Interview with Kieran Gilbert, Sky News

KIERAN GILBERT:

Joining me live now in the studio is the Treasurer Jim Chalmers. Treasurer, thanks for your time.

JIM CHALMERS:

It's been a whole three days Kieran since we last hung out.

GILBERT:

I know, it's been ages. You said within striking distance – you're within striking distance of getting a surplus in May. I want to put it in terms that – I know you're a Broncos fan, but you're basically Billy Walters in the Broncos with the ball five metres out. All you have to do is not drop it and you will have a surplus. That's fair enough, isn't it?

CHALMERS:

My last Broncos experience wasn't terrific in the GF last year so I don't enjoy the reminder. But look, we are within striking distance of a second surplus but we're not there yet, and there are good reasons to be careful and cautious about it. Now, part of the reason is our predecessors made the mugs and overpromised and underdelivered and they were humiliated in the end when they didn't get a surplus after nine cracks at it. We've delivered a surplus already. We're within striking distance of a second one but there's a lot of volatility in revenue, there's a lot of uncertainty, particularly in the global economy and so it pays to be cautious and conservative and that's what we're doing.

GILBERT:

No worries. I guess that makes sense given recent history for Josh Frydenberg, also Labor as well with the GFC many, many moons ago. But you've banked more than 90 per cent of the revenue upgrades. How important is it to you, as we look back at that history, back through the Howard period and beyond, because as long as I can remember in this place, Labor's struggled to hold that mantle of the better economic manager. Is that important to you personally but is it important politically as well?

CHALMERS:

Both. It's very, very important. You know, my mission really is to entrench Labor as the party of responsible economic management. I'm very serious about that and not just for political reasons, but for economic reasons. There are good economic reasons to run a tight ship when it comes to the budget. That's what Katy Gallagher and I are doing. We want to get the budget in much better nick and we are. Part of that is avoiding interest costs, part of it is putting downward pressure on inflation, but also we want to make room for our priorities – cost-of-living help, investing in the future of the economy. And so what we've been able to do today is consistent with what we've done in the first two budgets – get the budget in much better shape so that we can put that downward pressure on inflation so that we can fund our priorities, so we can avoid a lot of this debt and interest costs, and so that we can continue to clean up the mess that Angus Taylor and others left behind.

GILBERT:

Angus Taylor was on the program earlier. He says that it's spin from you suggesting that you're banking 90 per cent of the upgraded revenue since the May Budget, looking at parameter variations is how he put it, but basically increases in payments for people on welfare and so on. What's your reaction to that?

CHALMERS:

Well, as I understand it, Angus Taylor was saying that there is a lot of spending in the budget, a lot of that is parameter variations, which is really the indexation on pensions and payments. That is a big part of the extra money in the budget and so if he is saying that we shouldn't be doing that spending, he should say so. If he is going to end the indexation of pensions and payments, he should be up-front with people and say so. And if he's not going to end that, then he should be honest with people and say that whoever was in office would be up for those parameter variations that we saw in the budget.

But more broadly Kieran, I'm not taking lectures on responsible economic management from the party that delivered nothing but deficits, a trillion dollars of debt, and had absolutely no savings in their last budget. We are turning things around. There has been a historic turnaround in the budget, partly as a consequence of our efforts to get the budget in much better nick, the sorts of responsible economic management which is a defining feature of this government would be completely unrecognisable to Angus and his ilk.

GILBERT:

As we said, the surplus looks likely, within striking distance is how you put it. The other thing that looks very likely to me as I watched you this morning, is continuation of the energy bill relief, because it's helping people with the cost of living, but it's also, you argue, putting an immediate downward pressure on inflation. So it seems a no-brainer in the May budget that you would continue that. 

CHALMERS:

Well, we will make a decision about any further cost-of-living relief closer to the May budget. We will factor in the economic conditions and the budget pressures at the time, and we will make sure that we calibrate any new initiatives to the conditions. That's been our approach so far and it's been the right approach and we know that because the ABS, when they put out the inflation figures said that our policies on early childhood education, electricity bill relief and rent assistance were all putting downward pressure on inflation. And again, the Coalition voted against some of those measures, inflation would be higher under them than under us. We've made some welcome and encouraging progress in this fight against inflation, but we know people are still doing it tough, of course they are. That's why we're rolling out the cost-of-living help, that's why we're getting the budget in better nick, that's why we're investing in the future so that we can take some of this pressure off people over time.

GILBERT:

I know you say it's not just the politics but is it also you can deliver that closer to the next election? Next May might be your last budget before the election. So it makes sense politically to time an announcement around that. 

CHALMERS:

We will be guided by the economics of the situation. We will be guided by the economic conditions, which are uncertain. We will be guided by the budget pressures, which are still substantial, even as we get the budget in much better nick, and we will do as we have done in the first two budgets. We will make the right decisions for the right reasons. We recognise that people are doing it tough. Some of our cost-of-living relief is still rolling out from the May Budget and that's important too, and the ABS tells us it's making a welcome difference.

GILBERT:

With the tax increase or the windfall from more people in jobs and from higher than expected company tax receipts, it increases that as a percentage of taxation, as a percentage of GDP, does it make it even more important then to deliver those stage three tax cuts?

CHALMERS:

We've said all along that returning bracket creep is a worthy aspiration for a government and these tax cuts  – which are legislated, and we haven't changed our view about them – one of the reasons why the tax cuts have been legislated is because governments of either political persuasion return bracket creep when they can afford to do that and so we have said that.

I think it's important to recognise what you said in your question. One of the reasons why, really the main reason why the personal income tax take is a bit higher is because we've got more people in work – 620,000 new jobs created on our watch, a record for a new government, and we've got wages growing again. So we've got more people earning more and that's why the tax take is bigger. More people earning more is a good thing, not a bad thing, and, again, if the Opposition want to rail against that, it sounds like their tax policy is to have fewer people in work and to have people who are working earning less. That's what we saw for the best part of a decade – wage stagnation. We're turning that around and that makes a difference to the tax take.

GILBERT:

It could well come at a perfect time, the tax cuts, at a time when the RBA maybe would be looking to possibly cut rates in the second half of next year. So the cycle might work as well in that sense as we're trying to boost economic activity by the second half of next year.

CHALMERS:

I mean, that's the big task – whether it's the Reserve Bank or the Government – to work out when our focus shifts from inflation to growth more substantially. Still, for the time being, the primary challenge is inflation. That's why we've got this responsible budget and this cost-of-living relief rolling out.

The fight against inflation is a fight on multiple fronts – budget responsibility, cost-of-living help, infrastructure, migration, competition policy, investing in the supply side of the economy. We are doing all of these things and that's why the Government's actions are working in concert with the Reserve Bank's work, not in conflict with it. That's a point that has been recognised by the OECD, the IMF, the ratings agencies and others.

GILBERT:

Treasurer Jim Chalmers, thanks for joining us twice in a few days and merry Christmas.

CHALMERS:

Merry Christmas to you and your family, Kieran.

GILBERT:

Appreciate it. Talk to you soon.