PETER STEFANOVIC:
Okay, let’s go to Canberra now. Joining us live is the Treasurer Jim Chalmers. Treasurer good morning. Thanks for your time, as always. So, if there is a rate hike now, is that on you?
JIM CHALMERS:
Good morning, Pete. Look, the independent Reserve Bank will take its decisions weighing up a whole bunch of factors, not just the Commonwealth Budget but I’m really confident that what we released last night will be part of the solution to this high inflation that’s been in our economy for a couple of years now, not part of the problem. The Budget is designed to put downward pressure on inflation, not upward pressure on inflation – that’s partly about the design of our cost‑of‑living help, but it’s also about the responsible way that we’ve been turning deficits into surpluses in our 2 years in office.
STEFANOVIC:
So, yeah, on that point of downward pressure on inflation, you’ve got roughly $8 billion going out feeding the economy now, or will do, and then if the RBA is forced to tackle that by raising rates, I mean, is that not your fault?
CHALMERS:
What we’ve seen with this cost‑of‑living relief, the design, the way that we have done it again, is when we provided similar relief in the last Budget, it put downward pressure on inflation. The ABS, the Bureau of Stats, showed very clearly that we took the edge off energy bills. We took the edge off some of these still unacceptably high rents and that made a positive difference when it came to getting on top of this inflation fight. We understand that people are doing it tough. We are providing substantial cost‑of‑living relief in a responsible way. That’s a tax cut for every taxpayer, energy bill relief for every household and some targeted measures to help people with rent and medicines and student debt.
STEFANOVIC:
But according to Treasury, the expectation is there will only be 3 rate cuts, 3.25 per cent rate cuts by 2026. So, people are going to be doing it tough for a long time?
CHALMERS:
People are doing it tough right now and that’s why the Budget is designed to help them. The assumptions in the Budget around future movements in interest rates, that’s just informed by a survey of market economists. That is the usual kind of way that Treasury make those kinds of assessments and forecasts. What the Treasury forecasts show is that our Budget and the way we’ve designed our cost‑of‑living help will put downward pressure on inflation – that is a key consideration for the independent Reserve Bank, but they make their decisions independent of us. I’m focused on the job that I have to do, which is to manage the budget responsibly, we’ve done that with a second surplus but also to make sure that when we design our cost‑of‑living policies, we’re doing it in a way that takes the edge off inflation. That was certainly the case with these kinds of cost‑of‑living measures in the last Budget, and it will be again.
STEFANOVIC:
Okay, you’re a Queenslander and let’s just highlight Queensland here. There’s already a state energy credit of $1000. Now you’ve got another $300 here. Does that not trouble you at all?
CHALMERS:
No, I think it’s a good thing that the Queensland state government, the Miles Labor government, is helping people with the cost of living in the same way that the Albanese Labor government is helping people with the cost of living at the federal level. Whether it’s Steven Miles or Anthony Albanese, we understand that people are under the pump. We’ve found a way to provide substantial cost‑of‑living help, but responsible cost‑of‑living help, working with the states, not against them, trying to ease some of the pressures on our people.
STEFANOVIC:
How did you settle on $300, by the way?
CHALMERS:
We try and do the most we can but in the most responsible way and we have to weigh it up against all of our other pressures and priorities. Overwhelmingly, the cost‑of‑living package is a tax cut for every taxpayer but some extra help with energy bills for every household is an important part of that, about $3.5 billion worth of help, and there’s rent assistance and cheaper medicines as well. When we make a budget, when we try and make it all add up, we take into consideration the pressures that people are under and the pressures that the Budget is under and we come to the best conclusion that we can.
STEFANOVIC:
Politically though, does it offset the failed promise of a $275 reduction to energy bills?
CHALMERS:
Well, first of all, that number that you’re citing was a 2021 forecast about an outcome in 2025. It’s 2024 right now and we’re helping people with their energy bills –
STEFANOVIC:
But it blunts that argument.
CHALMERS:
Three hundred dollars off their energy bill. Well, I’ll leave the kind of political analysis to yourself and your colleagues and your counterparts. Our primary motivation here is helping people who are doing it tough – that’s what the Budget was all about. We found a way to do that in a responsible way at the same time as we invest in the future of our economy.
STEFANOVIC:
Some concerns over that $300 going to those at the highest end, that it should be means tested. Would you be willing to amend it at all?
CHALMERS:
We weren’t prepared to put the time and effort and money into designing a whole new system of means testing when this bill relief is delivered via the energy retailers. What happens here is we work with the states and with the retailers to credit and take pressure off people’s energy bills. Once you go beyond providing it to people just on pensions and payments which is what we did last time, there’s not a system in place that allows you to slice and dice it. But more fundamentally, Pete, what we’re doing here is providing cost‑of‑living relief up and down the income scale – that recognises that people are under pressure in middle Australia as well and that’s why we’re providing this relief to every household.
STEFANOVIC:
Final one here, Treasurer. Is this your last Budget before the election?
CHALMERS:
It remains to be seen. I’m expecting to hand down another Budget but that’s a decision for the Prime Minister appropriately. If we need to hand down another Budget before we go to the people, I’ll be ready and raring to go to do that. My assumption is that we are going full term and so, if that requires a Budget at the beginning of next year, I’ll be ready and raring to go.
STEFANOVIC:
Jim Chalmers, thank you as always for your time.