CANBERRA, ACT, March 18 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: Donald Trump comments, Middle East conflict, inflation, tax
Sally Sara:
The Reserve Bank has hiked interest rates for the second time this year, bringing the cash rate to 4.1percent. The most recent data had inflation running at an annual rate of 3.8, but with the conflict in the Middle East pushing up energy prices, there are expectations that inflation could go higher. Jim Chalmers is the Federal Treasurer and joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks very much Sally.
Sara:
Just first, before we get to the economy, we've heard USPresident Donald Trump this morning has taken to Truth Social, criticising allies including Australia - he's named Australia - for not sending naval escorts to the Strait of Hormuz, saying that we no longer need or desire the NATO countries' assistance, we never did, likewise, Japan, Australia and South Korea. What's the federal government's view of those remarks?
Chalmers:
Well, that wasn't something that we were considering, and as far as I understand it there wasn't a formal request to send ships into the Strait. We've made a commitment to the region, and our commitment's really clear. We responded to a request from the UAE, we've got the Wedgetail in the air in the region, and primarily that's about keeping more than 100,000 Australians as safe as they can be, including, I think, about 25,000 in the UAE alone.
So, the nature of our commitment's been very clear. As far as I understand it, there wasn't a formal request to send ships into the Strait, and it's not something that we've been considering in the almost daily National Security Committee meetings that have been taking place over the course of the last couple of weeks.
Sara:
So, we've had no formal requests to send naval escorts, we're helping elsewhere in the Gulf. Is there some disappointment from the federal government regarding these remarks?
Chalmers:
Oh, that's not something - no, is the short answer. It's not really something that has been a focus of our discussions, even this morning. And like I said, as far as I'm aware, there hasn't been a formal request. Obviously, the Defence Minister would have a better sense of that, but our commitment's clear.
Sara:
Talking about the broader relationship with the US briefly, I spoke to the former Prime Minister Malcolm Turnbull this morning. This is what he had to say.
[Excerpt]
Malcolm Turnbull:
It really just underlines, Sally, the importance of Australia being more independent, exercising our own sovereignty, and recognising that the course we have been undertaking, really since the Morrison government, of becoming more and more dependent on the United States, is absolutely the wrong course.
[End of excerpt]
Sara:
That's Malcolm Turnbull there. What do you think of his view?
Chalmers:
Well, I think the commitment that we've made is consistent with that. We've taken our own decisions for our own reasons. Responding to a request from the UAE, for example, and sending the Wedgetail to help protect Australians in the region. I think that's entirely consistent with the clip you've just played from Malcolm. Obviously, Malcolm's views on this are well known. I like him. I speak to him from time to time about a whole range of issues, and he's entitled to his view, but I think our commitment is consistent with the direction of those comments.
Sara:
The economics of this conflict - how long can nations like Australia withstand this effective blockage of the Strait of Hormuz?
Chalmers:
Well, this is really the key question. This is the key source of uncertainty. We already know that the global and domestic economic shock from what we're seeing in the Middle East is very substantial. We don't know how enduring it is or how enduring it will be. That's the key determinant.
At the time that we're at right now, where we're trying to finalise forecasts for the Budget and decisions for the Budget over the course of the next couple of months, really the key uncertainty is how long this thing drags out for. And also, reasonable assumptions about how quickly the global economy could get back on its feet if there was an end to the most dramatic hostilities. The assumption that if the war ended tomorrow that the global economy would be fine the day after, I think, is a naive one.
A lot of the discussions we're having at our end in the government, and discussions I'm having with economists - including the market economists that I'll be addressing tomorrow in Melbourne at the Australian Business Economists forum - a lot of that discussion is about not just how long will this go on for, but what is the damage being done to markets and to energy infrastructure and all of the rest of it.
And so, that's really the key source of uncertainty that we're working through. There's already enough uncertainty. There even was before this escalation in the Middle East. We already had a challenge with inflation and productivity and global uncertainty, and at least 2 of those 3 things are dialled up by what we're seeing in the Middle East. How enduring that will be remains to be seen.
Sara:
So, what else can the government do to get inflation down here at home?
Chalmers:
Well, we're focused on 3 things. First of all, we work very hard - I acknowledge the work of Chris Bowen and other colleagues, the PM - in addressing some of these issues in fuel markets in particular. Obviously, a big source of inflation right now is what we're seeing at the petrol bowser. So that's a big focus.
Secondly, rolling out the cost‑of‑living help. We've got to 2 tax cuts coming, for example, but all of the other cost‑of‑living help that we're rolling out.
And, thirdly, making sure that the Budget in May is as responsible as it can be. That we're continuing to make savings, we're continuing to improve the budget position as we have over the course of the first 4 budgets.
And those 3 things together are really the important responsibilities that we embrace, acknowledging that people are under pressure and we've got a job to do to help where we can.
Sara:
You told Sky News at the weekend that you're working up a number of options. Are you going to pursue capital gains tax changes in the May Budget?
Chalmers:
Well, we have made it clear that we're considering our options on tax, but the big focus on tax policy is rolling out those income tax cuts. We haven't changed our policy beyond that. We haven't taken any decisions. But we have indicated publicly for some time now, really since the Reform Roundtable in September or so of last year, that we have an open mind to tax reform. If we can afford it, if it makes sense from an economic and fiscal point of view, then we've got an open mind to that.
But at the end of the day, they will be decisions for the Cabinet. I don't want to pre‑empt those decisions or those discussions and deliberations. I've tried to be upfront with your listeners and with others in saying that we are working up some options. I'm not going to come at what those options look like, but there is certainly appetite for more tax reform if we can land it.
Sara:
Have you ever had a budget quite like this when the ground's moving under your feet like this?
Chalmers:
Well, unfortunately, the last 20years or so have been characterised by these pretty frequent economic shocks. We've had 4 already, and this is every chance of being the fifth, but it does feel like there's more than the usual amount of volatility and uncertainty in the world playing out in our own economy.
Our job is to do the best that we can to deal with those issues that have been in our economy for too long, at the same time as we recognise the world is more volatile than ever. From my point of view, some of the changes that we have been contemplating and working up and discussing with colleagues, they become more important, not less important, in the context of this dialled‑up economic volatility from around the world, and especially the Middle East.
Sara:
You've got a lot of commitments this morning, Treasurer, thank you very much.
Chalmers:
Thank you, Sally.
Disclaimer: Curated by HT Syndication.
