Jim Chalmers:
Inflation came down a bit in February but it’s still too high, and the war will make it worse. It’s pleasing to see that inflation was easing before the war but we know that inflation was already too high in our economy and the conflict in the Middle East will push inflation higher for longer. Headline inflation was flat in the month, it was 3.7 per cent through the year, which is down from 0.4 per cent in the month and 3.8 per cent through the year. Underlying inflation was 0.2 per cent to be 3.3 per cent through the year. Compared to January, the monthly number moderated from 0.3, while the annual number was unchanged.
As I said, it’s pleasing to see inflation come off a bit in February, but we don’t get carried away by that, because we understand that the inflationary pressures from the war in the Middle East are very substantial, and we expect to see the consequences of that war push up inflation higher for longer in our economy. But to have inflation coming off in the last data before the escalation of the conflict in the Middle East is an encouraging sign, even as we recognise that those inflation pressures were there before and they are now being intensified by the war.
If you look at the inflation data today, you can see that it reflects a mix of temporary factors and some more persistent factors, including, when it comes to the temporary factors, the end of the energy rebates. And Treasury estimates that around three‑quarters of the increase in inflation since the middle of last year to the beginning of this year reflects those temporary factors. If you look at the electricity inflation numbers in the data today, for example, if you exclude the impact of the energy rebates, inflation for that part of the economy is in the high 4s rather than the number that you see before you, and effectively, since I think November of 2025, if you exclude the impact of the energy rebates on the electricity part of the CPI, it’s been effectively flat. And of course, we had that good news from the regulator about the default market offer, which provides us some encouragement about electricity prices going forward as well, even with all of these pressures coming at us from around the world.
If you look at the education part of the CPI, again, a relatively high number, but largely driven by private school fees. Within the education component of the CPI, we actually saw childcare fees come down in the month, and we think that’s at least partly a consequence of the 3‑day guarantee. And so, even within these numbers, you can see that there are some temporary factors, there are some more persistent factors. We know that inflation is an ongoing challenge in our economy. It’s good to see it ease a bit in February but we know that the pressure will be upwards from here and that the war in the Middle East will make inflation higher for longer.
I wanted to touch briefly on 2 other issues before I take a couple of questions, and I’m under some time pressure today, so just a few questions today.
This morning I introduced to the parliament the legislation to double the penalties for people who do the wrong thing in our fuel sector to address some of the drivers of price gouging and potential price gouging in our economy. We introduced that legislation to double the penalties from $50 million to $100 million. And the reason we did that is very simple. The war in the Middle East is no excuse to rip people off, and our message to the suppliers and to the retailers is very clear – if you do the right thing by Australian motorists, we will work with you, and if you do the wrong thing by Australian motorists, the ACCC will throw the book at you. We’ve already empowered the ACCC on surveillance, we’ve already increased their penalties to $50 million. We’ve given them the ability to issue on‑the‑spot fines and now we’ve introduced legislation to substantially toughen the penalties for people who rip Australian motorists off at the petrol bowser.
You saw in the consumer confidence figures yesterday, you can see in other data, including the inflation data today, Australians are under pressure and it’s a reminder of just how important our cost‑of‑living relief and particularly those 2 more tax cuts are when they come in in July this year and July next year. Today is actually the one‑year anniversary of the 2025 Budget, and it’s a reminder that Angus Taylor opposed on Budget day the tax cuts which are all about helping 14 million Australian workers with the cost of living. So Angus Taylor, one year ago today, said that he opposed the tax cuts. One year ago tomorrow, voted against the tax cuts, one year ago on Friday said that he would repeal those tax cuts. So that is an important reminder in the face of these cost‑of‑living pressures that if the Liberal Party had won the last election, taxes would be going up, deficits would be bigger, and there’d be more debt, and I encourage you to remember that when we hear the usual politics being played by the Leader of the Opposition.
We’re going to start at the back with Tom, Shane, Andrew, Greg, and then we’ll see how we’re going.
Journalist:
Thanks Treasurer. Two ominous warnings today. Fuel analysts in Asia saying April will be difficult for fuel supply in Australia. Interested to get your response to that. And the National Farmers Federation say the same time frame, food prices will go up. Is the government doing enough on these 2 challenges?
Chalmers:
We’re working around the clock to address these very substantial challenges in our economy and in the global economy, and particularly as it relates to these global supply chains. We work very closely as a team in the Cabinet to make sure that we’re doing everything that we can and also that we’re doing the contingency planning and making sure that we understand best and worst‑case scenarios from here. For my part, I’ve released some of that Treasury modelling, for example, which shows some of the impacts of higher oil prices flowing through to other parts of our economy as well.
And so, we are constantly working on those twin challenges. We are constantly monitoring and analysing the consequences and potential consequences for Australia and where that relates to today’s data is pretty obvious. You can understand whether it’s at the petrol bowser or in other ways, what’s happening in the Middle East is a source of considerable upward pressure on inflation, considerable pressure on our supply chains, and addressing those challenges is the key focus of the government. Shane, then, Andrew.
Journalist:
Treasurer, have you – is the Cabinet or yourself considering a change to fuel excise? And in terms of the modelling, have you had an update from last week, and what is the terrible scenario that Treasury is going to be looking at?
Chalmers:
First of all, I think as I said as recently as yesterday, that change is not something that we have been considering. We’ve been focused on a fair go at the petrol bowser, getting more supply of fuel, making sure it gets to regional areas, engaging with our international counterparts, working with industry to make sure that where there are gaps in our supply chains that we can address them. I’ve been working with the Council of Financial Regulators and others to make sure that we’re across all of these challenges. That particular change is not something that we’ve been considering or costing up.
When it comes to the scenarios, as I said in Melbourne last week, we asked the Treasury to model a couple of scenarios which look pretty conservative now. One scenario was global oil at 100 bucks a barrel for a shorter period, another one 120 bucks a barrel for a longer period, and we’ve asked for some more challenging circumstances to be modelled. We’ve had some discussions with the Treasury about that, but not concluded sufficiently to be able to talk with you about it today.
I think we’ve been really clear from the Prime Minister down, that there are 2 key considerations here. First of all, the timing of the end of the war, and secondly, how long it takes for the global economy to get back on track after the hot part of the hostilities end. Those are really the 2 key variables which play out in all of our scenario planning and all of our modelling. And if you look, for example, at the market reaction to some of the comments from President Trump about discussions with Iran and other speculation that we’re seeing around the world right now, you can see that markets are reacting pretty positively to news of these potential discussions with the Iranians and others. And what that makes it clear, purely from an economic and market point of view, is that the end of this war can’t come soon enough for the economy. And all of the scenarios that we work through hinge in one way or another on those 2 things, when it ends and how long the lasting damage lasts.
Journalist:
Treasurer, on inflation and what we can expect in the coming weeks. Would you like the Reserve Bank to look at the fuel – fuel crisis and the shock that comes with it as effectively doing the work for them when it comes to their lifting the rates? And go [indistinct] as you can on that one? I know that you’re constrained. Secondly, secondly –
Chalmers:
Andrew likes to answer my questions for me.
Journalist:
Just on your ACCC – on your ACCC fines, you could make fines $1 trillion if you never implement them. If you’re going to make it $100 million, the threshold is so high, you effectively, I would challenge you, we’re never going to actually implement one of these fines. Is it better to have a lower fine so you can go after the hundreds of cases reported at the ACCC of people being gouged?
Chalmers:
In reverse order, Andrew, we have given the ACCC the powers to chase penalties up to 50 already and now up to $100 million. And so that allows for smaller fines if the ACCC and the system deems that appropriate. We also introduced a really important change a couple of years ago, which allows the ACCC to issue on‑the‑spot fines, immediate, more or less immediate fines, rather than going through long, drawn‑out processes. And the ACCC has issued fines. Not that long ago, I think Mobil had a $16 million fine for providing misleading information to their customers. And that shows, I think, a willingness on the part of the ACCC to go after people who are doing the wrong thing. The ACCC has also flagged some concerns about treatment by suppliers of independents in regions and they have flagged publicly that there are some investigations underway. And so, I think the more we can do to empower and strengthen the hand of the ACCC, the better for Australian motorists and that’s our motivation behind the legislation today.
Now, as you accurately predicted in your question and then the answer to your question, I’m not going to give free advice to the independent Reserve Bank. They look at all of these issues – temporary and more persistent. They spend a lot of time working through the impact of each different kind of shock in our economy. Effectively, this is the fifth big economic shock in less than 2 decades, and each one of them warrants a slightly different response, whether it’s from government or whether it’s the way that the Reserve Bank comes at these considerations independently. No doubt they will do that. The market will have a view about what the Reserve Bank should do in its next meeting and in subsequent meetings. Obviously, there’s more than the usual amount of uncertainty in our economy. Obviously, what we’re seeing with petrol prices, particularly for those Australians who can’t substitute out of petrol or diesel, obviously that has a dampening effect on the economy as well. But they will work through all those sorts of issues in their usual diligent, independent way. I said, Greg, and we’ll go these 2, and then we’re done. I’m sorry.
Journalist:
So, the Ministers such as Penny Wong and Madeleine King, and talking with our Asian trading partners about talking up Australia as a reliable supplier of gas, so we can continue to continue to receive petrol as well. Given that, is now the wrong time to be reconsidering the tax settings of gas exports, or is this still on the table?
Chalmers:
We haven’t changed our policies on gas and tax. You’re right to say that the colleagues are doing a lot of engagement with our partners in the world, particularly our partners in places like Malaysia and Singapore and Korea and elsewhere, to make sure that we can secure the most reliable supply chains for fuel as possible. Departments are doing a heap of work right now across the board on how we respond to developments in the Middle East. And when it comes to fuel, when it comes to energy, our priority is securing that supply. We haven’t changed our policies on any of these other sorts of matters.
Journalist:
While that prospect is – while that’s still, this speculation is still floating, does this have the potential to damage our ability to, actually, without the government ruling out a change to gas tax settings, does this have an impact on our negotiations with Asian trade?
Chalmers:
Well, that speculation is not coming from me. I’ve obviously seen lots of budget speculation, probably more than the usual amount this far out in the lead‑up to this Budget, and you know, I’m not going to respond to every piece of budget speculation, but we haven’t changed our policies there. The big focus is on that international engagement. The big focus is on securing that supply, and we’ll work very hard to do that.
Journalist:
Thanks Treasurer, on the legislation that was introduced today concerning the ACCC, was it a misstep to not have these laws apply retrospectively to before or in the immediate aftermath of the crisis in Iran? And I ask this, given that the ACCC – there were actions by the fuel retailers that prompted the ACCC to call the fuel bosses in for a meeting?
Chalmers:
At least 3 things about that. First of all, we dramatically increased the penalties a couple of years ago and so that gives the ACCC the ability to chase very considerable fines already and now we’ve doubled it.
Secondly, on the retrospective issues, obviously we work through some of the legal considerations on that front. We’ve actually been able to bring this in faster than the arrangements usually allow for. We have to consult with the states and territories. They usually have a long period to come back to us and I really appreciate the fact that they all came back to us more or less immediately. We rushed it into the parliament today. That’s a good thing. So, we’ve done this more swiftly than would ordinarily be the case.
Now, the third thing is when the ACCC hauled the suppliers and retailers and industry in for that discussion not that long ago, that’s a really important way, first of all, for the ACCC and the other side of the equation to understand where each other is coming from, but also to put these suppliers and retailers on notice. As I said before, war in the Middle East is no excuse to rip people off. We’ve made that really clear. The ACCC is doing, I think, a terrific job making the expectations clear. They’ve got tougher penalties in the event that they want to throw the book at some of these players in the industry and we’ll be making those penalties even tougher and that’s a good thing.
Chalmers:
This is the last one, Cam. Sorry.
Journalist:
As in the inflation data that we saw today, the cost of building a new home rose 3.7 per cent over the year February. We know that the Iran war is just going to make that worse. Materials suppliers are raising prices across the board. Builders are worried about where they’re going to get. Australia’s already a year behind of a national housing accord target. Firstly, is the government considering any measures to help the construction sector deliver more houses? And are you raising the white flag yet on the housing project data?
Chalmers:
Of course not. And of course, we’re providing very substantial government investment in housing because we’ve got that ambitious target. Everybody needs to do their bit in order to hit that target and the Commonwealth’s doing its bit with tens of billions of dollars investment. My colleague, Clare O’Neil, is working very hard so we can build as many homes as we can as soon as we can. And when it comes to building costs, obviously we are very focused on the potential impact on building costs of what we’re seeing in the Middle East and all of those supply chains which are caught up in those developments.
But if you look at today’s numbers, if you look at the monthly number for a new dwelling, it was just 0.1 per cent. It was actually in the month, quite a good figure. And what that shows, and it’s a bit consistent with the rest of the data, is inflation was easing before the war began. The war will obviously makes things harder and for longer, but in some of these really important areas, inflation had come off a little bit.
To finish where I started, we’re really pleased that inflation came off a bit, but we have the perspective which comes from understanding that this data is from the period immediately before the war. The war will make things harder for Australians. It will put more pressure on the global economy. It will push inflation up higher for longer, but at least we went into that with inflation coming off a bit. Thanks very much.