CANBERRA, ACT, Sept. 28 -- The Treasurer of Australia issued the following transcript:
Kieran Gilbert:
Joining me now is the Treasurer, Jim Chalmers. Thanks for your time. So, we're going rugby league to the budget.
Jim Chalmers:
We've got to get behind the Knights though.
Gilbert:
Oh, yeah.
Chalmers:
Every self‑respecting rugby league fan, behind the Knights.
Gilbert:
Yeah, our producer Luke O'Brien's a Roosters fan, but-
Chalmers:
Hi, Luke.
Gilbert:
He'll trip you on the way out. Now, tell me on the Budget outcome. You're saying it's $6billion better, that you're doing better than your predecessor, but can you- do you accept that a lot of Australians and those watching say, 'I'm not doing better, I'm worse off, my real wages are worse off.'
Chalmers:
Yeah, I do understand, and I've acknowledged in the long press conference I've just come from that Australians are under very substantial pressure. But more than acknowledge that, we're providing cost‑of‑living relief in a whole bunch of different ways. Cutting taxes, boosting bulk billing, boosting wages, making the housing market fairer for first‑home buyers because we recognise and we understand that Australians are under, in some cases, quite substantial pressure right now.
Gilbert:
You say that- and your argument is that the growth in public spending, or the government spending, is slowing, but that's not enough. It's still adding to public demand, isn't it? Shouldn't you be cutting it?
Chalmers:
Well, the last 2 Budgets that we handed down, the budget update in December and the Budget in May, in both of those instances, the net policy decisions, the overall impact of the Budget was a positive one. So, in the last 2 budget updates, that's actually quite rare. Very responsible Budget, very responsible budget update before that, and at the beginning of your question is a really important point. If you think about private demand in the economy and public demand in the economy, government demand, what we've seen in the last year or so is that 4 in every 5 dollars of extra demand in the economy has come from private demand, not public demand. If you look at this Final Budget Outcome today, you can see that growth in public final demand has actually gone down. It's lower than what was anticipated at Budget time.
Gilbert:
Sure, but government spending is still growing, isn't it?
Chalmers:
Well, in the last 2 Budget updates, we've taken pressure off spending. Net positive decisions in the last 2 Budget updates. Overwhelmingly, this inflation challenge that we have in our economy is because of what's happening around the world, making our own domestic inflation challenge that much worse. On Wednesday we'll get inflation figures, for example, where all of the-
Gilbert:
We know rates are going up tomorrow, that's the thing. And this is like the entree for the really bad main course tomorrow, isn't it?
Chalmers:
Well, obviously, you know, no Treasurer predicts or makes or pre‑empts decisions taken independently by the Reserve Bank. But certainly, it's the universal or near‑universal expectation of economists and markets that interest rates are going up right around the world and potentially here in Australia as well.
We'll get that announcement tomorrow. The Reserve Bank Board is meeting right now. But on Wednesday we'll also get the inflation numbers for August. And what everybody expects there is that headline inflation will come up because of global oil prices flowing through to petrol prices here in Australia. That's a big driver of the inflation we're seeing.
Gilbert:
What do you say to Australians who are struggling to get by?
Chalmers:
That we do understand that that's the case and that's why we're cutting taxes. It's why we are-
Gilbert:
Do you feel it though when rates go up? Like, do you, do you recognise that a lot of families are just struggling to pay the school fees, struggling to pay- every time they go up?
Chalmers:
Of course. Every time interest rates go up, it puts extra pressure on millions of Australians with a mortgage, and that pressure reverberates right through our economy. I don't think that's an inappropriate thing for a Treasurer to acknowledge. But I don't want to predict or pre‑empt the decision that they will announce tomorrow. They're meeting right now, no doubt they're weighing up all of these different considerations and these different factors, global and domestic, and they'll make their decision known.
But of course, I understand that when interest rates go up, it puts extra pressure on people. People are under pressure already, and that's why we're cutting taxes, boosting bulk billing, boosting wages, making the housing market fairer for first‑home buyers. All of that is because we don't just acknowledge that people are doing it tough, we're doing something about it.
Gilbert:
Bill Kelty, Labor luminary and union hero, he had a crack at you recently. He says that the people, their real wages are going backwards. You shouldn't- you suggest that their pay as a percentage of GDP is going up. But he's- what do you say to someone like Bill Kelty who says real wages for punters, for workers are going backwards and have since 2021?
Chalmers:
Well, I'm not interested in an argument with Bill Kelty. Bill Kelty is entitled to his view. I acknowledge his long service to the country as I have on other occasions. But it is a good thing that workers' share of national income is going up. He's right to point out that when we've got this inflation higher than anyone would like, then that has consequences for real wages. For a substantial part of this government's time in office, we've seen some real wage growth. But until we get that inflation number down back towards more normal levels in the target range, then there will continue to be pressure on real wages, wages growth itself-
Gilbert:
But could you have done more to reduce government spending? Because a lot of economists, not Bill Kelty alone, but heaps of economists, and not just the usual suspects, as you know, your critics, a lot of them say you spend too much.
Chalmers:
Well, I'm not sure Bill Kelty is saying that. I mean, Bill Kelty has told us that we should cut income taxes by more. We are cutting income taxes. He would like us to do that more. On other occasions, he's talked about boosting bulk billing. That's a huge part of the government's agenda. And obviously we are very attentive to this real wage challenge for all of the reasons that you and I have talked about already. Now, when it comes to cutting spending, we have found well over $100billion-
Gilbert:
- Could you have done more?
Chalmers:
- In savings- governments always have to balance the different considerations in the economy. But what we saw in the financial year just finished is that overwhelmingly, 80percent of the demand in our economy was generated by private demand, not public demand. Public demand came down in the Final Budget Outcome. And so that is, I think, an important bit of perspective. Now-
Gilbert:
- Have you let government spending settle in at a too‑high a rate off the back of COVID? Because that's an often regular, repeated critique of you.
Chalmers:
From time to time, you'll see it misreported that government spending right now as a share of the economy is higher than it's been for decades. That's obviously not the case. During COVID and in its aftermath, our predecessors had government spending up around a third of the economy. We got it down to around a quarter. In today's numbers, it's in the high 26percents. Right.
There's always more work to do to make sure that spending is as responsible as it can be. But if you look at real spending growth, real spending growth under us has averaged 2percent. Under our predecessors, it averaged 4.1percent. If you want to take COVID out of that, it averaged 2.6percent. So, real spending growth under this government, substantially lower than under our predecessor.
Gilbert:
Have you got the balance right on the migration policy? Because the backpacker question is a huge one. I spoke to my colleague Matt Cunningham in Darwin, people in Broome, when recently I was there. They're saying they can't see a cut of this magnitude on the backpackers. They rely on them. Their economies will get smashed by a 43percent reduction for the second and third year entitlement for backpackers.
Chalmers:
Well, a couple of things about that. I mean, first of all, we are managing the net overseas migration numbers down from that post‑COVID surge that we inherited. We've got it down almost 50percent from its peak. And we're managing those net overseas migration numbers down for good reason. There will continue to be a role for backpackers, for working holiday makers in the ag sector and elsewhere. There is, I think, more potential in the PALM scheme as well for Pacific Island workers.
But it's another reminder- you know, all of this feedback that we get about migration policy, some people over here and some people over here, in terms of where the settings are, we take seriously the concerns raised by the ag sector. It's why we're managing the migration system in the most responsible way that we can. Not trying to play politics with it, but trying to get the right economic outcome.
Gilbert:
I'll let you go. You've been generous with your time. But on AI, will you look to update a lot of the legacy systems? I know it's an area you've been looking at closely. Are you going to try and update legacy systems within the government so that they can combat the likes of that rogue AI agent?
Chalmers:
This is an important part of our work. As Katy Gallagher said earlier on today, we found an extra $160million to upgrade our cyber capabilities in government. That's a really important part of the work we're doing, but not the only thing we're doing. The Safety Institute, the National Standards for AI investment, the rapid review after this OpenAI incident, all of this is about recognising we'll only capture the upside of AI in economic terms if we do a good job managing the risks. And that's what we're doing.
Gilbert:
Are you worried about the risks, socially?
Chalmers:
Of course. I mean, I think everybody-
Gilbert:
- On humanity?
Chalmers:
I think everybody understands that the potential upside is very substantial, but the risks are extremely serious. We've seen a hint of that with this OpenAI incident. That's why the government spends a lot of time working out how to maximise the upside but minimise the downside risks. And those downside risks are very serious.
Gilbert:
Treasurer, thanks for your time.
Chalmers:
Thanks, Kieran
Disclaimer: Curated by HT Syndication.
