JIM CHALMERS:
Okay, a few things to cover this morning. I'll kick off and then hand you over to Katy and then obviously happy to take your questions. This Budget will be a Budget in the best Labor tradition: help for the vulnerable with cost‑of‑living pressures, an eye on the future, and strict fiscal discipline as well. We know that in order to do all of the things that we want to do for people to get them through a difficult period, and in order to properly set Australia up for the future, that needs to be built on a foundation of responsible economic management, and responsible economic management is what you will see on Tuesday night. This will be a Budget, which will see people through and sets the country up ‑ see people through a difficult time by helping them with cost‑of‑living pressures at the same time as we set this country up to take full advantage of the opportunities that are before us to set up a next generation of growth and opportunity in this country. And so our strategy on Budget night will have a number of parts: cost‑of‑living relief delivered in the most responsible way, targeted towards the most vulnerable Australians in ways that doesn't put upward pressure on inflation; key investments in the future, to invest in the future growth of our economy with cleaner and cheaper energy at the core of that strategy. This Budget will be very focused on the industrial and economic opportunities of the clean energy transformation. And you'll hear more from Minister Bowen about that later today.
We also want to make sure in addition to what we will do on cost‑of‑living for the most vulnerable Australians, a particular effort to attack entrenched disadvantaged in communities like the one that I grew up in. What Minister Rishworth and I and the Cabinet have agreed for Tuesday night's Budget is a series of place‑based initiatives to try and shift the needle in disadvantaged communities. It has been, I think, a concern of ours for some time that even in an economy, which is capable of creating opportunities, an economy with three and a half per cent national unemployment, there are pockets of disadvantage in this country. And we don't want to see long‑term unemployment. We don't want to see entrenched intergenerational disadvantage. And so one of the initiatives or one of the package of initiatives in the Budget on Tuesday night, will be a dedicated effort to attack entrenched disadvantage in communities right around Australia. So cost‑of‑living help, a plan for disadvantaged communities, a substantial effort to grab the opportunities of the net zero transformation as well.
Now, as you know, the Budget is under substantial pressure into the medium term. We expect a substantial improvement in the Budget in the near term but after that the pressures intensify rather than ease. We still have big structural challenges in our Budget, we still have that combination of interest costs on the debt, the NDIS, health care, aged care and defence putting substantial pressure on the Budget. And what we've revealed today is that the cost of servicing the debt that the Liberals and Nationals left behind in the Budget that we hand down on Tuesday night will be $112 billion over the forward estimates. This is the hefty price that Australians are being asked to pay for the Liberals’ failures to manage the Budget responsibly. These are the characters that left a trillion dollars in Liberal debt with not enough to show for it and Australians are paying a hefty price for that. This is one of the big two pressures on the Budget: $112 billion in interest costs on the debt that we inherited, one of a number of pressures that the government has been working through in a responsible and methodical way so that we can get the Budget into as good a condition as we can so that we can fund our priorities like cost‑of‑living relief, investing in the future and the industrial opportunities of clean energy, and making sure that the Budget that we hand down on Tuesday night properly reflects the values not just of the government, but the country as a whole.
KATY GALLAGHER:
Thanks, Jim. One of the other things we've been doing in this Budget in terms of cleaning up the mess and dealing with some of the legacy issues that we've inherited from the former government is identifying a whole range of areas right across government where there were terminating programs just ending that were actually really ongoing programs or a legacy of underinvestment in key areas of service delivery, forcing some of those areas to breaking point and making choices about reductions in services. So what you'll see in this Budget, we started it in October, where we funded about $4.1 billion in these zombie legacy unfunded programs. In this Budget, you'll see an additional seven and a half billion being found, we've made room for that in the Budget because these are services that people rely on, agencies that people rely on to deliver services in some cases, and services that people value. You've seen some announcements about the national institutions, that's an example of underinvestment which was forcing those institutions to breaking point. But we've got other areas right across government, where things were just going to fall off a cliff. The public dental program, for example, for adults ‑ you tell me that people don't need dental care on the first of July. So we've been dealing with that and you'll see that outlined in the Budget.
One of the other decisions that we've made clear today is our decision on ParentsNext, which was a program that had been put in place by the former government and there's been a number of reviews and recommendations around the sort of punitive nature of this program targeting vulnerable young people in particular, young single parents. We've made the decision to abolish that program from 1 July 2024. In the meantime, that punitive side of the program that took money away from people if they didn't do certain things ‑ and this is for parents of children in the ages of nine months to six years ‑ their parenting payment was taken away if they didn't do certain things. That side of the program will be stopped from today. So the mutual obligations side of ParentsNext will stop. We will work with stakeholders, program deliverers, and others to co‑design a program that's more appropriate. We want to make sure that this group of vulnerable Australians do get the support that they need to get ready for work or have other training opportunities, we just don't believe we need to take their money away in the process.
And the final point I make is just the fact that this is a very strong Budget when you see it on Tuesday, a very strong Budget for women in this country. We made a commitment as a government that we wanted to put women at the centre of our decision making, of our considerations. The Jobs and Skills Summit identified driving women's economic equality as a key priority for our economic prosperity. We have heard that, we have listened to women around the country. You saw the beginnings of that with PPL and child care investments in October. You'll see more of that in the Budget, and one of those was the one we announced yesterday in aged care workers, where more than 90 per cent of that workforce are women. The ParentsNext program, 95 per cent of people on ParentsNext are women. And you'll see that that's factored into our decision making very, very much. Thanks.
JOURNALIST:
You said last month that energy bill relief was one of the centrepieces of your Budget. At the end of last year, the Prime Minister announced the $1.5 billion package but households haven't seen it. Is the centrepiece what was already announced or is there more to come?
CHALMERS:
The Budget will provide substantial relief for vulnerable Australians with high electricity bills. And since the direction was announced at the end of December, we have been working for some time with the states and territories to come to a concluded view on the nature of the support which will be provided. And what that's required is that we do eight different deals with the states and territories, recognising the different pressures from electricity prices, recognising the different programs that states and territories are prepared to put in place to match their side of the investment. And so what you'll see in the Budget ‑ and it will be a key part of the Budget on Tuesday night ‑ is substantial relief for people on pensions and payments in particular, but also small businesses to help them deal with electricity bills. And one of the most important things about that is the way that we are providing that assistance will actually take pressure off inflation rather than add to it. And what that means is one of our big objectives here in providing this cost‑of‑living relief broadly in the Budget is to try and do it in ways that takes pressure off inflation rather than add to it. Now we will get later today from the Reserve Bank the Statement of Monetary Policy. And that will make it, I think, abundantly clear that of this complex combination of economic challenges that we are dealing with in handing down this Budget, inflation still remains the primary concern. People are feeling it right around the country, we will help where we can but will help in a way that doesn't add to inflation.
JOURNALIST:
Treasurer, you talked about there being a package directed at entrenched disadvantage. I imagine intergenerational unemployment is a big one. Can you give us an example of what you're going to do? Given that it would involve, I imagine, intervention with the kids who are exposed to mums and dads who haven't worked?
CHALMERS:
Well, a few things about that. There are people around the country in communities of entrenched disadvantage, who are doing the most remarkable work to try and shift the needle on this difficult social and economic challenge. And we want to support them, we want to back them in. And so the program of measures that Amanda Rishworth and I will announce on Tuesday, are all about backing in local leaders, investing in local organisations, making it easier for people to do this important work in communities like mine, and others around Australia. And what that means is; partnering with philanthropic organisations, it means investing in local community groups, it means doing something meaningful about impact investing. There are a number of different parts to our strategy because, I think, in order to build the kind of economy that we want, we've got to align what we want to see in our economy with what we want to see in our society and in our communities. And for as long as I've been involved in politics, all of my adult life, one of the things that I think hasn't made a lot of sense, is in a country like ours, which generates the most remarkable opportunities for people in aggregate in the broad, needs to do a much better job of putting those opportunities within reach of more people. And that's the motivation for this package of measures.
JOURNALIST:
Treasurer, you talked about the cost of servicing the debt as one of the acute growing areas of expense in the Budget. We've seen today, it's even more than what was forecast in October ‑ I think it was $4 billion more this financial year, $3 billion more next financial year. Can you explain why that is? And can you give us an idea of just how significant that cost is? You've said it's 'one of' those big cost pressures ‑ is it the biggest compared to the NDIS, for example?
CHALMERS:
Thanks, Reece. So the cost of servicing the debt is in the top two ‑ the top two are interest costs on debt and the NDIS. And then, beyond that, health care, aged care and defence ‑ they're the big five ‑ and we've been talking about that in this Blue Room since we were elected to government. Those are the big structural pressures on the Budget and they are a key reason why we will get this substantial improvement in the Budget, which I want to come back to in a minute, but the pressures after that intensify rather than ease, and that's why we've had a bit to say about the NDIS and some of these other areas. But when it comes to the magnitude of this interest bill, we are talking about a $60 million a day bill on the interest that was left to us by our predecessors. And our job, one of the many reasons why we want to put this Budget on a much more sustainable footing, is because we can all think of better ways to invest $112 billion, than the interest on all of this Liberal debt. That will take some time to turn this ship around, there are generations of debt left in the Budget. But I'm really quite proud of the work that Katy and our colleagues have done, already over the course of two Budgets, to try and make the Budget a bit more sustainable. And in making the Budget more sustainable, getting the Budget into better nick, we can make room for some of these other priorities ‑ aged care wages, a proper approach to women's economic participation ‑ all of these things which represent our values we can fund, if we get the Budget in better nick in the first place.
JOURNALIST:
Treasurer, can you confirm that the Budget will look to raise in the order of an extra 30 per cent from the PRRT ‑ about three billion over the next few years?
CHALMERS:
I'm not prepared to back in that number but I am prepared to repeat what I've said before in this room and subsequently. When our predecessors set up the review of the PRRT, it was because they recognised as we do and as the broader community does, that we want to see the PRRT deliver fairer returns for the Australian people. I received the advice from the Treasury, we have been working through it in a methodical way and we've been consulting with the industry, as you would expect us to do. And when we have more that we can say about that, I'm happy to say more about that at an appropriate time.
JOURNALIST:
Treasurer, will there be assistance for Ukraine in the upcoming Budget and concerns of aid fatigue? And if I just might Minister, on ParentsNext ‑ the Opposition has raised concerns that we've already seen businesses struggling to fill job vacancies, will this add to those pressures?
CHALMERS:
We are already one of the biggest non‑NATO contributors to the effort in Ukraine. We salute the quite remarkable courage and commitment of the Ukrainian people. I've come to know a little bit ‑ my Ukrainian counterpart, the Finance Minister, Minister Marchenko ‑ and I've engaged with him on these issues, as has the Defence Minister, as has the Prime Minister, the Foreign Minister, and no doubt other ministers as well. We are a big supporter of the Ukrainian efforts to repel the Russian invaders, and that'll be represented in the Budget.
GALLAGHER:
On the ParentsNext question, well, for a start, I'm not going to take any advice, free advice, from the Opposition about the skill shortages that exist in the country after they did so little to skill up the workers we need for the future. On ParentsNext, it's a relatively small population of the people on parenting payment. And it's actually more about, I think the Opposition misunderstood their own program that they put in place, because it's about providing opportunities to get job ready, and to undertake parenting programs or to do more education for those that may have left school because of their parenting responsibilities. So I wouldn't see that as a concern. I think the issue we've identified, is we want this and it's a pretty vulnerable cohort, to be able to get those opportunities without taking away their weekly money ‑ because that's what's been happening. It's a small group of vulnerable Australians, who, when they didn't show up to take their kid to the library for story time, had their money withheld.
JOURNALIST:
How many are in that cohort?
GALLAGHER:
It's about 98,000, of which about 95,000 are women.
JOURNALIST:
Both of you, on the entrenched disadvantage, is this an indication that the Workforce Australia, formerly Jobactive model, has failed? And could the investments in place‑based initiatives and long‑term unemployment, replace paying private providers to house job seekers to tick boxes and jump through hoops?
CHALMERS:
We are motivated, by the sense here, that we can do a much better job of putting the opportunities of a growing, job‑creating economy within the reach of more people. And part of that is how we do Jobactive and how we do employment services. This is an important part of our plan. There will be other elements on Tuesday night, but the work on employment services, which is being done really well by Julian Hill and other colleagues at the committee level, and by Tony Burke at the ministerial level. We do anticipate having more to say about that later this year at the conclusion of the committee process, and also in the course of putting together the Employment White Paper which the Treasury is leading, but working with a bunch of other ministers as well. So we do see that as part of the story here. You shouldn't anticipate big changes in the Budget on Tuesday night when it comes to employment services but we have been working a lot behind the scenes and around the clock ‑ Julian, Tony and others ‑ to see if we can do this much better.
JOURNALIST:
You've announced how much the debt is actually costing the Australian public but is your official aim to actually pay down that debt into the future? And also, housing is one of the biggest issues for Australians at the moment, what are you going to be delivering for renters in this Budget?
CHALMERS:
First of all, on debt reduction, one of the key reasons why we need to get this Budget under control is to try and get debt levels under control. And the steps that we took in October and the steps that we will take next week will mean a substantial amount of debt avoided compared to what the Liberals were forecasting in their last Budget and if we can avoid some of that debt trajectory that they had Australia on, we can avoid some of the interest costs on the debt that they left behind, then we can repair the Budget and fund our priorities. And in all the questions that we get about Budget repair, a couple of things are really important to remember. Yes, an element of this is the prices that we're getting on global markets for our commodities, that's an important part of the recovery that we're seeing in revenues, but it's not the only part of it. It is also important that we are doing better on unemployment than we expected, we are doing better on wages ‑ we're seeing the welcome beginnings of wages growth in this country after a decade of stagnation. And better employment outcomes and better wage outcomes also help the Budget and the other thing about that which is crucially important is it's not just that there are revenue upgrades which matter, it's what the government does with it and we banked 99 per cent over two years in the October Budget when the inflation challenge was its most acute, we will bank a substantial proportion of these revenue upgrades in the May Budget as well and that is really the reason why people are speculating about a much stronger Budget next week that I hand down. And if we had taken the approach of our predecessors which is to spend most of the upward revisions to revenue, then we would be nowhere near the sorts of outcomes that people are speculating on. Now, the last government only saved about 40 per cent of upward revenue revisions, the Howard and Costello government only saved about 30 per cent of upward revenue revisions, in October, we did 99 per cent for two years and we did that partly because of the inflation challenge, partly because of the Budget challenge and we're seeing the fruits of that now.
JOURNALIST:
And just on renters?
CHALMERS:
Obviously, housing is one of the big priorities of this government, I salute the work of Julie Collins and others. There are a few things that we need to do when it comes to housing. In the rental market, the best thing we can do is build more supply, build more stock. One of the reasons why we've got vacancy rates so low and rent so high is we don't have enough homes and that's why it beggars belief that the Senate, this coalition of weirdos in the Senate ‑ the Liberals and Nationals and Greens have banded together to say that they will oppose building more social and affordable homes in this country. It beggars belief, honestly and I understand some people want more built and some people want fewer built but to vote against the Housing Australia Future Fund at a time when there's such extreme pressure on the housing market just beggars belief. There will be additional measures in Tuesday's Budget, we recognise that housing for a lot of people is the pointy end of the spear when it comes to this cost‑of‑living challenge that people are dealing with. We've also announced out of National Cabinet something I was really proud to have worked up for the Prime Minister and for the Premiers and Chief Ministers which is some tax breaks to encourage investment in build to rent properties and that will help as well.
JOURNALIST:
Treasurer, on your point about wanting to address entrenched disadvantage in communities, proponents of a rate increase to JobSeeker would say the payment is so low it keeps them entrenched. So if a change to the rate is targeted in this Budget, can you at least provide an assurance that you will take on the recommendation of perhaps having a staggered approach should not everyone be happy?
CHALMERS:
First of all, I recognise that the payments that people receive in disadvantaged communities is an important part of the puzzle but it's not the only part of the puzzle and what we're trying to say today is that in addition to what we can do to provide support for the most vulnerable Australians, in addition to that, we also need to pay particular attention to the most disadvantaged communities in other ways. When it comes to the Economic Inclusion Advisory Committee recommendations and the Women's Economic Equality Taskforce recommendations, we've committed to try and work through them in a methodical way and we will make substantial progress ‑ Katy's talking about one of those recommendations today and I've talked about other recommendations. The place based disadvantage stuff is represented pretty substantially in the EIAC report, for example, ParentsNext, and some of the other measures that you'll see on Tuesday night. So we will work through it in a methodical way, we have been up‑front with people and said that we will do what we can. We will do what we responsibly can to help the most vulnerable in these communities.
JOURNALIST:
Treasurer, we've seen some pretty impressive bank profits this morning, not impressive enough for their shareholders but pretty impressive and you said yesterday that you encourage banks to pass on those rate rises to depositers but if that process continues to be slow, if we don't see it speed up, would you consider further legislative instruments or regulations to encourage that?
CHALMERS:
That's not something that we've been contemplating. I think I've made a relatively obvious point that when banks are doing well, we expect them to do the right thing by their customers and I think the thing that makes people especially angry is when interest rate hikes are passed on more or less immediately for borrowers but sometimes a bit more slowly for savers ‑ that makes people very unhappy and I can understand why that's the case. So we want to see our banks strong, well regulated, well capitalised, that's a good thing, particularly in this global economic uncertainty, but I think that when they are doing well, when they've got these big profits, all the time, frankly, they need to do the right thing by their customers too.
JOURNALIST:
Treasurer, what's your response to brewers who now say that federal taxes equate to $20 a slab and are seeking a break on excise indexation?
CHALMERS:
We can't afford to do all of the things that are proposed to us in a Budget ‑ not just that idea but other ideas are put to us pretty regularly, multiple times a day and we don't want to give people false hope about the things that we can't afford to do. We can't afford every idea, we can't even afford all of the good ideas. I think we're pretty up‑front about that, sometimes to our own detriment, but our priorities lie elsewhere in this Budget.
JOURNALIST:
Thanks Treasurer, have you asked the Labor Business Forum to consider dropping PwC as a sponsor for the Budget night dinner?
CHALMERS:
No, my focus when it comes to PwC is bedding down the Tax Practitioner Board changes that my predecessor sat on and working with the Treasury and the Tax Office and others to see if we can do further things to strengthen the arrangements so that this ridiculous situation from some years ago doesn't repeat itself. We want to be able to be a consultative government and we want to have faith in the processes. We understand why business want to be consulted, particularly on big changes, and we do what we can to try and satisfy that need but we can only do that if people trust the system and flogging off the confidential information to make a buck is not consistent with the sort of good faith that we want to see when we consult business on changes, whether it's tax changes or other changes. So my focus has been on implementing the changes that were in the in tray when I arrived ‑ for some reason which I can't explain ‑ and working with the Treasury and others to see if more needs to be done.
JOURNALIST:
I'm not asking you if you're going to deliver a surplus ‑
CHALMERS:
I like the questions that begin with "I'm not asking".
JOURNALIST:
‑ because I know what you'll say. But if you do, how should Aussies read into that, especially if they're perhaps disappointed with the cost‑of‑living relief that's handed down on Tuesday if there is a surplus?
CHALMERS:
Katy and I have said repeatedly that you should anticipate a substantial improvement in the near term in the Budget and then the pressures that we've been talking about intensify after that. We will make it clear on Tuesday night what the Budget position is for this year and the subsequent years in the forward estimates. What is already clear is that you wouldn't even be asking me this question today if we had taken the same approach as our predecessors. There has been a change in the way that the Commonwealth Budget has been managed ‑ the last two Budgets and the Budget is now being managed in a much more responsible way, particularly when it comes to those upward revisions to revenue which come from better unemployment outcomes and better wages outcomes and better outcomes for our exporters on world markets. And so we will make it clear on the night what the Budget position is. It is already clear that the responsible economic management which we have made a hallmark of our first year in office is paying substantial dividends. Now, when it comes to what we can then afford to do for people ‑ one of our key motivations in making the Budget more sustainable is so that we can afford to provide cost‑of‑living relief and target it to the most vulnerable, it's so that we can invest in the future, in the industrial opportunities of clean energy, it's so that we can do all of the things that Labor governments are elected to do and we're a really ambitious government but our ambition is built on a foundation of responsible economic management for a reason. And our approach has been vindicated and will be vindicated on Tuesday night and we will make it clear on Tuesday night what the final Budget position is.
JOURNALIST:
The Environment Minister announced today that she was cancelling two Queensland coal projects. Considering the Budget's been propped up so significantly by commodities, what are the risks in taking this approach?
CHALMERS:
Well, it's important to recognise the nature of these two projects and as I understand it, these are projects which had effectively lapsed, which had gone for some years without providing the sort of information which would be consistent with them trying to get environmental approvals. And so as I understand it, there are two projects here that both failed to provide the information required, one of those projects didn't provide that information for 10 years so I think it's entirely reasonable and entirely common sense for that project to be canned. It's effectively ‑ by the sounds of it ‑ been canned by the company itself. Under the law, the minister can declare these projects lapsed and cancel them. If the proponents of these projects wanted to submit an approval, then they can obviously do that, but I think the resources of the Environment Department are better spent on projects where the project proponents are actually participating and providing the necessary information and as I understand it, that hasn't been the case with these two projects. Thanks very much.