Raf Epstein:
Jim Chalmers has delivered his fourth Budget. He’s the federal Treasurer. Good morning.
Jim Chalmers:
Good morning, Raf. How are you?
Epstein:
I’m good. Look, people on $45 grand might really need it, but people earning $200 grand don’t need an extra $500 a year in a tax cut. High earners are getting tax cuts. Why?
Chalmers:
Well, every Australian taxpayer’s getting another 2 tax cuts in addition to the one that started rolling out in July. And that’s what we’re doing in the Budget. We’re topping up the tax cuts.
And when you cut the bottom rate from 19 cents all the way down to 14 cents, that flows to every taxpayer. That’s just how the tax system works. But the benefits will be disproportionately felt for people on lower incomes, younger people, people entering the workforce, and that’s deliberate.
Epstein:
Why are high income earners getting it? I just want to understand the rationale. You and I don’t need that money. It could be better spent by the government, it could be targeted at people who need it. Why are we getting it?
Chalmers:
Because the way the tax system works is it’s a marginal tax system and when you cut the bottom rate, it means that every taxpayer benefits and the –
Epstein:
– that’s an explanation. That’s not a reason.
Chalmers:
The only easy way to limit the tax cuts is to provide it in people’s tax returns. We’ve done that in the past, but we wanted to make this a weekly, enduring, ongoing benefit to people. The benefit, when you combine our 3 tax cuts together is an average tax cut of about $50 a week.
You ask me about cost‑of‑living relief more broadly. It’s not the only thing we’re doing. You know, strengthening Medicare is about out of pocket health costs, cheaper medicines, energy bill rebates, cutting student debt. These are all of the ways that we are responsibly helping people with the cost of living.
Epstein:
Without an election, would there have been tax cuts?
Chalmers:
Yes, we’re very keen to top up the tax cuts which started flowing in July. And that’s because we recognise that even though we’re making a heap of very encouraging progress in the fight against inflation, we’ve got inflation down lower and earlier in the budget than was expected, even at the end of last year.
But we know that people are still under pressure and so we’re providing cost‑of‑living relief, really one of the main focuses in the Budget. And, and we’re doing that in a whole bunch of ways and giving people 2 more tax cuts to top up the tax cuts, which are already flowing, is a very effective way of doing that.
Epstein:
Jim Chalmers, as Treasurer, your shared equity scheme, it is extra help for some people to buy a house, but there’s not much for most people trying to buy a house. Why do you keep kicking that can down the road?
Chalmers:
I don’t think we are. You know, the Help to Buy scheme, the expansion means about 40 – helping about 40,000 Australians into the housing market. That’s a significant amount of people. But it’s not the only thing we’re doing in housing.
There’s about $33 billion being invested in housing in all kinds of responsible ways, from social and affordable housing to the Help to Buy scheme, to working with the states to open up new estates and make sure that it’s got the infrastructure that it needs.
We’re investing in housing in a whole bunch of ways. We know that there’s a shortage. It’s one of the big challenges in our economy, as you and I have spoken about, I think, on a number of occasions, Raf and that’s why we’re doing something about it.
Epstein:
But aren’t those changes on the edges? The big changes are how we incentivise people to build wealth. Negative gearing, capital gains, like that’s the big lever that you haven’t pulled?
Chalmers:
We haven’t. That’s correct. But whether it’s cost of living or housing, it’s best not to look at any one measure in isolation. You look across what we’re doing in housing, we’ve got the most ambitious housing programme of any government in my lifetime.
Epstein:
Are you scared of negative gearing changes?
Chalmers:
We’re not going down that route because we’re not convinced that it would build more homes to change that. We’ve made that clear. And our emphasis is on housing supply. We want to build more homes, 1.2 million homes in the next 5 years. That’s going to be difficult. It’s ambitious, but it’s achievable if everybody does their bit.
We’ve shown a willingness and enthusiasm to invest in housing because we know it’s the source of a lot of this cost‑of‑living pressure, which is still hanging around. We know we don’t have enough homes. That’s why we’re acting decisively with $33 billion of investment.
Epstein:
Jim Chalmers is the Treasurer on 774. We’ll have a word to the Shadow Treasurer, Angus Taylor, soon as well.
Treasurer, if you had 60 seconds in a lift with Donald Trump, what would you say to him?
Chalmers:
I think I’d tell President Trump, exactly what I told his Treasury Secretary in Washington D.C. a few weeks ago. Ours is an economic relationship of mutual benefit. They run a big trade surplus with us, they enjoy tariff‑free access to our markets. We believe that should be taken into consideration and we will always speak up for and stand up for our interests.
Epstein:
Do you think he cares about Australia?
Chalmers:
I don’t think that’s a question really for me. You’d have to ask him. But I do believe whoever is in the White House and whoever is in the Lodge, this is such an important economic relationship and security relationship, it benefits both countries. And we will continue to make our case to stand up and speak for our interests.
We don’t want to trade away the things that we’re proud of in Australia, things like the Pharmaceutical Benefits Scheme that I invested in in the Budget. We want to make sure that we’re strengthening that because Australians need us to, not weakening it because American multinationals want us to. So that’s been in the mix. That’s been some of the things that have been discussed. I would make the same points to President Trump that I made to his Treasury Secretary.
Epstein:
You did pull a bit of a rabbit out of your hat with the tax cuts last night. One thing you did not mention is Melbourne’s suburban rail loop. Why not?
Chalmers:
Because we’d already funded that. As you know, I think the funding got released a few weeks ago. But that’s been in our, that $2 billion or so has been in our budget for a while. Usually in the Budget speech, you mentioned the new things.
Epstein:
You don’t think it’s a sketchy project, you’ve got faith in it?
Chalmers:
Well, it’s cleared the hurdles. And So we’re providing that $2 billion. We believe in it. We think it’s a project worthy of Commonwealth investment. That’s why Catherine King, my colleague, has been working closely with the Victorians to provide and release that funding for Suburban Rail Loop. But in the Budget speech last night, we focused on Sunshine Station because that’s part of a big new investment we’re making in the Airport Rail line.
Epstein:
Tobacco excise. I think it’s about $1.40 of tax per cigarette at the moment. That is failing in your Budget. You’re taking in even less money than you thought you would. It’s failing on the streets. Why are you sticking with that while shops are burning?
Chalmers:
There are 2 reasons why tobacco excise is down. There’s a good reason and there’s a bad reason. Good reason is more people giving it away. But I do acknowledge the essence of your question, which is we’ve got a challenge here and too many people are avoiding the excise, and that’s why we’ve actually invested a substantial amount of money and resources in the Budget last night to try and crack down on people avoiding the excise. There’s a lot of money in the Budget for compliance and enforcement because we do have a problem there. I acknowledge that. We’re doing something about it.
Epstein:
Will we ever get a surplus?
Chalmers:
We’ve delivered 2 surpluses, Raf.
Epstein:
I’m talking looking forward.
Chalmers:
I know, but this is too easily lost. When we came to office, there were deficits in every year, we turned 2 of them into surpluses. And we’ve shrunk the deficit this year and that’s helping us get debt down this year by $177 billion. I think that is too easily lost.
We do acknowledge there are structural issues in the budget in the medium term and in the longer term. That’s what’s motivated us in terms of making spending on the NDIS and in aged care more sustainable. We have made a structural difference, a structural improvement to the budget over time with those measures. But the work of budget repair is ongoing.
In every single one of our 4 Budgets, we’ve had savings. We’ve tried to. When we’re investing money in helping with the cost of living or strengthening Medicare, we’ve done it in the most responsible way that we can, which recognises these pressures on the budget.
Epstein:
Thanks so much for your time this morning.
Chalmers:
Appreciate it, Raf. All the best.
Epstein:
Jim Chalmers there, the federal Treasurer.