JIM CHALMERS:
First of all, I want to say our hearts go out to the family of the little girl who is right now in a serious condition over at the Queensland Children's Hospital after that dog attack in the heart of our local community in Woodridge. I know that neighbourhood pretty well, around the back of Woodridge North State School. I know that they will be doing it tough, all the young families in that part of our local community. There will be a lot of concern for that little six‑year‑old girl who was attacked yesterday afternoon in our local community. As the dad of a six‑year‑old girl myself, I can only imagine the worry that her loved ones have right now but I can assure them from personal experience that she will be receiving the absolute best care from the doctors and nurses and staff at the Queensland Children's Hospital. It is an absolutely world‑class children's hospital. And that little girl who was attacked by that dog in Woodridge will be receiving the best possible care. I also wanted to acknowledge and thank the young man who jumped the fence to help out during the course of those horrific events yesterday in Woodridge. I know that he sustained some injuries as well but we deeply appreciate the courage that he showed. And once again, our hearts go out to that little girl and her loved ones and we hope that she's on the mend before long.
The Budget is four weeks away today. Tomorrow, I'll be going to Washington DC for a brief trip to confer with my colleagues and counterparts in the G20 and at the International Monetary Fund and the World Bank as well. This is an absolutely crucial opportunity to confer with my colleagues and counterparts about the state of the world economy. The conditions in the global economy are deteriorating. There could not be a better time to take the temperature of the global economy to confer with my colleagues in this brief visit to Washington DC in the second half of this week. There couldn't be a more important time because we are putting the finishing touches on that Budget, which will be handed down in four weeks' time. And we try and carefully calibrate the settings in that Budget to make sure that it is as closely aligned as possible with the economic conditions that we confront here at home but also around the world.
Global uncertainty will be a key influence on the Budget in May. The Budget will be all about trying to provide some security for people in uncertain times, security for people here at home in the midst of all of the uncertainty and all of the vulnerability and all of the volatility that we're seeing in the global economy right now. And global conditions have become more complex and more confronting even in the course of the last few months. Higher interest rates have exposed vulnerabilities in parts of the international banking system and that's added to the already significant challenges of persistent inflation, slowing global growth and the impacts of the war in Ukraine as well. And the recent tremors that we've seen on global markets have increased uncertainty and downside risks and the International Monetary Fund is now forecasting the weakest five year period for global growth in more than three decades. So in this difficult environment, our job will be to strike the right balance between dealing with immediate challenges in our economy, preparing for the future and also doing what we can to safeguard our economy against these global risks and global shocks. And that's why the focus in the Budget will be targeted cost‑of‑living relief which doesn't add to inflation, laying the foundations for future growth in our economy and making our economy as resilient as it can be to these international developments.
This will be a responsible and methodical Budget. There will be a premium on what's sustainable and what's affordable – the Budget pressures warrant that and the global circumstances demand that. Now, we are confident about the prospects for the Australian economy but we are not complacent. We are optimistic about the future of our economy and our country but we are realistic about the impact of this global volatility and global uncertainty on our own economy here at home. Our Budget will be carefully calibrated for the conditions we confront and the global conditions, in particular, will be a key influence as we put the finishing touches on this Budget over the course of the next four weeks.
JOURNALIST:
We're seeing reports of a potential $5 billion hole in the Budget caused by declining tax revenue from tobacco sales. Is that accurate and how do you plan on filling that gap?
CHALMERS:
Well, we've seen an explosion in vaping, in particular, and that is incredibly concerning to me not just as the country's Treasurer but as a parent and as an Australian. The status quo when it comes to vaping and smoking more broadly is completely unacceptable. This is a problem for the Budget but much, much more importantly than that, this is a problem for our society. I think anyone who's driven past the bus stops before and after school and seen the way that vaping is spreading amongst our young people [would agree] ‑ these are incredibly concerning developments. I'm incredibly concerned about the explosion in vaping that we've seen in recent times, in particular. My colleague, Mark Butler, is working with his state counterparts and also with the health experts to see what can be done to clamp down on this vaping in particular and all of the associated issues in the health system and in our community. The status quo is unacceptable and that means that all options are and should be on the table.
JOURNALIST:
But is it a $5 billion problem? And how will you fill it?
CHALMERS:
Those numbers were provided independently by one of the organisations that monitors this. We don't have an equivalent number to provide to you today. Obviously, when we're seeing this explosion in vaping and people considering alternatives to cigarettes, clearly that's a big problem for the Budget but it's a much, much bigger, more concerning problem when it comes to our local communities and our health system more broadly. That's why the Health Minister Mark Butler is working with his counterparts in the states and with health experts to see what can and should be done. As I said a moment ago, the status quo when it comes to vaping is unacceptable. All options are on the table. We are incredibly concerned by this explosion in vaping which is doing damage not just to the Budget but to the health and life prospects particularly of our young people
JOURNALIST:
What Budget levers are available to you to help Australia avoid being dragged down in this sluggish global economy?
CHALMERS:
The global economy and these uncertain conditions which I will confer with my counterparts about in Washington DC later this week will be a key influence on the Budget and our job is to make sure that we are striking the right balance between providing that cost‑of‑living relief here at home, laying the foundations for future growth as well as making our economy more resilient. And so we have indicated already that one of the centrepieces of the Budget will be a bit of help for people dealing with high electricity bills. We've indicated that we want to invest in a broader and deeper industrial base and fixing our supply chains and getting cleaner and cheaper energy into the system. All of this is about making us more resilient to this kind of global economic uncertainty that the IMF and others are expecting.
JOURNALIST:
Are you going to bail out Victoria's state Budget?
CHALMERS:
The Victorian Budget is under pressure in the same way that the Commonwealth Budget is under pressure as well and many of the states and territories are facing similarly challenging times when it comes to the pressures on our Budget. In terms of the Commonwealth Budget, obviously the combined pressure of the increasing borrowing costs on a trillion dollars of Liberal debt combined with the cost of the NDIS, the health system, aged care, defence and in other areas is putting immense pressure on our Budget. And so, what we do is we work in a cooperative and collaborative way with Victoria and with the other states and territories as well to make sure that we are methodically working through these challenges in our Budget, that we're funding and providing the services that the people we represent need and deserve. Over the course of the next year or so, a number of funding agreements with the states and territories are up for renegotiation and we will work as we always do with Labor states and also with the Liberal Government of Tasmania to make sure that we're doing what we can but within those fiscal constraints that we have at the Commonwealth level and the states have at the state level.
JOURNALIST:
Are you confident you'll be able to generate enough savings in the Budget to offset the loss in revenue partially caused by vaping while also providing that relief to people on their energy bills? Is that going to be possible?
CHALMERS:
There are a number of pressures on the Budget and that means that we need to strike the right balance between providing that cost‑of‑living relief but also making sure that we can fund the services that we need, the aged care wage increase, we need to improve and bolster Medicare, we need to fund our national security. We've made it clear that there are a number of competing priorities in the Budget. One of the reasons why we were so responsible in the October Budget – finding $22 billion of savings, banking 99 per cent of the upward revision to revenue – is because we know we want to make room for the things that we truly value and the things that our people need and deserve when it comes to health care and aged care and national security and all of these other priorities. And so, we will do in May what we did in October – we will find the right way to trim spending in some areas to make modest but meaningful changes to tax including superannuation and multinationals at the same time as we show spending restraint. But we also need to factor in in this Budget the fact that we do expect our economy to slow as a consequence of the global slowdown and so we need to strike the right balance. Budget responsibility is key and within those constraints, doing what we can to help people through a difficult period.
JOURNALIST:
Treasurer, is cutting the defence maintenance budget compromising the ability to deploy platforms and weapons in service now, to pay for future acquisitions that might be years and in some cases decades away?
CHALMERS:
The Defence Minister and the Prime Minister have made it clear that they will be releasing the Defence Strategic Review in the course of the next month or so. And shortly after that, there will be the May Budget, which will fund and account for any changes to defence policy. I think it's well recognised right across the board, including in defence, that there are substantial pressures on the Budget and where we want to make new investments, we need to make sure that we can afford them, that they're sustainable, that we make room for those investments. That's true in defence but it's true across the Budget more broadly as well.
JOURNALIST:
Is now the right time to end the Low and Middle Income Tax Offset, given the pressures that Australians are under with the rising cost of living?
CHALMERS:
The story that we saw on Saturday was completely bizarre. The story that was reported on Saturday reflected a decision taken two budgets ago by the former government to end the Low and Middle Income Tax Offset last year. And at the time, both before the election and after the election, we made it clear that we couldn't afford to extend the Low and Middle Income Tax Offset. Now, at the time in the March Budget, my predecessor Josh Frydenberg said that this is not a permanent feature of the tax system. We made it clear at the time that the LMITO was ending last year. And so it has been completely and predictably dishonest from Angus Taylor and Michael Sukkar and all of these other B‑graders to now pretend that this is some kind of new announcement made by the government. Angus Taylor was in the Cabinet that decided that this payment would end last year. It is characteristically dishonest of him to pretend otherwise. This is another humiliating gaffe from Angus Taylor to pretend that the story that was written on Saturday doesn't reflect a decision taken by the government in which he sat around the Cabinet table, when Josh Frydenberg indicated that last year's payment would be the last one.
JOURNALIST:
Can you give us any more details of the assistance with energy bills you're going to be providing in the Budget?
CHALMERS:
A bit of assistance for high electricity bills will be one of the centrepieces of the Budget that I hand down in May. And we have been working closely with the states and territories of both political persuasions since the announcement in December to make sure that we are delivering this relief in the best way that we can which recognises the different pressures on states and the different programs that states have proposed to provide this cost‑of‑living assistance. Now, this is a good example of where we can provide some modest but meaningful cost‑of‑living relief without adding to inflationary pressures in our Budget. There are a lot of great ideas about how we could provide cost‑of‑living relief. We need to do that in a way that isn't counterproductive, that doesn't add to inflation and energy bill relief is an important way that we can do that.
JOURNALIST:
How would that look, that relief?
CHALMERS:
We've said that we'll work bilaterally with each of the states and territories to finalise the assistance package when it comes to energy bills for pensioners and households and small businesses. That work is ongoing. But clearly, between now and the Budget on the 9th of May, it will be clear to people the kind of assistance that they will be receiving. We know Australians are under the pump. We will do what we can to take some of the sting out of these cost‑of‑living pressures but we need to do that in a responsible and methodical way that doesn't add to inflation. And that's what we'll do when it comes to energy bills.
JOURNALIST:
[INAUDIBLE] do you think the government should work with APRA to change the serviceability assessment rules?
CHALMERS:
The serviceability assessment rules are a really important way for our regulators to impose some guardrails on the banks when it comes to lending, particularly home loan lending. Our regulators are aware of those issues that have been raised in reports today. They obviously keep all of their settings under constant review, and it's not for the government to provide them free advice on that front. Thanks very much.