JIM CHALMERS MP
SHADOW TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
PODCAST INTERVIEW
POLITICS WITH MICHELLE GRATTAN
WEDNESDAY, 30 MARCH 2022
SUBJECT: Federal Budget.
MICHELLE GRATTAN, HOST: Dr Jim Chalmers, this pre-election Budget is hard to attack isn't it? You're supporting the giveaways, so you have to resort to rhetoric and criticisms around the edges?
JIM CHALMERS, SHADOW TREASURER: No, I don't see it that way Michelle. I think there's a big hole in this Budget, where the long-term plan for the future should be. There's some cost of living relief made necessary by the fact that real wages are falling in the Government's own Budget, and we'll support that through the Parliament, but there's no plan for the future. It's a vote seeker Budget in the sense that it's got a shelf life of six or seven weeks. The Government is temperamentally incapable of seeing beyond the election, and that's the difference. I think there was a real appetite in the community for something that said we've been through a lot together and what does the future look like. The Government's sense of the future extends to six or seven weeks from now until the May election.
GRATTAN: So how do you think people will receive it?
CHALMERS: I think that they'll see through it in the same way they see through the Prime Minister. They understand that this is a cynical, poll-driven, political pamphlet, and not something which is about how we set up our economy and our people to succeed into the future. I think it reinforces the views that they already had about Scott Morrison - long on politics, short on a plan. He woke up one day in the last couple of weeks and realised he had to call an election in the next couple of weeks and decided he had to care about the cost of living. If he cared about the cost of living, he wouldn't have spent almost a decade going after people's wages, and job security, and pensions, and Medicare.
GRATTAN: Now you're saying there are billions of dollars of cuts in the Budget. The Government denies this. Where are these cuts precisely?
CHALMERS: Well, on page 49 of Budget paper number two - for the Budget watchers who are also Grattan podcast followers.
GRATTAN: Everyone will have those documents out.
CHALMERS: Everyone will have them in front of them.
(LAUGHTER)
CHALMERS: Page 49, Budget paper two, there are $3 billion in saves after the election. We've just said to the Government, tell us what they are, come clean on what those saves are, and they haven't been able to do that. That's because they've got a cash splash before the election, and then they've got secret cuts after the election. We don't know if it's Medicare. We don't know if it's pensions. We don't know what it is, and the Government should come clean.
GRATTAN: Medicare sounds a bit like your old 'mediscare' campaign of 2016.
CHALMERS: No, I don't accept that. The Government has come after Medicare, as recently as last year. People know that if they want to strengthen and protect Medicare, then the only option is Labor. The Liberals and Nationals have had lots of different attempts at undermining Medicare and we won't stand for it.
GRATTAN: Now, a Labor Government would be under pressure to keep the petrol excise cut, but you flagged that you wouldn't do that. Why not if fuel prices remain high?
CHALMERS: Well, I think the Government's intention in giving some petrol price relief before the election is to push this problem from one side of the election to the other and so the legislation in the parliament says that petrol prices go up at the end of September, no matter who wins the election. All I've said, to be upfront to the Australian people, is it's difficult to see a Government - of either political persuasion - being able to afford to extend that excise relief forever. We're just being upfront about it, because we believe in being responsible with the people's money. We haven't seen enough of that the last decade.
GRATTAN: The Budget doesn't renew the tax offset for low and middle income earners after this financial year. Do you agree with that decision and where does this leave these taxpayers and what would you do about them?
CHALMERS: It means that after people get their tax return this year, they will get the last year of the Low and Middle Income Tax Offset and they won't get it the year after. So that obviously means that they will be paying more tax under the Government's legislation the following year than they are this year. That's just a fact. We have said we don't want to pre-empt decisions that a future government may take - but again - we're talking about somewhere between I think $7 and $8 billion to extend this each year. We want to be responsible, we'd have to weigh that up against all the other priorities that we have in skills, and child care, and cleaner and cheaper energy, to make sure that we're getting maximum bang for buck. The reality is, this Government is going to the election with the worst set of books that any government has ever taken to an election in Australia. There's not room in our alternative Budget even for all of the good ideas, and so we've got to prioritise, and sequence, and make sure that whatever we do is delivering maximum bang for buck.
GRATTAN: So that sounds pretty clearly to me like you would not renew that tax offset?
CHALMERS: One of the things that I don't like doing is pre-empting future conversations of the Shadow Cabinet, or if we win office, the Cabinet. Obviously we will examine the circumstances we inherit, the Budget, the economy that we would inherit if we won office. I don't really want to pre-empt decisions, you know, down the track.
GRATTAN: That's post-election decisions.
CHALMERS: Yeah, but I'm just making the case that this is a costly initiative. The Government has designed a lot of these initiatives so that they run out on the other side of an election. I think that's intentional. The Government can explain that pushing of problems from one side of the election to the other. I don't want to pre-empt decisions that we might take about it. We'll be responsible and constructive about it.
GRATTAN: But can you maintain this position credibly, because it means you'll have a program outlined for the election. You'll have that costed. As you say, this is a lot of money. So you can't just leave this floating to say, well, we might do it, we mightn't do it.
CHALMERS: I'll tell you how I see it. I understand your question, Michelle. I'll tell you how I see it. If the government changed hands - and we don't take that outcome for granted, at all, whatsoever - but if the government changed hands think about what the inheritance would look like. A trillion dollars in debt with not enough to show for it, falling real wages, a petrol price hike in September, the end of the Low and Middle Income Tax Offset. Interest rates are expected to rise later this year or early next, depending on who you listen to. This is the inheritance if government changed hands. So my responsibility - if I was the Treasurer, if the government changed hands - then my responsibility is to weigh up all of those pressures, to implement our election commitments - around child care, and skills, and energy and a future made in Australia, and the NBN, and strengthen Medicare - those are our commitments and we will budget for and implement them. Anything above and beyond that depends on the Budget that we inherit, the circumstances we inherit. I will always do what's right for ordinary Australians, for their Budget, and for their economy. In order to do that you need take into consideration the economic conditions of the time.
GRATTAN: But wouldn't it be better to just say here and now, we couldn't afford this because we've got other priorities, so people know what your position is.
CHALMERS: I think it will be difficult for a government of either political persuasion to afford to extend it, but I don't want to pre-empt that conversation with my colleagues. It is an expensive measure. I think that's self-evident. We want to be responsible, given that we would be inheriting a trillion dollars in debt with almost nothing to show for it from this Government. We have to weigh up one priority against another, there's not room for all the good ideas, so we need to make sure that whatever we do is the best, most responsible, outcome.
GRATTAN: I suppose the average lower income taxpayer might say, well, have your conversation with your colleagues now rather than later?
CHALMERS: I would say to them, petrol is part of the story but not the whole story. The Low and Middle Income Tax Offset is part of the story but not the whole story. We've already got policies out there to make child care cheaper, to get power bills down, to get real wages going again. Real wages is a big part of this story. If you’re thinking about the cost of living, what really matters is people's capacity to keep up with it. In the Government's Budget real wages go backwards by about $26 a week on average. Even with this relief that's been provided at five minutes to midnight - even with that relief - it won't make up for the fact that people are paying thousands more in the costs of living, and they're earning less because real wages are falling. That is the issue.
GRATTAN: This whole question of real wages though, is a complicated one, isn't it? Because we've got a tight labour market. We've had virtually no immigration. You would expect in the normal course of events, that there would be market pressure to push up real wages. I don't see what a government would be able to do, except at the edges?
CHALMERS: The economics textbooks will say if you've got the unemployment rate falling in welcome ways, and you've got skill shortages, then we should be seeing more upward pressure on wages. Instead, real wages have been falling. The difference between wages growth under this Government - 2.1% on average, under Labour 3.6% on average - is one of the reasons why working families are being punished in the current economy. I think all of that is factual and self-evident. The difference is the Government says stagnant wages are a deliberate design feature of our economic policy. We take a different view. The way you get wages growing again, is you train people to grab opportunities as they emerge - higher wage opportunities. You make it easier for people to work more if they want to, and earn more by making child care cheaper and more accessible. You also do things like regulate the gig economy, you empower the Fair Work Commission to turn casual insecure work into more secure work, you deal with labour hire which has been undermining people’s wages outcomes. There are a range of things that a government that cares about wages can, should, and will do, frankly, if we get the opportunity.
GRATTAN: You said that if Labor wins there'd be another Budget this year. Would that Budget completely overturn this Budget or would it be just changing the priorities - something between a tinker and a relatively modest refit?
CHALMERS: If the government changes hands there will be another Budget this year, it'd be unrealistic to go from March 2022 until May 2023. So there'll be a Budget this year, we'll take some advice if the government changes hands from Treasury on the best time to do that. The best way to think about that Budget, it'd be about locking-in our policy commitments that we've made, about keeping faith on these cost of living measures that we are supporting through the parliament this week. But we've also identified some ways where there could be some reprioritising of spending - whether it's contractors and consultants in the public service, whether it's some of these discretionary funds that have been a source of so much rorting and waste over the last nine or ten years. These are the sorts of things that we would be looking at. I get asked all the time Michelle, would your first Budget go through spending line, by line, by line? I think every Budget should go through spending line by line, and make sure that we are delivering for people by ensuring maximum bang for buck for every dollar that is spent. One of the reasons we don't have enough to show for this mountain of debt that the Government has racked up, is because they've been spraying it around on rorts, and waste, and mismanagement for so long - tens of billions of dollars in money wasted - and every dollar wasted means it can't be invested in growing the economy. It can't be provided in cost of living support for working families. That is one of the defining failures of their economic mismanagement the last decade.
GRATTAN: Jim Chalmers, thank you very much for talking with us today.
ENDS
