STEPHEN CENATIEMPO:
Last night, as we’ve been discussing, the Treasurer handed down his third Budget. The Assistant Treasurer, Stephen Jones, joins us now. Stephen, good morning.
STEPHEN JONES:
Stephen, good to be with you.
CENATIEMPO:
A couple of things – I’ve got to say, and, look, I’m no economist here, but it doesn’t make a lot of sense to me that you pump money into the economy and somehow that’s going to bring inflation down.
JONES:
Look, based on the modelling that we’ve had provided to us by Treasury, the continuing trend of inflation coming down will continue over the course of the rest of this year. When we came into government, inflation running at 6 per cent, now down below 4 per cent. And we expect that to hit the Reserve Bank’s target band of 2 to 3 per cent over the remainder of this year. And the measures that we’ve put in place, including our spending restraint, ensuring that we provide cost‑of‑living relief in the short term, and provision for economic recovery over the course of the next 2 years. All of that leads to a picture where we see inflation coming down and economic growth recovery.
CENATIEMPO:
The Reserve Bank doesn’t seem to share your optimism, though. Why should we believe your figures and Treasury’s figures over theirs?
JONES:
Look, as good as the Reserve Bank is, what they can’t do is make decisions based on information they don’t have. So, they didn’t have information about the most recent budget initiatives that we handed down last night because they were meeting last week, prior to them having received the budget information. So, had they had the budget details that we released last night, I’m very confident that their inflation forecast would be the same as those provided to us by Treasury.
CENATIEMPO:
Stephen, prior to the election, the Prime Minister promised us that he would bring down the cost of living and he would also reduce our power bills by $275 a year. Doesn’t this Budget imply that you failed on both of those promises?
JONES:
Well a couple of things on both of those things in relation to the cost of living, we don’t create the economic, the international economic circumstances.
CENATIEMPO:
Yeah, but hang on, that excuse doesn’t wash anymore. I mean, most economists are saying that inflation is homegrown now.
JONES:
Well, that’s actually not true. If you look at the big components of inflation, energy is driving it. Energy is driving and energy costs are driving it. And that’s driven by international factors as much to do with uncertainties in the Middle East, wars in Ukraine and what’s coming at us from around the world. So, when the price of energy goes up, it flows through to everything else. We’re doing everything we can to ensure we get our energy supplies onto a lot more long term, sustainable basis. That will bring down the cost of energy and remove inflation pressures over the long term. And that was a big feature, a big feature of our Budget and the Future Made in Australia components thereof. So, we have seen a halving of inflation. Six per cent when we came into office, Stephen, they’re the facts. Inflation running at 6 per cent, that’s what we inherited from the previous government, and we’ve reduced it. We’ve reduced it to a level close to half that and on a trajectory to have it reduced again over the course of the remainder of this year, so that we are now, we will be within the Reserve Bank’s comfort zone of 2 to 3 per cent. We can’t control everything. But the things that we can control, we’re working hard at to ensure that we are reducing those cost‑of‑living pressures on Australians.
CENATIEMPO:
The cost‑of‑living relief, though, is largely part of these tax cuts which were legislated by the previous government. It’s a bit cheeky to take credit for that, isn’t it?
JONES:
Well, if we didn’t do anything to them, no, it would be cheeky. But the fact of the matter is, the tax cuts which will come into effect on the 1st of July this year was significantly modified by this government to ensure that they were fairer and provided a benefit to the majority of Australians. And as a result of this, 13.6 million Australians will get a tax cut from 1 July. Over 84 per cent of Australians are going to be better off under the package that we’ve legislated than that was left to us by the former government. The average tax cut will be around $1,900 a year. That’s $36 a week, and that’s meaningful relief to Australians. So, you asked me quite bluntly, what’s the difference between the tax cuts we’re delivering and those that were provided by the former government? They’re a benefit for all Australians, not just some. And over 84 per cent of Australians are better off.
CENATIEMPO:
Whether their version of the tax cuts or yours, given the financial situation most Australians find themselves in, how does that not become inflationary with all of that money going straight back into the economy?
JONES:
Well, a lot of it’s about the profiling of this stuff, Stephen, and when the Reserve Bank looks at these things, they don’t just look at the short term, they look at these things right through over the long term. And we’re quite confident, as a result of the profiling of the spending and the modelling that we’ve had provided to us by Treasury, that we’re going to hit those inflation targets. But more important than that, provide some immediate cost‑of‑living relief to Australian households that are doing it tough. Whether it’s the energy bill relief, whether it’s the rent assistance, whether it’s the cheaper medicines or the tax cuts, these are all designed to provide relief to Australian households who we understand are doing it tough. And at the same time, ensuring that as we come through this immediate period, where we know people are doing it tough, we are putting in place the foundations for a stronger economic recovery. And that’s what the Future Made in Australia is all about. It’s about ensuring that we are at the centre of the energy transformation that is going on around the world, and that Australia becomes the renewable energy superpower where they’re coming to us for the energy fuels of this century, in the same way that they came to Australia for the energy fuels of last century. Australia will be the centre of the energy fuel production cycle and that’s what the Future Made in Australia is all about. Renewable energies produced here in Australia using Australian resources and Australian know‑how.
CENATIEMPO:
Are we going to an early election?
JONES:
No, look, the Prime Minister has said he expects we’ll go full term and everything that I’ve seen confirms that to me.
CENATIEMPO:
Stephen, I appreciate your time this morning. Thanks for joining us.
JONES:
Good to be with you.