REBECCA LEVINGSTON:
It's a rare pleasure for this time of night to say good evening, Jim Chalmers.
JIM CHALMERS:
It's very good of you to have me on your show.
LEVINGSTON:
Got a bone to pick with you in just a moment.
CHALMERS:
That's a good start!
LEVINGSTON:
The other person who is, of course, here as he is every Monday evening is Everald Compton. Everald, evening.
EVERALD COMPTON:
Good to be here, Rebecca, and good to be with Jim. I think you and I will formulate the Budget tonight. The voters don't know that, but we’ll sort it out.
CHALMERS:
I've come to get my instructions from you two.
LEVINGSTON:
Possibly, possibly. We want a sort of behind the scenes look at how you put a budget together though. Jim Chalmers, I hear that you drank the last of the milk here at the ABC.
CHALMERS:
Everald and I were debating whether or not I could leave a little note in the ABC fridge that said that Everald will pay it back. In truth and this is a hundred per cent true, I didn't quite knock it off. There's a little bit left.
LEVINGSTON:
No, that's a terrible habit, Jim. People who do that are worse than people who just finish it –
CHALMERS:
Do you reckon I should have just knocked it off?
LEVINGSTON:
Well, what have you left, 3 mls?
CHALMERS:
A good 2 cups of tea I reckon.
LEVINGSTON:
Oh, okay. That's all right.
CHALMERS:
I wouldn't do that to you.
LEVINGSTON:
All right.
CHALMERS:
I wouldn't be that kind of housemate.
LEVINGSTON:
It's just one of those things that you can judge a person by, you know what I mean?
CHALMERS:
Well now all of Queensland is judging me by it. Thank you very much!
COMPTON:
They all know now. You've just lost him 500,000 votes!
LEVINGSTON:
Well, I tell you, you'll know what they think of you 2 weeks tomorrow night, Jim Chalmers, you'll be standing up to hand down another budget. So this will be budget number 3 for you. Don't give me a long, boring politician's answer. On Budget night how do you feel when you're talking to the nation about the wallet?
CHALMERS:
It's exciting because you've been working on it for so long and you're just desperate to tell people about it. And it's a big occasion, you wander into the House of Representatives, there's a lot of people there.
It's a big night, I've got Laura and at least 2 of my 3 kids are usually in the Chamber, so it's a big occasion, and when I wander in there, I try and think just for a moment how lucky I am to get the chance to do something like this.
LEVINGSTON:
Everald, can you remember the first budget that you took in that had a real impact on Australians; is there one that stands out?
COMPTON:
I was just having a chat to Jim about it. In my view, up until Jim arrived on the scene, the best budget I ever saw was from Bill Hayden in 1975 when he brought down a budget just before Gough Whitlam was dismissed. They dismissed him over the budget.
Bill Hayden had the economy not in good shape, he had to get a budget that would get it out of that and handle all the pressures, and then it didn't get passed until Malcolm Fraser got in. And after Malcolm Fraser had toppled Gough Whitlam over the budget, he didn't alter Bill Hayden's budget by $1. One of the greatest acts of irresponsibility I've seen.
Now I thought that Bill Hayden did a marvellous job under tremendous pressure. They tried to get him to change it to get it through the House, and I had great admiration for Bill Hayden that day. But I'm sure Jim's going to have a more dramatic budget some time.
LEVINGSTON:
We shall see. So that was 1975. Were you born in 1975, Jim Chalmers?
CHALMERS:
No, not quite, I was negative 3 in 75. But I’m a big admirer of Bill Hayden's, and a big loss when we lost Bill and Dallas.
LEVINGSTON:
You are 2 weeks out from handing down this budget, so 2 weeks tomorrow night. How much of it is done at this point?
CHALMERS:
Almost all of it. We've almost finished it. I've almost literally just landed back from Canberra where I had a good chat with Anthony Albanese and Katy Gallagher and some of the other colleagues about finishing the Budget. I reckon it's about probably 95 per cent done, and by the end of the week it will be 100 per cent done.
COMPTON:
But Jim, 6 months ago you sat down with a blank bit of paper and the Prime Minister, and the Cabinet said, ‘Jim, start to draw up the budget’. What's the first thing you do from a blank bit of paper? How do you get some guts into it? What happens?
CHALMERS:
Well, you're right, it is about 6 months ago. We do a mid‑year budget update, we do it in December, so the middle of the financial year, and we update all the forecasts and all the spending, and really the day after that mid‑year update I sit down with Anthony and Katy and other colleagues, and we work out what's the economy going to look like at budget time; how do we make sure our budget fits the times, suits the times, and what are our big priorities.
And you know, for us, cost‑of‑living help, renewable energy and a Future Made in Australia, the care economy is obviously a big priority for us, housing is a big priority for us. And so you work out what are the things you care most about, and how do you build a budget around that structure.
And the key there really is to recognise that you can only ever put in a budget maybe a tenth of everything that you want to do, and so it requires a lot of working out, okay, what can we do now and what will we have to do later? What combination of things will work best in the economy that we have now? How do we balance helping people in the here and now with what we need to do to make the economy strong into the future?
And so there's a series of fine balances that you need to strike, but the first thing you have to recognise when you start with that blank sheet of paper is you can't do everything that you want to do. You can't fund even all of the good ideas, and so you've got to prioritise and sequence.
COMPTON:
Jim, but also you have all sorts of pressures on you. I know you would have had a vision of the Budget 6 months ago, but you've got to deal with a Cabinet that will all stand up and say – not all of them, they know better than you, then the Caucus and then the Treasury says what to do, and the Reserve Bank, and so one way and another you have to then handle all the pressures of what people want, and so in the end a good budget is the art of the possible, isn't it? Not the art of the ideal, the art of the possible.
CHALMERS:
It is, and you know, it's tempting to think of these things as compromises, but they're really balances; you're really trying to strike these balances and get them more or less right. And that's what we're trying to do now, even as we finish the last little bit of it in the home stretch of the Budget, is to try and work out, for example, what's the best balance between what we need to do to fight inflation now versus what we need to do to invest in growing the economy into the future. And so all of those balances matter a lot.
And when it comes to the colleagues, I genuinely think, and I've known you probably half my life, Everald, and I know that you probably have a similar view. I think that pressure where people have got different views, if they're well‑motivated and well‑informed, the views that my colleagues have or people outside the Parliament, outside the Cabinet, I kind of like the push and pull of that.
That's why I like these kinds of conversations, but I like to tell people what we're grappling with, because I think when you get more and more people piling into this national conversation about our budget or our economy, or our future as a country, you get to a better landing place than if you just lock yourself away and pretend that you've got all the answers on your own.
LEVINGSTON:
You've got to justify the spend, and I think that's to people within politics, and certainly to the broader public as well, and to Jim Chalmers' point about you, Everald Compton, you have friends and colleagues on all sides of politics, and I think you relish the opportunity when someone disagrees, because that sparks a conversation where the best ideas come forward.
What is the dollar figure of the federal Budget, Jim Chalmers; like what's it worth?
CHALMERS:
It depends each year but about 700 billion.
LEVINGSTON:
So what happens then when you talk about the balance, what happens when 2 weeks out there are very clear important issues popping up, like, for example, the Prime Minister saying today, ‘We have a national crisis when it comes to the safety of women’? Automatically are you thinking, ‘There's more money to be allocated there’, is it thinking about the existing allocation, which you would argue has been significant in previous years? Like right up to the point of the 14th of May, are things like that changing?
CHALMERS:
Yes. Often not fundamentally but for example I think for good reason the Prime Minister's called a National Cabinet for Wednesday about this national scourge of domestic violence. And if in the conversation with his State and Territory counterparts we need to invest differently or more in one part of this effort or another, then obviously that's a compelling thing, that's obviously something we need to take into consideration, and really across a whole range of areas, right up until when we put the Budget to bed.
Things change, and my job is to make sure that we've got the ability to fund the priorities that we know, that are obvious, that are right there in front of us, and also the ones that might emerge from time to time, and so that's part of the finishing touches on the Budget.
COMPTON:
With the domestic violence matter that Rebecca's raised, Jim, it seems to me that from all the reading I can do about it, that it's a long‑term thing where we've got to take young children, both genders, and teach them good relationships from early in their lives, and Finland started a process 20 or 30 years ago where they did that, and now it's coming good; their domestic violence rate is the lowest in Europe, but they took 20 years. So you've got to make a 20‑year investment in domestic violence, haven't you?
CHALMERS:
No doubt about it, and young people have got to be a big part of our effort. We had a discussion today with some of the Cabinet colleagues about the role of social media in all of this. It's very easy for kids, even kids as young as my boys, to access all kinds of rubbish on social media. And this is part of the problem, this is what makes it more difficult but no less important that we teach our young people in particular.
COMPTON:
Jim, coming back to the big issue of inflation and cost of living, everybody in Australia is an expert on what ought to be done about inflation and cost of living. But in reality there's so many pressures causing things to go up and down and what have you. What are the fundamentals of attacking inflation – there's lots of things you can't even influence like the influence of America and the Gaza war and Ukraine and all those things. What are the fundamentals of tackling those 2 things?
CHALMERS:
The international story's a big part of it, but it's not all of it. I acknowledge that. Some inflation's brought to us from around the world, some of it from closer to home. There's really 3 things or 3 ways that we think about it: first of all, you want to get the Budget in better nick so that you're not spending too much and putting upward pressure on inflation, and so that's why we did the surplus last year, and why we're trying to land this second one. That's the first bit.
Second bit is where you can provide a bit of help to people, you've got to make sure that in providing that help it doesn't make the inflation problem worse, so we're not mailing cheques out to people and all of that sort of stuff and overheating things from an inflation point of view. We're giving energy rebates in that last budget, and rent assistance, and all of the things that actually get downward pressure on inflation rather than upward.
And then the third thing, which goes to the international piece, is – you'd know with all of your reading, Everald, about supply chains, and you know that when supply chains are busted because of the Ukraine war or conflict in the Middle East, or for other reasons – the pandemic was a big part of this – when your supply chains are busted things become more expensive to get your hands on. And so trying to make sure our supply chains are a bit more resilient and a bit more robust as well. Those are the 3 things that we focus on when we're trying to get on top of this inflation challenge.
We've seen inflation come off a fair bit the last couple of years, as you know, but we want it to come off further and faster, and so that will be a big emphasis in the Budget too.
LEVINGSTON:
Is it looking like a surplus?
CHALMERS:
We are a good chance. We're not quite there yet until we hit the button on the last big consolidation of all of the numbers, so we'll know a bit later on, but we are a good shot; we're a good chance of a second surplus.
And I think a lot of your listeners would be listening, Rebecca, and they'd be thinking, why does a surplus matter to them, and what I'd say to those listeners is, we don't see the surplus as an end in itself, we see it as a demonstration we've been able to make things add up, we've been able to pay down a little bit of the debt that we inherited, we've been able to make room to fund our priorities. I don't want to do a partisan thing, but our predecessors made these mugs that said ‘back in black’ and they threw a big party, and then they never actually delivered a surplus.
We've tried to take a different approach, which is to say, let's get the Budget in as good a nick as we can, a surplus is a good thing, it takes pressure off inflation, it helps us fund our other priorities, it means we're paying less in debt interest, but it's really the foundation of things that we want to do rather than an end in itself. And so if we can get a second one, that would be the first back‑to‑back surplus in almost 20 years.
COMPTON:
I'm trying to think of 2 in a row. But as an amateur economist, Jim, I hold the view that a lot of the inflation is caused by commerce and industry using inflation as an excuse to put their prices up. The prices don't need to get up, but they say because of inflation we'll put them up and we can hide behind the politics. I think a lot of it is created and shouldn't have been created, but what could you do about that?
CHALMERS:
I think the best thing you can do is make sure the economy is as competitive as it can be so if a business does that, somebody can go shop elsewhere, and that's hard in our supermarket sector, which is pretty concentrated. So we get the Competition Watchdog, we empower the ACCC to go after price gouging and to monitor prices and to make sure people are doing the right thing.
LEVINGSTON:
Except that, Jim Chalmers, the average person thinks the ACCC has no teeth, they never do anything, whether it's plane flights or being ripped off by something else. I reckon you'd be hard pressed to find a person in Queensland who went, ‘Oh, yeah, that's right, they did that thing that made things fair’.
CHALMERS:
I think they'd be surprised. The ACCC's got this incredible Chair, Gina Cass‑Gottlieb and she went after Qantas on some of the issues around ticketing, she's been pretty robust when it comes to the supermarkets, and so I think the ACCC plays an important role.
I'm in at my local shops with my kids all the time and you can see at the checkout people making difficult choices, sometimes people putting stuff back, you know, I feel that. That's why we try and make medicines cheaper and electricity bills cheaper, and early childhood education cheaper and all that takes some of the pressure off. So I understand people are sceptical, but I think the ACCC plays an important role, and without it we would be stuffed.
COMPTON:
Jim, can I switch to housing, and just as Rebecca shares my views about this, the median price – it was announced the other day that the median price of housing in Sydney is now $1.6 million which is extraordinary. Now when Helen and I got married 66 years ago, we bought a piece of land at Aspley for £5,000 and we built our house for £4,000, and so we were in our house for 9,000, and so we find it a bit hard to digest the 1.6 million.
Part of the problem is, as an expert now, and Rebecca will pile in on this, there's an excess of expectation of young people wanting houses. Helen and I – that house, it wasn't painted, we had a table and 2 chairs and a bed, that's all we had. We held the first meeting to establish the Aspley Uniting Church in our lounge room with everybody sitting on the floor because we didn't have a chair, and it took us 10 years to get our house the way it is. Now, the young kids want to go in a house that's got to have everything that opens and shuts and glorified everywhere.
LEVINGSTON:
Not everyone, Everald, but I take your point. But not everyone.
COMPTON:
How could we cut down what I think is an over expectation of what you're entitled to in a house when you get one?
CHALMERS:
I don't know that that's the problem, but Everald's pointing at Rebecca so maybe he wants her to have first crack at this, and then I'll come in off the long run.
LEVINGSTON:
I'm not the Treasurer of Australia, Jim Chalmers, you are. What I will say though is, and I don't want it to be a pile‑on of, you know, smashed avo on toast fight, but I was talking to a couple on the weekend who have a business where they act as a bit of a mediator between first home buyers and builders, and they – this is a couple who are both in their late 30s, business owners, who worked and saved to buy their first house.
And they said they are surprised that people are not willing to cut back more. But I think partly that comes around to, as you were saying, Jim Chalmers, at the grocery store. What are you cutting back on? Ham is expensive, bread is expensive, cheese is expensive, avocados if they're not in season are expensive. Like to live in 2024 is expensive.
CHALMERS:
Yes, and I think we need to be careful, Everald, you know, with the greatest respect, we need to be careful about being kind of judgey about the pressures that people are under. I think the pressures that people are under, including but not just young people, are substantial, and when you think about inflation, if you're renting, the inflation on rent has been way higher than we would like; lower than it would have been without our rent assistance, but still higher than we'd like.
And so I think people who are worried about getting into housing and who are under pressure, particularly young people, have got reason to be worried that they won't get the opportunity that you and Helen got to get a foothold, toe‑hold in the housing market. Maybe they think they might never own a home. And I think this is a serious thing. If we started with your blank sheet of paper before, and we all made a list of the top 4 or 5 things that we think are the biggest challenges we've got in our country, I think the housing market would be on that list, probably for all 3 of us.
So the way to do that, help people in the here and now with more rent assistance, but more fundamentally we've got to build a heap more homes, and not a few more, we think we've got to build 1.2 million homes in 5 years.
LEVINGSTON:
I had a question on that, I hosted the morning show all through the COVID period, and the change in the work dynamic, who was coming and going into this building here at ABC, who was coming and going into our country, and the big discussion that came off the back of it was we don't have enough workers, because people hadn't yet come back to Australia, and then we just didn't have enough housing.
So at what point did that disconnect happen where we seemed to lose a lot of people, we didn't get as many people back in, and then we just don't have enough houses in Australia?
CHALMERS:
Yes, I think there are a range of reasons for it, and you don't want to kind of over simplify it, but one of the big things that happened out of COVID, and again for understandable reasons, is people didn't want to live with 6 or 8 of their closest mates, particularly if they might have been working from home, dialling in to things.
I think one of the trends we've seen in housing is there are fewer people per home, and I think COVID was a big part of that. So that's part of the story in terms of housing supply, but nowhere near the whole story.
And when it comes to labour supply, this is one of the big things that will have people scratching their heads, we've got an economy which is softer, but we've still got unemployment with a '3' in front of it, which is pretty remarkable. We still need to train more people for more opportunities, and COVID really kind of reshuffled the deck in the way that we think of some of these things.
And so whether it's the housing market, whether it's the labour market, whether it's the way we think about what jobs people want to do and from where, all these sorts of things, we've had to re‑think them post‑COVID. People I think in their own lives thought, ‘How do I want to do things differently in my own life having gone through this horrendous experience of the worst part of COVID’, and I think it's true of our economy too. And so what we try to do is we said, ‘Okay, what have we learned from COVID? What does it mean for the jobs market? How do we think about full employment now?’ And all of these sorts of things.
And so all of these questions that you raise are pretty central to the way that we think about the future of our economy.
LEVINGSTON:
Once your budget is handed down, Jim Chalmers, inevitably the media frames it as, you know, winners and losers. What's in it for me? And I just wonder for you as the Treasurer how do you feel about that when things are carved up, or is that – do you understand that?
CHALMERS:
I understand it. I counted the other day – this is my third budget as Treasurer but I've been involved in either writing them or responding to them, I think, 18 budgets, and so you get used to the rhythms and the way that people think about the Budget, the way they hold it up to the light and see what's in it for them. I think that's totally understandable.
And I'd be lying if I said to you, I'm completely relaxed about how the media cover my budgets, I'm not. I want people to see the value in them, I want people to understand how we got there and why, and that we tried to do the right things for the right reasons, and all of that. But inevitably, you're not going to please everyone with a budget.
I've got a very little brief anecdote where, you know, when I was advising Treasurer Swan, another mate of Everald's, I went into the Budget lock‑up one year, and the editor of a major newspaper said to me, ‘Have a look at the front page’. And it was about 10 minutes into the lock‑up, and I said, ‘How can you have written the front page? You haven't read the Budget yet’, and he kind of chuckled and said, ‘We don't need to read the Budget to know what we think about it, mate’.
And so for me, that was a useful bit of perspective that I reflect on sometimes. You can't make everyone happy. People will come at it from their own perspectives. That's fine, that's cool. My job is to do the best that I can.
And when I'm out and about in my local area with my kids or out and about around the country, the thing that I appreciate most, which often comes from people of Everald's generation, is people will say to me, ‘We don't agree with everything that you've done, but we think you're doing your best’. And at the end of the day the media won't always write that, and that's fine too, but if people think we're doing our best, we're making those decisions for the right reasons, then that's cool with me.
COMPTON:
Let me tell you a little anecdote. One of the occasions I remember was when I was Chairman of National Seniors and I was negotiating with Swannie in 2008 to get what turned out to be the largest pension rise in the history of Australia from 1900, and you were roaming around the office there doing that, and just to talk about criticism, I think we achieved $35 a fortnight rise, a staggering rise really, and it took a year of negotiation.
It was Bob Brown from the Greens, he was on it, and his other passion other than Greens was looking after oldies, and after we got it through the Parliament Budget night, and I was there and Swannie got up and announced it, and Bob Brown grabbed me, and said, ‘Everald, you let the show down, you know damn well you should have got $70 a fortnight’.
LEVINGSTON:
You can't make everyone happy. Do you want to give us a headline ahead of time, 2 weeks out, Jim Chalmers, an exclusive here on the Evenings program? You've got all of Queensland listening.
CHALMERS:
Hello all of Queensland. I reckon tune in in 15 days' time.
LEVINGSTON:
That's a terrible sizzle. A terrible sizzle.
CHALMERS:
Yes, I didn't bring the sizzle at the end!
LEVINGSTON:
I've got 2 more specific questions, one serious, one less so. $700 billion you said in the Budget. How much debt is Australia in at the moment?
CHALMERS:
Gross debt, it's heading up to – it's a bit north of a trillion, or it's heading to north of a trillion. That's the easiest way to think about it. There's all different measures, net debt, gross debt and the like. But rounded off, about a trillion dollars.
And the big thing about that is we pay a lot of interest on it, and so the more we can get that down, the less interest we pay, the more we can spend that money on hospitals and aged care and the like.
LEVINGSTON:
All right. We might have to delve a little deeper into the pages of the Budget rather than your mate who got 10 minutes in. Ten minutes in. Everald, we've got to wrap it up. Jim Chalmers probably needs to go to bed or something.
COMPTON:
Look, one of the policies I've been trying to sell Jim on is that all blokes over 90 in Australia should get free whiskey, isn't that right?
CHALMERS:
Yes, and a statue!
LEVINGSTON:
Oh my God. That's not a bad point to end on. But my final question is, Jim Chalmers, what were you like with money as a kid? Like were you the kid who got pocket money early and saved it up and was like, ‘One day I'm going to be the Treasurer’?
CHALMERS:
I wasn't saying I was going to be the Treasurer one day, but I remember I saved up for a push bike. My parents were terrific, they said, ‘You save half of it, and we'll fund the other half of a pushy', and I remember doing that. And that involved some difficult choices, but also, because I'm thinking about my kids and pocket money now, my pocket money and my sisters’ was 10 cents for every year, so you know, if you're 11, you got $1.10, if you're 9, you got 90 cents. And so thinking about inflation, I've been trying to work out, talking with Laura about, what that does mean for our 9, 7 and 5‑year‑old if we were to do that today, how would we have a sort of an age calculation on their pocket money?
But yeah, I remember, 10 cents a year, and I remember I had to save up $54.50 because the pushy I wanted was $109.
LEVINGSTON:
Those figures are locked away. You've got a lot of numbers in your head.
COMPTON:
I remember back in the 1930s I used to be able to buy an ice‑cream for one penny, mate. Now what happened; what happened?
CHALMERS:
My fault.
LEVINGSTON:
Jim Chalmers, Treasurer of Australia. Thank you so much.
CHALMERS:
Thank you.
LEVINGSTON:
See you next week, Everald.