PETER STEFANOVIC:
Joining us is the Treasurer, Jim Chalmers. Treasurer, good to see you. It’s all ahead of MYEFO today, a big day for you no doubt. I do want to lead off with what’s going in Vanuatu, as I understand the death toll has just climbed to 14, and there is help that is on the way from the Australian Government.
Are you able to elaborate on that this morning?
JIM CHALMERS:
Good morning, Pete. They’re very concerning reports out of Vanuatu. That is a beautiful country and they are beautiful people, and what we’ve seen with the earthquake and its aftermath is a lot of damage, and unfortunately the loss of a number of lives.
We are deploying Australia’s help however we can. In the first phase, that will be search and rescue teams and medical teams, but I also know that my colleague Penny Wong has been talking with her counterpart there in Vanuatu about what additional support we may be able to provide.
Obviously that support will be forthcoming, it will be guided by the government of Vanuatu itself.
But this is family, and we will be there for them. We’re already deploying those search and rescue and medical teams, and more help is on the way.
STEFANOVIC:
Okay. As the Treasurer mentioned there, that is the first phase, more to come.
All right. On to MYEFO now, Treasurer, what sort of an economic picture will you be painting today?
CHALMERS:
A very responsible set of books which reflects the substantial progress that we’ve made cleaning up the budget.
What you’ll see in the mid‑year budget update is actually a deficit which is a bit smaller this year since Budget, but even when there’s slippage after that because of important investments in areas like Medicare and medicines and pensions, the budget will still be around $200 billion stronger than what we inherited when we came to office.
That means 2 surpluses in our first 2 years, a smaller deficit in our third year, much less debt and much less interest on the debt.
STEFANOVIC:
That’s all well and good, but how does that help folks afford a Christmas lunch this year?
CHALMERS:
We’re rolling out very substantial cost‑of‑living help, you know, because people are doing it tough, that’s the motivation for the tax cuts, the energy bill relief, the cheaper medicines, cheaper early childhood education, the student debt relief, the rent assistance and getting wages moving again.
We’ve been able to find room in our budgets for cost‑of‑living relief, which is substantial and meaningful, but also responsible, and we’ve been able to do that at the same time as we’ve made that $200 billion improvement in the budget.
That $200 billion improvement in the budget since we were elected means $177 billion less debt and $70 billion less interest on that debt.
You can see over time, even with a little bit of slippage in the later years, those 2 surpluses and the smaller deficit this year are making a substantial difference to the amount of debt that the budget is carrying, and making room for our priorities, including that cost‑of‑living help.
STEFANOVIC:
When you say ‘slippage’, does that mean high government spending?
CHALMERS:
There are some areas, as we’ve been saying through the course of the week, where spending is going up; Medicare’s a good example, the PBS and medicines is another good example, supporting veterans, there’s some extra money for natural disaster responses, about an extra $1.8 billion.
We’re talking about some substantial figures, but in areas where there are pressures, automatic pressures, but also areas which are a priority for this government, Medicare is obviously among the most important of those.
So big pressures on the budget, we’ve tried to accommodate that with some savings, but there is some slippage in later years, even as we’ve got the deficit a little bit down in the year that we are currently in.
STEFANOVIC:
See, that’s where your critics have seized upon. Your answer so far to economic woes has been more and more government spending, which is keeping interest rates higher, therefore hurting more people for the longer run. Is that right?
CHALMERS:
No, it’s not, and the Reserve Bank Governor has, herself, said that public demand is not the main game when it comes to inflation and interest rates.
What we’ve been able to do with the very responsible way we’ve been managing the budget is we’ve seen inflation come off substantially. When we came to office it was much higher, more than twice what it is now, and it was rising, now it’s much lower and it’s been falling, and that’s partly because of our responsible economic management.
As the RBA Governor has also recognised, some of this spending that’s been in the first 3 budgets that we’ve handed down is that cost‑of‑living help that you started the interview by asking me about, and that’s put downward pressure on inflation in the areas like energy bills and early childhood education and rent as well.
We’ve struck the right balances here, very responsible set of books, striking all of the right balances, recognising that fighting inflation’s our number one priority, but we can’t ignore our responsibilities to people and we can’t ignore the risks to growth. That’s what’s driven the set of books that we’ll be handing down in a couple of hours.
STEFANOVIC:
Yet we are in a per capita recession, and unlikely to get a rate cut in the near term.
CHALMERS:
That’s your prediction, Pete, you know I don’t make predictions about decisions taken independently by the Reserve Bank.
When it comes to the economy, it is very soft, the economy’s very soft and people are under substantial pressure, and that’s why now would be the worst possible time to hack into Medicare, to hack into wages, to hack into pensions.
Now don’t forget, and I see you had the Shadow Treasurer on this program yesterday, he calls the sorts of investments that we’re making in medicines and Medicare and pensions, he lumps that into a big category of things he calls ‘wasteful spending’, and what he really means by that is if there’s too much spending on Medicare and medicines and pensions, what he’s really telling people is that he wants to hack into that, and we know that ‑‑
STEFANOVIC:
That’s not what he’s saying.
CHALMERS:
– they are a risk to people’s household –
STEFANOVIC:
They’re not cutting Medicare.
CHALMERS:
He said that. He has said on your program and elsewhere that there is too much spending in the budget, including, he uses the number $315 billion, which includes pension indexation, it includes Medicare, it includes disaster relief, it includes veterans’ support, and as you rightly asked him yesterday, ‘Well, what will you cut?’ He won’t tell you. He won’t come clean on that. There’s a very good reason for that. If he thinks spending on Medicare and medicines and pensions is wasteful, he needs to tell people how much he’ll cut from those really important areas.
STEFANOVIC:
All right.
CHALMERS:
Now would be the worst time to do that when the economy is soft, and people are under pressure. We’ve found a way to get the budget in much better nick, $200 billion stronger than we inherited at the same time as we help people, at the same time as we don’t ignore the risks to growth. That’s the responsible and appropriate balance to strike and that’s the balance you’ll see struck in the mid‑year budget update.
STEFANOVIC:
You mentioned energy relief during our chat. Is that going to be extended?
CHALMERS:
Not in the mid‑year budget update. Now obviously we keep these sorts of decisions under review from budget to budget, but the existing energy bill relief’s still rolling out. At the moment our focus is on rolling that out. People shouldn’t anticipate another round of that when we put these numbers out at 10:30.
STEFANOVIC:
All right. Treasurer, Jim Chalmers, appreciate your time on a busy morning. Thank you so much.