THE HON JIM CHALMERS MP
TREASURER

MEMBER FOR RANKIN

E&OE TRANSCRIPT
DOORSTOP INTERVIEW
CANBERRA

TUESDAY, 5 JULY 2022

SUBJECTS: New South Wales Floods; Interest Rates; Food Prices; Budget.

JIM CHALMERS, TREASURER: A lot of Australians are doing incredibly tough today, particularly in flood-affected areas of New South Wales. Our message to the people whose homes and businesses are underwater in New South Wales today is that the Albanese Government will be with you, we will support you, we will stand by you, to make sure that you get the support you need in difficult times. We have been working around the clock with the Perrottet Government in New South Wales to make sure that we're being briefed on the developments, to make sure that the disaster funding arrangements are in place so that people can get that support that they need.

A lot of these people who are underwater today have been underwater recently as well. And so for a lot of Australians, they're doing it incredibly tough. In the toughest of conditions we see the best of Australians. Neighbours helping each other out. Governments, local community organisations, the SES, everybody working together to make sure that we can make people safe, that we can get them this financial support that they need, we can get them dry and fed, get their phones charged, and all those sorts of important things that happen at evacuation centres as well. We're thinking of the people of New South Wales today. We will be there for you, we will stand with you, we will support you, and we will work with your state government to make sure that you get the support that you need.

Today will be a difficult day for Australians, even those beyond flood-affected areas. We don't pre-empt the decisions taken by the independent Reserve Bank Board, but the universal expectation is that there will be another interest rate rise today. Just because these interest rate rises are expected doesn't mean that they sting any less. For a lot of families and a lot of homeowners, they will have to find, in already stretched household budgets, even more to service the mortgage. A lot of people are doing it incredibly tough already with the skyrocketing costs of essentials, like groceries, and petrol, and electricity, and this will make life even harder for a lot of Australians. Our job - whether it's dealing with natural disasters, whether it's dealing with high and rising inflation, and falling real wages, and rising interest rates - the job of our Government, which we embrace, is to make sure that we can have an economy and a Budget as resilient as the Australian people have proven themselves to be again, and again, and again. That's our focus - supporting people through difficult times and making sure that we can grow their economy the right way, so that we can take some of the pressure off this inflation that we have inherited, which is causing so much damage in household budgets.

JOURNALIST: We are expecting an interest rate hike today, but we're also being warned that this is not the last of them to come?

CHALMERS: That's the strong expectation, the Reserve Bank Governor has flagged more interest rate rises throughout the course of this year. People are doing it incredibly tough. For every half a percent that interest rates go up, on an average mortgage it's about $90 a month. If you owe $500,000, it's about $137. It's not hard to imagine the pressure that finding that money to support and service your mortgage, the pressure that that puts on household budgets which are already stretched. We're conscious of that. The Budget in October will be about providing cost of living relief in areas like child care, like medicine prices. But most of all, the Budget needs to be about making our economy more resilient. We've had a wasted decade of missed opportunities and we're seeing the costs and consequences of that now in the energy system, when it comes to labour shortages, and in other areas as well. We will work around the clock for Australians, to make sure that we make their economy and their Budget more resilient and that we help them through difficult times.

JOURNALIST: Are the floods going to push up people’s grocery bills?

CHALMERS: That's the expectation. I saw the National Farmers Federation talking about how important this part of Australia is to supplying our supermarkets with fruit and vegetables, and so our expectation is that this will push up vegetable prices and fruit prices even more. Grocery prices are already skyrocketing, and natural disasters like this are notorious for making that challenge worse. We already expected the inflation challenge in our economy to get worse before it gets better and this, unfortunately, we will be part of that.

JOURNALIST: So how long will people be feeling the pain for at the checkouts?

CHALMERS: It remains to be seen. We've been upfront before the election, during the election, and after the election, that there's a substantial inflation problem in our economy and that's why interest rates have been rising even before the election. We do have high and rising inflation, we've got rising interest rates, falling real wages, and our ability to deal with a lot of these issues is constrained by that trillion dollars of debt that we inherited from the Liberal Party. We've been upfront with people that it will get harder before it gets easier, unfortunately. But I strongly believe in the capacity of the Australian people, I strongly believe in the prospects of their economy. Into the medium term and into the longer term we can have a better future, but first we have to navigate some pretty extreme difficulties - a very tricky set of circumstances - natural disasters, and all of the other economic conditions that we've inherited.

JOURNALIST: How big of a hit is the Budget going to take as a result of the floods?

CHALMERS: It remains to be seen. The Budget will be impacted, of course, by the necessary disaster support that we will be providing to people in affected areas. It will also be impacted, of course, by a really important part of the Australian economy being underwater, and what that means for supply chains and what it means for groceries in our supermarkets. We expect the impact to be relatively substantial. The full costs and consequences of this flooding will be made clear to us in time, and I'll do my best to keep the Australian people updated as we go.

JOURNALIST: One final one, Jim. Is the Government looking at any kind of cost of living vouchers to get people through the tough times, or is it just the support already expected in the Budget?

CHALMERS: The support that we will be budgeting for will be substantial - particularly for parents, particularly for people who rely on medicines with regular scripts that they need to fill. We've made that a priority when it comes to cost of living relief. We'll always do what we can to make life easier for people but we need to do that within the pretty substantial constraints of a Budget which is absolutely heaving with Liberal debt. Our responsibility is to try and unwind some of the rorts and waste which is weighing down the Budget, so that we can redirect it to other purposes - whether its cost of living relief, whether it's making our economy more productive and more resilient - there are much better uses for taxpayer dollars than what we've seen for the best part of the decade. That's why Katy Gallagher and I have been working really hard in advance of the October Budget, and in advance of the July economic statement to the parliament, to make sure that we're doing the work to ensure that every dollar in the Budget we're getting bang for buck for that - whether it's cost of living relief, making the economy more productive, or in all these other ways.

ENDS