Peter Stefanovic:
The Albanese government is bracing for higher inflation ahead of fresh CPI data this week. Today’s monthly inflation figures, which does include volatile items such as fuel, is expected to show an annual rate of 3.6 per cent which would be up from the 3.2 per cent that we saw in the September quarter. That’s according to the Commonwealth Bank today.
Well, the federal Treasurer, Jim Chalmers, joins us live now. Treasurer, good to see you. Thanks for your time. Are you expecting tough reading again today that all but confirms no more cuts this year?
Jim Chalmers:
Morning Pete. Look, we’ll see what the numbers say at 11.30 this morning about inflation. I think most economists expect the headline number to tick up a little bit, as you have just suggested. But a big reason for that will be the removal of some of the state energy rebates, and so a lot of economists will be watching far more closely the underlying inflation figure. We’ll see what those numbers say.
But what we already know is the very substantial progress we’ve made on inflation, getting it down very substantially since we came to office has already given the Reserve Bank the confidence to cut interest rates 3 times this year, and that’s providing some welcome relief to millions of Australians with a mortgage. But even with all the progress we’ve made together in the economy, we know that Australians are still under pressure, it’s why our cost‑of‑living relief is so important, and why it’s so important that we’re cutting income taxes 2 more times in the life of this parliamentary term.
Stefanovic:
So, I mean, yeah, there has been 3 cuts this year, that’s worth noting. But if inflation stays outside the target band until 2027, which the RBA now expects, what do you say to those mortgage holders who won’t be getting any more relief either this, or quite possibly next, year as well?
Chalmers:
Well, I think as you know, Pete, I don’t make predictions about the decisions taken independently by the Reserve Bank, I haven’t done that before, and I don’t intend to do that now. The Reserve Bank will weigh up all of the factors in our economy and come to those decisions in the usual way.
When we came to office inflation was north of 6 per cent and rising fast, it’s now been much, much lower than that. Underlying inflation’s been in the Reserve Bank’s target band for a little while now, that’s a good thing, and as I said, that’s given the Reserve Bank confidence to cut those interest rates 3 times already. Future movements in interest rates will be a matter for them.
Stefanovic:
What about one factor being excessive government spending? Do you concede that that has let, or played a part, in the inflation genie being let back out of the bottle?
Chalmers:
No, there’s no evidence of that, Pete, and the Reserve Bank hasn’t mentioned that in their recent statements. It’s not something that they have been focused on. In fact the Reserve Bank Governor has pointed out on a number of occasions now that we’ve delivered a couple of surpluses and the budget position is much better than what we’re seeing around the world. I mean that’s just the fact of the matter.
We’ve got the budget in substantially better nick than we inherited from our opponents. We’ve got their Liberal debt down by almost $200 billion, at the same time as we’re cutting income taxes and providing cost‑of‑living relief. So, our record on the budget has been substantially better than our predecessors’.
We know that there’s more work to do in the lead‑up to the mid‑year budget update and the main game, which is the Budget in May, and so we will continue to find the best way we can to manage spending and manage the budget and the economy in the most responsible way, because responsible economic management is a defining feature of this Albanese Labor government.
Stefanovic:
That leads me to my next point. There are reports today suggesting you’ll cut $5.6 billion from the public sector, which has grown some 40 per cent in the 4 years you’ve been in power. Can you confirm that major cuts are coming?
Chalmers:
Well, what we’ve done here, Pete, is we’ve asked every department for suggestions on their lowest priority spending to see whether we should redirect that to higher priority areas. It’s not especially unusual or controversial in the lead‑up to budgets for us to ask departments to reprioritise their spending. We’re not asking every department to cut their staff or cut their budget by 5 per cent, we’re asking them where the lower priority spending is so that we can redirect it to higher priority areas if we want to.
And if you look at the last 2 budgets that we have handed down, this has been a constant feature of our responsible economic management. We’ve found $100 billion in savings, and that’s meant we’ve found the room to strengthen Medicare, invest in bulk billing, build Urgent Care Clinics in our communities, cut income taxes 3 times. That’s just a standard part of managing the budget in the most responsible way we can, making room where we need to for the investments that we want to make in our people and in our community.
Stefanovic:
So no job losses?
Chalmers:
Well, what we’ve seen in the budgets is that we’ve been able to turn some of these external consultants into permanent public servants. We’ve been able to do that in some areas, that’s a very good development. And what we’ve been able to do is to make sure we’re investing in the workforce that we need to deliver the services that Australians deserve.
If you think about veterans, for example, some of the growth in the public service has been because we’ve devoted resources to making sure that people who serve this country get the payments and the services that they need and deserve.
Stefanovic:
Okay.
Chalmers:
That’s been approach to the public service. Again, it’s not unusual for us to ask departments to suggest ways to reprioritise spending. We’ve done that in every budget, and people should expect us to do that in the next budget too.
Stefanovic:
But is there going to be job cuts coming?
Chalmers:
We’re not asking departments to make those big job cuts that our political opponents took to the last election. As I said a moment ago, our approach is to invest in the public service so we can provide those services.
Stefanovic:
If it’s not big though, is that a lower level?
Chalmers:
Well, in every budget there’s reprioritisation, whether it’s people, whether it’s public investment, services and programs that governments provide. But overwhelmingly we’ve been investing in the public service to provide those services, we’ve done that at the same time as we’ve reprioritised spending to areas like strengthening Medicare and cutting income taxes, and all of the things that we’re very proud of.
But we always need to find room to do that, to make room in the budget to invest in our highest priorities, and people should expect us to do that, not just in the next budget, but indeed in every budget that we have the honour of handing down.
Stefanovic:
How much money do you expect to be saved, if the money is redirected?
Chalmers:
Well, this is the work that happens in the lead‑up to the Budget, so no numbers have been finalised –
Stefanovic:
Right.
Chalmers:
– when it comes to the May Budget. We’ve got a budget update next month, and we’ve got the main game, the Budget in May. And so obviously we haven’t finalised the numbers.
What’s happened here is we’ve gone in the usual consultative methodical way to departments, asked them to identify their lowest priorities so that we consider whether we redirect some of that spending to higher priority areas. I think that’s what Australians expect us to do. Certainly, that’s what we’ve done in our first 4 budgets, and people should expect us to do that our fifth as well.
Stefanovic:
Just a couple of quick ones before are you go. You did mention the energy rebates. The state ones, which have come off, adding to the inflation issues at the moment, the federal one is still in place. Are you going to keep the federal energy rebates in place beyond this year?
Chalmers:
We’ve made it really clear that the ways that we are helping people with their electricity bills are an important part of our Budget, but not a permanent feature of our budgets. We’ll take decisions about that in the coming weeks.
But we’ve been very clear and very upfront for some time now, this electricity bill relief is really important, it is taking some of the edge off power prices for families and pensioners and people in our communities right around Australia. It won’t be a permanent feature of the budget. We’ll take a decision about that in the next few weeks.
Stefanovic:
Do you think Sussan Ley is making headway on her energy policy at the moment?
Chalmers:
I think people understand that the harebrained approach that the Coalition is taking to net zero is a recipe for higher power prices, not lower prices, and would swing a wrecking ball through investor confidence, through the budget and through the economy more broadly.
What Sussan Ley is proposing on energy is a recipe for higher power prices, more debt in our budget as they pay to extend the life of these increasingly unreliable coal‑fired power assets.
So, what the Coalition is proposing is economic insanity. It will smash the budget, it will smash our economy and it will push power prices up, not down, and that is the consensus amongst economists and experts and analysts.
Stefanovic:
Okay. I’m out of time, I know you’ve got other interviews to get to, but another very important question to ask. Can I bring this picture up, please, if we’ve got the new badge for the Broncos. The new badge for the Broncos, Jim Chalmers. Do you approve?
Chalmers:
Absolutely love it. I give it 100 out of 100. I think it’s absolutely perfect, and I think it’s a good demonstration that even after winning the Premiership in the men and the women’s comps that there will be a fresh approach to the next season. I think it’s wonderful, and I’ll be loading up on all of the merch with the new logo on it.
Stefanovic:
I think I will too. Jim Chalmers, good to see you, thanks for your time. We’ll talk to you again soon.
Chalmers:
You too.