Sarah Ferguson:
Treasurer Jim Chalmers joins me now from Parliament House. Treasurer, welcome to 7.30.
Jim Chalmers:
Thanks for having me back on your show, Sarah.
Ferguson:
Now, you’ve described the $1.2 billion hit from Cyclone Alfred as a quote, ‘big new pressure’ on the budget. As important as this is, with government spending forecasted about $730 billion this financial year, is emphasising this a form of misdirection ahead of the Budget?
Chalmers:
Of course, it isn’t. What makes it a big new pressure on the budget is that most of the announcements that we made over the course of the last couple of months were already provisioned for in the mid‑year budget update. What makes this different, what makes this $1.2 billion a big new pressure on the budget is the fact that it’s come at us quite late for obvious reasons and so we found room for that in the budget, so it’s a key pressure on the budget. It’s not the only pressure on the budget. There is global economic uncertainty as well, there are other domestic pressures closer to home, but that’s a big new one.
Ferguson:
I want to talk to you about the global environment. You’ve argued today that that the more generalised impact on global trade will be the most severe impact for Australia rather than the impact of individual tariffs. How severe could that be?
Chalmers:
Well, nobody wins from a trade war and especially a trade-exposed country like ours. Our economy relies heavily on exports and so we’ve got a lot of skin in the game when it comes to these really disappointing developments. The escalating trade tensions around the world are really the biggest part now of this global economic uncertainty that we’re not immune from. And so what the Treasury modelled in coming to our view about the impact of the direct tariffs on Australia versus the indirect impact of these escalating trade tensions is that it’s the latter which is much more concerning for us when you consider not just what’s happening out of Washington D.C. but Beijing and elsewhere around the world. We are seeing the breakdown, that the rules of global economic engagement are being rewritten. We can’t pretend otherwise. These are not surprising changes, but they are seismic changes. It’s a whole new world in the global economy and that will impact our own economy and our own budget.
Ferguson:
Could it impact Australia’s ongoing fight against inflation?
Chalmers:
I think, as the Productivity Commission made clear today and as the OECD made clear overnight as well, 2 of the consequences of escalating trade tensions are slower growth and higher inflation. And again, it would be strange to conclude that we’d be immune from that. When these tariffs are imposed and when there’s the retaliatory nature of these escalating trade tensions, we do expect higher prices, that’s one of the obvious consequences of tariffs. We’ll see that around the world and we are at risk of seeing it here.
Ferguson:
Now in the near term. You spoke today about helping with cost of living in the budget, as you have a few times recently. Does the inflationary impact of those that cost‑of‑living relief stifle the likelihood of further interest rate cuts?
Chalmers:
I wouldn’t have thought so, Sarah, but again, I don’t want to give free advice to the independent Reserve Bank, but what we’ve been very careful to do in our first 3 budgets, and we’ll be careful again in our fourth Budget, is to provide cost‑of‑living help in the most responsible way that we can. One of the reasons why we’ve been able to get the budget in much better nick at the same time as we provide this cost‑of‑living relief over the last couple of years, is we’ve worked out the most responsible way to go about it and we’ll do that again.
Ferguson:
Now at the same time, there are some big energy price rises expected in some parts of Australia in July – from July, you’re going to have to find room for a new round of subsidies to deal with those, aren’t you?
Chalmers:
Well, there’ll be cost‑of‑living help. I’m not going to detail the nature of that on the programme tonight. I’m hoping you’ll have me back on Budget Night, Sarah and we can talk about these things in almost exactly a week’s time. There’ll be cost‑of‑living help in the budget. It’ll be meaningful but it will be responsible. It will recognise that even though we’ve made a lot of progress in our economy together, the Australian economy has genuinely turned a corner. We’ve got growth rebounding solidly, inflation down, real wages up, unemployment low, we’ve got the debt down – these are all good developments but people are still doing it tough and that’s why there’ll be cost‑of‑living relief in our fourth budget, just like there was in our first 3 but it will be really responsible once again.
Ferguson:
I’m not expecting you to detail them, but do you expect bipartisan support if you do roll out subsidies for energy relief?
Chalmers:
Well, I wouldn’t have thought so, Sarah, but it remains to be seen. I think one of the most surprising, most disappointing elements of this parliament has been whenever we’ve tried to help people with the cost of living, the Coalition under Peter Dutton has opposed that. They didn’t want us to provide a tax cut to every taxpayer, energy bill relief to every household, cheaper medicines, rent assistance, cheaper early childhood education, getting wages moving again, Fee-Free TAFE. It beggars belief, frankly, in the context of the pressure that people have been under that Peter Dutton has opposed all of that and that means people would be thousands of dollars worse off today if he had his way and they’ll be worse off still if he wins the election.
Ferguson:
Won’t it play out like this? You’ll challenge Peter Dutton to promise that he won’t reverse those subsidies if he wins government. That’s how it’ll go, won’t it?
Chalmers:
Well, let’s see what happens. We’ll announce our cost‑of‑living relief in the Budget, that won’t be the only element of the budget. A big part of the budget will also be about making our country and our economy more resilient to all of this global economic uncertainty but we would obviously ask the Opposition under Peter Dutton to do away with this habit that they’ve formed of opposing all of our cost‑of‑living help. Everyone in the parliament recognises that people have been under pressure the last few years, the difference is only the Labor Party has been there for people to help them with the cost of living and that cost‑of‑living help is rolling out right now despite the Coalition, not because of it.
Ferguson:
Now, in 2023, you instructed the Productivity Commission to carry out an inquiry into early childhood education. The result of that review that you requested was a recommendation for a commission to monitor performance and to increase accountability of the system. Where is that commission?
Chalmers:
We’re in the process of acting on the recommendations of that Productivity Commission inquiry. You know that we’ve acted on some of them. Already, the three‑day guarantee, for example, is one of the ways that we’ve acted on that –
Ferguson:
And in terms of the commission, will you be supporting a commission being formed?
Chalmers:
Well, we’re certainly supporting a much better way to make sure that providers are adhering to the national quality framework. And I know why you’re asking about this, Sarah. I thought, frankly, as a parent, some of the revelations on the ABC in the last day or so when it comes to early childhood education were very distressing. And distressing as well for the hundreds of thousands of people who work in the sector and do the right thing by our kids to see that some centres and some providers are falling short is very distressing and very disappointing. Now, we will work closely with the states and territories to make sure that people are meeting that national quality framework. As the Prime Minister said today, if there’s more work that needs to be done, of course we’ll do that. And the revelations from that report on the ABC will help us make sure that providers are up to the mark.
Ferguson:
Let me just come back to the question, though. In terms of a commission, you’re talking about better standards, but is that commission something that you’re going to roll out or not?
Chalmers:
Well, I think, as I said in the answer the first time you asked it, Sarah, we’re implementing the recommendations of the PC. We’re considering the best way to do that, but in the first instance, this is about the national quality framework, administered by the states and territories. But it’s a national regime and we want to make sure that kids are being treated appropriately in early childhood education. So we’ll continue to work with the states and territories to make sure that’s the case. Most centres, most providers, most educators, the overwhelming majority are doing the right thing by Australia’s young people. Where that’s not happening, we’ve all got a role in making sure that that improves.
Ferguson:
We’ll come back to it. Treasurer Jim Chalmers, see you at the Budget. Thank you very much indeed for joining us.
Chalmers:
Thank you, Sarah.