Interview with Patricia Karvelas, RN Breakfast, ABC

PATRICIA KARVELAS:

Jim Chalmers is the Treasurer and he joins me now. Treasurer, welcome back to the program.

JIM CHALMERS:

Thanks very much, Patricia.

KARVELAS:

You’ve said the government will see a surplus even bigger than the one forecast in the Budget. Tomorrow is June 30, the end of the financial year. How big exactly will the surplus be?

CHALMERS:

We’ll know after the end of the financial year the final budget position, and we’ll make that known when that’s clear. But it’s already obvious to us that the surplus will be bigger this year than we forecast in May. And that’s because we’ve taken a deliberately cautious and careful and restrained and responsible approach to this. It is a good thing that the surplus will be bigger, but it’s not an end in itself. It’s really just a much stronger foundation from which we can provide cost‑of‑living help for people doing it tough and invest in the future of the economy.

KARVELAS:

You say you’re open to another round of cost‑of‑living relief but want to maintain a healthy budget surplus, basically to keep a lid on inflation to help deal with that issue. So what’s the tipping point, Treasurer, for more support? How do you make that call?

CHALMERS:

Well, first of all, it’s really important to recognise that the cost‑of‑living help in the Budget is rolling out now. Some of it will come in next week at the start of the new financial year, whether it’s cheaper early childhood education, we’ve got electricity bill relief rolling out before long. And so a lot of the initiatives that we funded in the Budget are rolling out now, and that’s a good thing because people need a bit of help because people are doing it tough, and we recognise that. So that’s the first point. The other important point is when it comes to the surplus, this bigger surplus is a consequence of responsible economic management, but it doesn’t come at the expense of cost‑of‑living help. In fact, as I said before, by getting the budget in much better nick, turning around the situation we inherited, taking responsibility ‑ whether it’s savings, whether it’s banking upward revisions to revenue, whether it’s showing spending constraint ‑ by getting the budget in much better nick we can afford to provide this cost‑of‑living help for people. And that will roll out in the coming weeks, and that will take some of the edge off these cost‑of‑living pressures without adding to inflation.

KARVELAS:

I understand what you’re currently doing but you did leave open the possibility yesterday of more cost‑of‑living relief. What I’m trying to work out is how do you make that call? On what basis do you decide that more is needed and when?

CHALMERS:

Well, all I said yesterday was this responsible approach and the better budget position makes the cost‑of‑living relief possible, which is what I was getting to a moment ago in the –

KARVELAS:

Yeah, yeah, yeah, but it’s been widely reported that you’ve left open the door for further support. So are you saying that you haven’t. Can you just clarify that?

CHALMERS:

No, I’ve obviously seen those reports, and in every Budget we work out the budget position, the economic conditions and if we can afford to help people in different ways, obviously we consider that at the time. But I’m not floating that now, what I’m saying is that the cost‑of‑living relief is rolling out in important ways. And that’s made possible by the responsible approach we’ve taken to the budget.

KARVELAS:

Okay, so who do you think might need more support down the track?

CHALMERS:

I’m not contemplating more support or floating more support, as I’ve explained to you a couple of times now, Patricia, in the response to your first couple of good questions on this. There is cost‑of‑living relief, whether it’s cheaper child care, electricity bill relief, out‑of‑pocket health costs –

KARVELAS:

All right. Well, let me go to something very specific –

CHALMERS:

In all of these ways we’re rolling out help, and that’s possible because we’ve been more responsible with the budget than our predecessors were.

KARVELAS:

Okay, let’s go to something specific ‑ parents might end up paying higher childcare fees despite your $5.4 billion cheaper child care subsidy because early learning centres are bumping up fees to deal with rising costs, right? Do you accept that for the majority of parents child care inflation will mean the subsidy will be eaten up?

CHALMERS:

Well, a couple of things about that. First of all, this is a game changing investment. It will make it easier for people to work more and earn more if they want to. So it will be good for the economy as well. You and I have talked about that on a number of occasions. People will still be receiving substantial assistance with their early childhood education, and that’s a good thing. And when it comes to prices, there are obviously existing caps in the system. But I’ve also – I’m working closely with Jason Clare and Anne Aly to make sure that the ACCC can give us advice about how pricing works in the childcare system, in early childhood education. And that’s an important part of our work as well. But people will get substantial help from the beginning of July. That’s really important. It’s one of the big pressures that people face, we acknowledge that and that’s why we’re doing something about it.

KARVELAS:

That’s right, but there are price increases. Will that substantial help be eaten up by those price increases?

CHALMERS:

Well, people will still get substantial help, and so it won’t cancel out –

KARVELAS:

It will for some. It will for some families, though, won’t it?

CHALMERS:

Well, you think about a family that’s on about 120 grand, if they’ve got one child doing three days a week, the expectation is the benefit is around $1,700 a year. And when it comes to pricing, we acknowledge obviously there are existing caps. But if there are other changes that we need to make when it comes to pricing, then we’ll factor in the advice we get from the ACCC later in the year. That’s another important part of the work that we’re doing.

KARVELAS:

I understand that, but that’s not going to do anything immediately for price hikes that families are facing imminently.

CHALMERS:

Well, the alternative to that is not providing any help at all, Patricia, that’s the logical –

KARVELAS:

I’m not suggesting that at all. No, it’s not, it is not, I’m talking about the fact that child care is going up, people are getting a subsidy, but whether it gets cancelled out for many families, that’s a reasonable question.

CHALMERS:

People are getting substantial help from the beginning of July. They will be better off as a consequence. It will take some of the pressure off family budgets and it will make it easier for people to work more and earn more, which is good for the economy that desperately still ‑ despite everything that’s coming at us around the world ‑ needs workers. And so that’s a good thing as well. So it will be a net benefit to people and to the economy. It will be a game changing investment in early childhood education, and we’re proud of it.

KARVELAS:

Okay, you mentioned the ACCC ‑ it’s investigating childcare costs. Has its report landed on your desk yet?

CHALMERS:

Not yet, but before long, I think in the coming months. But the ACCC knows because of the task that we’ve set it – Jason and Anne and I set it this task – and so they’re working away on it in their usual diligent way, and we’ll get the response to that before long.

KARVELAS:

If we take a look at another issue where inflation is a huge issue still, the Australian Energy Regulator says the number of households on hardship plans to repay electricity bills has surged by 19 per cent in the first quarter of the year. Is it time for another energy relief payment?

CHALMERS:

Well, the energy relief payment is rolling out from the beginning of the new financial year, so people are yet to receive that. When they do, it will make a difference. And so we’re not contemplating another payment beyond that. We’re rolling out up to 500 bucks in bill relief for people for their winter bills, and that will be an important way as well to take some of the edge off these cost‑of‑living pressures. But in addition to that, these electricity price rises would have been much worse if the Liberals and Nationals had their way and we didn’t put the caps on in the system, which also mean that the increases we’re seeing in electricity costs are much smaller than they would otherwise be if the government hadn’t taken decisive action. So we’re taking some of the edge off those electricity price rises. We still understand that people are under the pump, and that’s why we’re providing cost‑of‑living relief without making the inflation challenge worse.

KARVELAS:

Energy bills are set to rise by more than 20 per cent in some parts of the country from July 1, though. Your Budget offered relief for some households. We spoke to Cassandra Goldie before; she said that you need more targeted assistance to the lower income households. Is that on the table?

CHALMERS:

Well, the assistance is targeted to lower income households ‑

KARVELAS:

She says there needs – that’s my point, though. She says it needs to go further.

CHALMERS:

Yeah, I understand that, and that’s the view that you would expect from ACOSS and from Cass, and that’s fine. We respect and value her input and ACOSS’s input as well. But we’re providing targeted assistance to people who are doing it toughest. But also, don’t forget, the price caps that we put in, despite the opposition from our political opponents, they are taking some of the edge off these price rises for everyone. And if you look at what the Treasury has said, the Reserve Bank and others, really, one of the big reasons why our Budget is taking pressure off inflation rather than adding to it is because of the combination of those price caps and the electricity bill relief. We know that people are still doing it tough. We know that these prices are still difficult for people to swallow in their household budgets, but they would be much worse without the decisive action we’ve taken.

KARVELAS:

The Reserve Bank will meet and make a determination about interest rates. Now, I know what you’re going to say – that they make decisions independent of the government, and that’s absolutely right. But given the latest inflation numbers, do you think a pause, families would be hoping for a pause, people who have mortgages would need a pause right now?

CHALMERS:

Well, I think you’ve predicted it right, Patricia, and for good reason – I’m not going to change the habit of a lifetime and pre‑empt or second guess the Reserve Bank independently.

KARVELAS:

No, but on the question of what households would expect?

CHALMERS:

Well, I think what the Reserve Bank will weigh up is the fact that inflation is moderating in our economy in welcome ways. It’s still too high, but coming off its peak at around Christmas time. They’ll weigh that up. They’ll have retail data, consumption has been softer, construction approvals have been softer. There’s clear evidence that the economy is slowing in ways that we have expected and anticipated. And they’ll weigh that up along with all of the global conditions as well. But I’m not going to change my usual practice, I’m not going to give them free advice. I’ve got my own job to do, I take responsibility for doing that. A bigger budget surplus, record jobs, moderating inflation, cost‑of‑living help and investing in the future of our economy ‑ those are my focuses.

KARVELAS:

There was a story by Shane Wright – who I’ve just name checked there – in relation to some of the candidates for Governor. Why would he even know about candidates for governor if Phil Lowe’s term was going to be extended?

CHALMERS:

Well, I think we’ve made it really clear that we’re consulting pretty broadly when it comes to what is a big job, and so it’s a big decision. And that doesn’t mean that the speculation you’ve seen from Shane or from others, frankly, in the print media in particular doesn’t – hasn’t come from me. It doesn’t mean it’s necessarily accurate. But we’ve made it clear – I think I made it clear the last time you and I had a yak on your program – that I’m approaching this in a really consultative way. It’s a big call, it’s a big job. I work with my Cabinet colleagues and especially the Prime Minister and the Finance Minister to conclude a view. We’re looking to do that in July before the parliament comes back and we’ll make it known when we do.

KARVELAS:

Early this week PwC hired a new CEO and announced they’re selling off their government arm to a private company for a dollar. What did you make of that Treasurer?

CHALMERS:

Well, it’s a commercial decision, and obviously they’re doing – they’re trying to react to what has been a stunning breach of faith and breach of trust. And so they’re making these commercial decisions. From our point of view, our initial advice – and we’re still working through all of the implications and consequences of a restructure like this – but from our point of view it doesn’t appear to us initially that this changes the approach that we’re taking. Whether it’s the AFP referral from the Treasury, whether it’s the steps we’re taking to tighten up procurement or to tighten up the Tax Practitioners Board, and the way that we consult on policy changes. We’ll keep going as we have been and they’ll continue to take these commercial decisions.

KARVELAS:

But do you get the sense that they still don’t get it?

CHALMERS:

I don’t really want to kind of get into that. I don’t really want to get into – there are a lot of processes underway. I’ve made it really clear – I think it was a disgraceful episode, frankly. Deeply disappointing, deeply disturbing and a shocking breach of faith and shocking breach of trust. And so I’ve made all of that clear. Beyond that, we’ve got a whole bunch of processes and work in train. We are taking decisive action on the legal front, on the procurement front and when it comes to the way that we consult so that this doesn’t happen again. This has been a shameful episode. We don’t want it to happen again, and my focus is on making sure that it doesn’t.

KARVELAS:

Treasurer, thank you so much for joining us.

CHALMERS:

Thanks, Patricia.