CANBERRA, ACT, April 15 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: IMF World Economic Outlook, May Budget, fuel security, defence investment, immigration policy
Sally Sara:
The International Monetary Fund has warned of significant pressure on the global economy and inflation if the war between the US and Iran is prolonged. Its worst‑case scenario would see a global recession, inflation as high as 6percent and elevated fuel prices all the way through to 2027. Federal Treasurer Jim Chalmers joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks very much, Sally.
Sara:
This is a concerning picture that's being laid out by the IMF, it has various scenarios. Is it consistent with what Treasury is telling you about the economic implications of this conflict in the Middle East?
Chalmers:
Well, this is a really dangerous time for the global economy. The International Monetary Fund is expecting slower growth and higher inflation, and we are too. We will see those global developments play out in their own forecasts in the Budget in May. The IMF is really sounding the alarm here about some of these more severe scenarios. And what it tells us once again is that from an economic point of view, the end of this war can't come soon enough. We need to see an enduring end to the war, we need to see the Strait of Hormuz properly opened. And even when that happens, we need to acknowledge that some of the consequences of this war on the other side of the world will be felt for some time.
Now, Australians didn't choose the circumstances of that war, but they are paying a very hefty price for it, and these will be the central considerations of the Budget that we hand down in less than 4weeks' time.
Sara:
If fuel prices remain elevated into next year, 2027, as the IMF has warned, would the federal government here in Australia continue to subsidise petrol until prices return to normal?
Chalmers:
Well, we don't want to pre‑empt that. Obviously we run a whole range of scenarios, as does the International Monetary Fund, as does the Reserve Bank and the private economists. And the 2 big uncertainties here are obviously when an enduring end to the war and the opening of the Strait actually occurs, and then how long the tail is for these quite severe economic shocks and consequences rolling through the global economy and hitting Australia and Australians here.
So, there's a lot of uncertainty. That's why we run these different scenarios, it's why we like to try and keep our options open. We are helping by cutting the fuel excise, we are engaging with industry and with the world to make sure that Australia has the fuel security that we need to keep the country moving. We're working around the clock on a whole range of scenarios to make sure that we are well placed and well prepared for whatever the world throws at us in the coming months and potentially years.
Sara:
The IMF also says governments in advanced economies have been 'too loose' with their budgets and should now show restraint. Does the war encourage you to go further with spending cuts in the Budget?
Chalmers:
Well, first of all, the IMF report acknowledges that different countries are in different circumstances. We've engaged and made a lot of progress on budget repair over the course of the last 3 and a half years. But we've acknowledged even before this conflict in the Middle East that there's more work to do, and people will see some of the fruits of that work in the Budget. So, it will be a responsible Budget, there will be savings in the Budget to get the budget into better position, including to put it in a position to be able to respond if we see some of these more serious scenarios play out.
Now, obviously, the Budget that we contemplated in February won't be identical to the Budget that I hand down on 12May, but it will still be ambitious, it will still be responsible, and it will be focused on 2 things overall - resilience and also economic reform.
Sara:
You're listening to Radio National Breakfast. My guest is the Treasurer, Jim Chalmers. What are the most recent discussions you've had with the RBA Governor, Michele Bullock?
Chalmers:
Well, the Reserve Bank, as you know, operates independently from the government, but we do work closely together, we do speak frequently and compare notes about our forecasts, our expectations. I try and take the opportunity relatively frequently to run her, the Governor, through the government's thinking when it comes to these very serious global pressures. We had a good conversation yesterday actually, as it turns out, on the eve of these important engagements that I'll be undertaking in Washington, D.C., to make sure that we can compare notes and that we can understand where each other's forecasts are heading.
The Reserve Bank will release forecasts in May, as will the government in the Budget, so I like to take that opportunity to confer with her, to work closely with her where we can, recognising we've got different responsibilities that we discharge independent from each other. But we've got similar objectives, and that is to do what we can to get Australia through this difficult period, recognising there are pressures on growth and inflation at the same time.
Sara:
What did you take away from that discussion with the RBA Governor?
Chalmers:
Well, obviously, I'm reluctant to go into the detail of those discussions. There are good reasons why treasurers and governors wouldn't do that, but your listeners would expect that we compare notes on the forecasts, we try and build understanding when it comes to the direction of travel in both institutions.
For my part, I took the opportunity to run her through the government's thinking, preparations and scenarios for the Budget. I've done that actually for each budget, but it's especially important, I think, at this extremely dangerous time for the global economy, with all of this uncertainty and volatility playing out, not just in our forecasts, but much more importantly than that, in our local communities.
Sara:
There has been speculation about cuts in the Budget to the NDIS and the public service, but the government is rolling out a series of new defence spending commitments this week. Is defence now the government's number one spending priority in this uncertain global environment?
Chalmers:
I'm reluctant to rank them. There's a number of important investments we'll be making in the Budget, and defence is obviously very key to that. What we've been able to do in defence - and this is a tribute to Richard Marles and Pat Conroy and their colleagues in the department and in the services - is that we've been able to substantially lift investment in defence at the same time as a lot of effort has gone into reprioritisations and making sure that we get value for money.
So this is part of our responsible approach to the Budget and to national security, recognising that economic security and national security are as closely intertwined as they have ever been. So these investments are really important. I support them wholeheartedly, and I'm grateful for the work that Defence and defence ministers in particular have put in to ensuring that we're getting value for money for this increase in defence investment.
Sara:
Just briefly, yesterday we heard some details of Angus Taylor's new migration policy. He's accused the government of using 'mass immigration to keep the illusion of economic progress.' What's your response to that?
Chalmers:
I thought it was a pretty strange and pretty disappointing contribution from Angus Taylor. I think what he's doing is he's plagiarising the politics and the rhetoric of other countries and another time, and what he fails to recognise-
Sara:
What do you mean by that?
Chalmers:
Well, I mean a lot of the language that he uses, a lot of the rhetoric he uses and the divisive politics that he is trying to play, we've seen in other parts of the world. And in Australia, we should be taking the right decisions for the right reasons. I think what he's doing here is he's playing more to the internal politics of the 3 right‑wing parties in Australia than he is concerned with the national interest.
We will continue to manage the immigration system in a considered and methodical way. We've actually got net overseas migration down 45percent from its peak in the aftermath of the last government. Net overseas migration actually came in 30,000 people lower over the last full financial year than what we were anticipating. And so we need to have that perspective as we go about this really important policy area which demands of all of us, not the kind of divisive politics that Angus Taylor is desperate to play to assuage the other right‑wing parties, but to make sure that we're making these decisions in the national interest, and that's our approach.
Sara:
Treasurer, thank you for your time this morning.
Chalmers:
Thanks very much, Sally.
Disclaimer: Curated by HT Syndication.
