TOM ELLIOTT:
Last night was the federal Budget, and here to explain it all and answer our questions is the federal Treasurer of Australia, Jim Chalmers.
Mr Chalmers, good morning.
JIM CHALMERS:
Good morning, Tom, how are you?
ELLIOTT:
I’m good. Thank you for joining us. Now the $300 energy bill subsidy you’re going to pay, is this an admission that the $275 cut to power bills that was promised 2 years ago, that that’s not going to happen anymore?
CHALMERS:
That number was forecast in 2021 about an outcome in 2025. We’re helping people with energy bills right now in 2024, and this is all about substantial cost‑of‑living relief, but responsible cost‑of‑living relief.
There’s a tax cut for every taxpayer in the Budget, there’s energy bill relief for every household, and there’s also help for people with rent and medicines and other cost‑of‑living pressures, because we know that people are under the pump.
ELLIOTT:
Okay. So, we still think that that $275 that Chris Bowen promised, you think that will still occur next year?
CHALMERS:
That is a forecast that was made some years ago about an outcome in the years ahead, and what we’re doing, and what the Budget was all about is providing help for people with energy bills in the here and now, $300 for every household to take some of the sting out of these bills.
ELLIOTT:
Okay. Now you’ve been perhaps unusually for a Labor Treasurer, you’ve had 3 surpluses in a row, in fact it’s been a long time since we’ve had any surpluses from either political party, but we’re going back into deficit next year and for the rest of the forward estimates. Why is that?
CHALMERS:
There’s a couple of reasons for that. First of all, it’s 2 surpluses, and we inherited 2 deficits, and we turned them into 2 surpluses, that’s important, but it’s not an end in itself, it’s how we make room for our priorities and how we get the budget in much better nick.
In terms of next year the deficit for next year was going to be $47 billion and we got it down to $28 billion, so we’re making some progress, and a lot of the spending next year is things that your listeners and any objective observers would say is unavoidable spending. Extending some health programs that would have terminated, extending funding for myGov and government services, as well as the cost‑of‑living package.
So out of the spending that is in the Budget, some of it is unavoidable, all of it is warranted, but overall, we’re making heaps of progress in getting the budget in much better nick, we are avoiding heaps of debt that we inherited from the Liberals and Nationals, and that’s because we’ve been really responsible and really restrained with our spending.
ELLIOTT:
Yeah, but I look at the gross debt and it’s still set to hit $1 trillion next year, and it’s going to keep going up for years afterwards though. So I mean that surely has got to start costing the budget a lot of money in terms of interest repayments?
CHALMERS:
Great question, Tom, because this is one of the big things I focus on. Debt was on a trajectory to breach a trillion dollars this year, and we knocked off $152 billion of that debt so it’s closer to 900.
And to give your listeners a view of the impact of that, because of what we’ve been able to do to get the budget in much better shape, we are avoiding about $80 billion in interest repayments over the next 10 years, and that is really one of the dividends of the way that we’ve managed the budget responsibly, got the place in much better nick, at the same time as we’re providing this cost‑of‑living relief and investing in the future.
ELLIOTT:
Can I ask you about the Made in Australia policy. You’ve picked thus far 3 areas; we’ve got solar panels, we’ve got green hydrogen and we’ve got quantum computing, and I spoke with the Prime Minister about that the other day.
Are you certain that you know the right areas to put billions of dollars of public money into? I mean after all China makes solar panels cheaper than what Australia will ever be able to.
CHALMERS:
We don’t want the supply of solar panels to be dominated by one country, we think that we have an opportunity to make solar panels here, but it’s much broader than that. You mentioned hydrogen, which is a big opportunity for Australia, critical minerals as well, refining and processing and value‑adding to those critical minerals that we are blessed with, also low carbon liquid fuels, manufacturing more broadly and clean energy technology.
It’s not a free‑for‑all of public money, it’s a very robust, very rigorous framework which governs the areas where we’re prepared to make an investment.
Even in those areas where we’re making an investment, what we are trying to do is not replace private investment and private capital, but incentivise more of it, and so in that Future Made in Australia package I announced last night, most of it is actually tax breaks for people who are able to produce renewable hydrogen or value‑add to critical minerals. We’re using the tax system, that is a very robust and very rigorous way of going about it, and it’s governed by a really strict framework.
ELLIOTT:
Yeah, but it still relies essentially upon you or the people that advise you to say these are the areas that deserve public support, no to the car industry, but yes to solar panels.
CHALMERS:
There’s a lot of work that goes into it, a lot of consultation with the private sector, not just government advisers, but I work really closely with the investor community and the business community, as you and your listeners would expect me to do as Treasurer.
And we are confident that the sorts of areas that we are identifying, they will be a big part of the global net zero economy into the future, and our goal here, to really simplify it, is we want to make sure that our people and our communities and our regions are big beneficiaries of the way that the world is moving to net zero.
And because we’re blessed with these opportunities; hydrogen, critical minerals and other opportunities, we need to make the most of it, and that involves some public investment, but we need to attract private investment to make it happen, and that’s how the plan is devised.
ELLIOTT:
Speaking of investment, I note there’s no extra money for the Suburban Rail Loop project here in Melbourne. I think there’s only $2.2 billion of federal money, and that means $32 billion of state money has to be found. Is that because you don’t think it’s such a good investment?
CHALMERS:
Oh, no, we’ve made a capped contribution of a bit over $2 billion, $2.2 billion towards the early works on the Suburban Rail Loop East project.
We’ve made it clear in the past, and I’m happy to make it clear again that funding is, contingent on the project meeting the relevant conditions and working with Infrastructure Australia to make sure that we’re getting value for money.
We’ll make further decisions about funding when some of that other work progresses, but we’ve got $2.2 billion in the budget that’s still in the Budget, and we will work with the Victorian Government here and across all of the really quite substantial infrastructure investments that they are making and we are making.
ELLIOTT:
And you’re confident the Victorian Government can afford the rest?
CHALMERS:
I’m confident that we’ve got the right processes in place to determine all of that. You know, there’s the Infrastructure Australia process, there’s the relevant Acts and rules and National Partnership Agreement, and we’ve said on a number of occasions we’ll make further decisions about funding once we get through all of those processes.
But a couple of billion dollars in the Budget for Suburban Rail Loop East, that’s a big commitment, an important commitment, and we want to make sure that we get the value for money that we need out of that.
ELLIOTT:
I know you’ve got to go but I want to ask about superannuation quickly. Now in the past we’ve discussed the super tax surcharge that will soon apply to super funds with balances of more than $3 million.
I read the other day the Greens want to negotiate that $3 million down to $2 million. Is that going to happen?
CHALMERS:
Not if I can avoid it. I’d rather pass the superannuation changes we announced some time ago, and that’s our intention, that’s what’s in the Budget, is to set that threshold at $3 million rather than $2 million, and hopefully the Senate will support the policy that we announced.
ELLIOTT:
And finally, because I do know your time is limited, you announced the other day that gas is going to be part of our energy future for quite some time and I think people welcomed that. Yet here in Victoria we’re told that gas has to end fairly soon, like you can’t build a house with a gas connection anymore. Is your policy at odds with the state government policy here?
CHALMERS:
I don’t really see it that way. State governments and certainly the federal government understand that the future is renewable, we need to get more renewable energy on to the grid, but the gas strategy that my colleague, Madeleine King, released recognised that gas has got a role to play for a bit longer as we make this really important transition and transformation in our energy system.
States make their own decisions about the elements of this and they have a role in and a say in, but we’re on the same page when it comes to how we see the future of renewable energy in particular, and from our point of view, from a national point of view, gas has got a role to play for a bit longer yet.
ELLIOTT:
I know you’ve got to go. Jim Chalmers, federal Treasurer, thank you for your time.
CHALMERS:
Appreciate your time, Tom, all the best.