SARAH FERGUSON:
Is today’s speech a rehearsal of the arguments we will hear between now and the election for why the government should be re‑elected?
JIM CHALMERS:
It is an update on the progress that Australians have made together. It has been a lot of progress made, but we know as a government that it’s not mission accomplished, because people are still under pressure.
So many of the numbers that we track closely are traveling in the right direction, but we also know that those numbers don’t always capture the way people are feeling and faring in the economy, in real communities right around Australia, and so we are realistic about the pressures that people are still under, but we’re optimistic about the future. One of the reasons we are optimistic about the future is because whether it’s inflation halving or creating a million jobs, getting real wages moving again, giving everyone a tax cut, delivering 2 surpluses, this shows that there has been a lot of progress made.
FERGUSON:
Now what you’re referencing there, as you did in your speech, are really the perils of incumbency in this environment, in a cost‑of‑living crisis, you said today, there’s still more to do and plenty to lose if we don’t do more. What more can you do between now and the election?
CHALMERS:
People know what our priorities are for the remainder of this term and for a second term, if we’re fortunate enough to get the permission from the people to continue running the economy in their interests. Obviously we want to do more when it comes to housing. We’ve got to get the energy transformation right. We’re making our economy more competitive and more productive.
But we’re maintaining, overwhelmingly, a primary focus on fighting and beating inflation and helping people with the cost of living. The tax cuts, which are rolling out right now are boosting confidence in our economy and helping people with the cost of living. There are other ways that we’re helping too.
What we’ve said, and what I say again tonight to all of your viewers, Sarah, is, if there’s more that we can responsibly do in future Budgets, of course we’ll look to do that, but we do that within the prism of the responsible economic management, which has been the defining feature of this Albanese Labor government.
FERGUSON:
Let’s talk about things that you could do. One of the key things keeping headline inflation down is your energy bill relief. Will you extend those measures to prevent that figure jumping up again next year?
CHALMERS:
Our decisions on those sorts of things, Sarah, will be governed by what we can afford to do and where we can be the most helpful to people who are still doing it tough.
FERGUSON:
What are you thinking about now? Looking forward?
CHALMERS:
From Budget to Budget, we make decisions about cost‑of‑living help. We’ve done that in the first 3 Budgets, and we’d do that in a fourth Budget as well. That shouldn’t be especially surprising, but those energy rebates are already rolling out. They’re rolling out right now. They’re making a meaningful difference. But they also don’t explain the whole moderation that we’ve seen in inflation in our economy.
Our inflation has come off, not just in a headline sense, but underlying sense, non‑tradeable inflation, monthly inflation. All of that is coming down in really welcome and really encouraging ways. Our policies are part of that, but they don’t tell the whole story.
FERGUSON:
But at the same time, you don’t want to see that headline figure bounce back up again. So are you contemplating keeping those energy measures in place?
CHALMERS:
We’re contemplating a whole range of cost‑of‑living options, but we haven’t come to a concluded view on any of those.
FERGUSON:
The question here is about the energy relief. Are you actively considering keeping them in place?
CHALMERS:
We’re actively considering cost‑of‑living relief in a number of different forms. We haven’t come to a concluded view on that.
Part of the reason for that is because we’ve already got rolling out energy bill relief and tax cuts and cheaper medicines and rent assistance, and all of the ways that we’ve responsibly budgeted for the cost‑of‑living help, which is helping people right now who are doing it tough.
So that’s our focus is rolling that out. I give you the same answer I’ve given you on other occasions, Sarah. From Budget to Budget, we contemplate and consider different options. We haven’t come to a concluded view on that one.
FERGUSON:
But it’s under consideration?
CHALMERS:
Cost‑of‑living relief is under consideration more broadly. I’m not prepared to come at any specific options, because we haven’t come to any decisions about that which might be in the March Budget or otherwise.
FERGUSON:
Why did all your work with Treasury on the energy bill relief fail to convince the Reserve Bank that the impact on inflation of those measures was justification for them to cut rates?
CHALMERS:
I’d be very careful about the assumptions in that question, Sarah.
Our motivation in providing energy bill relief was to take some of the sting out of these bills for people who are doing it tough, and we’re very pleased to be able to afford to roll out that help.
We’ve been able to do that at the same time as we’ve got the Budget in better nick and Governor Bullock has said that our 2 surpluses are helping in the fight against inflation as well, and we’re also investing in the future.
There will always be conversations in the political press and occasionally in the economic commentary, which tries to ascribe different kinds of motivations to government. I want to be clear to your viewers that what we’re trying to do here is provide help to people, and we are.
FERGUSON:
I don’t think the question excluded the possibility that you were doing 2 things at once, but you spoke a lot yourself about the effect on headline inflation of those cuts, so I’m just wondering why it didn’t convince the Reserve Bank, who’ve continued to say that they will look past that energy relief in order to make its decision on the next rate cut.
CHALMERS:
A couple of important factual points about that.
First of all, we factor in those energy bill rebates in the Treasury the same way that the Reserve Bank does. There’s not a difference in how those things are factored into forecasts.
The second thing is, the Reserve Bank in the last couple of weeks have actually lowered their forecasts for inflation, and not just headline inflation, but underlying inflation as well.
That’s the important point which is too frequently missed, and that is, it’s not just headline inflation coming down. It’s not just those parts of inflation which are impacted by our cost‑of‑living help. It’s also underlying inflation that’s coming down in welcome and encouraging ways. It actually came down quite substantially in the last data. That’s a fact which is too frequently ignored.
FERGUSON:
So we shouldn’t look at your forecast that you referred to in the speech today and read into that that you have already made decisions about the energy bill relief for next year?
CHALMERS:
No, you shouldn’t make that conclusion. You shouldn’t read that into the forecasts which were alluded to today in the Ministerial Statement on the economy. We’ll update our inflation forecasts in the usual way in the mid year update.
But it’s another important opportunity, Sarah, to remind your viewers that the Treasury forecast that we would get back into the inflation targeting band of the Reserve Bank between 2 and 3 per cent by the end of this year, a lot of people said that wasn’t going to happen, and it has happened. It’s the first time we’re in the inflation targeting band since 2021 and that’s another indication that we’re making progress in the fight against inflation. It’s not mission accomplished, because we know people are still doing it tough, and that’s why the responsible way that we’re providing this cost‑of‑living relief and getting wages moving again is so important.
FERGUSON:
Now economists have set out the scale of the problem that you face in terms of the way people feel about their circumstances, which you alluded to earlier. They’ve identified a 10 per cent drop in living standards since 2021, 8 and a half per cent drop since the election. How are you planning to convince voters that they are better off than they feel?
CHALMERS:
First of all, as I said before, we don’t pretend that the pressures that have been on people the last couple of years have just suddenly disappeared, even though we’re making good progress in the aggregate numbers. I acknowledged before that sometimes the aggregate numbers don’t always perfectly reflect how people are feeling and faring in the economy.
But we need to recognise that when we came to office, people were already going backwards. Real wages were falling very substantially when we came to office. Inflation was much higher, more than double what it is now. And so people in their household budgets have got a lot of ground to make up. That’s why our efforts, the way we are managing the Budget and the economy, providing that cost‑of‑living relief, getting real wages moving again for 4 consecutive quarters, all of that is absolutely vital to catching up the ground that people have lost since they started going backwards under our predecessors.
FERGUSON:
Would you at least agree that there is no leeway for you to deliver the traditional election budget full of giveaways and sweeteners?
CHALMERS:
I’ve said before, and I meant it, happy to say it again. People shouldn’t think that the March Budget will be some kind of free for all of public spending.
As I keep returning to we’ve made very good progress in the Budget. We don’t want to throw that all away. We want to continue to strike the best balance.
Fighting inflation is our highest priority, doing that without ignoring the risks to growth, trying to preserve as many jobs as we can. We’ve been successful now in managing all of those risks and balancing all of those priorities.
People should expect us to try to continue that in a Budget in March.
FERGUSON:
Treasurer, thank you very much indeed for joining us.
CHALMERS:
Thanks for your time, Sarah.