CANBERRA, ACT, April 29 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: new CPI data, Tim Wilson, tax policy, Pauline Hanson and Gina Rinehart, May Budget, fuel excise
Jim Chalmers:
These new numbers from the ABS show that inflation ticked up as expected in the month of March, largely because of global pressures. These numbers show that Australians are paying a hefty price for the war in the Middle East. These are the costs and consequences of a major conflict on the other side of the world, and it's another reminder that from an economic point of view, an enduring end to this war in the Middle East can't come soon enough.
If you look at the monthly data, headline inflation was 4.6percent in the 12months to March, up from 3.7percent in February, a little bit better than expected but obviously showing some very substantial impacts from what we're seeing overseas. Trimmed mean monthly inflation remains steady at 3.3percent in the 12months to March. If you look at the quarterly data, headline inflation was 4.1percent through the year, up from 3.6percent in the December quarter. Trimmed mean inflation was 0.8percent in the March quarter to be 3.5percent through the year. This is a little bit down on the 0.9percent in the December quarter, but which was then 3.4percent through the year.
Obviously the most substantial impact on this inflation data comes from fuel prices. Automotive fuel rose 32.8percent in March to be up 24.2percent through the year. And to consider the impacts of fuel in the month of March, remember that automotive fuel fell 7.2percent in the month of February. So, the impact of fuel alone is adding 0.8percentage points to annual headline inflation. What we're seeing here is largely a story about international pressures playing out at the bowser. But in the coming months we expect the impact of this oil shock to be felt more broadly across prices and across the economy as well, broad enough to impact on the trimmed mean data as well.
Now, Australians didn't choose this war, but we do choose how we respond to it. We're responding with decisive action to slash the fuel excise and to help with the cost of living and also with a very responsible Budget now in less than 2weeks' time. It's also worth remembering that these figures today are from before the government's temporary cut to the fuel excise took effect, but it shows just how important and how necessary that decision from the government was.
Since we've halved the fuel excise - so, after this period that we're talking about now in the inflation data - we've seen petrol and diesel prices fall by at least 70cents in most capital cities, and this shows how important that fuel excise relief is for the next couple of months.
Our fuel excise cut has been a very important factor taking some of the sting out of fuel prices, and that's reflected in the movement in fuel prices in April. We recognise that diesel prices in particular are still higher than we'd like, and we've also seen global oil prices spike again in recent days - more than $111 a barrel the last time I looked today. That will obviously impact prices at the bowser going forward as well.
We already had an inflation challenge in our economy - we know that - before the conflict. But the tick up in the monthly headline data today was driven by the conflict, and this war could drive inflation up even higher before it comes back down again. We've seen the war play out in headline inflation today, and we know that it will be increasingly reflected in other measures of inflation in the coming months as well. Treasury's expectation is that inflation is likely to peak higher than this, but they are still finalising the forecasts ahead of the Budget next month. If you look around the world, what you've seen is that inflation has come in higher across every major advanced economy. It's come in higher in Canada and France, Germany, Italy, Japan, the US and the UK. And even with this spike in inflation from higher fuel prices coming out of the Middle East, we still have inflation substantially lower than what we inherited and what we saw in 2022.
We do understand that people are under pressure. That's why we cut the fuel excise. That's why we're providing cost‑of‑living help. That's why we're providing additional tax cuts. It's why we're providing a standard deduction to provide a bit more tax relief and cost‑of‑living help, and at the same time as we're making medicines cheaper and making bulk billing more accessible.
We know the Australian economy is not immune from all of this global uncertainty and volatility and unpredictable conditions. But we are better placed and better prepared and with faster growth than any major advanced economy to finish out 2025. We've got low unemployment, we've got solid wages growth, and so we've got pretty good foundations as we confront this period of heightened uncertainty in the global economy. Just this month, the IMF showed that the Australian budget is one of the 3 strongest budgets in the G20, and that's important when it comes to the foundations of the Australian position.
We know there's more work to do. We know that the Budget is an important opportunity to continue to improve the foundations of the budget and the economy - and that's our focus. The Budget will prioritise fuel security and supply chain resilience, addressing inflation, boosting productivity and also managing and responding to all this global economic uncertainty. It will be a really responsible budget which balances the pressures that Australians are feeling in the here and now with our intergenerational obligations as well at a time where there is a substantial amount of global economic upheaval.
Happy to take a few questions.
Journalist:
Treasurer, are you rock solid in your support for whatever the RBA decides next week? And are you being careful in your Budget to not fuel the inflation problem?
Chalmers:
Well, first of all, the Reserve Bank takes these decisions independently. It's not for me or for any of my predecessors to engage in a running commentary on their deliberations or to try and predict or pre‑empt the issues that they will consider when they come to their decision next week. Obviously, like central banks all around the world, they will weigh up these inflationary pressures coming from the war in the Middle East and potential consequences for global and domestic economic growth. So that's a matter for the Reserve Bank to determine independently.
Whether it's the Reserve Bank or the government, obviously we both want to see our economy to continue to grow, we want to keep unemployment low to the extent that we can, and we need to address these inflationary pressures. The government's Budget, the Budget that Katy Gallagher and I hand down 2 Tuesdays from now, will be a really responsible budget because we recognise that these inflationary pressures mean that Australians are paying a hefty price for the war in the Middle East. And we will do what we responsibly can to respond to those pressures and to continue to manage the budget in the most responsible way that we can.
Journalist:
What's your message to home owners who are facing yet another interest rate rise under this government?
Chalmers:
Well, we understand that the movements in interest rates have a big impact on household budgets. There were 3 interest rate cuts not that long ago which saved Australians some money in their monthly household budgets, and on the other side of the ledger, when interest rates go up, obviously it more pressure on people. And that's why we take our responsibilities so seriously.
The Budget will have more savings in it. It will have more spending restraint in it. We'll have more investments in the productive capacity of our economy so we can lift the speed limit on the economy so it can grow faster with lower inflation when some of these international developments begin to normalise.
I think Australians understand that neither the government nor the Australian people more broadly have chosen the circumstances of this war, but Australians are paying the costs and consequences of this war. And so we will continue to manage the economy and the budget in the most responsible way that we can, responding to these pressures in the here and now whilst not forgetting our reform obligations to the future.
Journalist:
Treasurer, Tim Wilson has released a playlist detailing music for your Budget.
Chalmers:
Has he?
Journalist:
Do you think he's taking his job as Shadow Treasurer seriously?
Chalmers:
I mean, I think he's really embracing this role as the Opposition's karaoke clown, and we saw that yesterday. I mean, to be fair to Tim Wilson, from time to time people will get a number wrong. That happens from time to time. There are a lot of numbers in this Treasury portfolio. But Tim Wilson seems incapable of getting anything right, and that's because he's determined to play this role as some kind of karaoke clown. We saw that in the parliament. We saw it when he got the fuel excise wrong. He said that his policy yesterday cost $80billion when the press release said $800million, so he was a hundred times out - $79billion out on his own policy announced that day.
I think even Angus Taylor, who's not the sharpest tool in the shed, is probably having some regrets about appointing this guy as Shadow Treasurer. These are serious times, Tim Wilson is not a serious person. The government is doing its best to work through these serious issues in a methodical and a considered way, decisive way when that's necessary. And the Shadow Treasurer is determined to behave in this fashion. And whether it's the policy they took to the last election for higher taxes and bigger deficits and more debt, or whether it's the behaviour of the Shadow Treasurer since then, I think little wonder that Australians don't really take the Coalition seriously on the economy anymore.
Journalist:
Housing inflation was up 6.5percent over the last year. How would changes to negative gearing and CGT alleviate that pressure?
Chalmers:
Well, obviously we've had some challenges when it comes to the costs of construction for some time now, and the war in the Middle East risks making those cost pressures worse. We have been doing what we can across the construction sector, whether it's with skills and incentives for apprentices or in other ways, to try and address these- some of these longer standing cost pressures in the construction sector.
Obviously, when it comes to some of those tax changes which are being speculated about, I'm not going to engage in consequences of policies that haven't been finalised or haven't been announced, or when the Budget itself hasn't been finished. And so a lot of those decisions are still to be taken in one way or another.
Journalist:
But more broadly, when it comes to housing, a big emphasis on supply, big emphasis on cost, and also trying to make sure where we can that we can get more first home buyers into the market. So those are our priorities in housing, without coming at any of those specific tax reform changes that you've mentioned in your question.
Gina Rinehart's company has bought a plane for Pauline Hanson. What do you make of that?
Chalmers:
I think Pauline Hanson is a wholly owned subsidiary of Gina Rinehart, and we know this because whenever Pauline Hanson's asked to vote in the interests of Australian workers, she instead votes in the interests of Gina Rinehart. Whether it's in industrial relations, whether it's in cost‑of‑living relief, what we've seen again and again from One Nation is they typically vote the way that Gina Rinehart wants them to rather than how the workers and battlers of this country need them to.
If you go back through One Nation's voting record, what you'll see is a very consistent pattern of voting against the interests of people who work and people who struggle in this country. And so I don't think it's a big surprise to see this very close relationship between One Nation and Gina Rinehart. Gina Rinehart has got an agenda she's flagged before. She's flagged things like getting rid of the minimum wage and all of these sorts of things and I think pretty frequently we see One Nation dance to Gina Rinehart's tune. And so these disclosures of these sorts of donations are not especially surprising to us.
If One Nation was really about people who work and people who struggle in our country, they wouldn't have voted against the government's efforts to help people who work and people who struggle as regularly, as consistently as One Nation has.
Journalist:
Treasurer, on inflation, is it the case that the situation will get worse before it gets better, and that's just a reality that Australians need to accept and prepare themselves for?
Chalmers:
It's certainly the current expectation of the Treasury and the Reserve Bank and others, is that these pressures will continue to play out and that we expect to see inflation peak higher than what we've seen today. Some of these numbers came in a bit better than what was anticipated by the market. And so Treasury and the Reserve Bank and others will factor that into the forecasts as they get updated relatively regularly and, in our case, for the forecasts which get released on Budget night. So we'll factor all of that in. But certainly the expectation is that these oil shock pressures will continue to play out in inflation in our own economy, that the impacts of what we're seeing in the Middle East will not just intensify in the inflation figures but also broaden out, and we've been upfront about that.
Journalist:
Treasurer, just one more from me, how does CGT and negative gearing reform help tackle intergenerational inequality?
Chalmers:
Well, again, you're asking me about a Budget which hasn't been finalised yet, but the government has made it really clear for some time now as we work through some of these considerations and deliberations about tax reform in the Budget that intergenerational fairness is a really important factor in our discussions. So the Budget is not finished yet. It will be released in a couple of Tuesdays' time. There will be tax reform in the Budget. The nature of that tax reform will be settled in the coming days as we finalise the Budget in the usual way.
Intergenerational fairness is a really important way that we address some of the substantial and understandable issues in our budget, in our tax system and in our economy more broadly. What we are determined to see is a fairer economy that works for more people, including for younger people. There is, I think, a sense out there, an understandable sense out there that younger people are at risk of being denied some of the opportunities of people who have come before them. We take that very seriously. And so as we work through the sorts of proposals that have been put to us, as we work through really since the reform roundtable and onwards, as we work through some of these considerations, then obviously intergenerational fairness is a key factor in our thinking.
Journalist:
Treasurer, do you expect we will enter a period of stagflation?
Chalmers:
Well, a couple of things about that. First of all, we've seen today that inflation is coming up because of these developments in the Middle East, and for the same reasons we expect there to be downward pressure on growth. But what we're seeing in the labour market is not really consistent with the way that we have traditionally understood stagflation. We've got a really strong labour market. We've got unemployment still in the low 4s, despite all of the pressures on the labour market. We've got pretty good wages growth. That's not consistent with the way that we've usually thought about or characterised stagflation in economies.
And so if the question is do we expect inflation to tick up and do we expect growth forecasts to come off a bit, we do expect the both of those things. But the fact that our labour market is strong and we've got so much else going for us I think means that that label is an oversimplification of what we're seeing in our economy.
Journalist:
Given the cost of fuel is decreasing at the moment, should the government scrap the cut in the fuel excise sooner than the planned 3months?
Chalmers:
The government's fuel excise cut is a key reason why we've seen petrol and diesel prices come off a bit. And it will continue to roll out over the course of the next couple of months. It is a temporary change to the fuel excise. It's a key driver of some of those cheaper, particularly petrol, prices that we're seeing around our economy. Obviously we keep all of our policies under review when you've got this degree of international uncertainty and volatility and unpredictability.
But if you look at the major petrol markets today comparing petrol prices to before we made the excise cut - in Sydney down 75cents, Melbourne down 78cents, Brisbane down 77cents. And so you can see that petrol prices have come off substantially over the course of the last few weeks, and our petrol excise cut is making a difference there. Now, the diesel fuel market is off a different benchmark and there has been more pressure on diesel prices than on petrol prices, but even in that sense, since we announced the changes to the fuel excise - Sydney diesel prices down 74cents, Melbourne down 72, Brisbane down 71. In some of the markets for petrol, we've actually got cheaper fuel now than before the war began. Diesel is a different story.
Now, the reason I run through all of that is because there's a lot of volatility in these prices. And this period captured in the inflation data is from before the excise cut came in. But in recent days we've seen the barrel price for oil go up to $111 plus, and that will play out in coming weeks as well. So a lot of uncertainty, a lot of volatility, but what is already clear is that our cut to the fuel excise was an important way to take some of the sting out of the costs and consequences of this war in the Middle East.
Thanks very much.
Disclaimer: Curated by HT Syndication.
