CANBERRA, ACT, March 18 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: interest rate hikes, rising fuel costs, capital gains tax discount
James Glenday:
Now the Treasurer, Jim Chalmers, says he is not expecting a recession and that is despite the Reserve Bank warning that it may be a possibility in a bid to rein in inflation exacerbated by rising fuel costs and the war in Iran.
The Treasurer joins us now from Canberra. Jim Chalmers, welcome back to News Breakfast.
Jim Chalmers:
Thanks very much, James.
Glenday:
First of all, I think there will be a lot of people waking up this morning to a note from their bank saying that their interest rate is going up on their mortgage. What's your message to families who are worried about putting food on their tables and fuel in their cars?
Chalmers:
Well, obviously this is not the decision that a lot of Australians were hoping for at a time when they were already under significant pressure. Obviously this puts additional pressure on people with a mortgage and at a time when the global economic environment is especially volatile.
And so more than acknowledge the pressures that people are under, we're acting on it, we're doing a lot of work when it comes to fuel security, we've obviously got go the of the cost‑of‑living help rolling out, including 2 more tax cuts, and this inflation challenge that we had in our economy before the hostilities in the Middle East really escalated but have been made worse by developments on the other side of the world. That's obviously a really key focus for us as we put the Budget together.
Glenday:
Our audience has been writing in this morning telling us about some of the ways that they're cutting back. You mentioned cost‑of‑living relief in the Budget. I'm just wondering whether or not you've reviewed some of that, because there are fears that some of that could be inflationary in the short to medium term?
Chalmers:
Well, obviously we weigh all of that up. We've got 2 more tax cuts coming in July this year and July next year, we're making medicines cheaper, there's more bulk billing to take pressure off families, we're cutting student debt, there's a whole range of things that we're doing in the most responsible way that we can, because obviously we have to strike that balance.
And as we get closer to the Budget in May, you know, we've got a big focus on inflation, on productivity and on global economic uncertainty, and in all of those areas really one of the defining objectives is to make sure that we are addressing this inflation challenge; inflation is too high in our economy, that's why the Reserve Bank has hiked interest rates yesterday, we understand that. That's not primarily because of government spending, but we've all got a role to play, I've got a role to play in making sure that the budget is as responsible as it can be.
Glenday:
If government spending was lower though, would the inflation problem be quite so bad, and are you looking to make this a fairly tough budget where you maybe kick some of your ideas down the road or make broader tax changes in order to take some of the heat out of the economy?
Chalmers:
Oh, there will be more savings in this Budget, but there have been savings in all of the budgets that Katy Gallagher and I have delivered, and we're working very hard to work out where those savings can come from, and so that will be a focus and a feature of the Budget in May.
Now when it comes to government spending there are 2 things here: first of all, obviously government demand, public demand is part of the overall calculation of aggregate demand in our economy, but what the Reserve Bank pointed out, including in its statement yesterday is the reason that we had higher than expected inflation towards the end of last year is because we had higher than expected private demand, the private economy came back much quicker than they were anticipating, and that has helped to create some of these inflationary pressures which are made worse by developments in the Middle East.
And so, we're aware of that, I'm going to give a big speech about that tomorrow in Melbourne at the Australian Business Economists to explain to Australians how we're seeing the outlook, but that is primarily the situation.
We know we've got a role to play in making the budget as responsible as it can be, we've already found $114billion in savings to this point, and there will be more to come in May.
Glenday:
I just want to jump in and take you to some of the specifics. A parliamentary report out yesterday seemed to green light a tax overhaul for property investors, specifically a cut to the capital gains tax discount. Can you confirm that that is now going to be happening?
Chalmers:
No, we haven't taken any decisions on that, James, our tax policy in that regard hasn't changed. The big focus in tax is cutting income taxes for all 14million Australians. Our opponents said that they would repeal those tax cuts.
Glenday:
Sorry, just to jump in and take you back to property taxes. I mean this seems significant because Labor senators have endorsed this, and that seems to be the first time in some time anyone from the Labor Party has put their name to capital gains tax changes. Is that a pretty good insight that you are all but- you know, you're very much considering this?
Chalmers:
Look, we've made it clear in recent weeks that we are considering our options when it comes to tax reform. The focus is on income tax cuts, as I've explained. We haven't taken any decisions, it's only the middle of March and the Budget is towards the middle of May.
When it comes to that report from the parliamentary committee, I mean first of all, most obviously our tax policy is decided by the Cabinet, not by parliamentary committees, but my colleagues, Richard Dowling and Ellie Whiteaker, have done a terrific job feeding into the considerations of that committee. They've actually issued their own words, they haven't signed up to all of the words from the committee chair.
But a lot of the analysis in that report is familiar to us about how the capital gains tax discount operates. A lot of that is factual information, there're very similar conclusions in my own tax expenditure and insight statement.
I'll go through the report, and obviously I'll take it seriously, but at the end of the day the decisions, any decisions taken in this area will be made by the Cabinet.
Glenday:
Just to Cabinet, Donald Trump overnight has hit out at NATO and countries, including Australia, for not supporting his idea of a military operation to keep the Strait of Hormuz open. Can you clear this up? Have we received any formal request for extra military support to keep this Strait open from Washington?
Chalmers:
Not that I'm aware of, and it's not something that we've been considering. We've made the nature of our commitment really clear. Our commitment is about keeping more than 100,000 Australians safe in the region, including I think about 25,000 Australians in the UAE, and so we've provided the Wedgetail for good reason, and we've responded to a very specific request from the UAE, and we've made clear the nature of our commitment; we're not intending -
Glenday:
So you can rule out Australia taking part in any military operation to keep the Strait open?
Chalmers:
Yeah, that's what Richard Marles has made clear, that it's not something that we are considering. We've got a different kind of commitment, and we've made the nature of that commitment really clear.
Glenday:
Federal Treasurer, Jim Chalmers, thanks for joining us this morning.
Chalmers:
Thank you, James.
Disclaimer: Curated by HT Syndication.
