Interview with Virginia Trioli, ABC Melbourne

VIRGINIA TRIOLI:

Well, as I mentioned, rising energy prices, stagnating wages – a little bit of a lift in wages, say, in two years’ time – and a very big budget black hole even while the deficit seems to have been halved due to unexpected incomings into the coffers from booming commodity prices. But not much for you. How are you going to cope?

Jim Chalmers, of course, is the Federal Treasurer and he gave his first Budget last night in the House of Representatives. Treasurer, good morning, and congratulations on your first Budget.

JIM CHALMERS:

Thanks for having me back on your show, Virginia.

TRIOLI:

It’s a pleasure. Well, Treasurer, when struggling Australians realise that you’ve had an extra $140 billion poured into the coffers because of those booming commodity prices but they’re still left to struggle with high utilities, petrol, food, health, rental costs, do you expect they’re going to understand or thank you?

CHALMERS:

I think there is some level of understanding in the community that when you’ve got all this global uncertainty, you’ve got all of these pressures in our economy, that the most responsible thing that you can do is to try and make your Budget as strong as possible and at the same time, we have provided about seven and a half billion dollars in cost‑of‑living relief. I know that people would often like that to be more or sooner, but that’s not an insubstantial amount of relief on its way and we’ve been able to do that in a way that doesn’t put more pressure on inflation because inflation is really the defining challenge in our economy and the defining challenge in our Budget. Even when you consider that temporary revenue windfall from higher commodity prices, a lot of that is eaten up by increases to payments which come from higher inflation and the indexation from those payments.

We’ve tried to be as responsible as we can. We’ve tried to explain to people why that’s the case, but at the same time we’ve provided some cost‑of‑living relief in a targeted and responsible way.

TRIOLI:

That is very targeted. And due to its targeted nature, it does leave out a lot of households. And I accept what you’re saying about the not insubstantial quantum there, but I know that you wanted to keep your election promise of cutting household power bills by $275 by 2025. But that’s now all but dead due to your own projections. When you know the incredible pressure that households are under right now and how even harder that’s going to get, can you live with that call?

CHALMERS:

A couple of things about that – and I’m pleased you asked me about it. The modelling that came up with that figure in 2021 when we were in opposition, between then and now we’ve had a war in Europe, and that is causing havoc on international energy markets and it’s having implications for the cost of electricity here in Australia as well. We can’t ignore that. That’s been a big factor in these price rises that the Treasury is forecasting in the Budget that I released.

It remains the case that renewable energy is cheaper energy as well as cleaner energy and the more renewables you can get into the system the better chance you give yourself of getting those prices down over time but there’s no use pretending the war in Ukraine hasn’t happened. There’s no use pretending that a decade of energy policy chaos hasn’t been damaging, because it has.

Our job is to inject some more renewables into the system but also some policy certainty and some policy stability. What we did yesterday was we funded our regulators to do more work on some of these areas and if there’s more steps that we can take and they are responsible and sensible, then obviously we’ll explore taking them.

TRIOLI:

Well, indeed. And I’ve got some questions about that, and also about the regulatory measures that you flagged last night that I know you’ve been grilled on, but I’ll have my go as well, Jim Chalmers. But, look, on that point, and, you know, you say that a lot’s changed between 2021 and now, why not an energy rebate then? That wouldn’t necessarily be inflationary, and that would be the kind of immediate relief that might make people feel like you’re at least trying to keep faith with the promises you made about getting people’s bills down.

CHALMERS:

Yes, I understand, Virginia. A couple of things about that. First of all, we only make commitments that we can afford and there’s no use pretending we don’t still have a trillion dollars of debt in the Budget even though we’ve been able to improve the situation a little bit, so, we need to afford what we promise.

We’ve seen around the world that these energy rebates do have the capacity to push up inflation and push up interest rates as well and we don’t want to see that and also, there might be other options and other steps that we can take in addition to what we’re doing on cleaner and cheaper energy, in addition to what we did yesterday around the regulators and what we’re doing in the gas market and there is more work to do with states and others to see if there’s regulatory changes that we can make to take some of the sting out of these price rises.

TRIOLI:

Well, so you’ve signalled more government intervention in the energy sector. How exactly? What are the mechanisms that you could use, that you plan to use, or are we talking here about legislative changes that you’re actively considering?

CHALMERS:

I think the best way to understand it, Virginia, is we’re considering a broader range of options than might have been considered in the past.

TRIOLI:

Give me some examples of that, Treasurer.

CHALMERS:

I don’t want to – the reason I don’t want to do that, Virginia, I don’t want to pre‑empt the work that needs to happen, including by my other colleagues in the Cabinet and including potentially by state governments. I don’t want to limit our options but really why I raised it yesterday is people are asking me, is the best way to deal with that to send cheques in the mail? I’m not convinced that it is because of our inflation challenge and our Budget challenges. I think a smarter thing to consider is whether we can do something in the energy market itself.

TRIOLI:

A cap of some kind? A price cap?

CHALMERS:

Well, I’m not going to pre‑empt it. I really don’t want to limit the conversation or narrow the conversation and I’m conscious that other colleagues are involved and other levels of government are involved and so, I’d rather flag to your listeners, Virginia, we know it’s an issue. We know people are already under the pump. Obviously, these projected price increases will be difficult for people to accommodate. Any responsible government at any level seeing these kinds of forecast increases would be considering their options, and we are.

TRIOLI:

Jim Chalmers, the Federal Treasurer, is with you this morning. You can text in on 0437 774 774.

The head of the BCA, Jennifer Westacott, is warning this morning, Treasurer, that what you’re mentioning there, that the possibilities you’re flagging but not going into the details of, that that could undermine business certainty that the energy market needs, particularly in order to drive the changes to net zero emissions technology. Do you agree with her? Are you potentially spooking the market even not going into detail by flagging this?

CHALMERS:

I don’t think so. I think I’m just being upfront with people that, when you’re facing this kind of situation you need to consider your options. I’ve got a great, respectful relationship with Jennifer Westacott, I’ve got a lot of time for her, I spend a lot of time with her and I take her views seriously, but obviously our intention is not to do what she’s describing. Our intention is to flag that we understand the pressure that these price rises will put on Australians and on Australian industry and if there’s more that we can do responsibly in consultation with the business community, then we’ll consider that.

TRIOLI:

Given the structural spending challenges that we face – we simply aren’t reaping enough in taxation to cover what the government needs to spend – might this Budget then turn out to be a missed opportunity for significant taxation reform? Was that something you were actively considering and, if so, why not at least start to do that now?

CHALMERS:

I think we did make a start when it comes to multinational tax reform, starting to ensure that multinationals pay their fair share of tax.

TRIOLI:

But I’m referring to domestic taxation is the focus of my question, because we are not a poor country, as you know. We are a relatively speaking very wealthy country, but that wealth is very unevenly distributed.

CHALMERS:

Yes, but the point I’m making is that you’ve got to start somewhere, and we think the best place to start is multinationals, but there were also billions of dollars in tax crackdowns in the Budget I released yesterday and some other measures as well to make the system simpler and fairer and more consistent. I think we made a good start, just as we made a good start on savings - $22 billion in savings – and just as we showed the kind of spending restraint that would be unfamiliar to our predecessors to try to make sure that we’ve got less debt and more to show for it over the forward estimates.

I’ve always encouraged people, encouraged your listeners, to see the Budget yesterday as the beginning of a far more responsible approach to the Budget, not the end. We know there’s more work to do. There’s more pressure on the Budget. Those pressures are intensifying rather than easing and so, people can expect to hear more from us about how we continue to put the Budget on a more sustainable footing but we made a good start yesterday.

TRIOLI:

Well, those comments from my listeners and their observations are pouring in thick and fast as we’re talking, Jim Chalmers, and here’s just one example that’s popped up on text: “With the projected stage three tax cuts coming, isn’t the burden of fighting inflation being left to lower and middle‑income earners?” And, of course, with the extinguishment of the low and middle‑income earner tax offset, it would seem that, yes, it is. So you say it’s a good start, but my listeners have already identified for some time a stronger start that could have been made in relation to at least those stage three tax cuts.

CHALMERS:

Yes, I understand and there are a lot of people who have got a lot of views about those tax cuts. I guess the point that I’ve repeatedly made is that they are not legislated to come in for another couple of years. There’s still a couple of Budgets between now and then and the broader point about vulnerable people when inflation is high I think is right and as Labor people and as a Labor government, of course we’re attuned to the pressure that this high inflation environment puts on people and you’d always like to do more is the truth of it. We supported a substantial increase in the minimum wage, which will help a bit. We’ve got $33 billion in extra payments and pensions in the Budget as a consequence of indexation and when inflation is high indexation is high. That’s a good thing. I’m not claiming credit for it, I’m just saying that it is a part of what tries to cushion the blow in Budgets when inflation is high and we would always like to do more, but we’ll only promise what we can afford to do, and we’ll do it in the context of ensuring that we don’t make this inflation problem worse.

TRIOLI:

I know you have to leave, Treasurer, but let me just slip in one quick last question, although it’s a really crucial one, and I’m hoping to spend time with Minister Bill Shorten on it - you said last night, of course, when you were speaking to my colleague on 7.30 Sarah Ferguson the NDIS was going to end up costing hundreds of billions of dollars. Have you and your minister Bill Shorten spoken in detail about whether or how to change the NDIS in order to make it more affordable? For example, tightening definitions or reducing the lifespan of payments or removing some diagnoses even? Are you getting down to that level of detail? Is that under active consideration?

CHALMERS:

We’ve had a number of really important conversations with Bill, who’s doing important work when it comes to making sure we get value for money in the NDIS. He’s got a review that he’s announced with a couple of eminent people looking into the NDIS. Our aspiration is to put people at the centre of it, to make sure that we can continue to deliver for Australians with a disability.

My answer to Sarah Ferguson’s question just reflected the fact that in the current Budget, the NDIS hits about 50 billion by the end of the forward estimates, about 80 billion a year by the end of the 10‑year horizon and so, we need to make sure we’re getting value for money there and that it’s actually delivering. Bill’s doing that work, and we’re supporting him.

TRIOLI:

Good to talk to you, this morning. Thanks for your time.

CHALMERS:

Thanks, Virginia. All the best.