CANBERRA, ACT, March 18 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: interest rates, economic growth, capital gains tax, Middle East conflict
Peter Stefanovic:
Joining us live now is the Treasurer, Jim Chalmers. Treasurer, thanks for your time this morning. So, do you accept any blame for this latest hike?
Jim Chalmers:
Good morning, Pete. I take responsibility for my part in the fight against inflation, and inflation is too high in our economy, that was the case before the dramatic escalation of hostilities in the Middle East, and that will make this inflation challenge harder rather than easier. But more than acknowledge that, we are acting on that. All of this work we're doing in fuel markets, the cost‑of‑living relief we're rolling out including 2 more tax cuts, as well as our efforts to make sure that the Budget in May, like the 4 that preceded it, is as responsible as possible.
Stefanovic:
When you say your responsibility, do you recognise there's been too much spending?
Chalmers:
If you look at the statement that the Reserve Bank issued yesterday, they said that the uptick in inflation towards the end of the last year was because of faster than expected growth in the private economy, not public demand. But overall, I understand that public demand is part of the overall calculation of aggregate demand, we understand that, that's why we've put so much effort into getting spending as a share of the economy down very substantially since we came to office, it's why we've found $114billion in savings and delivered budget surpluses and got the deficits down, it's because we understand that a responsible Budget is one of the most important things that we can do in the context of this inflation, which is too high.
Stefanovic:
But those savings you talk of, they were just spent elsewhere, wasn't it? So, you've just moved one part to another part.
Chalmers:
Well, the overall budget position's improved by $233billion, Pete, and that's because of surpluses and smaller deficits, banking upward revisions to revenue, making room for our priorities, including investments in Medicare and cheaper medicines, and the tax cuts as well. And so, we've managed the Budget in a responsible way which would be unrecognisable to our predecessors, but we know that there's more work to do to make the Budget even more responsible and that's a big focus of the meetings that we're having, including today and throughout the week, in the lead‑up to the Budget in May.
Stefanovic:
How much worse do you expect this to get, Treasurer? Because this decision yesterday, you point out here it was made without the war in mind, so this current situation with Iran is obviously going to affect things. Now you've got a potential cyclone in Far North Queensland. If that's bad, as we know from experience, that could affect supply, that could also affect fuel. So, how much worse do you think the economic picture could get?
Chalmers:
Well, first of all, I'm pretty sure that the conflict in the Middle East was part of the discussions. It wasn't part of them around the Reserve Bank's board table. The Governor made it clear, as I have made it clear, that we had an inflation challenge already before developments in the Middle East, and those developments will make things harder for people, including at the petrol bowser, obviously, and we're seeing that because of the global oil price and other factors. And so, the Reserve Bank obviously has all of these considerations in mind, as does the government, as we put the Budget together. Now, when it comes to forecasting or anticipating what happens next, clearly petrol prices will put upward pressure on inflation, clearly what's happening in the Middle East will weigh on global growth and growth in our own economy. The Treasury does its best job it can at trying to forecast all of those developments and take them into consideration. There's a lot of work going on right now. I'll have a bit more to say about this tomorrow in a major speech I'm giving in Melbourne. But forecasting is difficult at the easiest of times, and these are very volatile and uncertain times, and so the Treasury and the Reserve Bank and others will do the best job they can, coming up with the most accurate forecasts that they can.
Stefanovic:
Well, can you guarantee we won't head into a recession?
Chalmers:
Well, it's certainly not something that we're expecting or forecasting or anticipating, and neither is the Reserve Bank. I saw the press conference from the Reserve Bank Governor warning about worst‑case scenarios, but the central case, the expected trajectory, is that our economy will continue to grow, and we've actually got faster economic growth than any major advanced economy, and we've got unemployment at 4.1percent; we'll get an update on that number tomorrow as well. And so we're not immune from what's happening around the world, we do have our own share of domestic challenges as well, but we've got very, very strong economic fundamentals when it comes to the labour market, when it comes to growth in our economy, and particularly private sector growth in our economy, and so we have some advantages too.
Stefanovic:
Does a Parliamentary Inquiry give you cover now to change the capital gains tax discount?
Chalmers:
I don't see it that way. I've read some of the commentary about that today. The Parliamentary Committee's done a lot of work. I shout out my terrific colleagues, Richard Dowling and Ellie Whiteaker, who've done the Labor part of the work on that, but at the end of the day, decisions on tax reform are a matter for the Cabinet, not a matter for the Parliamentary Committee.
I'll read the report, I will go through it. I suspect that its conclusions are very similar to the sorts of conclusions which have been reached in my own Tax Expenditures and Insights Statement that I released, and we'll take all of that into consideration. But our tax policies haven't changed, we haven't taken any decisions, the big focus is on rolling out those income tax cuts.
Stefanovic:
Okay. But a change to the capital gains discount, if you do do that, is that just a distraction from the real problem which is that not enough homes are being built?
Chalmers:
Well, there's obviously issues in the housing market, and some of those are intergenerational issues, we've made that clear and the big focus for the government is on building more homes. We're playing catch‑up, we're doing what we can. Tens of billions of dollars of investment, working with the states and territories and local governments, making deposits easier to save for.
All of these things are about addressing the very real challenges in the housing market, but the primary focus is on supply, and that's got an intergenerational dividend as well. We need to build more homes for more Australians, and that's the government's priority.
Stefanovic:
Just a final one, and separate from all of this, Treasurer, Donald Trump has singled out Australia overnight saying they don't need our help. Just for clarification, did they ever ask us for help?
Chalmers:
Look, not that I'm aware of, and it's not something that we've been considering in terms of sending battleships to the Strait of Hormuz. Obviously, that's the most sensitive part of the world right now. We get all kinds of requests, but I'm not aware of that being one of them. And we've made the nature of our military commitment really clear. We responded to a request from the UAE. We're providing some help there, we've got the Wedgetail helping to keep Australians safe in the region, more than 100,000 Australians are in the area. And so, we've made really clear what our commitment is. That's not part of it, and as far as I'm aware, there hasn't been a formal request to send ships into the Strait.
Stefanovic:
So, why would he be singling out us then? Is there a bit of reverse psychology here in a hope that we would offer something up?
Chalmers:
I'm not sure that he is singling us out, I mean, there's a number of countries mentioned in that social media. And all I can say is what I've said already, which is I'm not aware of any formal request. Richard Marles has talked about these issues for the last couple of days. We're making a commitment there, but a very different kind of commitment, and we've made clear the reasons for that, which are primarily about helping to keep Australians safe in the area, responding to that UAE request, and doing what we responsibly can. But we haven't been considering or contemplating sending battleships into the Strait or being part of any offensive efforts against Iran.
Stefanovic:
All right. That's the Treasurer, Jim Chalmers. Thank you so much, as always, appreciate it.
Disclaimer: Curated by HT Syndication.
