Press conference, Darwin

JIM CHALMERS:

Thanks everyone, I've got a few issues to cover off and then myself and the Chief Minister are happy to take any of your easy questions, and 'Gos' will take any of your difficult ones. I want to cover off on three issues in particular ‑ first of all the surplus, second of all the monthly inflation number, and thirdly, I've been asked to cover off on petrol prices. So let me work through those and then happy to take any of your questions. We are expecting now a stronger surplus this year, as a direct result of the responsible, methodical way that we have been managing the budget. A hallmark of the last decade has been waste and rorts, and a trillion dollars in debt and deficits as far as the eye can see. And a hallmark of our first year in office, as the Albanese Labor Government, has been the kind of responsible economic management that makes this kind of outcome possible. We were deliberately careful and cautious and responsible and restrained when we forecast a $4 billion surplus in the May Budget for this year. We are really pleased that the surplus will come in bigger than that, not because the surplus is an end in itself, not because we want to sell hundreds of 'Back in Black' mugs like my predecessor did. But because a budget in much better nick is the foundation for everything that we want to do to help people through difficult times and invest in their future. The surplus for 2022‑23 will be bigger than was forecast in May, and that's a good thing but it's not an end in itself. It's part of our efforts to manage this economy in a much more responsible, much more methodical way and we're now seeing some of the fruits of that effort, in the bigger surplus that we will report when the Final Budget Outcome comes out before long.

Second issue is the monthly inflation gauge. Inflation is moderating in our economy but not as fast as we would like. It is good that inflation has been moderating since its peak around Christmas time, and we see that again in the new numbers released today. Inflation will be higher than we'd like for longer than we'd like and we understand that that is putting pressure on people right around this country. Our Budget was aimed squarely at addressing the primary challenge in our economy, which is the inflation challenge. Inflation is moderating but not as fast as we would like and that's why it's so important that we build this bigger surplus and these bigger buffers at a time when inflation is at its most persistent. That's why we're providing cost‑of‑living relief without adding to inflation, a point that the Reserve Bank Governor has made ‑ that our Budget helps people take some of the edge off these cost‑of‑living pressures without adding to inflation in our economy. The Reserve Bank Governor has made it very clear that our Budget will take the pressure off inflation and not add to it.

The third related point is around petrol prices. Look, we understand that petrol prices have been volatile for some time but it's pleasing to see that we end the financial year with petrol prices lower than they were at the start of the financial year. If you look at the peaks across the capital cities, this time last year, often around $2.10, or $2.15 ‑ now more likely to be in the dollar‑seventies in the most recent average numbers that I have seen. So petrol prices are obviously a big part of the pressure on Australians and particularly Australian motorists. But in a world where inflation has been persistent, it is pleasing to see that in some cases the average has come off 40 or 45, or even 50 cents, depending on what capital city you're in, in Australia. That's a good thing, but we're realistic about it. We know petrol prices have been volatile, but they are lower now on average across the capitals than they were this time last year. We end the financial year with average petrol prices in the capital cities lower than we began the financial year, and that's a good thing. All of us are happy to take your questions.

JOURNALIST:

Treasurer, how much of a relief will this be to households that the CPI isn't as hot as was expected?

CHALMERS:

Well, we want to see inflation moderate and it is, and we want to see it moderate quicker, which is why a central part of our economic plan in our two Budgets has been to help people through these cost‑of‑living pressures without making the inflation challenge worse. So inflation is moderating in our economy, we've seen that again today. We want it to moderate faster, because cost‑of‑living pressures are still the defining challenge around the kitchen table and around our economy.

JOURNALIST:

Economists are now tipping there's now a 50‑50 chance of a recession. Would you agree with those [inaudible]?

CHALMERS:

The Treasury forecasts and the Reserve Bank forecasts are for continued growth in the Australian economy. We've been really up‑front with people for some time and said that we do expect the Australian economy to slow considerably, as the inevitable consequence of interest rates which started going up before the election, combined with very difficult global conditions. We're seeing the front edge of that already in the soft National Accounts we got for the March quarter. We see it in our retail data, our consumption data, our household savings and our construction approvals. This is what happens when there is a substantial tightening of interest rates combined with a slowing global economy. We've been up‑front with people about that. It's why the Budget was so squarely focused on helping people with the cost of living, but also investing in the foundations of growth in our economy into the future, at the same time as we bring the budget back to a more substantial surplus. That is the best thing, or one of the best things that we can do when inflation is more persistent than we'd like.

JOURNALIST:

You've indicated that the surplus in the Budget will be bigger than the $4 billion forecast in May, roughly how many times bigger?

CHALMERS:

We will know in the coming weeks and months, the Final Budget Outcome for this financial year. We already know that the surplus will be substantially bigger than the $4.2 billion that we printed in May. We deliberately took a very cautious, very conservative, very responsible, very restrained approach to the surplus that we printed in May, frankly, because I didn't want to repeat Josh Frydenberg's error of over promising and under delivering when it comes to the final Budget position. We are now supremely confident, not just that there will be a surplus in 22‑23, the first in 15 years, but also that it will be bigger than we printed. This is what happens when you've got a government which takes its responsibilities to manage the budget and manage the economy the right way, seriously. We have shown remarkable spending restraint which would be unrecognisable to our predecessors. We've banked almost all of the upward revisions to revenue, we found $40 billion in savings and reprioritisations, and we've shown spending restraint right across the Budget. This bigger surplus that we are confirming today wouldn't be possible without the Albanese Labor Government's responsible economic management.

JOURNALIST:

What is the exact Budget surplus, and will there be a second one next year? And if you can't say why ‑ what it is ‑ why not?

CHALMERS:

Well, first of all, and the same kind of answer that I gave your colleague a moment ago ‑ when the Final Budget Outcome is released in the coming months, it will be clear that the Budget surplus is bigger than the $4.2 billion we printed in May, for all of the reasons that I've run through. We are yet to get the numbers for June, the final numbers for June because the month isn't finished yet. But we are already very confident, not just that there'll be a surplus but it will be bigger, and that's a direct consequence of the responsible approach that we've taken to managing the budget and managing the economy.

JOURNALIST:

You must have some kind of idea of how much bigger it will be though, right ‑ like twice, three times bigger than what was forecast?

CHALMERS:

We'll make that clear in the coming weeks and months.

JOURNALIST:

You've touched on obviously Australians struggling with the cost of living, is banking billions then a slap in the face of those Australians crying out for more relief?

CHALMERS:

Of course not, getting the budget in much better nick is what makes it possible to provide billions of dollars in cost‑of‑living relief for people who desperately need it. We understand that Australians are under the pump. And there's a role for our government, and I acknowledge and congratulate Treasurer Lawler and Chief Minister Fyles for the work that they are doing with us to try and help people through what is a really difficult period. I think both governments acknowledge that there are a lot of people doing it tough. And we've got a responsibility to take some of the edge off these cost‑of‑living pressures where we can, and what makes that possible and responsible and affordable, is the fact that we have made room in the Budget by cracking down on the rorts and waste which were a hallmark of our predecessors, so that we can invest and spend money where it's desperately needed, which is cost of living, health, investing in the future, at the same time as we get the budget on a much more sustainable footing. The other reason for that, is that the global economy is an unpredictable place right now and we want to make sure that we can rebuild our buffers against this global uncertainty and part of that is improving the budget position, avoiding some of these interest costs that our predecessors tried to saddle us with. Our predecessors were more focused on printing 'Back in Black' mugs than they were in actually getting the budget in better nick. Unfortunately, Australians have been paying a price for that, and we've spent more than a year now trying to turn that around.

JOURNALIST:

Just a couple of things. Just to go back to what you're saying there are additional supports for small businesses in particular that will face tough times ahead and also just on petrol as well ‑ is the ACCC doing enough to monitor service stations that are overcharging and is more needed? What is the federal government doing in this circumstance?

CHALMERS:

Thanks very much, Jen. First of all, on small business. Small business was a key focus of the May Budget, we provided new tax breaks for businesses, particularly small businesses who want to invest particularly when it comes to making their operations more energy efficient, as well as providing help with them to deal with the cyber uncertainties that a lot of businesses are confronting right now. So we made small business a central focus of the Budget in May and if there's more to do, that we can responsibly do and afford to do in the future, obviously we will consider that. When it comes to petrol prices and the ACCC, we have asked the ACCC to ensure that the service stations and the wholesalers are doing the right thing when it comes to petrol prices and we started that when the excise assistance came off last year and the ACCC, in my view, does a good job of monitoring the changes in prices, particularly in this especially sensitive part of the household budget. But again, I think it's really important for us to understand and acknowledge that with all of the price pressures that Australians are feeling right now, petrol prices have come off substantially on average in the capital cities since this time last year. We finished the financial year with petrol cheaper on average than it was at the start of the financial year and given all the other pressures that people are facing that's a good thing.

JOURNALIST:

Just on gas ‑ with the development of Middle Arm, how important is that towards Australia and the Northern Territory's economic growth and what do you say to critics of that development that essentially, it's a fossil fuel carbon bomb, and that the governments have broken their promise?

CHALMERS:

I don't agree with that view that you've just summarised. But I do understand that there are strong views about this in communities and I think that's not especially surprising. The reasons the commonwealth government is keen to make this co‑investment is because Middle Arm will be about more than one source of energy and more than one provider. This is an opportunity to secure the economic future of the Northern Territory with a precinct that won't just have gas as important as that is to the clean energy transformation, but will also have opportunities for renewable energy. I'm a big believer in the net zero transformation, we need to get cleaner, cheaper, more reliable, more renewable energy into the system but gas has a role to play in the transformation. And the Albanese Labor Government wants to invest in the economic foundations of the Northern Territory, so that this important part of Australia can have the kind of economic future that the people here need and deserve and we see this important investment in that light.

JOURNALIST:

Is there too many eggs in that basket, too much reliance on that actually going ahead and being successful?

CHALMERS:

Well, I think, whether it's the Fyles Government or the Gunner Government, before that, the Albanese Government, certainly a lot of our efforts are directed towards making sure that our economic base is broad and diverse and part of that is making sure that we get the right energy sources, that we're good at value adding and exporting, that we're good at providing the kind of jobs and opportunities that people desperately need, and that we can house people near where those opportunities are being created and so there's a really quite remarkable affinity, I think with what Eva and Natasha are trying to do here and what Anthony and I are trying to do at the national level. We want an economy which has an industrial base, which is broad and diverse and deep, which creates more opportunities for more of our people in more parts of our jurisdictions and part of that, frankly, is investing in the care economy. I'll be releasing the Intergenerational Report in the coming months and one of the things that I think it will show is that the care economy will become an increasingly bigger part of our industrial base and so we need to train the workers and retain the workers to grab those opportunities too. So whether it's Middle Arm, whether it's the care economy or all of the other ways that we're working together, our interests are in securing the economic future of this really important part of Australia and that's what we're trying to do.

JOURNALIST:

Your government promised $250 million for social problems in Alice Springs. More than $100 million still hasn't been allocated. Why haven't you delivered this funding on urgency as was implied at the time?

CHALMERS:

Well, we're providing this funding as fast as we can. We’re obviously committed to that $250 million, that we want to invest in that community to help get on top of the challenges, which have been obvious some of them entrenched challenges and we want to play our part there. I'll pay tribute to Anthony Albanese and Linda Burney and Marion and everyone who wants to see that investment flow. We'll get it flowing as soon as we can. A large chunk of that funding is already flowing into that community and the rest of it will flow before long.

JOURNALIST:

On today's CPI announcement, are we going to see do you think a little bit of relief in relation to increases around interest rates and a pausing? You talked about it this morning in your speech.

CHALMERS:

Well, I don't pre‑empt decisions that the independent Reserve Bank takes about interest rates and I try not to second guess them after those decisions have been taken. They've got a job to do and they do that independent of political pressure from the government. I've got my own job to do, which I'm focused on ‑ delivering this surplus, providing cost‑of‑living relief and investing in the future of the economy, including in places like Darwin. So I won't make a prediction about interest rates. I will remind you and your viewers, that the Reserve Bank Governor not that long ago said that the Budget will take pressure off inflation rather than add to inflation. That's my part of this is to make sure that the Budget is helpful and not harmful when it comes to these sorts of decisions. Beyond that, I'll leave that to the Reserve Bank Board and the Governor who take those decisions completely independent of me. Thanks very much.