Jim Chalmers:
Okay, thanks, everyone. Three things I wanted to touch on before I take some of your questions. The first one is about card surcharges, then I wanted to touch on fuel excise and then a decision from the Fair Work Commission.
Australians will no longer pay $1.6 billion a year in surcharges and small businesses will save $910 million a year when credit and debit card surcharging ends in October. These changes will help take some of the pressures off consumers and businesses and help with the cost of living.
We’ve made it really clear for some time now that people shouldn’t be punished for using a credit or a debit card. Australians should be able to use debit and credit cards without being penalised, and that’s what this change will help deliver. In late 2024 we announced that we were prepared to ban debit card surcharges to help with the cost of living subject to further work by the Reserve Bank and safeguards in the economy more broadly. And in response to this, the Reserve Bank has released its policy today, which will go further, ending credit card and debit card surcharging from 1 October.
Australians hate paying these charges; let’s be blunt about it. And the Reserve Bank has done quite a bit of work here. They are responsible for the system that is being changed here. They have the ability to make these changes without the parliament legislating them. They are the appropriate place for these changes to be determined and implemented. And so I acknowledge the work that they have done in making this announcement today.
And what they’ve announced is really a three‑part reform package to lower the cost of doing business and to simplify payments for consumers and businesses. It is effectively, firstly, removing card surcharges; secondly, amending interchange fees and making other fees more transparent. So what these changes will do, will give consumers more certainty and transparency about the total cost of goods and services when they pay by a card, and it will lower fees for businesses, as I said, by about $910 million a year. And the Reserve Bank expects it to boost competition in the card payment market as well.
We know that the current rules are difficult to follow, and so this will simplify the arrangements as well. Obviously the RBA and the ACCC will monitor the implementation and progress of the package as well. These changes will make the card payment system fairer, more efficient, more transparent, and be beneficial across the economy.
And in addition to that, I wanted to say that there’s been a heap of work done in the parliamentary committees, including by some wonderful colleagues of mine – Jerome Laxale, Louise Miller‑Frost, Sally Sitou, Michelle Ananda‑Rajah, Ed Husic, Tania Lawrence and Al Byrnes – who have all been working on this issue and campaigning for change in this regard for some time. I wanted to acknowledge them and the excellent work that they have been doing.
Look, no doubt not every part of the economy will be happy about this. There will be reactions about it. Often when changes of this magnitude are proposed there will be people who are supportive of it and people who oppose it. We expect that. And no doubt the Reserve Bank will engage with all of those stakeholders between now and the 1st of October to make sure that these changes are implemented in the best way that they can.
Second issue I wanted to touch on was the fuel excise. And so later today – really quite soon – I’ll be introducing into the parliament the legislation to halve the fuel excise to give Australian motorists and truckies some cost‑of‑living relief at an especially difficult time. This assistance is timely, it’s temporary, it’s responsible, and it recognises that it’s not the fault of Australian motorists or Australian truckies that there’s a war in the Middle East which is dramatically pushing up petrol prices and diesel prices at the bowser.
So the government is stepping up and stepping in, in a responsible way to provide some cost‑of‑living relief. It’s an important part of our plan but not the only part of our plan. We’re focused on supply, distribution, cracking down on rip-offs and also helping Australians with the cost of living. In addition to this temporary relief obviously we’ve got the tax cuts coming in and all of our other cost‑of‑living relief – cheaper medicines, student debt relief, more bulk billing and the like. And so we feel that this is a responsible, obviously timely, and temporary way to take some of the sting out of these high petrol prices that Australians are paying.
What you’ll see in the legislation is it gives me the ability to make additional changes beyond the halving of the excise, and beyond the reducing the heavy vehicle road user charge to zero, and it allows me to make changes which reflect the very good progress that the Prime Minister was able to make with the state and territory leaders yesterday in the National Cabinet meeting.
And what the state and territory leaders did yesterday was that they indicated a willingness to also come to the table when it comes to temporarily reducing the price of fuel compared to what it would otherwise be. We’ve been negotiating with the states and territories over the course of the last 24 hours or so to give effect to that commitment that they gave the Prime Minister. In a world where it is too complex to apply the GST relief at every part of the purchasing chain, there are other ways that we can consider where we would give the equivalent amount of relief through the fuel excise system. And so the eagle‑eyed among you will see in the legislation when it’s introduced by me in the next hour or hour and a half or so, that there are some additional powers there for me to do more for when we are able to come to a concluded deal, concluded view, with the states and territories.
The last thing I wanted to touch on – and thanks for your patience – is the Fair Work Commission has come out with its decision about younger workers. This is a great outcome for young workers, especially in retail, fast food and pharmacy. We welcome it. The independent Fair Work Commission decided to get rid of junior pay rates for people over 18 in these industries but with phase‑in periods for businesses to adjust. So one of those decisions which recognises there was an unfairness here when it came to people, younger workers who were over 18 in those industries but also providing for a sensible phase‑in period for businesses to adjust to the new arrangements.
This is all about ensuring that Australians get fair, decent wages, and the outcome announced by the Fair Work Commission will help achieve that. And I wanted to thank in particular the SDA union for the campaign that they’ve run on this really important issue and this significant win that they’ve achieved for young Australian workers. Gerard Dwyer and his colleagues do a wonderful job representing younger workers in these industries, and we see the fruits of their efforts here in this decision.
Happy to take a few questions. We’ll start with Greg and then work our way across.
Journalist:
Treasurer, a fortnight ago you said that the war was a reason to go harder [indistinct] on reform, not softer. And then early last week you said that the government was not considering a change to the fuel excise. Is it fair to say the government’s thinking has changed over the past week to now being the time to deliver a Budget with temporary cost‑of‑living support to help Australians get through this period rather than focusing on long‑term reform?
Chalmers:
Well, every budget that we hand down is calibrated to the economic conditions. It would be strange if it wasn’t. And clearly when we’re seeing the way that the global economic conditions are playing out here in Australia, any diligent, responsible government factors that into their budget planning. But I would encourage you to still expect that this Budget is an ambitious budget. This Budget will balance the pressures of the here-and-now with the demands and obligations of the future. There will be a focus on some of the intergenerational issues in our economy and in our budget. There will be efforts to boost productivity and lift the speed limit in our economy. There’ll be savings in the Budget.
Now, clearly, in the preparation for every single budget but probably especially this one given we’re dealing with more than the usual amount of global economic uncertainty, we put a lot of effort into making sure that the budget reflects the times.
Journalist:
Treasurer, economists are warning that the change to the fuel excise could increase pressure on the RBA to hike rates. Westpac is now predicting 3 interest rates hikes later this year. Do you accept that those actions – that, you know, the actions you’ve taken on fuel excise could trigger unintended consequences like an interest – more interest rate hikes?
Chalmers:
Yeah, obviously I don’t comment on decisions taken independently by the Reserve Bank. I don’t make predictions about that or pre‑empt the discussions that they have in their meetings. I don’t think market expectations for interest rates changed much yesterday after the announcement of our policy. That’s just the market’s assessment of the announcement yesterday. If you look around the world, most markets are expecting higher rates for longer in other economies as they work through what this shock means for global inflation.
Expectations in the US, for example, pared back a bit overnight after the US chair’s comments, but the expected trajectory for rates in most advanced economies is much higher now than it was before the conflict. And so I think the primary influence on the discussions that the independent members of the Reserve Bank will have will be to weigh up the costs and consequences of this war in the Middle East. And obviously the impact on the global economy of this war in the Middle East is very, very substantial. From a purely economic point of view the end of the war can’t come soon enough. And central banks around the world, including here in Australia, will weigh up the likely consequences for inflation and growth and unemployment in all of the usual ways.
Journalist:
Treasurer, when do you expect the 26 cents fuel excise cut to be passed on to consumers? And given that for weeks now government ministers have been saying that the fuel shortages have been driven by demand, what gives you the confidence that essentially cheap petrol won’t just continue to exacerbate demand?
Chalmers:
Yeah, thank you. First of all, it’s really important to remember that the excise cut is levied to or applied to wholesale fuel sales. So the full 26 won’t show up at 12:01 tonight. It is about the replenishing of the stocks in the tanks because it’s applied to the wholesale. Obviously the fuel in the tanks right now has been purchased at the higher rate and so people should expect it would take, you know, somewhere between maybe one and 2 weeks for the full benefit of the excise to flow through. And I think that’s a really important question. I want to manage expectations on that front because people shouldn’t rock up at 5 past midnight tonight and expect to see the full benefit passed on. Obviously we’ll make sure via the ACCC that the benefit is passed on, as is appropriate. People shouldn’t be taking motorists for mugs when it comes to passing it on. I’ve written to the Chair of the ACCC to set the expectations on this front. And so the change kicks in at midnight, but people should expect to see it over the course of the next fortnight or so.
Now, when it comes to your other question about demand, the best way to think about it is our change yesterday in Treasury’s estimation would have an extremely small impact on demand; you know, perhaps something like 2 per cent on demand. But remember that’s in the context of the broader pricing meaning something like 10 per cent less demand. And so multiples of that 2 or 3 per cent will be netted out and by what we expect to see more broadly in fuel markets. So the higher prices we’re seeing right now we think will mean about a 10 per cent hit to demand in fuel. What we announced yesterday maybe 2 or 3 per cent. And so still very, very substantial price signals in fuel markets even after the change is fully implemented.
Journalist:
Treasurer, early in the war Energy Department officials did some preliminary analysis of the impact of reduced imports on our fuel reserve. As part of that they considered that rationing would come in with about 10 days of supply left. To what extent do you think that the amount of fuel left in reserve should have an impact on when rationing maybe comes into effect?
Chalmers:
Right, look, a lot of the effort that we’ve been putting in with the states and territories, with industry, with our international partners has been about trying to avoid rationing. You know, our objective here is to try and avoid some of those heavier‑handed COVID‑style harsher interventions in our economy. So we don’t want to go down that path. At every stage since the war began, I think 4 weeks ago now, we’ve been focused on securing more supply and making sure we distribute it effectively.
If you look at that National Cabinet plan yesterday, it had the 4‑stage plan. The current stage we’re in is stage 2, which is keeping Australia moving, which is all about managing localised shortages while the shipments continue to arrive and our refineries continue to do their thing as well. We will continue to work really closely with the states and territories to consider the best actions under stage 3 and stage 4 of the plan that the PM released yesterday, if they were to become necessary. But as I said at the start, our goal here, our objective here, is to keep the place moving, keep the economy ticking over. And if we collectively, if everybody does their bit, then we hope to avoid some of those harsher interventions like rationing.
Journalist:
Treasurer, can you defend the excise cut as responsible when viewed through the lens of fiscal health? You say it’s temporary, but would you consider extending it? We don’t know what the outlook for supply is. We don’t know how long the conflict is going to last. And also isn’t it kind of at odds with a savings package in the Budget?
Chalmers:
Look, not necessarily. I mean, you’re right to point out that there is an extreme amount of uncertainty, not just in our economy but in the global economy, and the 2 main sources of that uncertainty are, first of all, when the war ends and second of all, how long it takes the global economy to get the show back on the road after the end of hostilities. You know, thinking about the reopening of the Strait, for example, but also some of the lasting damage done to oil and gas infrastructure and some of the lasting damage potentially done to global supply chains. And so there is a lot of uncertainty, and you’re right to point to it in your question.
I think the main reason this is responsible is because it is temporary. And we’ve found the most responsible way, I think, to help people with the cost of living, to take some of the edge off these higher petrol prices in a way that doesn’t overdo it. And the reason that’s consistent with our broader budget strategy is one of the reasons why it’s so important we got the budget in better shape over the course of the last 3 or 4 years – substantially better shape than what it was in 2022 – is when a crisis hits like it has right now from the other side of the world, you want to have the ability to respond in timely and temporary and responsible ways, and that’s what we’re doing.
Journalist:
Treasurer, just following on from Lea’s question there the NRMA says based on the speed that petrol prices have been going up over the last couple of weeks that this 26 cents could basically be gobbled up inside of a week. Isn’t it spending 2 and a half billion dollars for fairly negligible impact if it’s only going to last a week? And there’s some analysis from JP Morgan that suggests that most fuel deliveries to Australia could be stopping around April 20. We’d be probably the last in the world to have that impact. Does that tally with analysis that the government is doing?
Chalmers:
Well, first of all, the impact of our excise cut will be something like $19 per 65‑litre tank. And so I understand the NRMA – who I’ve got a lot of time and respect for – I understand that they would like it to be more and bigger than that.
Journalist:
[Indistinct].
Chalmers:
And some people would like us to have gone down a different path. I understand that. But it means that that 65‑litre tank is $19 cheaper than it would otherwise be. And what we’ve tried to do here is to take some of the edge off these petrol prices. Obviously we can’t on our own immediately return to the fuel prices that we saw in February. It wouldn’t be possible or responsible, but we’ve done the most responsible thing that we can here in taking some of the edge off it. I understand the points that people have made about it.
Now, when it comes to shipments, I mean, here I acknowledge the really quite remarkable work of my cabinet colleagues – you know, Chris, Penny and Don and others, the PM. We put a lot of work into trying to secure these shipments. And when we got word that 6 shipments – out of a huge number, but 6 shipments – weren’t arriving, we replaced it with 9 shipments. And the work that we have been doing in and around the announcement on Saturday via Export Finance Australia is all about securing as much of that uncontracted supply as we can. Obviously there’s huge pressures on the supply chain. That’s what JP Morgan is pointing to, and that’s what we’re responding to.
Journalist:
Treasurer, on the surcharge issue, Australians you say will not be paying $1.6 billion a year when it comes to fees. But when they go and tap for a coffee, will they actually be saving money on this, or will the small businesses just have to jack up prices?
Chalmers:
Well, the difference is small business will have that choice to make, and there’ll be transparency about the price that people pay. I mean, we all know that Australians absolutely hate this idea that there’s a sneaky charge when you tap and go. When you get a coffee or get a beer, people would rather know how much that coffee or beer or sandwich costs. And so there are 2 important elements or 2 important parts to an answer to your question, Trudy: first of all, there’ll be more transparency, but, second of all, by getting some of the interchange fees down that will be of benefit to some of these small businesses that we hope that they will pass on to customers as well. And so there are swings and roundabouts here. But fundamentally this is about Australians knowing what they’re paying. It’s about ending that $1.6 billion surcharge hit so that Australians can make more informed choices about whether they have that second coffee or that fifth or sixth schooner.
Journalist:
Treasurer, with the Budget, are you – when it comes to the table of truth, the decisions taken by government not necessarily [indistinct] to variations, are you expecting that that will ultimately result in more spending working against the RBA or net savings working with the contractionary stance of the RBA? And then just you mentioned the Export Finance changes that came into effect. How would you describe the international situation at the moment in terms of getting fuel? Is this like COVID, you know, in trying to secure PPE? Are we basically in a bare‑knuckle brawl with other countries to get whatever we can get?
Chalmers:
Well, the first part of your question, Ron, we don’t finish the Budget in the last day of March; we finish it typically in the first week of May. And I think it’s entirely conceivable that we will finish this one later than usual. And so there’s a lot of deliberations and decisions still to be taken. If you look at the last time we released a budget update in December there was a net improvement along the lines of what you’re describing in your question. But it remains to be seen. And the quality of the spending matters, too, and how much room we’ve been able to make for some of the estimates variations and other pressures that you identify rightly in your question.
Obviously when it comes to the global situation and global supply chains for fuel – but not just fuel; fertiliser, PVC, other vulnerable parts of the supply chains – there is a bit of a scramble going on in the world, and that’s why we empowered EFA and the deal-makers that work for us to try and secure as much of this uncontracted, above‑normal supply as we can get our hands on. That’s really the motivation of the changes that the PM and Chris announced on Saturday.
I’ve been engaging, you know, very, very regularly with the CEOs of the major companies, including the major miners, in the last couple of days to make sure that we understand the efforts that they’re putting in to purchasing fuel as well. So of course there’s a global scramble underway. We feel like we have equipped ourselves to do the best we can in securing some of that extra supply.
Journalist:
Treasurer, market economists have been steadily advising that the forecast for the economy over the last week or so –
Chalmers:
I noticed that too.
Journalist:
Yeah. HSBC yesterday said the base case now is for Australia’s economy to go backwards in the second quarter. Can you [indistinct] on that for worst‑case scenario that Treasury was modelling, and do you now see negative growth in the second quarter [indistinct]?
Chalmers:
Yeah, that’s not our expectation, but you’re right to point out that the forecasts are evolving. They’re evolving in the private sector and they’re evolving when it comes to preparations for our Budget as well. And forecasting is difficult at the – at more stable times, and it’s especially difficult when we’ve got all this global volatility. And so the Treasury colleagues do a wonderful job of trying to present the best set of forecasts that they can. I’ve been clear with you on other occasions and said that the couple of scenarios I’ve already released I consider to be too conservative, certainly more conservative than a lot of the private sector forecasting that we are seeing. We’ve got a few weeks still before we finalise the forecasts for the Budget. We’re not currently anticipating our economy to go backwards, but obviously there’s more than the usual amount of global economic uncertainty playing out in our efforts to land credible forecasts.
Journalist:
Treasurer, of the 5 budgets that you have been involved in putting together as Treasurer, is this the one that has the most riding on it to you? Is this the most consequential Budget for you?
Chalmers:
I don’t see it in personal terms. You know, I try and do the best job I can for the country every time we’re asked to hand down a Budget. I don’t do it on my own. I work very closely with Katy Gallagher and with the PM, with Expenditure Review Committee colleagues and Cabinet colleagues, and caucus more broadly. So it’ll always be a team effort. And the way that we make decisions in our government, the collective decision making, which is a hallmark of the Prime Minister’s leadership, is the strength of our government, rather than a weakness of our government. So I’ll do the best that I can.
Certainly, I think the most challenging because the global environment is just so desperately uncertain right now. And anybody who tells you that they know with any precision how the economy’s going to play out for the coming weeks, months, and years, I think you should be very careful about that because there’s more than the usual amount of uncertainty. Supply chains are being tested in quite extreme ways, and Australians are paying the price for all of that. And that’s why, you know, one of the reasons why we provided this cost‑of‑living help is because it’s not Australians’ fault that there is a war in the Middle East, but they’re paying the price for it, and any responsible government takes those pressures seriously at the same time as it weighs it up against all or the other objectives that we have in the budget in the near term and longer term, along the lines of my answer to Greg before.
Journalist:
Treasurer, World Vision has just told SBS that some South Pacific neighbouring countries, like Papua New Guinea and Timor Leste are on day zero of their fuel, and the Prime Minister says we have more fuel than at the start of the conflict. You’ve just spoken about the fuel that’s coming in, you’re on the National Security Committee. So what will be the government’s obligation to Pacific and neighbouring countries if they run out of fuel and ask us for help?
Chalmers:
Look, I haven’t seen that report, and obviously I’m not going to go into discussions of the National Security Committee. We work with our friends and partners in the region where we can. That’s not an issue that I have been part of discussing in other forums, but we’ll have a look at the conclusions of that report and we’ll obviously take it seriously.
Journalist:
But if we’re asked for help, do you think that there’s an obligation on Australia?
Chalmers:
I’m not going to pre‑empt that. I mean, that will primarily be work done by the foreign-facing colleagues, but our first responsibility and our highest priority is making sure that we’ve gotten enough supply here, getting it distributed, providing cost‑of‑living help, cracking down on rip-offs, all of the parts of our strategy here in Australia.
Journalist:
Treasurer will the $2.55 billion dollar cost of the excise be offset by savings elsewhere in the Budget? And it’s only a fortnight ago you were down in Melbourne and you outlined the 3 parts –
Chalmers:
Feels like longer.
Journalist:
It does seem like longer. But they, in terms of savings, tax reform and productivity, have you modified your thinking on those 3 packages in the past fortnight?
Chalmers:
We’re still working towards those 3 packages and we haven’t finalised them and we wouldn’t have finalised those 3 packages even absent the pretty extreme oil shock emanating from a war in the Middle East. But our attention is to continue to work up those 3 packages for the Cabinet colleagues to consider. Obviously, we’ll factor in all of the economic conditions, prevailing conditions in the usual way, and calibrate our economic strategy to them. But those 3 areas still strike me as the best way to organise that work.
Journalist:
And are you offsetting?
Chalmers:
There’ll be savings in the Budget.
Journalist:
For that $2.55 billion?
Chalmers:
Well, it all goes to the bottom line, and you know, we’re working very hard to find savings in the Budget, and again, we haven’t finalised them, I wouldn’t have expected us to. But we’re working very hard to make the Budget as responsible as we can.
Journalist:
Can I just take you back to surcharging? Have Australian consumers been ripped off, having to pay these surcharges now, if the RBA is clear that banks can do without them?
Chalmers:
Look, I’m not going to point the finger at different parts of the economy. I mean, I don’t think the banks will be delighted with the changes that the Reserve Bank has announced today and there’ll be other stakeholders as well who’ll have a view about it. I don’t want to get hostile about them or point the finger at them. I just think it’s really clear that the time has come to deal with what is a major irritant for a lot of Australians paying these surcharges. And so the changes which have been worked out, released today by the Reserve Bank, you know they are the Reserve Bank’s best efforts to get at this major irritant in our economy. Not everyone will be happy about that. We’ll hear from different stakeholder groups, no doubt, through the course of the day but I think Australians broadly will welcome the extra transparency that comes from knowing, that the price which is up on the chalkboard is the price that they pay.
Journalist:
Just building on Shane’s question about the Budget. Those 3 headings of tax, spending, productivity, obviously at that time you were saying that the war was a reason to do more as Greg alluded to. Can we take implication from what you’re saying that there’s so much change in the world since then, that now your view overall is that some of those more controversial elements of those structural reforms, maybe it’s better to wait until the picture settles down?
Chalmers:
Well, I mean, first of all, whether it’s Greg’s question, Shane’s question or your question, I encourage you not to assume that we had kind of finished a whole bunch of reforms on the 28th of February, and then we woke up on the 1st or 2nd of March, and shredded them. That’s not really how budgets work even in normal times and especially not how budgets work in times like these. So we had, and we continue to have a number of reforms under consideration.
Now, it would be strange if we didn’t factor in the prevailing economic conditions. Every budget is pretty carefully calibrated to the economic circumstances, people face right now and our best anticipation and expectation of how the economy will play out in the future. As I said in response to Greg’s question, this Budget will balance the very substantial pressures people are under right now. With those intergenerational obligations and responsibilities that we have, that we have flagged in some detail over recent months, and so the Budget is not finished yet. We haven’t taken those key decisions. We haven’t taken a bunch of decisions on those big reforms and then decided to start again at the start of March. That’s not really how budgets work.
Journalist:
Thank you very much for the question. Just, do you agree with the PM that it is simplistic to say that a cut in the excise, without offsets, is inflationary? And also, this is a really, this is a very, very serious crisis economically around the world. When you look at that and the risks, do you prioritise keeping inflation low over avoiding a recession?
Chalmers:
Well, on the first part of your question, I think the point that the PM’s making, which I agree with, is that it’s not the only thing that’s happening in our economy. I mean, the primary driver of inflation now in our economy is a war in the Middle East. Now, we did have an inflation challenge before the war in the Middle East, I’ve been very frank and upfront about that. But the war in the Middle East has turbocharged that challenge in our economy, and that’s the primary driver. So the idea that the primary driver of inflation in our economy is an announcement we made at 12:30 yesterday, I don’t think any objective observer could sign up to that. There are a lot of other things going on in the economy, and I think that’s the point that the PM is making.
The second part of your question is obviously the key one, and that is how we balance all the pressures and considerations in our economy, in our economic plan, and in the Budget, more broadly in the second week of May. Obviously, inflation is a primary near‑term concern, and over the medium term, we’ve got this issue with the speed limit in our economy. Our economy can’t grow fast enough without seeing this unwelcome return of inflation in our economy, I’ve been up front, about that, including in the long speech I delivered in Melbourne that Shane referenced. And so it’s not one challenge or the other, but in the near term, inflation is obviously the big pressing challenge. In the medium term, you know, we’ve had this long‑standing productivity challenge. We’ve got this challenge with the output gap in our economy. We want to lift the speed limit on the economy, and so really everything that we’re doing is trying to balance those near‑term and longer term considerations, not focussing necessarily or exclusively on one challenge or the other, but trying to strike a series of fine balances and to do the best we can in uncertain times. Thanks very much.