Interview with Neil Mitchell, 3AW

NEIL MITCHELL:

Federal Treasurer, good morning.

JIM CHALMERS:

Good morning, Neil. How are you?

MITCHELL:

Look, I apologise if I’m going to be rude to you because we’ve only got about five or six minutes and there’s a lot of things I want to get through so I apologise in advance. Power and gas prices, we’ve talked about that already. Will you legislate to keep prices down?

CHALMERS:

We’ve got more work to do there obviously. We’re considering a whole heap of options when it comes to energy. A big part of the inflation problem is the increasing cost of energy which comes courtesy of the war in Ukraine.

MITCHELL:

So will you consider price fixing?

CHALMERS:

I don’t want to narrow this or pre‑empt what we might be able to do here, and it involves a bit of work with other colleagues and with other levels of government.

MITCHELL:

But it’s on the table – it is on the table, is it?

CHALMERS:

We’ve made it very clear that we would consider a broader range of options than might have been considered in the past and that’s because the situation brought about by the war in Ukraine is going to be put substantial pressure on our electricity prices and therefore on Australians right around the country so if there’s more that we can do, we’ll obviously consider it.

MITCHELL:

Price fixing is on the table?

CHALMERS:

I don’t want to pre‑empt it, Neil. I don’t want to pre‑empt the work of other ministers or other levels of government.

MITCHELL:

Okay, fair enough. You did promise to get energy bills down by $275. That’s obviously gone by 2025. That’s gone, that promise.

CHALMERS:

As you rightly identify that was the modelling that said that would be the impact by 2025. The modelling was done in 2021. We’ve had a war in Ukraine, which has dug in, causing havoc on energy markets. But it remains the case that renewable energy is cheaper energy. It remains the case that a decade of policy chaos in energy hasn’t helped and we’ll do what we reasonably can to get those prices down over time.

MITCHELL:

Gas prices, too, 44 per cent on gas prices. If we get more gas, surely the prices will stay down, don’t they?

CHALMERS:

Well, ideally, but I think that we need to do more there, too, Neil, to be frank about it. My colleague, Minister Madeleine King has done a good job getting more supply into the market, but we need to think about prices specifically. There’s a Code of Conduct that applies to the gas market in Australia. We’re speaking with the companies and with industry as well to see what changes we can make to that.

MITCHELL:

Okay, will you speak to Daniel Andrews to see if he will lift his ban on coal‑seam gas exploration?

CHALMERS:

I think it’s a matter for the states, Neil, how they do things state by state.

MITCHELL:

But hang on, if the prices are going up – if he mines it, prices don’t go up as much, it must help. Will you lobby that with him?

CHALMERS:

I don’t intend to, Neil, and I’ll tell you why. We’ve got national levers that we can pull. We’ve got a Heads of Agreement. We’ve got a Code of Conduct and we’ve got other regulatory arrangements and my view, not just in this issue, and probably when we’ve spoken before, Dan Andrews can do his job and I’ll do mine. We’ve got work to do in the gas market and that’s what I’m going to focus on.

MITCHELL:

Okay. Well, speaking of him doing his job – $2.2 billion for the Suburban Rail Loop. That’s 85 cents in every dollar of new infrastructure money is going to the rail loop. Have you yet seen a business case from Infrastructure Australia?

CHALMERS:

What we’ve done here, Neil, and I appreciate you’ve got a strong view about Suburban Rail Loop, but we’ve committed that money because we think it’s a good project, and we’ve committed that money to the early stages on the work, on the first part of it, which is the Suburban Rail Loop East – that’s the first section of the overall project. We know that there’s been views expressed about the broader project, but not as I understand, about that specific part of it. We think it’s important to get more public transport into the suburbs of Melbourne and we said before the election that we would kick in and that’s what we did in the Budget.

MITCHELL:

But we don’t have a business case on that first section, we don’t - well, we’ve got a business case on the whole section which says it doesn’t work. It says that. Our own Auditor‑General’s ripped it apart, yet you’re willing to give it $2.2 billion. Did you consult with Daniel Andrews about the cuts that were coming through in things like the Glenferrie Road Level Crossing? Did you consult Daniel Andrews on that? So we cut those and you get this?

CHALMERS:

A couple of things about that. Obviously, our Infrastructure Minister Catherine King works closely with all of the state governments on the reprofiling of some of these projects because we’ve got high input costs, building materials, and we’ve got labour shortages. I think everybody recognises that you need to be reasonable and responsible about how you roll out this infrastructure program. So Catherine’s done a terrific job talking with state governments about that.

MITCHELL:

So that means – does that mean that Daniel Andrews signed off on the cuts?

CHALMERS:

I’m not saying that, Neil. I’m saying that there is a process of consultation with states, which goes on, and I meet with the treasurers of all the states and territories, and one of the things that we have been grappling with at every level is how do we recognise the costs of building are going through the roof because of the labour shortage, because of building input costs – 

MITCHELL:

I’m just trying to get to who set the priorities? $2.2 billion to the rail loop, but we do away with all these other projects; who set those priorities?

CHALMERS:

We take responsibility for that at the Commonwealth level and we’ve obviously got to make difficult decisions about investing in infrastructure. But we want there to be more public transport in the suburbs of Melbourne. That’s what this is all about. Obviously, there’s a heap of work to go on between now and the finalisation of the project to making sure we get value for money.

MITCHELL:

So, is Infrastructure Australia still looking at it, are they?

CHALMERS:

We’ve had to revamp Infrastructure Australia because it was run‑down, so we’re rebuilding it because we think it’s important.

MITCHELL:

A million new houses, who’s going to build them?

CHALMERS:

It’s going to be a combination. That’s the beauty of this Housing Accord that I announced yesterday is because the problem is so substantial. We’ve got low vacancy rates and high rents –

MITCHELL:

But we have no builders. We’ve got no builders. We’ve got very few materials. Who’s going to build them?

CHALMERS:

That’s why the accord kicks in 2024. We’ve done that very deliberately –

But you’re not going to train them in a year?

CHALMERS:

We’ve been consulting really closely and working closely with the building industry and their view is there’s a lot of activity right now. There’s a lot of pressure on prices and there’s labour shortages right now. By 2024 the pipeline comes away a bit and that’s when the accord cuts in.

MITCHELL:

Are you aware of KiwiBuild?

CHALMERS:

I’m not. Tell me.

MITCHELL:

KiwiBuild, they tried the same thing in New Zealand, it was an absolute disaster. They were going to build 100,000 homes. They’ve built a few hundred and they couldn’t sell them. It’s cost them millions.

CHALMERS:

As I understand it, we’re talking here about a different model and the reason we are –

MITCHELL:

But you haven’t looked at it.

CHALMERS:

One of our big national advantages is that we’ve got a different superannuation system. And I’ve spoken with a lot of the super funds. I’ve spoken with State Governments. I’ve spoken with the building industry and they think there’s something in this. We can build more homes, closer to where the jobs and opportunities are and that’s important.

MITCHELL:

Okay, I’ll let you go. One last question: hard decisions ahead. What areas? What’s on the table for these hard decisions ahead, presumably in the May Budget?

CHALMERS:

It’s always a combination of four things. Firstly, spending restraint. We showed that yesterday. Secondly, trimming spending where we can – $22 billion of savings yesterday. Thirdly, sensible tax reform. We started with multinational taxes yesterday and tax compliance. And, fourthly, making sure that we’re only promising what we can afford and we get some economic bang for buck for our investment. And that’s the combination we had yesterday. That’s the combination we’ll have in the future.

MITCHELL:

Does tax reform possibly mean tax increases?

CHALMERS:

I think inevitably if you want to simplify the system and make it fairer, inevitably you need to contemplate, with all the pressures on our Budget, you need to work out if there’s a fairer way to raise revenue to pay for our priorities. That’s what we did yesterday with multinationals.

MITCHELL:

You also took 1,200 bucks off lower income earners on that allowance they got. But just to clear up that answer –

CHALMERS:

I don’t accept that description, Neil. That payment ended under the life of the former government. We’ve said repeatedly before the election and after the election we couldn’t afford to reinstate it, and the help for people on the lowest incomes comes from the minimum wage rise and it comes from an extra $33 billion in pensions and payments in yesterday’s Budget.

MITCHELL:

But have people earning under $126,000 lost 1,200 a year?

CHALMERS:

That’s the end of a program from before the election. That’s been known for ages and we said before the election and after the election we’ll only promise what we can afford and that remains the case.

MITCHELL:

I’m sorry. Just to get it clear on the tax then. Tax reform could mean increased taxes for higher income earners?

CHALMERS:

We’ve said repeatedly that when you’ve got a trillion dollars of debt, deficits as far as the eye can see, the situation we inherited from our predecessors, you need a combination of things. Our priorities have been spending, trimming spending and spending restraint, but there will inevitably be a conversation about tax reform, too.

MITCHELL:

Okay, and what’s a high‑income earner, in your view?

CHALMERS:

I don’t put a label on it. It depends where you live. It depends on what your cost of living is.

MITCHELL:

Fair enough.

CHALMERS:

I don’t pick a kind of arbitrary amount. I understand that Australians are under the pump everywhere and, obviously, what we did in the Budget providing that cost‑of‑living relief but in a responsible way that doesn’t push up inflation is really important.

MITCHELL:

Thank you so much for your time. I appreciate it, thank you.

CHALMERS:

I appreciate yours, Neil. All the best.