DANICA DE GIORGIO:
Well the Treasurer has revealed booming commodity prices and the strongest labour market in decades have delivered a $50 billion windfall to the government's bottom line, but Jim Chalmers has warned of deeper future deficits. Joining me now our live is the Assistant Treasurer and Financial Services Minister Stephen Jones. Thank you so much for joining us. So, deeper deficits to come, does that mean not a lot of room for cost‑of‑living relief in the upcoming budget?
We're still carrying a trillion dollars‑worth of debt from the former government and although the numbers are coming back in and looking a lot better than we anticipated Denita, we are still going to close the year off with a $30 billion deficit and that's a lot of money in anyone's language. It's about what we spend per year on Medicare, so we can't be complacent. We know that the war in Ukraine has given us better returns on our commodities, which is more money coming into the federal coffers, but that's going to be short lived. You wouldn't go out and extend your home loan after getting one overtime shift in a week and that's kind of the situation we're in here. We know the numbers are going to go up and have been better than we anticipated for the close off of this financial year, but we know that there is rough times ahead.
Okay, so again, not a lot of wiggle room then for cost of living. What can people expect?
People can expect that we'll do exactly what we promised to do. So we've already announced the measures that we'll be taking to decrease the cost of medicines for households struggling with cost‑of‑living pressures, particularly health costs and we've got a plan for childcare which we will be implementing as we promised which will reduce the cost of childcare for over 90 per cent of Australians. And the best thing that we can do at the moment. I've got to say, though, is ensure that what we're doing from a budgetary point of view isn't working in the opposite direction from the Reserve Bank. The Reserve Bank is busy -
Okay. we've lost –
If government adds to the spending flame that makes it worse.
Okay, actually we do have you sorry, Stephen Jones, we did lose you momentarily there, but it appears we have your line back up and running. But look, just on this improvement, it's really based upon commodity prices and the soaring price of iron ore. How long can that last though?
We know that these markets are very volatile, coal and iron ore prices have been incredibly good over the last six months. But we've also even over the last month we've seen them move around in a 20 per cent, 30 per cent range. So we can't bank that. Like I said, you wouldn't go out and extend your home loan on the basis of one overnight overtime shift. So we can't do the same thing with the Federal Budget. We know the war in Ukraine, for example, is having the impact of bringing up those commodity prices that, hopefully, does not last forever. Hopefully, we have a quick end to that conflict, which you'll see those commodity prices normalise again so we've got to look through the short term into the long term we've got structural deficits, incredible problems around bringing in the cost of those big spending programs, around NDIS, around healthcare, and ensuring that we are able to meet our commitments in the defence area of the budget and pay down the interest, pay down the trillion dollars of debt worth of debt that we've inherited. The interest payments on that alone are one of the fastest growing areas of the federal budget. So we're by no means in clean air, good news, but short‑term good news and we've got big challenges ahead.
We heard yesterday the fuel excise won't continue because the government can't afford to sustain that handout for that long. How long will it be until Australians can feel that pain once again at the bowser?
Well, these were short‑term measures the former government said that they wouldn't extend them. We're not going to extend them. To the further point, the point that I was making a moment ago, we've got a trillion dollars‑worth of debt. If we were to extend this program, which has cost us about $3 billion in its initial period of operation, that's $3 billion that is going to add to the existing $30 billion deficit from last year and the trillion dollars‑worth of debt. We cannot just keep writing billion‑dollar cheques to solve every problem in the economy. The best thing that we can do around cost of living is to ensure that the Federal Budget does not add to inflation, which means is ensuring that budget policy and monetary policy are working hand in hand. And that is the strategy that we'll take into this budget in October and in May next year.