PETER STEFANOVIC:
Let's go live to Washington DC, now. Joining us is the Treasurer Jim Chalmers. Treasurer, good to see you. Thanks for your time. So you've arrived as inflation in the US drops to about five per cent. That's getting better but the global scene is still precarious as rates rise. So what have you learned so far while you've been there?
JIM CHALMERS:
Well, I think that further moderating inflation here in the United States has been broadly welcomed, but cautiously because there still is a big challenge with core inflation here, in particular. For all of us, whether it's the US, Australia, all of the similar countries, inflation is more persistent than we'd like, it will hang around longer than we'd like and so that is one of the key challenges that we confront. But in the global economy, clearly there's been some jitters in global financial markets around the banks. The International Monetary Fund expects the global economy to slow considerably throughout this year and we won't be immune from that in Australia. We've got a lot coming at us from around the world. But we've got a lot going for us as well.
STEFANOVIC:
Now on the IMF, there's a few points there. The federal and state budgets, they're going to be in deficit until the end of the decade, IMF concerned about the cost of servicing that debt. You've spoken about that in the past, but it's going to continue to drain resources. So will there be extra spending cuts and tax increases next month?
CHALMERS:
First of all, I share the IMF's concern about the cost of servicing that trillion dollars in Liberal debt that we inherited from our predecessors. That is the fastest‑growing area of government spending in the Commonwealth Budget is the cost of servicing that debt - it's growing much faster even than the NDIS, aged care, health care, national security and all of these other important areas which are putting pressure on the Budget. And so what we'll do in May a bit like what we did in October is we'll find the best balance between some modest but meaningful tax reform - whether it's superannuation tax breaks, or multinationals - we'll also show spending restraint, only making the commitments that will make life easier for people or help to grow our economy. And also we will trim spending where we're not getting value for money and where we can redirect it to areas which are more important to us. The combination of those three things is really important. They were important in October and they'll be important in May as well.
STEFANOVIC:
Right, you've got a Budget hole though of $70 billion a year. Isn't there going to have to be something a bit more than modest and meaningful?
CHALMERS:
This is the sort of challenge that you can't just deal with in one Budget or even two Budgets, or even one term of the Parliament, as you rightly pointed out a moment ago. This is a structural challenge that we've got in the Budget. It will get a little bit better in the near‑term because we're getting really good prices for our exports and we've got low unemployment and that's helping the Budget this year. But in the medium‑term, these pressures on the Budget actually intensify and so we've got a structural problem and you've got to chip away at it - you've got to do what you can to manage the Budget in the most responsible and sustainable way that you can. You've got to make sure when you provide cost‑of‑living relief as we will in the Budget that you do it responsibly and make sure that you're getting value for money. This is what's been largely absent for the last decade. That's why we've got this mountain of debt to service as interest rates go up and it costs more and more to service that debt. So we take our responsibility seriously to try and clean up this mess but it will take more than one Budget, more than two Budgets.
STEFANOVIC:
We've got jobs data that's coming out today as well off the back of a surge in migration which was needed but is there a danger that we're letting too many folks in, Treasurer?
CHALMERS:
Well, a couple of things about that, we'll see what the unemployment rate is in a few hours' time but it's been quite remarkable over the first year of this Albanese government - the incredible jobs growth that has kept the unemployment rate with a three in front of it. With all of the challenges that we've got coming at us from around the world, to have maintained that over the best part of the last year is really quite a remarkable achievement. We'll see what the number says later on today when those numbers come out, but when it comes to migration, it is important to remember that that big number that has been reported in the past is a combination of things - it's the students coming back, which is welcome in our universities, it's the longer‑term tourists coming back which is welcome, obviously, in our tourism industry, but it's also a whole bunch of people, Australians who are choosing to stay at home rather than go overseas and so that's how we get that bigger than usual number. But the other thing that's really crucial to know, Pete, is that even with this bounce back in migration that we're seeing right now, it still doesn't make up for the amount of people we lost during COVID. We still haven't caught up to those projections that we had before COVID hit.
STEFANOVIC:
Treasurer, the RBA with a mea culpa, admitting what many of us already knew, that the RBA did a terrible job handling inflation after the pandemic. Do you agree with the Board?
CHALMERS:
They take their decisions independently and I think it's a really good development that they're prepared to explain and defend those decisions publicly. I think that is an important part of our system which has the independent Reserve Bank Board making these decisions about interest rates and it has the government focusing on what we can influence and that's the Budget, trying to fix these broken supply chains which are pushing up interest rates, trying to deal with this inflation challenge and get on top of that, trying to build the foundations of low inflation growth. That's my job. I'm focused on that. The Board members that made that public commentary earlier in the week, that is something that I would encourage the Board and the Governor to do - to explain and defend the decisions that they take independently.
STEFANOVIC:
Were you on the plane with the Governor on the way to DC?
CHALMERS:
No, we came here separately, but I'll be seeing him in about 45 minutes' time, we'll be spending a big chunk of the next day and a half together on this brief but busy trip to Washington DC to confer with our counterparts.
STEFANOVIC:
I was going to check if he was having a Chardonnay while you were having a Fourex Gold but you weren't flying together, so there you go during that conversation. Treasurer Jim Chalmers, appreciate your time. Thank you. We'll talk to you soon.