Jim Chalmers:
This week’s all about engaging with our counterparts to strengthen our economy in the interests of our people. Global conditions will be the primary influence on our economy and on our choices in the government’s second term, because what we’re dealing with is extreme global economic uncertainty, compounded by conflict and trade tensions around the world. So our engagement is all about navigating a world where volatility and unpredictability are the norm, not the exception. And the way we see it is that the best defence against more uncertainty and more volatility is more engagement and more resilience, and that’s our strategy when it comes to engaging with the world. It’s why the Prime Minister is in China. It’s why I’m off to the G20 this week, and it’s also why our engagement is good for Australian workers and businesses and industries, and our economy more broadly. The economy is the major focus of the Prime Minister’s engagements in China. I’m conscious that he’s up shortly, and so I’ll say a few things about that, but leave it largely to him.
There couldn’t be a more important time to strengthen an economic relationship which is full of opportunity, but also not short of complexity. China is a really crucial part of our prosperity, and that makes it an important and obvious focus for our economic diplomacy as well. The G20 is another crucial opportunity for Australia to engage. We are big believers in multilateral engagement because Australia is a big beneficiary of global forums like the G20 and also from free and open markets for our goods and services. I’ll be heading to Durban later in the week for meetings on Thursday and Friday. I’ll be participating in G20 discussions, but also meeting directly with my counterparts from Indonesia, Japan, Canada, the UK and Germany. And my focus at the G20 will be on strengthening economic ties, but also with a particular focus on capital flows, on supply chains, on critical minerals, and also dealing with the structural issues in our own economies. That’s the focus of our international engagement in July, and it’s also the focus of our Reform Roundtable in August.
I have been really encouraged by the interest shown by my colleagues, by the regulators, by business and union leaders in the Reform Roundtable. Just over the course of the last couple of weeks, we’ve had a number of good discussions with Cabinet colleagues. I met with the Education Minister this morning about his contribution to the roundtable. I think I’ve written to more than 30 regulators now. I had a good long discussion with the head of the Business Council. I’ve had a good, long discussion with the leaders of the ACTU. And from those discussions, I am really encouraged and really optimistic that people will bring to the Reform Roundtable good, constructive ideas for how we build on the agenda the government is already rolling out. Build on the progress that we’ve made together in our economy and building consensus about the next steps forward as well.
We’ve largely now finalised the structure of the agenda – resilience day one, productivity day 2, sustainability day 3. We’ve asked Michele Bullock to kick off day one after the Prime Minister and I, we’ve asked Danielle Wood to kick off day 2, and I’ll ask Jenny Wilkinson to kick off day 3. We’re also finalising the next round of core invitations. I don’t think it would come as a surprise to anyone who’s seen the interest that people have shown in the roundtable that it is difficult to narrow that down. We can’t have every industry, or every interest represented individually, but the major peaks will be there. There will be other opportunities for people to contribute. And again, my ministerial colleagues are doing a terrific job hosting their own reform roundtables to gather ideas and priorities in their own portfolios. Those roundtables have already begun, but the pace of those will quicken between now and towards the end of August when we host the roundtable next door. So, a huge week for international engagement. Really important week to feed into our other considerations when it comes to economic policy. Happy to take some questions about any or all of that. We’ll just impose some order here and go here and then Jack.
Journalist:
You’ve always spoken about the importance and value of independent advice. Treasury says you can’t fix the budget without raising taxes or slashing spending. So, are you open to this advice?
Chalmers:
Well, a couple of things about that. First of all, you’re responding to some headings in the advice that we’ve got in the incoming government brief. Obviously, Treasury advises governments of both political persuasions, that advice can’t always be adequately captured in the subheadings which are reported in documents which are sent in error and what’s happened here is a Treasury official has sent those documents in error. That sort of thing happens from time to time. I’m pretty relaxed about it, to be honest, because, of course, Treasury provides advice for incoming governments, and no government typically goes into the detail of that. The other reason I’m pretty relaxed about it is we’ve already made it really clear that we will need to do more to meet our housing targets. We’ve already made it really clear that we will do more to make our economy more productive and more resilient. We have made it clear that we need to build on the progress we’ve made in repairing the budget so that we can make the budget even more sustainable. So, the priorities which are being reported today are the sorts of things that I have mentioned before, including at the National Press Club, I gave a whole speech on how we need to do more to meet our housing targets. We do need to do more to make our budget more sustainable and our economy more productive.
Journalist:
Do you need to raise taxes?
Chalmers:
We’ve made it clear over the course of the first 3 years in government that the substantial progress that we’ve made in repairing the budget comes from all different categories of effort. For example, I increased taxes in the PRRT so that Australians got a bigger return sooner for offshore gas. That’s not unusual. We combined that with spending restraint, banking most of the upward revisions to revenue. We combined that with $100 billion in savings in the budget as well. And so, when you make the kind of progress that we’ve made on budget repair, 2 surpluses, biggest ever nominal turnaround in the budget in a single parliamentary term, getting the Liberal debt down by $170 billion, that always involves a combination of measures. We’ve shown in our first term an ability to deploy all 3 of those things. Now, when you ask me about tax reform more broadly, what we’ve asked people to come to the roundtable with is ideas which are broadly budget neutral or better. And people will come with all kinds of suggestions about how changing one tax over here will make it possible to cut taxes over there. That is, in lots of ways, the essence of the tax reform that a lot of people who will come to the roundtable are grappling with. So again, I don’t think it’s particularly surprising that Treasury provides advice in their incoming government brief. I don’t think it’s particularly surprising that the Treasury has highlighted, as I have personally, that we need to do more to make the budget more sustainable. Now, we’re going to go here, Greg, to Jack, and then we’re going to go to Shane. I’ll come back to you.
Journalist:
Treasurer, we’ve seen the iron ore price rally in the last 3 weeks. It’s almost [indistinct] dollars a tonne now. Do you think this is, I guess, this rally in the last few weeks, do you think that’s something that can be sustained or do you think the headwinds facing the Chinese economy will mean we’ll see a drop off again? And I guess, if so, what are the implications of the federal budget?
Chalmers:
There are good reasons why I don’t try and forecast on my own the iron ore price. We’ve got conservative assumptions about iron ore in our budget. Those assumptions are provided by the Treasury. There has been a very modest tick up in the iron ore price in recent times, but it’s been below the glide path in our budget at different times over the last little while as well. There’s volatility in commodity prices, copper, oil, gold and other commodities as well, and we’re seeing that in iron ore too. Our iron ore industry, our exports make a really valued and important contribution to our economy, to our labour market, to our budget. We’re big supporters of the resources sector. It’s why the Prime Minister is convening today a meeting of the major iron ore exporters with the Chinese steel industry, and we’re optimistic that iron ore will continue to make a big contribution to our export offering and to our economy more broadly. Prices will bounce around a bit, and that’s why we have those conservative assumptions. Shane.
Journalist:
Treasurer, if the states were able to come up with their own GST reform plan to your roundtable, would you be open to it? And do you believe that GST regulation, where tiramisu is treated differently to cheesecake, is that a sign that the tax system is too complex in that space?
Chalmers:
I think both the Prime Minister and I have made it pretty clear when it comes to the GST, we’ve had a view about that historically and that view hasn’t changed. We’ve tried not to artificially limit the ideas that the states or others will bring to the Reform Roundtable. We’ve tried to have a relatively open mind, but you’ve all heard me talk about the GST before, and you all would have noticed what the Prime Minister said about the GST in the last few days, and those views haven’t changed.
When it comes more broadly to complexity in the tax system, of course, we are interested in ways to simplify the tax system. When we speak with tax experts and people that have a view about tax reform, they’re interested in efficiency and equity and simplicity and other design principles like that. Ideally, people will come with views about how we simplify the tax system and where that fits more broadly into our efforts on productivity. In engagement I’ve had with our regulators, the views that we’ve expressed publicly is if there are ways that we can simplify and consolidate regulations in our economy, then that would be a good thing for productivity as well, so long as we don’t trade away reasonable standards and protections for people.
We’ll go to Mike, and then we’ll go to Matt and then Phil and then Tom. We’ll come back to you.
Journalist:
Just on the potential or consideration of a road user charge that could be applied to electric vehicles. EV sales, the EVs only comprise like 8 per cent of the car market at the moment, and transport emissions continue to trend up. Just wondering if you’re factoring in the potential for a road user charge to stymie growth, and have you discussed the issue with Minister Bowen?
Chalmers:
That wouldn’t be the intention of reforming that part of the tax system. I think it’s been clear for some time that over time, there’ll be disagreements about how long it will take. But over time, the use of fossil fuels in our car fleets will come down, and EV use will go up. We’ve seen that, and we’re making a contribution to that with our policies and that will have implications for the tax base.
Again, I’ve tried to be upfront with people really for some months now, engaging with the states, engaging with the sector. I had a discussion with the Transurban board the other day about this. I’ve had discussions with Catherine King and Chris Bowen about this over time. This is not a new development, and our interest in seeing what can be done over the medium and long term is not a revelation either. We flagged that for some time.
Matt, then Phil, then Tom.
Journalist:
At the National Press Club, you mentioned that tax as a percentage of GDP was lower than your spending as a percentage of GDP. Are you happy for that to stay the way it is? Do you think that the spending as a percentage of GDP would need to change, and can you point out anything specific that might need to be lowered? You know, 8 per cent spending growth in NDIS, etc.
And then, just secondly, the Treasury advice mentioned building on super as part of reform as well. Will that be something important to bring up in the Economic Reform Roundtable?
Chalmers:
In reverse order, I think other people might bring that up. That’s not been something that we’ve been working on. Our focus has been on the changes that we announced 2 and a half years ago.
On tax to GDP, our tax to GDP is lower than under John Howard. Our opponents say that John Howard was the gold standard. Our tax to GDP is lower. When it comes to spending to GDP, when we came to office, spending to GDP was about a third of the economy. We got it down to about a quarter of the economy. It settled around 26, 27, partly because of pressures from the care economy and other pressures. What I tried to make clear at the Press Club is that we’ve done a lot to make the budget more sustainable, whether it be the NDIS, interest costs, aged care and in other areas, $100 billion of savings, a couple of surpluses, the big turnaround in the bottom line. All of those things are making a helpful contribution to budget sustainability.
But we need to look for ways to do more. Again, that’s not a new thing. In all 4 of my budgets, working with Katy Gallagher, there’s been a combination of savings, spending restraint, tax changes, because we want to make sure that part of our intergenerational responsibilities is making the budget more sustainable where we can. People will bring all kinds of ideas to the Reform Roundtable and that’s a good thing.
Phil, then Tom.
Journalist:
Thanks, Treasurer. On the super bill, parliament’s back next week. Is it a priority to get it through the lower house in the next couple of weeks? And have you or your office yet begun talks with Nick McKim as you flagged would happen in July?
Chalmers:
As I understand it, we’re working with his office to find a time. They have been very constructive about it privately and publicly in the discussions between the offices. I haven’t had a direct conversation with Senator McKim as yet. I’m grateful for the constructive approach that they have flagged publicly.
The start of parliament is pretty congested with lots of demands on everybody’s time. We will have a discussion at some stage, recognising that we can’t pass legislation in the Senate on our own. But it won’t be the first bill that we introduce into the parliament. The Prime Minister has already made that clear that that will be student debt relief.
Journalist:
Will we see in the next fortnight in some shape or form into the House of Reps?
Chalmers:
We haven’t taken a decision on that yet. There’ll be discussions to be had with the colleagues and with the crossbench, but we’ve already indicated that our legislative priority in the first week coming back is student debt relief.
Tom. Thanks to you. I will come back to you guys.
Journalist:
Thanks, Treasurer. I think the incoming government brief makes an assessment of the government’s policies, your election commitments, and then gives advice about implementation. This one says that the housing target would not be met. What gives? It seems like the challenges in the sector are too great for the government’s policy.
Chalmers:
First of all, you’re responding to a subheading in a document, a partial – governments don’t release the incoming government brief. It’s been released in error. These things happen from time to time. As I said before, I’m pretty relaxed about it. But you are responding to a partial release. The point that the incoming government brief makes is the same point that I’ve been making, Clare O’ Neil and others have been making, is that we will need more effort to reach that substantial, ambitious housing target. And we’re investing tens of billions of dollars. We’re working well with the states and territories and local governments, we’re engaging with the industry, we’re trying to get the capital flowing. I’ve changed the tax arrangements for build‑to‑rent. There are a whole range of things that we’re doing and that Clare is doing which will make an important contribution to achieving that target. But we’ll need to do better, and we’ll need to do more, and the advice just reflects that.
We’ll go there and then come back to Jacob.
Journalist:
Do you still believe the target can be met?
Chalmers:
Yes.
Journalist:
There was another famous target in your first term, which the Opposition beat you over the head with at every opportunity on electricity prices and how much they would fall by. Was it a mistake to put a housing target out there like this, that your own department now says won’t come in?
Chalmers:
No, I don’t believe so. We have to be ambitious in housing, and we are. And I think it would be strange if a government like ours saw the obvious challenges in housing and decided anything other than to try and be ambitious about building many more homes for people. I find it strange that people want to limit our ambition when it comes to housing. We’d rather have a big, ambitious, difficult target and work around the clock to meet it in all of the ways that I’ve run through today than to continue the approach of our predecessors, which was to build too few homes. It’s not the worst thing from time to time for it to be understood in the broader community that this will be a difficult target to meet. But if we all do our bit, we all play our part, as the Commonwealth has been willing to play, then we can build the homes that people desperately need.
It’s one of the defining challenges in our economy, and we’re ambitious when it comes to trying to solve it.
Charles, then Katina and then we’ll come around the front.
Journalist:
The Prime Minister was clear during the election campaign that he would stake his job on increasing the rate of bulk billing. Given that the only people limiting the ambition on housing is the Housing Minister and the targets put out there. Should there be more accountability to yourself, to the Housing Minister, if those targets aren’t met?
Chalmers:
First of all, we’re talking about a target which is still 4 years away. And we acknowledge, as we have publicly on a number of occasions, that we need to do more and we need to do better to hit that target in 4 years’ time. We take responsibility for all of our efforts, whether it’s bulk billing, whether it’s the housing target or in other areas. Again, it comes back to the question that Jake asked me before. We’re an ambitious government. We set ambitious goals, and we work very hard to achieve them, and I think that that’s what the Australian people expect of us.
Katina.
Journalist:
Mr Treasurer, you mentioned just briefly about the G20 meeting. Critical minerals will be on the agenda. Now, the G7 agreed on a deal to basically speed up diversifying supply chains. The Quad Foreign Ministers meeting came to some sort of similar agreement. Are you looking to do something like that through the G20, whether it’s now or at the Leaders Meeting later on? And how difficult is that, given that China is a member of the G20?
Chalmers:
While I’m in South Africa, one of the discussions will be to build on the work of the G7+. So, we’ll use that really as the foundation for the discussions that we’ll have with a number of colleagues and counterparts.
There’s a specific discussion of G7+ colleagues around this issue and what I would like to try and do – there’s the resilience of the supply chains, but there’s also the capital flow as part of the story. And for me as Treasurer, that’s a big focus of my efforts, and you’ll hear more about that through the course of the week.
You two and then Tom and then Greg.
Journalist:
Hello, my name is April, I’m from Nine. Do you have any response to the tariffs announced over the weekend to the EU and Mexico? And has any progress been made between meeting between Trump and Albanese to discuss this?
Chalmers:
First of all, there’s been no change to our baseline tariffs when it comes to the US, but I think it’s clear that every week brings new developments, new uncertainties, and over the weekend, we saw more of that. We work our way through the consequences for us of these sorts of announcements, which come from time to time. When it comes to engaging with the US, we’re engaging at a number of levels. The Prime Minister has already had 3 conversations with President Trump. I’ve had 3 conversations with my counterpart, Secretary Bessent. Minister Wong was meeting with Secretary Rubio the last week or two. So, we’re engaging at a whole range of levels with our American counterparts, but also in China at the G20, really, wherever and whenever we can.
Journalist:
Special Envoy to Combat Antisemitism Jillian Segal has been found to, well, her husband’s been tied to donations to Advance, and we’ve seen calls from some community groups that she should resign in her position. What’s your response to that?
Chalmers:
As I understand it, she’s made comments about this herself and she’s addressed this issue publicly, and I see it really as a matter for the Envoy.
We are taking substantial steps to crack down on this disgraceful escalation in antisemitism that we’re seeing in our society. We’re already taking a number of steps, and the Envoy has provided us with some suggestions and ideas, proposals for what else might be considered. We’re working our way through that.
But when it comes to donations made by her husband to that organisation, she’s addressed this publicly on the record, and I see that as a matter for her. Tom.
Journalist:
Treasurer, how concerned are you about the scenario that Treasury has modelled that involves the loss of the US dollar of the global reserve currency and the independence of the Fed? And secondly, just for the record, that subheading in full on new homes says that the 1.2 million new homes target will not be met. It’s about as unambiguous as any of the headings get. So, are you saying that your department is wrong on that?
Chalmers:
Well, Tom, I’ve read the incoming government brief. I don’t need reminding of what it says. I read it on the Sunday after the election and subsequently as well, and what you just pointed out is not inconsistent with the question that I answered, I think, from Tom a moment ago. The point that the Treasury is making, the point that I understand and accept, is that the government will need to do better and do more to meet that target. Under current trajectories, we would fall short. But that doesn’t mean that between now and over the course of the next 4 years, that we can’t consider ways and work with the states and territories and others, local governments and others, on ways to build more homes. And I can tell you, having discussed this and met with Minister O’Neil a number of times since the election that her highest priority is working out what we need to do differently and better in our current ambitious suite of housing policies to meet this ambitious target.
When it comes to the part of the incoming brief about international conditions, I welcome and I encourage the Treasury to think about best‑ and worst‑case scenarios. I’ve always been like that since I’ve been Treasurer and last time I was working in this portfolio, because I believe if you consider worst case scenarios, it gives you a better chance to work through them if they eventuate. The approach we took in the global financial crisis, it’s the approach we take now. We’ve got to recognise this is the fourth big economic shock in less than 2 decades. It would be strange if Treasury wasn’t advising me on the worst‑case scenarios, whether it’s about bond markets in the US currency exchanges or other challenges to the global system. As I made clear at the very beginning, this global economic uncertainty is really the primary influence on the government’s second term. It’s the thing that is most likely to constrain our choices and guide and shape our choices.
I think what you’re seeing in those headings released under the FOI is really the Treasury’s best attempt at working out a whole range of scenarios. I appreciate that. I’m grateful for that work that they do because it helps me think through various scenarios, even if we think that the chances of that happening are remote. Greg.
Journalist:
You made the point, Treasurer, that tax as a percentage of GDP is lower than under the Howard government. You’ve also made the point, you put it out there in your speech, that tax, as Matt said, tax as a percentage of GDP, was lower than spending. So, is it your view that as part of the reform process, tax as a percentage of GDP will need to increase to make the budget more sustainable?
Chalmers:
I’ll give you exactly the same answer to your question that I gave to Matt a moment ago.
Thanks very much.