SALLY SARA:
A multi‑billion dollar blowout to the federal Budget is expected over the next 4 years. That’s because the federal government is expecting a $100 billion downgrade in mining exports over the coming years.
To get a clearer picture of the budget ahead of the release of the Mid‑Year Economic and Fiscal Outlook on Wednesday, joined now by the federal Treasurer, Jim Chalmers. Jim Chalmers, welcome back to Breakfast.
JIM CHALMERS:
Thanks very much, Sally. How are you?
SARA:
Very well. Before we get to economics, the remaining members of the Bali Nine have flown home after almost 20 years in jail in Indonesia. Were there conditions placed on their release in Australia? Were they agreed to between Australia and Indonesia?
CHALMERS:
Not as I understand it. This was an act of cooperation and commitment and compassion from President Prabowo and we’re very grateful to him for that.
These guys committed some serious offences, but they’ve been in Indonesian jails for the best part of 2 decades now. It was time for them to come home, and I’m pleased that they’re home.
SARA:
Would you describe the relationship between Australia and Indonesia given this release of the Bali Five?
CHALMERS:
We’ve shown a capacity to work closely together, and on a range of fronts, not just this one. Certainly on the economic front I work very closely with the Finance Minister, Sri Mulyani, and my colleagues work closely with their counterparts, and I think this is an indication really that President Prabowo has done a good thing, the right thing, and we’re very grateful to him for that.
SARA:
Well, let’s get back to the dollars and cents, turning to the Mid‑Year Economic and Fiscal Outlook. The downgrade in mining exports is eye‑watering. How heavily will this affect your next Budget?
CHALMERS:
We’ll put out the mid‑year Budget update on Wednesday. I will do that with the Finance Minister, Katy Gallagher, and what people should expect is that responsible economic management will be the defining feature of that update, just like it’s been the defining feature of our government.
It will show the really quite remarkable progress we’ve made in the budget since we came to office, the biggest ever positive turnaround in the budget, a couple of surpluses, and also making room for some of these pressures. That’s a big part of what we’ll be doing on Wednesday, accommodating the pressures on the budget, accounting for them, and one of the big ones is the weakness in the Chinese economy, and that does have implications for us, for our economy and for our budget.
As you rightly identified we’ll be downgrading mining exports by about $100 billion, we’ll be downgrading company taxes by about $8.5 billion over the next 4 years.
What that shows is that the global economy’s uncertain, and that’s weighing pretty heavily on our budget and on our economy more broadly.
SARA:
So how are you going to deliver cost‑of‑living relief, and are those measures still on the table given how much the context has changed?
CHALMERS:
The focus for us in that cost‑of‑living relief is rolling out the relief that we’ve already announced and already budgeted for.
People are still getting energy bill rebates, people are getting those tax cuts, every taxpayer’s getting those, cheaper medicines, student debt relief, rent assistance, cheaper early childhood education, getting wages moving again, all of that is rolling out, and what it shows is our ability to provide that cost‑of‑living relief at the same time as we manage the budget in the most responsible way that we can.
Those 2 surpluses that we delivered and our ongoing efforts to get the budget in as good a nick as we can in the face of all of these pressures means that there is much, much less debt in the budget than we inherited a couple of years ago.
SARA:
But these numbers are blowing out significantly. You’re saying that you’re going to accommodate existing cost‑of‑living measures. Does that mean that there will be no new cost‑of‑living measures in the Budget?
CHALMERS:
This Budget update on Wednesday is not really an opportunity for big new policies, there will be some policy accounted for including, for example, the game‑changing announcement that the Prime Minister made last week when it comes to early childhood education, but we don’t typically use the mid‑year Budget updates to announce big new policies. That’s typically the job for the Budget itself, in our case in March.
What people will see in this budget is we’re still rolling out that cost‑of‑living relief, we’re trying to make room for these big pressures, whether coming at us from around the world, or whether it’s about doing the right thing by our veterans, which we proudly do. You will see all of that tallied up and accounted for on Wednesday.
SARA:
Given how much the numbers have changed, would it be responsible for you and for the government to announce new cost‑of‑living measures in the Budget next year?
CHALMERS:
Responsible economic management is about really doing 3 things.
It’s about providing relief where you can afford to do that. We’ve been able to do that over the first couple of years and remember our political opponents didn’t support that cost‑of‑living help.
The second part of it is trying to repair the budget, and those 2 surpluses are part of that story, getting debt down, paying less interest on the debt, that’s the second part of it.
And also making sure that we continue to reform our economy to make it more productive and dynamic.
Those are the 3 parts of our task. We’ve shown an ability to weigh all of those things up, to deliver on all 3 fronts simultaneously, and people should expect that to continue in the next Budget like it did in the first 3.
SARA:
So despite the economic situation, you would still offer new measures next year?
CHALMERS:
Obviously there will be new measures in the Budget, but the nature of those, we haven’t taken decisions on. Every budget has new initiatives, whether they’re cost of living or in some other way. What we try and do is make the right economic decisions for the right economic reasons, and a lot of those decisions for March haven’t yet been taken.
SARA:
Do these numbers, will they change some of those decisions, do you think, impact them heavily?
CHALMERS:
Of course. What we try and do in every budget and every budget update is to factor in the conditions that we confront, near‑team and longer term, and in this update on Wednesday, the big pressures are these pressures we’ve been talking about – from a slower Chinese economy, that’s a big one, we’ve been talking about some of this unavoidable spending in areas like veterans, early childhood, Medicare, the PBS, accounting for all of that.
In every budget and in every budget update we weigh up the conditions that we confront, we make the most responsible decisions that we can, and people should expect to see that on Wednesday, but also in the Budget in March.
SARA:
You’ve delivered 2 consecutive budget surpluses. Does that come to an end next year?
CHALMERS:
People shouldn’t expect there to be surpluses in the mid‑year Budget update, we’ve been upfront about that on a number of occasions already, we’ve been upfront about some of the reasons why in some of the years there’s a little bit of slippage in the budget but not every year, and that’s the inevitable consequence of some of these pressures that you and I have been discussing this morning.
SARA:
Treasurer, just on a separate issue, on nuclear energy, energy experts have had a lot of questions about the Opposition’s nuclear energy policy.
CHALMERS:
Sure have.
SARA:
We’ll be speaking later with Tony Wood from the Grattan Institute, he’s labelled the Opposition’s modelling as ‘heroic’. He does say though that Australia needs to have an adult conversation about nuclear and consider it in the mix down the track. Are you open to that?
CHALMERS:
What we saw on Friday was a modelling meltdown from the Coalition and you’re right to say that people have got a lot of questions and that’s because what the Coalition attempted on Friday raises more questions than answers and it’s just a shambolic attempt to paper over the fact that the Coalition’s is a recipe for less growth, less energy and higher prices.
Some of the most basic questions: what does it mean for bills? How big will the off‑budget funds be? Why don’t they think they need any transmission? All of these questions have been unanswered, and that’s why the energy experts and the economists have been so scathing about this shambolic economic insanity that is Peter Dutton’s nuclear fantasy.
SARA:
Treasurer, New South Wales Police are investigating an Islamophobic graffiti attack in Western Sydney on the weekend. The National Imams Council says there’s been a surge in these kind of incidents and a failure to address them effectively. Is the government doing enough on this issue?
CHALMERS:
Our responsibility as leaders is to try to calm these divisions where they exist and not inflame them or make them worse.
We’ve shown a willingness, whether it’s anti‑Semitism or Islamophobia, to provide the necessary resources to try to keep people safe. But what we saw with this graffiti in Western Sydney was completely disgraceful, completely unacceptable, it was cowardly, and there’s no place for it.
We don’t want to see the problems of the world tearing our communities apart. There’s too much of this and we all need to come together at this time because people are genuinely worried about their own communities and their own safety.
SARA:
Jim Chalmers, thank you.
CHALMERS:
Thanks very much, Sally.