THE HON JIM CHALMERS
MEMBER FOR RANKIN
TUESDAY, 24 MAY 2022
SUBJECTS: Swearing in of the Albanese Labor Ministry, Labor’s Economic Priorities for October Budget, Australia-China Relationship
PATRICIA KARVELAS: Treasurer Jim Chalmers says the task of Budget repair has already begun following the election of the Albanese Government on Saturday. But he's declared that inflation is now almost out of control as the Budget and the economy are buffeted by forces from overseas. Jim Chalmers, welcome again to Breakfast and crucially, congratulations.
JIM CHALMERS: It's very kind of you, Patricia. Thanks for having me back on.
KARVELAS: Well, it's obviously a very big deal to become the Treasurer of a country as excellent as ours. You've been briefed by Treasury Secretary Steven Kennedy on the state of the books. What have you learned about the Budget that you didn't know before? Are the numbers even worse than you expected?
CHALMERS: Well, I think the briefings have really confirmed what we expected and to some extent what we feared. We do have a trillion dollars of debt in the Budget, there's substantial weakness across the board in the Budget because there's been a lot of wasteful spending over the last decade or so and so the big focus of the briefings I had on Sunday at home in Logan with the Treasury Secretary, yesterday with Treasury officials and those conversations will be ongoing today, is really about how do we improve the quality of the Budget.
It will take generations to pay off the debt that the Liberals have racked up and so we need to make sure that there's a generational dividend for that debt and that means responsible investments in areas like clean and cheaper energy, making child care cheaper, strengthening Medicare, investing in a future made in Australia, TAFE and training so we can address skills shortages and all of those key elements of our economic plan.
KARVELAS: So you've started going through spending by the previous government line by line. Will there be cuts when you hand down the Budget in October that voters weren't told about before the election or will they be limited to the $750 million that Labor said would be slashed from programs that you say have been rorted?
CHALMERS: The first priority is to implement our commitments and that includes $11.5 billion in Budget improvements that Katy Gallagher and I announced when we released our costings. So that's a good start. $11.5 billion is a very good start when it comes to trying to improve the quality of the budget. If there are more opportunities that come from our rort, our waste of - sorry, our audit of rorts and waste in the Budget, then obviously we'll pursue those as well. We will be handing down a Budget in October and when we do that, we will obviously have the benefit of that audit of rorts and waste. We'll have the opportunity to go through the Budget line by line. We've begun that work already and we hope to be able to improve the Budget further.
KARVELAS: The Budget will be in deficit to the tune of $224 billion over four years. That's now your problem to fix and you say that you've inherited this. We clearly had a once-in-a-generation pandemic that led to a lot of spending. Given the economy is performing strongly, when will we see material improvement in the bottom line? Will it take even longer given Labor's plans to run higher deficits?
CHALMERS: We need to be realistic about it and we need to be upfront with people about it. This is a big, substantial challenge that will take some time to turn around. We've indicated where we would begin with those $11.5 billion in budget improvements. We said we'll have that audit, as I just said, and there are other ways we can improve the quality of the budget but we need to be upfront about it. No government can click their fingers and all of a sudden make a trillion dollars of debt disappear. It is generational debt. At this point, there's not a generational dividend for that and that's what we want to change.
KARVELAS: So on that, you say $11.5 billion that you've already outlined and you will be looking at what more you can do for your October Budget, and thank you for giving me two budgets to cover in one year. What a lucky person I am and everyone listening.
CHALMERS: You're welcome, Patricia.
KARVELAS: What an exciting time to be alive. But on the extra savings potentially that you will look for, will you tell us as you discover them or will there be sort of a surprise moment in the Budget?
CHALMERS: Well, I think the Budget's the appropriate time to kind of outline any further Budget repair that we might be able to do. But what I would like to do is I would like to engage the public in a conversation about these big, economic challenges. You said before that the economy was performing well, I think that would be news to the people who are copping the worst real wage cuts in more than 20 years. We've got skyrocketing costs of living, we've got falling real wages, we do have a lot of international uncertainty and we've got that trillion dollars in debt with not enough to show for it.
So I want to engage the Australian public in this big conversation about our national economic challenges. They've had enough after a decade of over promising and under delivering on the economy. I want to be honest and upfront about it. It will take some time for us to turnaround these big challenges but unlike our predecessors, we intend to take them seriously and we intend to include the Australian people in the effort.
KARVELAS: On the economy inflation is running at 5.1 per cent and forecast to hit 6 per cent by the end of the year. You have said that the CPI is almost out of control. Isn't that a bit alarmist coming from the Treasurer? Don't we need a more calm and sort of sober assessment of the biggest challenge facing the economy?
CHALMERS: I think it is a sober assessment to say that we've got high and rising inflation. That's just a fact and it comes back to what I was just saying before. There's no use mincing words when it comes to these big economic challenges and Australians in communities right around Australia listening to your show this morning, know that the costs of living are skyrocketing, they know they're finding it harder and harder to make ends meet, let alone get ahead because their real wages are going backwards. So there's no use mincing words about that, Patricia. This is a serious economic situation that we are inheriting from our predecessors. Our ability to deal with it is constrained a bit by that trillion dollars of debt that we would inherit. So we need to be upfront about that, we need to start dealing with it, that's why we've hit the ground running already in the economic portfolios of Treasury and Finance.
KARVELAS: Okay, but by saying inflation is almost out of control, are you trying to walk back the hope Labor might have given people that the Albanese Government could do something about the cost of living?
CHALMERS: We can do something about the cost of living. We need to be realistic about that and say that what government can do is do things like make health care cheaper and more accessible, whether it's medicines or access to Medicare, we can make child care cheaper with our policy to do that. We can get energy prices down over the medium term if we implement our Powering Australia plan. We can get real wages growing again which we've got a plan to do that, which begins with a rise to the minimum wage that keeps up with the cost of living. So these are the ways that we go about it.
Nobody's flicking a switch and saying the day after or two days after an election everything will change, but what will change is you now have a government that understands these cost of living pressures, has a plan to deal with them over time and our first Budget will be all about implementing those commitments and that plan.
KARVELAS: You spent years criticising the Morrison Government's performance on wages growth. When will Labor lodge a submission with the Fair Work Commission for a rise in the minimum wage and will we - I mean, obviously it became this moment in the election campaign where we were trying to find out what that figure would be in your submission. Now you are the Treasurer, you've been sworn in, can you tell me?
CHALMERS: Well, we said absolutely that people on the minimum wage should get an outcome where they keep up with the cost of living and inflation, as you said, is 5.1 per cent, it's the highest in some decades. It's expected to rise even further. So we've made it really clear publicly that we want to see minimum wage people keep up with that. The process at the Fair Work Commission is already well under way but our views, I think, are well known to the Commission and more broadly.
KARVELAS: The message from the election is that Australians want more done on climate change. That is certainly one of the messages, if you look at the outcome. Why won't Labor lift its 43 per cent target by 2030? Doesn't the decisive swing to the teal independents and also the Greens in your own home State, give you some political cover to go harder and faster?
CHALMERS: Well, first of all, there's absolutely no question in my mind that there is a substantial appetite in the Australian community for an ambitious climate change policy, which is all about cleaner and cheaper energy and more investment and more jobs which is good for the economy. So there's no doubt about that. You know, we've said that we've got a policy, an ambitious policy on climate change and we intend to implement that policy and we will work with anyone who shares our objectives to do that.
But more broadly, Patricia, when it comes to climate, whether people voted teal, green, yellow, orange, blue or red, one of the things that Anthony Albanese really wants to do is to work with everyone from all parts of the political spectrum, no matter who you voted for around Australia, is to try and bring us together around these big challenges and climate change is a huge challenge that we have to address. It's a massive economic opportunity that we need to grasp. There's an appetite for that in the Australian community and we intend to seize it.
KARVELAS: Okay, so you say he wants to work with all of those groups. They want more ambitious climate change action, they've made it so clear, if you get a majority and you don't need them will you ignore them or will you still bring them to the table and try to negotiate something more ambitious?
CHALMERS: We have an ambitious climate change policy.
KARVELAS: They say it's not ambitious enough.
CHALMERS: Well, it's ambitious and our modelling shows how good it can be for the economy, how good it can be for power prices, how good it can be for jobs. So our intention is to implement that policy and we want to work with anyone who shares our objectives. I congratulate the parties and the people who got themselves elected on a platform partly of climate change action. Labor, as a party of government, has ambitious plans to do something meaningful about climate change so we can have that cleaner and cheaper energy. We intend to implement our policy and we would love to work with anyone who shares those objectives.
KARVELAS: The Chinese Premier has congratulated Anthony Albanese and the Foreign Ministry has said that it's willing to work with the new Government to uphold respect mutual benefit and win/win results. Is this a turning point in relations or will they stay in the deep freeze?
CHALMERS: Will who stay in the deep freeze, Patricia? You just broke up for a second.
KARVELAS: China. China.
CHALMERS: Look, we want to work with countries in our region to make sure that it's stable and prosperous and the whole reason why Anthony Albanese and Penny Wong are engaging with Quad colleagues is because we want to see that outcome and that's why the developments on the trade front are so exciting because we want the region to grow strongly, we want all of our economies to benefit from that and we will engage with countries in the region on that basis.
KARVELAS: Okay, but will you continue the former government's tough line on China?
CHALMERS: I think first it’s important to understand that the situation we find ourselves in China is because China's position has changed. There has been, traditionally, historically, an element of bipartisanship at this end in Australia when it comes to managing what is a complex relationship and becoming even more so. The main difference between the parties here has been we don't want to see it politicised. We want to see that relationship managed in a considered and sober way and that's what we intend to do.
KARVELAS: Well, this will be the first of many conversations with you as the new Treasurer, Jim Chalmers, especially as we try and find out what's in your October Budget. Thanks for joining us this morning.
CHALMERS: Appreciate it, Patricia. All the best.
KARVELAS: Treasurer Jim Chalmers.