Interview with Lisa Millar, News Breakfast, ABC

LISA MILLAR:

Good morning, Lisa Millar coming to you from the lands of the Ngunnawal people here in Canberra where we have spent the evening dissecting Labor's Budget. The Treasurer says it's responsible, it's sustainable, it's affordable, and warning of an end to those hip‑pocket handouts that we might have seen in the past as Australians are grappling with spiralling cost of living forces.

Australians, they're staring down the barrel of the galloping inflation set to peak at nearly 8 per cent in December, but wages remain relatively stagnant, and workers aren't expected to feel any real relief until 2024 at the earliest. The Budget does include a so‑called cost‑of‑living package with cheaper child care, expanded paid parental leave and more affordable medicines. But at the same time, it shows it will be even more expensive to keep the lights on, with power and gas prices set to rise over the next year and a half.

Well let's get straight to it. I've got the Treasurer Jim Chalmers here with me. Good morning, how are you feeling this morning?

JIM CHALMERS:

Good morning, Lisa, ready to go.

MILLAR:

Really? Because it wasn't the kind of Budget that I imagine a Labor Treasurer would have wanted to be handed down.

CHALMERS:

I think that we handed down a budget last night which was really responsible and right for the times, as you say. We've got our fair share of challenges right now and so what we were able to do in the Budget was provide some cost‑of‑living relief in a way that doesn't push up inflation further, but also invest in strengthening the economy and begin the hard task of fixing the Budget.

MILLAR:

When you talk about that cost‑of‑living relief, there wasn't a whole lot there really when you think about it.

CHALMERS:

About seven and a half billion dollars worth of cost‑of‑living relief, cheaper medicine, cheaper child care -

MILLAR:

The child care doesn't kick in until next July.

CHALMERS:

- paid parental leave. Yeah, understood. But what we're trying to do here and what I'd encourage your viewers to understand, I think they do, is that when you're providing cost‑of‑living relief you need to be really careful not to overdo it or to be excessive about it or untargeted about it. Because if you do that you risk making inflation even worse. The primary influence on the Budget last night was this inflation problem that everybody is familiar with, the cost of living is going up. And so, our job is to make sure the Budget doesn't add to that pressure, and you do that by providing cost‑of‑living relief in a really responsible and targeted way.

MILLAR:

We've got Australians who are really hurting and they're looking at possible electricity increases of 56 per cent compounded.

CHALMERS:

Yeah, this is a big part of the challenge and there's no use pretending otherwise. Inflation will peak, as you said in your introduction, towards the end of the year. It will hang around for a bit longer than we would like, and a big part of the reason for that, or two reasons for that. One, electricity prices because of the war in Ukraine. And secondly, these natural disasters will push up the price of groceries because some of the flood‑affected communities are some of our best farming land in the world actually. So those two things mean that we will have a cost‑of‑living challenge ahead of us for a little bit longer than we'd like. That's why the cost‑of‑living relief is important. But also, why we've been so restrained in our spending, because as I said at the start you don't want to make this inflation challenge even worse. You don't want the Reserve Bank to come in and have to jack up interest rates even more than they would otherwise.

MILLAR:

Okay. So yesterday you seemed to indicate, it was almost a threat to the energy companies, that there would be some kind of intervention. What does that look like, how are you going to do it?

CHALMERS:

First of all in the Budget there were some important steps around boosting the work of our regulators and backing in the work that we're doing with the gas companies, which is a big part of the story. The Energy Minister Chris Bowen has done a lot of work with his state counterparts in this area. So we've already started acting on these electricity prices. But what I said yesterday and what I'm happy to repeat today is any responsible government looking at these kinds of energy price rises, I think needs to contemplate a broader range of options than we might previously. So we've got some more work to do here. I've flagged that work. I'll work closely with my colleagues to see if we can do more on the regulatory side because clearly electricity prices of this size, of this magnitude brought to us largely by the energy market around the world, if there's things that we can sensibly do to intervene here we should be exploring that.

MILLAR:

Yeah, okay. So with, I wouldn't call it a benefit of COVID that we've been able to see what happens in the northern hemisphere before things hit here. We are now seeing the crisis they are facing going into winter, where authorities have even said they fear for the lives of people not being able to afford to heat their own homes. Is that the kind of scenario we would be facing here in Australia? Because everything you're talking about is not things that can happen immediately.

CHALMERS:

I understand that, and we do understand that people are under pressure. And I think you're right to explain to the viewers that a lot of these problems are coming at us from around the world but obviously the impacts are felt around the kitchen table. And when it comes to energy, we're providing cost‑of‑living relief in lots of different ways. We're trying to be responsible about it, but at the same time there's more work we can do on the energy market itself. The high price of gas, the high price of coal is feeding into the high price of electricity. All of that is a consequence of the war in Ukraine and other global issues, but if there are things that we can do here at home we will.

MILLAR:

I just want to talk about the NDIS because the language that was being used yesterday has alarmed a lot of people who rely on the NDIS, a system that has changed their lives. What's your message to them this morning when people are talking about it being out of control with its spending?

CHALMERS:

We see it as an absolutely crucial service that the Government should and is providing to Australians with a disability. And our task is to put people with a disability at the absolute centre of the NDIS. In order to do that we need to make sure that we're getting value for money for every dollar that we spend on the NDIS.

It will always be a central feature of the services that a Federal Government should and will provide to people with a disability. The costs are increasing, not as fast as the interest bill on the trillion dollars of debt that we inherited, but the costs are increasing relatively swiftly.

Minister Shorten has got a review with a couple of people who really know what they're doing when it comes to the NDIS. We make sure we get value for money, make sure it's efficient, but always people will be at the centre of it wherever Labor's involved.

MILLAR:

Well, you're talking about having to have some hard conversations with Australians that might get even harder. A lot of it is around tax, this structural deficit that you have in the Budget. Do Australians just need to cop the fact that taxes are going to go up?

CHALMERS:

I think we need to do a range of things and last night was a good start on this. First of all we trimmed spending by $22 billion, which is a good start. Secondly, we showed restraint when it comes to these temporary boosts to revenue that come from higher commodity prices. We returned 99 per cent of that to the budget over the next two years. That's important, too. But tax has a role to play. Last night we released our multinational tax plan, which is about making sure multinationals pay a fairer share of tax in Australia. We announced some tax compliance measures which are important as well and a handful of other measures.

So, what we showed last night, and I think this will remain the case into the future, is you need to act on a number of fronts simultaneously. The budget is in structural deficit. We do have big persistent structural spending pressures on the budget, and we can't ignore them.

MILLAR:

Well, what's the time frame for that, because Jennifer Westacott said it's been kicked down the road?

CHALMERS:

We made a good start I think, and I engage with Jennifer, I've got a lot of respect for Jennifer, and we work closely together. We made a big start. And a lot of the things that we did last night were unfamiliar to our predecessors who let the budget get a trillion dollars in debt with not enough to show for it. And so, you've got to start somewhere. When you inherit something like that you've got to begin somewhere. We made some savings, we showed spending restraint, we made targeted investments, and we made some tax changes as well. All of those things will be important, not just in the Budget we handed down last night but in each budget from now on.

MILLAR:

All right. Jim Chalmers, you've got a big day ahead of you. Thanks for joining us here on News Breakfast.

CHALMERS:

Appreciate it, Lisa, thanks.