Interview with Matthew Doran, Afternoon Briefing, ABC News

MATTHEW DORAN:

The flooding disaster has inflicted pain on many households across the three affected states but, of course, the impact will be felt even further, including when it comes to how the national economy ticking along. The Federal Treasurer Jim Chalmers is putting the final touches on his first Budget, and he joins me now from Treasury. Jim Chalmers, welcome to Afternoon Briefing. You were warning on Monday that there would be a further cost‑of‑living crunch as a result of these floods across three states. Do you have any of those early figures as to just what that impact might well be?

JIM CHALMERS:

Thanks for having me back on the show. I think we see this primarily, what’s happening in the flood‑affected areas, we’re focused mainly on the human consequences, as the Prime Minister said. In times like these, Australians are there for each other, and the Government will be there for them as well. But it also does have consequences for our economy, for the cost of living and for the Budget too. One of the things that we’re very focused on today here at Budget headquarters, at Treasury in Canberra, is to see if we can capture an up‑to‑date understanding of the economic and budget consequences of all of this flooding in the Budget that I hand down on Tuesday night. Obviously it’s premature to understand in a total form, all of the costs and consequences, but we’ll do our best to at least have some kind of consideration of that as we finalise the Budget.

DORAN:

There is going to be a flow on to things like groceries, fresh food, with huge swathes of agricultural land being passed on. Do you have any early indication as to how that will manifest?

CHALMERS:

We’re working that through now. Clearly one of the ways that most Australians will feel the impact of these natural disasters is in the supermarket aisles. We’ve seen this before unfortunately – flooding is becoming a more and more regular occurrence in this country ‑ and we’ve seen before what it means for fresh produce, what it means for fresh food, what it means for meat and other groceries. And so, we can expect to see that again.

We are, really as we speak, working through trying to get our best understanding of what it means for inflation. Australians are already under the pump, and this will make things a little bit tougher for people. There’s no use pretending otherwise. At the same time as we update our inflation forecasts, we also have to factor in other things that are happening in the economy – the global situation is a big part of it. There’ll be swings and roundabouts in that inflation number. Some things have actually come off a bit since the last numbers that I released in July, for example, petrol in lots of parts of Australia is about 40 or 50 cents cheaper than it was in that July peak.

We’ll make sure that we get to the bottom of all of that. We’ll try and present via Treasury the best forecast that we can with up‑to‑date information. I think people understand that this is a rapidly evolving situation. As the Prime Minister said a moment ago, this has a long way to run unfortunately, but we’ll do our best to capture some of the impacts in the Budget I hand down on Tuesday.

DORAN:

The last inflation forecasts were suggesting it was going to be in the high 7 per cent mark by the end of the year. Do you foresee a situation where we could be looking at inflation in the 8 per cent sort of area?

CHALMERS:

I’m not prepared to say that yet. I know that there’s a lot of speculation about that, and you’re right that the peak in inflation that I released in the Treasury forecasts around the middle of the year were 7 and three‑quarters around the end of this year, around December. As I’ve said a couple of different ways now, we’re working through the consequences of this flooding. If that number changes, then I’ll update it in the usual way in the Budget.

DORAN:

You’ve spoken a lot about how this Budget is going to be a well‑being Budget. But does the cost‑of‑living crisis sort of cancel out those sorts of aims and ideals, because there are going to be a lot of people who are looking at it come Tuesday night and thinking, “Okay, this is the status quo. This is the situation facing my household. I’m not exactly feeling like my well‑being is in that good a shape.”

CHALMERS:

I understand, Matt. There’s a couple of pieces to your question. I think the first piece is that inflation – the rising costs of living – is probably the primary influence on the Budget that I’ll hand down on Tuesday. It impacts on how we’ve approached cost‑of‑living relief. It impacts how we’ve targeted our investment to areas that get the economy growing without adding to inflation. And it’s guided our approach to the Budget as well, and making sure that it's responsible ‑ as responsible as it possibly can be. So, the Budget will be solid. It will be sensible. It will be suited to the times. And the biggest influence on it will be this cost‑of‑living pressure that so many Australians are under.

More broadly, I’ve said for some time now – indeed, for some years – that in addition to all of the usual ways that we measure progress in the economy, which we want to keep and hold on to and keep analysing, we also should have the capacity to think more broadly about wellbeing in our community. And we should have the capacity to measure what matters to us so that we are taking a broad and holistic view of our community so that we can measure our progress so that we can judge our policies against it. And I don’t see anything that’s happening right now in the global economy or in the cost‑of‑living or pressures on the budget which are intensifying as well, I don’t see any of that cutting across our objective to agree with the Australian community, some of these broader measures of wellbeing, so that we can measure what matters in our economy but also in our society, and make sure that we’ve got an agreed way forward.

DORAN:

You will have no doubt seen comments from your New South Wales counterpart Matt Keane earlier in the week. He’s taking issue with something that already has been announced in the Budget – the carve‑up of infrastructure spending. He says that his state is being duded at the expense of Labor states that are getting far more money than New South Wales. How do you respond to that sort of criticism?

CHALMERS:

Look, I respectfully disagree with Matt, as you would expect me to. You know, we’ve got big investments rolling into New South Wales, as we should. And I’m proud of what the Budget will do for New South Wales, particularly for Western Sydney, but in other parts of the great state of New South Wales as well. I work pretty closely with Matt. I would work closely with Daniel Mookhey in the event of a change of government as well. I think as we get closer and closer to elections I understand, and I’m not that troubled by the sorts of commentary that we’ve heard from Matt. We’ll continue to work closely. We’ll continue to fund infrastructure in New South Wales – a crucial part of the national economy. And if there are further discussions that we need to have about further investments in New South Wales then I’m obviously up for that as well.

DORAN:

I do have to ask you one other issue – you would have been sitting around the Cabinet table when this decision was made to reverse the Morrison Government’s decision to recognise West Jerusalem as the capital of Israel. The key criticisms lobbed at the Government is that this has been a botched announcement. It appeared on the DFAT website before anyone was told about it. There was some delaying tactics there from your Foreign Minister Penny Wong before actually coming clean on what this change had been. And the Israeli Government wasn’t told about it before she held her press conference. Did you botch this announcement?

CHALMERS:

No, of course not. All we did on this occasion was reaffirm a policy that we’ve had for quite some time now – some years. We do understand that some in the Australian community are disappointed with this decision. We know that these are sensitive issues, but from our point of view we reaffirmed a longstanding position we’ve held for some time now – and that is that this is a final status issue for negotiations, peace negotiations, between the two parties. And so, we’ve reaffirmed that.

We don’t lightly dismiss the concerns that have been raised. We take them very seriously. We know it’s a sensitive issue. We know it’s an important issue. For my part, yes, I do support and was part of the discussion that led to yesterday’s announcement. So, I take responsibility for that as well. But my primary focus has been on the budget.

DORAN:

Well, Treasurer, we’ll let you get back to proofreading those Budget documents. Thanks for joining us today.

CHALMERS:

Thanks very much, Matt.