Sarah Abo:
Well fresh inflation figures could this morning squash any remaining hopes Australians will see another rate cut before Christmas. To discuss it Treasurer Jim Chalmers joins us from Canberra. Good morning to you, Treasurer.
Jim Chalmers:
Good morning, Sarah.
Abo:
I wanted to ask how you are, we haven’t seen anyone on the Today Show for a long time. Where have you been hiding?
Chalmers:
It has been a few weeks. I’ve missed you too, Sarah, and I’ve missed your mate that’s normally sitting to your right as well.
Abo:
No, nothing to miss about Karlos, don’t worry about him. Look, you have had a bit on your plate obviously, Treasurer, sticky inflation, stubborn rates bringing no relief to homeowners. When will we be out of the woods?
Chalmers:
Well, first of all, the Reserve Bank’s cut interest rates 3 times this year, and that’s providing some really welcome relief to millions of Australians with a mortgage. But we know that people are still under pressure, it’s why we’re rolling out all of this cost‑of‑living relief, it’s why we’re cutting taxes 2 more times, to provide that relief that people need and deserve, at a time where this inflation is a little bit higher than we’d like.
And we expect to see later today the headline inflation tick up a little bit. Most people will be watching the underlying inflation number because one of the main drivers of the inflation number today will be the removal of some of those state energy bill rebates. So we’ll see what those numbers say later today but regardless, more than acknowledge that people are still under pressure. We’re doing something about it. We’re providing cost‑of‑living help in the most responsible way we can. We’re cutting taxes over the next 2 years as well to provide that relief that people need.
Abo:
The issue is I guess this new way of modelling inflation data isn’t necessarily going to help in terms of actually lowering rates. In fact we’re more likely to see a hike, aren’t we?
Chalmers:
I don’t make predictions about future movements in interest rates. The market doesn’t expect an interest rate hike that you’ve just put in your question, but again, you know, those are not predictions for me to make.
There is a new way we’re measuring inflation more frequently from the data that comes out today. It’s going to be monthly rather than quarterly, and that will be helpful, that’s a welcome development.
But if you think about the progress on inflation the last few years, we’ve been able to get inflation down very substantially from what we inherited from our political opponents. That’s given the Reserve Bank the confidence to cut interest rates 3 times already this year, and that’s, as I said before, providing welcome relief for people with a mortgage already.
Abo:
Treasurer, you know though that spending is completely out of control. I mean you’re trying yourself to cut $5.6 billion in terms of bureaucratic expenditure after the public service grew 38 per cent over 4 years. It sounds exactly what your scolded the Opposition for during the election campaign. A bit hypocritical, isn’t it?
Chalmers:
Oh, I don’t agree with any of the characterisations in your question, Sarah.
Abo:
It’s exactly what you did during the election campaign.
Chalmers:
No, it’s very different. I’ll tell you why it’s different.
Abo:
Well you’re making cuts, aren’t you?
Chalmers:
Well if you let me explain why it’s different, Sarah. What the Coalition was proposing was to cut tens of thousands of jobs. What we are proposing, or what we’re asking departments to suggest is ways to reprioritise their lower priority spending so that we can invest it in higher priority areas.
Abo:
Like?
Chalmers:
We’re not asking every department to cut their staff or to cut their budget by 5 per cent. And this is not an unusual feature as we get closer to budgets. In fact it’s been a feature of all of the budgets that we’ve handed down.
We’ve tried to reprioritise lower priority spending so that we can invest in strengthening Medicare, for example, or cutting income taxes 3 times. And that’s what responsible economic management looks like. It means working out where our investments, where public spending can make the biggest difference, and making room in our budget –
Abo:
Okay, so are you conceding, Treasurer –
Chalmers:
To do that.
Abo:
Then that you might not be able to? I mean it was a former Finance Department chief who reckons you’ll have to cut 5 per cent in every department to make that kind of saving. Is that unlikely then?
Chalmers:
What is likely in the Budget in May is you will see what you’ve seen in all of our budgets so far. There will be savings, and they will be made in order to invest in high priority areas, like providing more bulk billing, building more Urgent Care Clinics, cutting taxes for workers, providing student debt relief.
That’s what responsible economic management looks like, Sarah. It’s all about reprioritising in the budget. We found $100 billion of savings, we’ve delivered 2 surpluses, we’ve got the deficit for last year down considerably, we’ve got the Liberal debt down by almost $200 billion, and those are all important outcomes. But most important of all it’s about making room for what our country and our people desperately need, including in areas like Medicare, in areas like income taxes and student debt relief, and that’s what we’ve done in all of our budgets. It’s not especially unusual or –
Abo:
But if you’re cutting, Treasurer, unemployment goes up. I mean if you were to cut the $5.6 billion a year, which would be the highest since the 1980s as well.
Chalmers:
Well in your questions today, Sarah, you’ve suggested that we’re spending too much and now that we would be spending too little if we went ahead with some of these suggestions.
Abo:
Because it’s unlikely that you’ll make the cuts is the point because of all the spending. I mean they need to come but how are you going to do them, where are they going to come from?
Chalmers:
Well look at the last 3 years, Sarah. We’ve found $100 billion in savings, at the same time as we’ve cut taxes 3 times and delivered 2 surpluses. And again, that’s what responsible economic management is all about, it’s about going to the departments and agencies and working out where their lower priority investments and spending are so that we can make room for higher priority investments.
It’s not doing as our opponents wanted to do, which was to slash and burn tens of thousands of jobs. We’re not asking every department to cut their staff or their budget by 5 per cent. We’re asking for suggestions of lower priority areas of spending so that we can direct that where public investment can do the most good. That’s a good thing. I think that’s what people expect from us.
Abo:
All right, we’ll see if there are in fact any job losses. But moving on very quickly. You are taking aim at the Coalition’s energy plan this morning. You reckon it will cost $17 billion, compared to how much under your plan?
Chalmers:
Well what the Coalition is proposing by abandoning net zero will push power prices up, not down. And it will swing a wrecking ball through our budget and the economy. And that’s because they have this harebrained plan to subsidise the extension of the least reliable parts of our system, which is the ageing coal‑fired power fleet. And so that will cost the budget billions of dollars.
It will swing a wrecking ball through investor confidence and the economy more broadly. And that’s why what the Coalition is proposing, when it comes to this really important energy transformation, is a recipe for higher prices, less investment and a weaker economy. And that’s what the experts, the analysts, the economists, in this area all agree.
Abo:
All right. We just don’t know how much yours is going to cost overall, do we?
Chalmers:
Well we’ve invested $75 billion so far in the energy transformation, but overwhelmingly the investment will come from the private sector.
Abo:
Fingers crossed. And we have run out of time, Treasurer, I’m sorry. Thank you for joining us this morning.
Chalmers:
Thanks, Sarah.