CANBERRA, ACT, April 29 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: latest inflation data, budget considerations
Kieran Gilbert:
Let's go live to the Treasurer Jim Chalmers, who joins us off the back of today's inflation number. Treasurer, thanks for your time. Obviously, the fuel price - that's been the big one for the month. On the year, housing is still a big driver. Do you recognise and concede that there are other inflationary forces at play here, it wasn't just all about the war?
Jim Chalmers:
Well, this is primarily about fuel prices being higher because of the war in the Middle East. There are other inflationary challenges in our economy, but overwhelmingly, what we saw, particularly in the month of March, is that Australians are paying a really hefty price for this war in the Middle East. We're seeing the costs and consequences of that conflict flow through to household budgets in Australia, and it's another reminder that, because of all these pressures on Australians, from an economic point of view, the end of this war can't come soon enough.
Gilbert:
Indeed. Obviously, that's been the monthly impact. But throughout the year, you've seen rising costs in housing. What is driving some of that underlying pressure that remains and was there prior to the war?
Chalmers:
Well, first of all, the underlying figures didn't change much today; they were steady in both a monthly sense and in a quarterly sense as well, but we expect those underlying figures to be impacted more and more by fuel as the consequences broaden out across our economy. Remembering this is just up until the end of March, and so a lot of the pressures that we're seeing from the Middle East are still to play out. But you're right to identify, there are other challenges in our economy, other inflationary pressures in our economy as well. We've been very upfront about that. We've had an inflation challenge in our economy for a little while now, but what we're seeing out of the Middle East is overwhelmingly primarily the key driver of these higher prices in March.
Gilbert:
How does it feed into your thinking ahead of the Budget?
Chalmers:
Well, this is really a key factor as we finalise the Budget. The Budget is on Tuesday week, so less than 2weeks from today. And these numbers will obviously impact on the budget forecasts for inflation. Actually, some of them came in a little bit lower than was expected, but the Treasury is certainly anticipating inflation will get more difficult before it becomes easier. I think that's the expectation of countries right around the world, where we've seen inflation go up because of the war in the Middle East.
And so first and foremost, what we're seeing with inflation will impact on the budget forecasts, but it also is a really key factor in our decision‑making as well. The Budget is about addressing inflationary pressures, it's about making the economy more productive, it's about making it more resilient in the face of all of this global economic uncertainty as well, and it's also about economic reform. We reject this false distinction between resilience and reform. As the Productivity Commission Chair said in the last 24hours or so, reforming our economy, making it more productive, making it more dynamic and competitive is a key part of dealing with these pressures we're getting from around the world and making our economy more resilient.
So the Budget will balance these near‑term inflationary pressures with some of our intergenerational obligations as well. And I'm looking forward to telling you all about it on Tuesday week.
Gilbert:
And I look forward to hearing about it. The intergenerational challenges - it sounds a lot like some property tax changes in terms of capital gains tax and negative gearing. Some pressure from Labor people to say any revenue should be spent on housing measures. What do you say to them?
Chalmers:
Well, a couple of things about that. I mean, first of all, the Budget is not finished yet and some of the biggest parts of the Budget will land over the course of the coming week or so. That's not especially unusual, even as we've given ourselves a bit more flexibility until later in the process because of these international developments. So the Budget is not finished yet.
But more broadly, we've indicated not just a willingness to continue to respond to some of these intergenerational pressures, some of these issues around intergenerational fairness. If you look at the way that we've changed and delivered 3 tax cuts, for example, that's all about intergenerational fairness. If you look at the changes we made in superannuation, that's about intergenerational fairness. So we've got an interest and a responsibility to respond to what I think are legitimate concerns about intergenerational equity. And so you know that as we've been putting this Budget together, that's been a key feature of our thinking.
Gilbert:
Is it going to be your most ambitious budget yet, or brave budget? Is this going to be your most brave budget to this point?
Chalmers:
Well, I think it will be the most ambitious of the 5 that Katy Gallagher and I have delivered. If we can land some of these decisions over the course of the coming days. There is every chance that people will see this, I think rightly, as the most ambitious of the 5. The government is an ambitious government, and this will be an ambitious budget. You'll see that in the way that we've come about - come at the productivity challenge in our economy. You'll see that there are substantial savings, and Mark Butler identified, outlined and explained the biggest one of those last week. And also when it comes to tax reform, there'll be more tax reform. And that's because we recognise that we don't just have an opportunity here but a responsibility to balance the pressures in the here and now with some of those intergenerational obligations.
Gilbert:
Just finally - you've got to go - but you've copped flak for spending as a percentage of GDP. It's at a high level, hasn't come down as much since COVID as many would like. That NDIS move, what sort of impact does that have both in the overall spending envelope and how that relates to public demand and inflation?
Chalmers:
Well, first of all, I mean, spending as a share of the economy was up around a third of the economy in the aftermath of COVID under our predecessors. We got it down to closer to a quarter. This year it's in the 26spercent. And that does largely reflect some of these pressures from the NDIS, aged care and the like. And so we've been working in a really considered, methodical way to try and address these challenges. The NDIS is a very good example of that. I pay tribute to the work that Mark Butler, Jenny McAllister, Katy Gallagher, and all of us on the Expenditure Review Committee did on -
Gilbert:
So that will be down further?
Chalmers:
- those announcements that Mark Butler made.
Gilbert:
That number?
Chalmers:
There's that, there's the aged care progress as well as - I beg your pardon?
Gilbert:
That number will be down further? You said it's in the 26s as a percentage of GDP. That will be down further in the budget?
Chalmers:
Yeah, well, we haven't finalised that number, Kieran. And obviously, that number comes at the very end of the process because there are still decisions to land. I guess the point that I'm making is we got it down very substantially from COVID. That hasn't been easy. There have been difficult decisions in the NDIS, aged care and getting debt down as well and debt repayments down as well. That all has a positive impact, but where that final spending to GDP number lands is still to be determined.
Gilbert:
Treasurer, thanks for making the time.
Disclaimer: Curated by HT Syndication.
