Sally Sara:
Sally Sara with you for Breakfast. Well slightly higher than expected inflation in January has kept pressure on the Reserve Bank to inflict another interest rate hike, and increased scrutiny of the federal government’s economic management. Jim Chalmers is the federal Treasurer and joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks very much, Sally.
Sara:
What’s your message to Australians who may be worried that inflation is not under control and could result in another interest rate rise?
Chalmers:
Well inflation was steady in January but it’s higher than we’d like. We’re upfront about that. I don’t make predictions about future movements in interest rates, but I assure your listeners that the government is very focussed on this inflation challenge. It’s a big part of our thinking in the lead up to the Budget in May.
Sara:
Why are the government’s measures not working?
Chalmers:
Well don’t forget, Sally, that when we came to office inflation was higher than 6 per cent and it was rising quickly, it peaked up around almost 8 per cent in 2022. So it’s much lower than that now. I know that that’s not especially comforting for people that we acknowledge are still under cost‑of‑living pressure. But we have made a lot of progress together as a country since the peak of inflation in 2022, but it’s higher than we’d like for longer than we’d like and that means there’s more work to be done.
Sara:
Yesterday you said you were working on making the upcoming Budget the most ambitious delivered by the Albanese government. In what way will it be ambitious?
Chalmers:
Across the board. This will be the government’s fifth Budget, and in all of the first 4 there was a level of ambition in terms of making the budget more sustainable, making our economy more productive, making progress in important areas like cutting income taxes 3 times. We are an ambitious government, the Budget will be an ambitious budget. It will recognise the pressures on people but also the pressures more broadly on our economy, whether it’s the inflation challenge, this long‑standing productivity challenge we’ve had in our economy, all of this global economic uncertainty. These are the key factors and pressures that we’re focused on as we get closer towards making some key decisions about what will be and won’t be in the Budget in May.
Sara:
Treasurer, you’ve said there will be more savings. When it comes to government spending, is there scope for significant cuts in this Budget?
Chalmers:
There will be more savings in the Budget, we’ve made that clear. But there were also savings in our first 4 budgets. In fact, this government has found $114 billion in savings. I’s one of the reasons why we’ve been able to help engineer the biggest positive turn around in the Budget since Federation, more than $230 billion positive turn around in the Budget, $176 billion less debt, a couple of surpluses in the first term. All of this is about responsible economic management. People can expect to see more of that in May, and as part of that there will be more savings.
Sara:
On savings, earlier this morning we had the Shadow Treasurer Tim Wilson on the program. This was his proposal on savings.
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Sara:
What’s your response to that? Is fraud in your view a major driver of inflation?
Chalmers:
Well, we’re cracking down on the CFMEU in ways that our predecessors did not, and we’re taking important steps in the NDIS in ways that our predecessors did not. When we came to office, growth in spending on the NDIS I think was up around 22 per cent. We’re getting it down closer to between 5 and 6 per cent. I think the Actuary said that because of our efforts the NDIS is spending something like $45 billion less than what was anticipated when we came to office. So, we’ve made good progress but there is more work to do there.
I commend here Mark Butler and Jenny McAllister who are doing an absolute mountain of work, including with the states, to make sure that the NDIS delivers on its key objective which is a standard of care and support for people who need and deserve that care and support in this country. Fraud is a part of the work that Jenny and Mark are engaged in. Again, we’ve made some good progress there but there’s more work to be done.
Sara:
You’re listening to Radio National Breakfast, my guest is the federal Treasurer Jim Chalmers. Earlier this month, the government introduced legislation to parliament to increase the tax rate on superannuation accounts with very high super balances. We’ve heard from the Greens that they are in talks with the government on the Bill. Can you give any update on those negotiations ahead of parliament’s return next week?
Chalmers:
The legislation does 2 things. It does make the concessional tax treatment fairer for people with the biggest balances, but it also increases the low‑income super tax offset for people with the lowest balances.
This is about making the super system fairer from top to bottom. We have had good discussions with the Greens. I’ve personally engaged with my counterpart in the Greens, Nick McKim, there’s been discussions between the Finance Minister and the Greens, and at office level. We’re not there yet, there’s not an agreement there yet, but I want to thank the Greens for the constructive way that they’ve gone about these discussions.
And frankly, I think the Coalition should support this too. If they care about the intergenerational issues in our tax system, if they care about making it fairer for people with low balances, then they should support the legislation. Because if they vote against this legislation they will be voting for less super for people on low incomes, and they will be voting for even bigger tax breaks for people who have $10 million or $20 million or $30 million in their super already.
This is an important intergenerational issue. It’s an issue of fairness. And it’s an issue of making sure that our superannuation system delivers on its purpose, which is a decent retirement income for as many Australians as possible.
Sara:
Just finally, you’ve said the government is considering ways to make the tax system fairer. Do investors have the right to know if you’re going to change the rules on capital gains tax discount on investment properties in the Budget? How soon can you confirm your final position?
Chalmers:
Well, we haven’t changed our policy on tax, which is to cut income taxes 2 more times. We do understand that there are intergenerational issues in the tax system and in housing. We’re dealing with them in other ways, including the super change, the efforts to build more homes, the 5 per cent deposits for people buying their first home. And as you know, we’re considering other options for the Budget, as we always do at this time of the year. We don’t finish the Budget in February, we finish the Budget in May, and any next steps in any of these areas would be a matter for Cabinet in the usual way.
Sara:
Treasurer, thank you very much for joining me this morning.
Chalmers:
Thanks very much, Sally.