SHARRI MARKSON:
Treasurer, thank you so much for your time this evening.
JIM CHALMERS:
Thanks very much, Sharri, for having me back on your show.
MARKSON:
Now we’re in a cost‑of‑living crisis. The RBA Governor says that people are skipping medical appointments, others are sending their kids to school without lunch. Families are even living in cars. What will you do as Treasurer to help vulnerable Australians in tomorrow’s Budget?
CHALMERS:
The main motivation behind this Budget is people doing it tough. We want to do more than just acknowledge that things are difficult for people right now. We’re actually doing something about it. So, there’ll be cost‑of‑living relief in the Budget. There’ll be a tax cut for every taxpayer, but there’ll be additional cost of living help on top of that as well, at the same time as we try and build much more housing, because that’s one of the reasons why people are under so much pressure, that absence of housing.
MARKSON:
Look, you write at the top of your notes the words 41, the first 2 digits of the Logan postcode where you live. You’ve just spoken about tax cuts. You’ve said that they amount to about $36 a week. The stage 3 tax cuts that will take effect from the 1 July. Do you worry that this won’t be enough to lift people out of the sort of extreme financial stress that they’re suffering?
CHALMERS:
That’s why there’ll be more than the average of 36 dollars a week. I think that’s really important. That cost of living help that will come from that tax cut for every taxpayer right up and down the income scale. All 13.6 million Australian taxpayers will get a tax cut, and 84 per cent of those taxpayers will get a bigger tax cut than they were going to get before under the old stage 3 plan from our predecessors. But tax cuts are not the only cost of living help in the Budget. There’s more help on top of that, and that’s because we recognise that people are doing it tough. And really the centrepiece of this budget, it will be a responsible budget, but the centrepiece will be cost of living help at the same time as we invest in the future of our economy.
MARKSON:
Can you be a bit more specific tonight? You’re handing down the Budget tomorrow. What is the centrepiece cost of living help that Australians who are struggling will receive tomorrow?
CHALMERS:
People will see it in the Budget when we announce it tomorrow evening. But we know what the pressures are in our economy. This inflation, which has been a feature of our economy since before we were elected and continued after, is really the main thing that is putting people under such pressure. We know that, and that’s why really the main purpose of the Budget tomorrow is to provide those tax cuts for every taxpayer to give additional cost‑of‑living relief, because we recognise that people are under really quite extreme pressure, as you are right to outline, and we’re going to do something about it.
MARKSON:
Well, on inflation, the Treasury has a more optimistic outlook than the RBA. The Treasury forecasting that inflation by the end of the year will be under 3 per cent, around 2.75 per cent, while the RBA has it at 3.8 per cent. Of course, Treasury Secretary Steven Kennedy sits on the RBA board. So, how do you explain this discrepancy between the Treasury and the RBA forecasts on inflation?
CHALMERS:
It’s very easy to explain, Sharri, and I’m glad you’ve given me the opportunity because our political opponents either don’t understand this, which is troubling, or they’re lying about it, which is even more troubling, that the main difference between the forecast from the Reserve Bank and the Treasury is that the Treasury’s forecasts take into consideration the policies in the Budget. Now, we speak with the Reserve Bank Governor from time to time about our settings in the Budget. We’ve been able to give her a briefing about what’s in the Budget, but because of the timing of the Reserve Bank’s forecasts, they weren’t able to include our policies in those forecasts that they released last week. And so the main difference is not necessarily a difference of opinion, but a difference of timing. And so because Governor Bullock released hers before the Budget, and because ours will be released with the Budget, it means it can take into consideration the spending restraint that we’re showing, the way that we’re designing our cost of living help. Our Budget will be part of the solution to this inflation challenge, not part of the problem. The Budget will put downward pressure on inflation, not upward pressure on inflation. And that’s why the Treasury forecasts are different, because they can take all of that into consideration.
MARKSON:
So, just to clarify that, are you saying that the Budget measures will bring down inflation by up to 1 per cent?
CHALMERS:
We’re saying that the design of our cost‑of‑living policies, combined with our spending restraint, the fact that we have been banking such a big proportion of the upward revenue revisions in the near term in the Budget, all of this combined, the really responsible and restrained way we’ve gone about things, means that we are putting downward pressure on inflation in the Budget. The Treasury has been able to factor that in because it’s got all of the effects of all of our policies, including our cost‑of‑living policies. The Reserve Bank timing of their forecast didn’t allow for that, and that’s the main reason for the difference.
MARKSON:
So, if you’re saying that the Budget helps the fight against inflation, does the Budget therefore make a rate rise this year less likely?
CHALMERS:
Look, I focus on my job rather than the Reserve Bank’s job. Obviously, they come to their own decisions about interest rate movements. They come to those decisions independently. I don’t tell them how to do their job and they don’t tell me how to do mine, and that works just fine I think. My focus is on getting inflation down as soon as we can. We all want to see inflation moderate further and faster. We’ve made really good progress together. Inflation is almost half what we inherited when we came to office. We’re actually ahead of the inflation forecast that we had in the last Budget update. So, we’ve made some welcome and encouraging progress on inflation, but it’s not mission accomplished because people are still hurting. That’s why the Budget will be so focused on the cost of living. And it’s also why it won’t be a slash‑and‑burn budget, because people are under pressure and the economy is soft. We can get on top of inflation without slashing and burning the Budget, and you’ll see that in what we release tomorrow.
MARKSON:
Treasurer, you’ve indicated that you’re going to give substantial energy bill relief in tomorrow’s Budget. That that will be one area of cost‑of‑living relief. Of course, that is welcome. If you reduce the price of energy, there’s a reduction in that component of the CPI, which is what you’ve been speaking about. But it also means that people will have more money in their pocket, which they could spend in the economy and then could raise inflation. How do you balance that risk?
CHALMERS:
First of all, people have to wait and see what extra cost of living help is in the Budget. But if you look back to the energy bill relief that we provided last time in last Budget, instead of energy prices going up in the year to March by around 15 per cent, they went up by 2 per cent. And so we made a difference. And that was consistent with inflation moderating quite substantially, which I think is the main reason why I wouldn’t agree with those who say that that kind of relief, getting energy bills down, adds to broader inflationary pressures in our economy. What we’ve seen in the past is it actually puts downward pressure on inflation, not upward pressure on inflation. And without pre‑empting what is or isn’t in the Budget tomorrow, I think people will see that what we’ve been able to do, and consistent with the Treasury advice, is put downward pressure on inflation with our cost‑of‑living package, without adding to broader inflationary pressures in the economy. There’s more than one way to provide cost of living help. If you mail cheques to people, it’s more likely to be inflationary. There are other ways to go about it which is smarter and which makes sure that we are part of the solution rather than part of the problem when it comes to inflation.
MARKSON:
Now, another initial that you write in your notes, this was reported on in the Sydney Morning Herald today is ‘S‑H’ for steady hand. This is a reminder to keep inflation in check. It’s well known that every minister, particularly in a Labor government, wants to spend in their policy area. Were you prepared to be unpopular with your colleagues to keep spending down, to keep the Budget contractionary?
CHALMERS:
Obviously, we’re prepared to take tough decisions. I don’t take them on my own. I’ve got the Expenditure Review Committee. I’ve got a Prime Minister who takes a very responsible and restrained approach to the Budget. And I’ve got a wonderful colleague in, Katy Gallagher, the Finance Minister, and we all work together. I think the whole of government understands that we’ve got to get on top of this inflation challenge, and that means being restrained, sequenced, targeted with our investments. And so we are able to do that in the Budget that you will see tomorrow. I think there’s always the case in budgets that there are more good ideas than can be funded. Often you can only fund a small sliver of the good ideas that people put to you. I think that’s well understood right across our team.
MARKSON:
Yes, it makes it a very difficult task as Treasurer, being the `No’ guy, I imagine. Look, one of the biggest pressures on your budget is the NDIS. According to the Fin Review, initial estimates said it would only cost around $13 billion. It’s now on track to hit $125 billion in just a decade’s time, in 2034. If it does hit that, it would be 3 per cent of GDP. Why not means test it like the IMF has suggested?
CHALMERS:
We intend for the NDIS to continue as a demand‑driven scheme, and our overriding objective here is to make sure the NDIS can deliver for the people it was designed to help. That’s our primary motivation. In order to do that, we’ve got to make sure we’re getting value for money and we’ve got to make sure that we can afford the growth in the system. Nobody’s contemplating hacking the system back. We’re just talking about managing the growth in the system. I really commend and pay tribute to Bill Shorten, he’s done a mountain of work in this regard and across our cabinet, we’re very conscious that the cost of the NDIS has been growing quickly. It will continue to grow quickly, but we need to make sure that we’re getting value for money for all of those billions of dollars that we’re investing to help people who need and deserve our assistance.
MARKSON:
Look, a centrepiece of the Budget, also a centrepiece of the Albanese Government’s pre‑election pitch is the Future Made in Australia program. This involves investing in select companies, such as the billion dollars in the quantum computing company. As you know, venture capital companies regularly invest in start‑ups that fail or don’t make money. How can the government outperform these professional investors? And why risk $1 billion of taxpayer funds in this way?
CHALMERS:
What you’ll see in the Budget tomorrow, Sharri, is that there are a range of different levers that we are proposing and funding to make the most of this vast industrial and economic opportunity which has been presented to us by the global shift to net zero. And so in order to grab those opportunities, there’ll be a whole range of policies that I’ll announce tomorrow, a very coherent, considered, targeted set of policies. Whether it’s the tax system, whether it’s the kind of investments that you described, whether it’s making sure that we’re attracting and deploying private investment and private capital much more effectively in our economy. You’ll see that it is a much more sophisticated and coherent package.
There are some elements of it which is about grants, but that’s not the whole story. And what we’re trying to do here is not replace private capital with public capital. We’re trying to use the levers available to us as a government to attract much more private capital to invest in opportunities, whether they are industrial or energy or resources, or relying on our skills base to make sure that we can create a new generation of growth and prosperity in this country, which recognises that the world is changing, the pace of that change is accelerating. And we’ve got some pretty handy cards to play to make sure that our people are beneficiaries of that change rather than victims of it.
MARKSON:
Look, you’re hearkening back to a treasurer before you when you encourage parents to have more children. Why are you sending this message to Australians?
CHALMERS:
I’m really pleased you asked me about that, Sharri. I think it’s one of those occasions you’d be familiar with given your long experience in journalism. Sometimes the headline doesn’t really capture the conversation. I was asked whether, in the context of an ageing population, would it be better if birth rates were a bit higher. I gave the same answer that treasurers since Peter Costello have been giving. It’s been uncontroversial for a couple of decades now to make that point. But more importantly than that, I said it costs a lot to have kids and people are making their own choices and I understand those choices. Not for one second do I want to tell people what to do with their own lives, and especially their own family lives. That’s not how I roll, how I go about this job. My job is to make sure that people can make choices if they want to. And that’s why I’m investing billions of dollars in early childhood education, expanding Paid Parental Leave, paying the superannuation guarantee on Paid Parental Leave, so that people have more choices available to them in the context of raising kids being so expensive. I understand that. And so I’m not telling anyone what to do. I’m not giving anybody any free advice about how they manage their own families and make their own decisions. I’m simply making the point that raising kids is expensive and we want to make it easier if that’s what people want to do.
MARKSON:
Treasurer, can we expect another surplus tomorrow night?
CHALMERS:
You have to wait and see, Sharri. We’ve certainly been shooting for that, as you know, not as an end in itself but because getting the Budget in much better nick helps us fund our other priorities. And as I’ve said a couple of times tonight, our big priorities in the Budget, a responsible budget, is help with cost of living and investing in the future, and getting the Budget in much better nick is part of that.
MARKSON:
Look, you reportedly went for a run at the ripe hour of 3:46 a.m. Yesterday. 3:46 a.m. Kevin Rudd as Prime Minister famously only slept for 3 hours a night. How many hours are you managing at the moment?
CHALMERS:
Not a lot of sleep at the moment, Sharri, but I don’t expect people to get the violins out about that around budget time. It’s not unusual for treasurers to only sleep a little bit. And I figure if I wake up early, I might as well make the most of it. So, I go for a very slow trundle too, it’s a good way, I think, to clear the head before a big day.
MARKSON:
All right, Treasurer, I appreciate your time this evening, as you say, before your big day tomorrow. Thank you so much.
CHALMERS:
Thanks so much, Sharri.