PETER STEFANOVIC:
Joining us live now, the Assistant Treasurer, Stephen Jones. Following yesterday's figures, Stephen coming in a shade under Treasury's 8 per cent inflation target, so we're a little under that. So is this as bad as it gets or do you think that there's more to go?
STEPHEN JONES:
Pete, I hope we've seen the worst of it. There are signs, like internationally, that some of the more dire forecasts that we were looking at the end of last year, things are starting to improve. Of course, a lot of the problems caused by China chasing COVID zero, which has flown through to our markets here in Australia, starting to ease with them, returning to more normal production methods. So, look, there are things that we can point to around the globe and around the country that say, look, we think we've seen the worst and it might start to improve from here. Of course, the independent Reserve Bank is going to look at these figures and respond as it sees necessary for its part in monetary policy. I'm not going to speculate on whether that automatically means an increase in interest rates. What I can say is that the job of the government is to ensure that there's no big policy lurches, steady as we go, hold our nerve. And the budget coming up in May is not going to be a big spending budget, it'll be one which is delivering on those things we've already committed. Importantly, ensuring that that targeted energy price relief that we announced before Christmas flows through in this budget.
STEFANOVIC:
Well, we'll get to that in a second, but December and Christmas spending was always going to inflate numbers, right? So in that sense and the fact that we've come in under Treasury's forecast, is that an indicator that your policies are working or do you need more time?
JONES:
Look, it gives us cause for hope, Pete, but this is no time for popping champagne corks and saying the battle is won. Inflation is unacceptably high. It's a tax on households and if it gets out of control, the pain that many households are feeling now with increased cost of living pressures is going to get worse. So we have a national interest in bringing that inflation number down over the course of the year. We think with current settings that can happen, but we're vulnerable to things that are going on in the rest of the world, there's no doubt about that. But the policies we've got in place, we think are the right policies to help ease the pressure and over the course of the year see things improve.
STEFANOVIC:
Right. Just zero in on electricity. It's still one of the main drivers, prices are still out of control on that front. Does that mean the energy assistance in the budget, and you referred to this, it'll go higher than one and a half billion dollars?
JONES:
Well, that's what we've announced and that's what we're intending to deliver on. That's a rock solid guarantee that will deliver on that in the budget. Of course, the Treasurer has already indicated that we're looking very closely at the impact that this has on households. On the plus side, the price caps and the policies we put in place in relation to gas and coal in combination with the states, we're seeing early signs that that's starting to work as well. So those longer‑term contracts, the wholesale prices in the energy market will start to flow through in the prices that households are paying and the businesses are paying. So again, early signs that the things that we put into place at the end of last year are starting to work.
STEFANOVIC:
Can middle‑income earners expect help in the budget?
JONES:
Look, our priority is ensuring that the relief is targeted and measured and ensures that we don't make a bad situation worse. So we're working through these issues with the states before Christmas, we prioritise small businesses and households on receiving family tax benefits and other forms of income support. That's what we've announced over the course of the year. And we'll see how our policies that are already announced are starting to work. We're hoping that it's not necessary to go further than this.
STEFANOVIC:
It does seem inevitable that the RBA and we know that they're independent, but it does seem inevitable that interest rate rises will come. Is it more likely next month, Stephen, than it was before yesterday's numbers?
JONES:
The Reserve Bank is going to be balancing a couple of things. Not my job to commentate on their role, but they'll be looking at a number of these things and saying "some of that's seasonal, some of that's a holiday splurge" and the energy stuff starting to flow through. Is that going to turn around in the next quarter? They'll be looking at that. But I think the thing that concerns us all is that the underlying figure is still unacceptably high. We've got to get it down. Monetary policy will respond. Fiscal policy has to respond as well.
STEFANOVIC:
Are you still sure that we'll avoid a recession?
JONES:
It's a narrow path, Pete. But again, off the back of some of the revised figures we're seeing from around the globe: international factors looking better, together with the policies we've put in place in energy, in immigration, in labour force, I think some of those pressures will come off. I think there's a narrow path, but I think we can get there.
STEFANOVIC:
So you're saying it's touch and go?
JONES:
I'm not going to make any wild promises or projections, but what I can say is early signs are the policies we're putting in place are working together with the fact that some of those international factors are getting better.
STEFANOVIC:
Okay. Stephen Jones. Appreciate it. And happy Australia Day to you. Thank you.