CANBERRA, ACT, March 15 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: Iranian soccer players, fuel prices, petrol supply, economic reform, the Budget, interest rates, responsible economic management, savings, fuel excise
Andrew Clennell:
All right. It's my great pleasure to welcome live the Treasurer Jim Chalmers. Jim Chalmers, thank you for your time. I want to start with this development this morning, the announcement that 3 members of Iran's women's football team have decided to go back to Iran after claiming asylum. Is it possible they've been threatened? Are we confident the 3 remaining are going to remain? It's certainly a twist in the story. What's your take on it all?
Jim Chalmers:
Good morning, Andrew. I don't have all of the details of what's happened here and I'm not going to guess at them. Obviously we'll be briefed on developments in due course. I can only imagine how difficult these decisions are for these Iranian women.
The job for the Australian Government has always been to provide the opportunity for them to stay if they wanted to, not to compel an outcome, and I'm really proud that we've provided this opportunity, I'm pleased that there are a number of Iranian women who still intend, as I understand it, to stay in Australia, that's a good development. But at the end of the day these are decisions that these women will take. Our job is to provide the opportunity, we've done that, not compel an outcome.
Clennell:
Well, I've revealed this morning it was during drug testing of these Iranian female athletes that Australian authorities made the offer for them to seek asylum, quite an extraordinary sort of cloak and dagger mission, isn't it?
Chalmers:
Well, I don't know about that, Andrew. Our officials are incredibly professional and I want to also commend the work of Tony Burke, working with the other colleagues, including the PM. His officials are absolutely top shelf, and they've been working around the clock on these issues and on a number of related issues as well, and so the way these things unfold is ultimately a matter for those officials to determine. They have done the absolute best they can by these Iranian women under extreme and extraordinary pressure, and often that requires some pretty dramatic and unusual steps like those which you've described.
Clennell:
Okay. Let's talk about petrol. If the war goes on, could we run out of petrol?
Chalmers:
That's not something we're expecting, in fact we have really more than enough fuel as it stands right now. We've got big stockpiles of fuel, whether it's petrol or diesel or jet fuel, and we work around the clock to make sure that Australia doesn't run out, we're certainly not expecting that we will.
Clennell:
How high could petrol prices go in Australia if the war continues? Could they go past 3 dollars a litre?
Chalmers:
Well, again, I think in your question really is the answer, which is it depends on the duration. We don't have a model that has petrol prices going that high, but there's a lot of volatility and a lot of unpredictability in the global oil market, and of course when it comes to petrol at the bowser here in Australia as well.
We've seen just in the last few months the global oil price has gone from around $60 to almost $120, the last time I looked last night it was trading a bit over $100, and so that's obviously having implications at petrol bowsers right around the world.
For us, what we've done is we've dramatically increased the ACCC surveillance and reporting, we've doubled the penalties for any fuel suppliers or retailers who are doing the wrong thing, but we're also working really closely with the ACCC and with the industry so that all these hundreds of millions of litres of fuel that we're releasing into the system finds its way where the shortages are most acute, and often that's in regional areas.
Clennell:
The National Australia Bank predicted last week inflation would hit 5percent next quarter. Is that possible?
Chalmers:
Well, again, it depends a bit, not just on the severity of this price shock coming out of the Middle East, but also its duration.
We run a number of scenarios as well, just like the private banks do, we've got a couple of months to finalise the Treasury forecast for the Budget in May, and so obviously we are working through scenarios and contingencies like this pretty much every day as we try and land these forecasts for the Budget.
So we've run a couple of scenarios which make it clear on some realistic assumptions about global oil prices and how that would potentially flow through to inflation and for how long.
If we were putting pencils down on those forecasts today, we'd have inflation peaking somewhere between the mid to high fours, which isn't far off some of those private forecasts that you're referencing in your question.
But there's a little way to run yet, and the biggest variable, I mean really the source of the most extraordinary volatility in our forecasts, and in the economy more broadly and more importantly, is really how long this drags out for. We know already that it's a very substantial shock, whether it's a substantial and enduring shock remains to be seen.
Clennell:
What's the rationale then, given how much petrol plays a role in inflation, behind you ruling out a petrol excise increase?
Chalmers:
The point that we've made about that, Andrew, is that it's not something that we've been considering. We have been considering a whole range of other steps, including the ones that we announced on Wednesday, that Chris Bowen and Andrew Leigh and I announced on Wednesday, which is to double those penalties and to increase surveillance and to do much more work with industry and the ACCC to make sure fuel's getting to areas where there are supply issues.
And so we have a whole bunch of policies under consideration. They are largely focused on making sure that the petrol suppliers and retailers do the right thing by Australian motorists and Australian customers.
Clennell:
So Treasurer, I mean -
Chalmers:
We haven't been considering that particular change, but there are other steps that we are taking.
Clennell:
But you're not ruling it out. I mean you're not saying to me, 'oh, you know, if this keeps going by the time of the Budget, I'll change my mind and we might do it', are you? It's possible.
Chalmers:
You and I have been engaging in interviews like this for a long time, Andrew, and you know that I like to be as upfront as I can about what we're considering and what we're not. This is not something that we have been considering.
Obviously at some point down the track, governments might choose to make different decisions about this, but it's not something that's on the list of things that we are working up for the Budget.
We do understand and share the concern that motorists around Australia have, and that's why we have turbocharged the surveillance and doubled the penalties and working with industry, it's why we've released hundreds of millions of litres of fuel, it's why we've temporarily relaxed the fuel standard to get more fuel into the Australian market. We're taking a whole range of steps here, not that particular one that you identified, but a whole range of other steps which we think are an important way to come at these concerns that people legitimately have in suburbs and towns right around Australia about what's happening with fuel prices.
Clennell:
If inflation keeps rising off the back of this war, could the economy just crash? Could we see a recession?
Chalmers:
That's not something that we're anticipating or expecting. If you look at the scenarios that Treasury has already run, they expect there to be a hit to growth, but not the kind of dramatic contraction that you are describing in your question.
Obviously, again, there are a lot of unknowns, there's a lot of volatility, there's a lot of uncertainty, that existed even before the dramatic escalation of hostilities in the Middle East a couple of weeks ago, but it's especially the case now, and if you think about how this plays out in budget preparations, obviously what's happening in the Middle East is putting upward pressure on inflation here and around the world, it's weighing heavily on growth here and around the world, and that will be a big part of our deliberations for the Budget.
The Budget will be focused on the inflation challenge, the productivity challenge and global economic uncertainty, and at least 2 of those 3 have been dialled up quite considerably in the last fortnight.
Clennell:
Is this the most fearful you've been ahead of a budget in terms of the economic situation? This is your fifth Budget now.
Chalmers:
I wouldn't use that word, but obviously when you've got heightened levels of volatility and uncertainty, you do stay up late at night working through the implications for the people that we work for, the people that we represent. And so this will be a difficult budget, it will be an ambitious budget too because this is an ambitious government, and just how difficult the economic circumstances and just how ambitious the Budget will be will be determined over the course of the next couple of months, and it will be determined by the fiscal considerations, the international developments, and also obviously the deliberations with the Cabinet colleagues.
I'll be working up a number of reform packages for this Budget and they'll be focused on savings, they'll be focused on productivity. I'll give the colleagues a whole bunch of options when it comes to tax reform, and we'll work through these issues in the usual considered and methodical way, recognising that we're in the midst of another period of very substantial international economic uncertainty, and that will weigh heavily, not just on our economy, not just on our Budget, but also on the deliberations that we undertake in the next couple of months.
Clennell:
All right. We've spoken about the volatility and uncertainty. Do you think that might give cause for the Reserve Bank where normally a rate hike would seem the logical thing to do, do you think that might give them cause to say maybe not, or they've just got to do it this week?
Chalmers:
Well, as you know, Andrew, there are good reasons why Treasurers don't engage in that kind of speculation or give free advice to the independent Reserve Bank. I take their independence seriously and I respect it, and they will take a decision on Tuesday afternoon, and they'll announce it and they'll explain it, and that explanation is really important, and clearly they'll weigh up a whole range of factors, the inflation challenge, clearly, but also global economic developments.
And so I won't make a prediction, I won't pre‑empt the decisions that they take. If you look at the market expectations, they have moved pretty considerably in the last couple of weeks. Twoweeks ago the market was expecting about a one in 10 chance of an interest rate increase on Tuesday. That was before the escalation of the conflict in the Middle East. Now there's about a two‑thirds expectation. And so, you can see that those expectations have shifted a bit over the course of the last couple of weeks. We'll see on Tuesday. I won't be giving them free advice or making predictions.
Clennell:
Equally, does the volatility and uncertainty give you pause when you look at things like tax reform in this Budget?
Chalmers:
I think we're in this period now where we've seen at least 4, maybe 5 big economic shocks in the last couple of decades, and so I see all of this uncertainty and all of this volatility not as a reason to go slower, but as a reason to go further on reform.
This is a reforming government, it's not always recognised, but if you look at the steps we've taken in energy and productivity and competition policy and the work that we do with the states, and planning and zoning reform, and the EPBC and foreign investment reform, we've got a big record when it comes to making our economy more competitive, more dynamic and ultimately over time more productive. But there is much more work to do and we're upfront about that and I see developments around the world and pressures on Australians here at home not as a reason to go slower, but a reason to go further, and that's the approach that I'll be taking to the deliberations that I lead with the Cabinet colleagues.
Clennell:
Well, that's interesting, and that brings me to this question. Now you've let the speculation go in terms of changing Capital Gains Tax, you haven't hosed it at all. So are you looking to cut the Capital Gains Tax discount on investment properties from 50 to 30 or 33percent or by any amount, are you looking at that?
Chalmers:
Well, first of all, we haven't taken any decisions on it, but as I said a moment ago, we're working up a number of tax reform options for the colleagues. But let's not forget we've already got a tax policy, that tax policy hasn't changed. That tax policy's got at least 2 important elements: first of all, we're cutting income taxes in July this year and July next year, and secondly, just in the course of the last week, we reformed the tax concessions in superannuation -
Clennell:
Sure.
Chalmers:
- and that's a good example of tax reform and economic reform and that's a good example of tax reform and economic reform with an intergenerational dividend, it makes the super system fairer from top to bottom, and it helps fund more super for people on low incomes -
Clennell:
All right. I understand.
Chalmers:
- and so we've got a tax policy, we haven't changed it, and we haven't taken any decisions -
Clennell:
You haven't changed it yet.
Chalmers:
- about next steps, but I have indicated to you, and on other occasions, that I'll be working up some options for the colleagues to consider.
Clennell:
If you did that- if you did that, Treasurer, would it be grandfathered?
Chalmers:
Well, I'm not going to go into the details of a policy that we haven't adopted, Andrew, I think you would understand that. But what I've tried to say to you today is we have a tax policy, we haven't changed that tax policy, we'll work up considerations for next steps, and really the best sense I can give you of the work that I'm doing on tax with the colleagues is, if you look at those objectives that came out of the Reform Roundtable, a fair go for workers and in intergenerational terms, attracting investment if we can afford a way to do that and also simplifying the system, we've been considering a number of options in order to try and meet those objectives and we haven't landed them yet, we haven't taken any decisions on that yet and we wouldn't normally at this stage of the Budget process, we've still got a little way to run.
Clennell:
All right.
Chalmers:
But I've been upfront with you this morning and on other occasions in saying if there are additional steps we can take in tax reform beyond those income tax cuts, beyond the changes in super tax concessions and the other tax reforms that we've already made, there is a willingness on my part to consider some of those options.
Clennell:
All right. What about negative gearing in more than one or 2 properties? Are you looking at changing that, ending that?
Chalmers:
I would give you an identical answer to that question as to the one before, Andrew. We haven't changed our policy on that. We've got a policy on tax which is to cut income taxes, we've got a policy on housing which is to build heaps more homes and make it easier for people to save a deposit.
We do understand that when you think about the intergenerational unfairness in our economy, a lot of that, I think, is fairly focused on housing. We don't have enough homes, we're trying to turn that around, we can't do that overnight, and in the tax system, by providing these 3 tax cuts, one already delivered and 2 to come, it's really all about meeting our obligations to people on low incomes and younger people as well, and that's the motivation behind the super changes which passed during the week too.
Clennell:
Are you considering making changes around the tax arrangements around family trusts?
Chalmers:
Well, Andrew, I mean all of these questions I would answer in an identical way. We haven't changed our policy on that, and we've got a tax policy, and we've indicated a willingness for some time now, really for the duration of this term in office, to consider next steps in tax reform, to make sure that we can deliver the kind of intergenerational fairness that people deserve, but also to try and attract investment, also to try and simplify the system.
And I should be really clear, Andrew, in saying that we haven't taken any decisions on any of these, there's a lot of discussion still to happen between now and the end of the Budget process- you'd expect that. You've asked me, I think rightly, about some of the global uncertainty which is weighing on these budget deliberations in particular. So any tax reform in the Budget will be guided by those 3 principles, and it will be shaped, I think, by fiscal considerations in the Budget, by international developments, but also by deliberations with my Cabinet colleagues. We take the collective decision making in our Cabinet very seriously -
Clennell:
Sure. I'm sure, but Treasurer, you know -
Chalmers:
- and there will be discussions to be had.
Clennell:
It's been- it's only 10months since the election, and you could have taken any one of these things to an election, and you didn't. So is it really fair if you lump any of these things in a budget right now?
Chalmers:
Well, first of all, I mean you're assuming we've taken decisions that we haven't, and so I'm not going to go through the politics of decisions which haven't been taken. But what we have said, I think pretty consistently, including in those 2 big Press Club speeches that the PM and I gave after the election, is that we take seriously our responsibilities to deliver what we committed to, strengthening Medicare, Urgent Care Clinics, the tax cuts are an important part of that as well, and we consider delivery of what we took to the election to be a foundation of our reform efforts, not necessarily a destination. There is always more to do, when you're a government like ours -
Clennell:
It seems to me -
Chalmers:
- an ambitious government, a reforming government -
Clennell:
Sorry, Treasurer, it seems to me the only way politically you could sell it is if it was accompanied by further tax cuts? Is that a fair analysis on my part? So in other words you're cracking down tax‑wise in these other areas, and you're saying to people, 'look, we didn't promise it at the election, but we're going to use this to pay for tax cuts' because this seems to be kind of a hallmark of your time as Treasurer, that's probably how you'd have to sell it if you did it, isn't it?
Chalmers:
I think a hallmark of my time as Treasurer has been 3 income tax cuts for every single one of the 14million taxpayers in this country. And so when you ask me will there be additional income tax cuts, I would point out to all of your viewers, Andrew, that we're already cutting income taxes 3 times, we did that first, not the other way around, as you're proposing, but to deliver about 50 bucks a week across the 3 tax cuts for the average worker, and that's because we know that the tax system's a good way to provide relief from these cost‑of‑living pressures, so that people can earn more and keep more of what they earn and also retire with more as well.
And so we've done the income tax cuts first, 3 rounds of income tax cuts that our opponents said that they would repeal if they won the last election, and I think that's important to remember.
Clennell:
All right. Nearly out of time. Very briefly, would you consider a cut in tobacco excise, because you know, we've seen this underworld trade flourish in it?
Chalmers:
Look, it's a substantial problem that we have, but that's not the solution.
Clennell:
All right.
Chalmers:
I don't think cutting taxes on cigarettes would get us the outcome that you seek, but what will, is dramatically dialling up the compliance and the law enforcement, which is what we're doing -
Clennell:
Sure.
Chalmers:
- working closely with Tony Burke. We've seen some success in recent times, but we know there's more work to do there too.
Clennell:
I'm getting pretty severe time calls here, but I do want to ask you this last one, Treasurer. Are you going to slam the breaks on spending? We keep hearing that you're going to keep the NDIS growth to 4 to 5percent, but here's something I want to read you from the latest NDIS quarterly report. It says to ensure sustainability, National Cabinet set a target to reduce annual costs growth to 8percent by 1July, and as at 30June 2025, the annual growth rate had fallen to 10.8percent. So it's still growing at 10.8percent. Your projection's for it to go to 4 to 5, which will be part of your forward estimates, are they realistic?
Chalmers:
We got it down from about 22 to something that looks a bit more like 8, and so that's very good progress, and Mark Butler and Jenny McAllister have indicated a willingness to go further, and that the outcome of those discussions with the states is a good indication of that. I'm not going to front run their discussions or their deliberations.
But more broadly in the budget, there will be more savings in the budget, we've already found $114billion in savings, including $20billion just in December in the mid‑year update. There will be more to come in the May Budget. The role of the NDIS in that will be a matter for those terrific ministers and the discussions and deliberations that they'll be engaged in over the coming weeks.
Clennell:
Treasurer, thanks so much for your generous time.
Chalmers:
Thanks.
Disclaimer: Curated by HT Syndication.
