital gains discount that you’re looking at at the moment, is that just going to apply to housing, or are you able to confirm that shares or cryptocurrencies will get a pass?
Chalmers:
Well, we haven’t changed our tax policies, Pete, and so I’m reluctant to go into layers of detail on something which isn’t our policy. Our policy is to cut income taxes for 14 million workers. Angus Taylor opposed that of course, and then they made him the leader, which says something about the Liberal Party’s economic credibility.
Our agenda when it comes to tax, cutting income taxes, dealing with multinational tax evasion, introducing the standard deduction, boosting the low income super tax offset, that’s our agenda when it comes to tax, and as I said a moment ago, any steps beyond that will be a matter for Cabinet in the usual way.
Stefanovic:
Okay. But is capital gains going to form part of your budget coming up? Are you at least able to confirm that you’re looking at it?
Chalmers:
Pete, this far out from the Budget, you know, remembering that we don’t write or finalise the Budget at the start of February, we finalise the Budget at the start of May, we’ve said that we are looking at ways to make the budget more sustainable and deal with some of these intergenerational issues in housing, but we’ve already got an agenda there.
When it comes to housing, we’re building more homes, making it easier to save a deposit, when it comes to tax, cutting income taxes, boosting low income super; that’s what we’re focused on, that’s the government’s policy, we haven’t changed our policy beyond that, and there’s months to go before the Budget’s handed down.
Stefanovic:
Okay. Back to the IMF, and Michelle Bullock recently confirmed a link between state and federal spending and inflation. Will taxpayers have to bail out heavily indebted states such as Victoria? This was forecast by the IMF as well.
Chalmers:
Well, first of all, the Reserve Bank Governor made 2 points, both of which I agree with. The first one was that public demand is part of aggregate demand, that’s not an especially controversial position, that’s not contested by anyone. But she made the point that the reason we saw that tick-up in inflation towards the end of last year, the thing that changed in their estimation was that the private sector came back stronger; as the public sector was retreating, the private sector came back stronger, so that’s an important bit of perspective.
Now when it comes to state spending, I don’t give free advice to my colleagues; you know, the federal government hasn’t been considering any kind of bailout, but all of our budgets are under pressure, and that’s why it’s so important that we’ve found room for tens of billions of dollars in investment in the hospitals deal struck in the last week or 2, in the schools deal struck last year as well. We’re providing extra funding for schools and hospitals, we’re topping up the GST of most states as well. That’s because we recognise we’ve got a responsibility to deliver for the people we both represent. All of our budgets are under pressure in one way or another, and that’s why we’re doing the best we can to help them where we can, but we’re not considering or contemplating some kind of bailout like that which has been in the newspapers today.
Stefanovic:
Okay, we will have to leave it there. Treasurer Jim Chalmers, thanks as always. We’ll talk to you soon.