SKY Budget Special 29/03/22

29 March 2022

SUBJECT: Federal Budget


SUBJECT: Federal Budget.
KIERAN GILBERT, HOST: Let's get the verdict from Labor now, who could be in office in just a matter of months. With me is the Shadow Treasurer, Jim Chalmers. So what is the verdict when it comes to this cost of living package, first and foremost? $8.6 billion to be spent within six months.

JIM CHALMERS, SHADOW TREASURER: Well, nothing that's in this budget tonight, Kieran, makes up for a decade now of attacks on wages, job security and pensions and Medicare. Australian families are still in the hole, I think as some of your respondents were just talking about then. The average Australian family’s gone backwards about $3600 on cost of living alone. This budget says that real wages go backwards by another $26 a week. So we won't stand in the way obviously of cost of living relief for Australian families who are dealing with skyrocketing costs of living, falling real wages, and as a consequence they’re falling further and further behind.
GILBERT: So that’s all the payments, the payments been announced tonight - $250 for pensioners and welfare recipients, the $1500 for the low and middle income tax offset at July 1and the fuel excise - all of those?
CHALMERS: We’ve foreshadowed-
GILBERT: You're not gonna, you're not gonna stand in the way of any of those?
CHALMERS: Correct. We’ve foreshadowed for some time that Australian families who are dealing with these falling real wages - they've had stagnant wages for the best part of a decade under this Government. They are doing it tough in lots of parts of Australia, and so they need some cost of living relief. We won't stand in the way of that. The issue that we have with this budget is that it is so short sighted it can't see beyond the May election. It's taking a lot of the challenges in the economy from before the election and pushing them to after the election, and there's no plan for the future.
GILBERT: So on that, one of the key challenges is inflation and interest rates. With inflation forecast to get up to four and a quarter per cent, you're backing the cost of living measures - are you worried it's a risk in inflation terms that you provide that relief in fiscal terms, but then you have the money taken away via higher interest rates? 
CHALMERS: Well, the best thing you can do when it comes to inflation is grow the economy in a way that doesn't add to those inflationary pressures. That's why our economic plan is about cleaner and cheaper energy, child care, TAFE and skills, the digital economy, a future made in Australia - all of these things are designed to grow the economy without adding unnecessarily to those pressures. There is a role for cost of living relief in the interim. We’ve said that we won't stand in the way of that.
GILBERT: Are you worried that this is a risk though in inflationary terms?
CHALMERS: Of course inflation is a risk in the economy. That's why our economic plan is about-
GILBERT: Putting more money into it like the government's doing?
CHALMERS: Our economic plan is about building the capacity of the economy so it can grow strongly without adding to those pressures. In the interim, we've got Australians whose real wages are going backwards. They're copping these extraordinary lifts in the cost of living. If you think about if the government changes hands in May, no government's gone to an election with a worse set of books than this government will be. And the legacy of this government, if it changes hands, will be interest rates on the way up, a trillion dollars in debt and not enough to show for it, a petrol price hike in September. These are the sorts of things that the government is deliberately pushing from this side of the election to the other.
GILBERT: And you're going to have to deal with that. It's a bit of a time bomb for you. But I mean we have also, to be fair to the government, been through a once in a generation pandemic and come out of it a lot stronger than comparable nations.
CHALMERS: When it comes to net debt, most of the debt was added before the pandemic. When it comes to gross debt, about half the debt was already added before the pandemic. They can't blame the pandemic for everything that's wrong with their budget. This is a government that takes credit for anything that's good and doesn't take responsibility for the trillion dollars in debt and the falling real wages, which are the defining features of the budget.
GILBERT: There's no increase in foreign aid, and we've seen the Solomon Islands in the last week open to China's embrace. Will you increase aid?
CHALMERS: We will always be better than the government when it comes to foreign aid-
GILBERT: So that’s a yes?
CHALMERS: But that's not the only part of the story. I think, as we were discussing earlier in the week with the leader Anthony Albanese, you know we need to go to the Pacific with a relationship of trust based on doing the right thing on climate, doing the right thing on foreign aid. There's a range of issues we need to do better to ensure that the ‘Pacific step up’ is more than a slogan, which is what it is under this government.
GILBERT: The huge costs looming for Labor if you win, for the government if they retain office - things like NDIS, aged care, defence, huge expenditure items and there's just not the plan to fund them. Do you have the appetite for reform necessary to cover those costs?
CHALMERS: Yes, we do. I mean, those are important investments in the future. We want to see investment in defence, NDIS, aged care, health - all of these crucial investments. If the government hadn't sprayed around and wasted tens of billions of dollars, there'd be more room to fund our priorities, to invest in the future, and to provide that cost of living relief that people need.
GILBERT: When you talk about that reform, what do you have in mind? Because these are massive expenditure items and they're structural. They're, they're baked in.
CHALMERS: Well, we've said already every Labor government will go through the budget line by line. We've already nominated areas like billions of dollars in contractors and consultants. We've already said there's a role for multinational tax reform. But most importantly of all, we need to shift the focus in the budget from the quantity of spending - money spraying around everywhere - to the quality of that spending, making sure that there's an economic dividend. And that's the difference people will see if government changes hands.
GILBERT: It's $100 billion better bottom line across the forward estimates. So the budget repair job appears to already be working and as the Treasurer pointed out, the majority of that is due to a stronger labour market, not just commodity prices. But if commodity prices stay where they are for another six months and if Labor wins, you could inherit another $30 billion windfall from higher commodity prices. Would your priority be to bank that to reduce the deficit?
CHALMERS: We’ll always do what's right for the economy and what's right for the budget. You know, we're not prepared to make those kinds of commitments now without seeing what the budget might look like if and when we came to office. But the Treasurer does take credit for the increase in commodity prices, takes credit for anything that's going well, doesn't take responsibility for anything that is difficult. Commodity prices are a big part of the story, but even with those commodity price hikes, we've still got a trillion dollars in debt. We've still got deficits as far as the eye can see. You got to laugh when the Treasurer said today that he delivered on all the promises that he made before the last election. Remember he printed the ‘Back in Black’ mugs before the last election, said that he balanced the budget - deficits as far as the eye can see, a trillion dollars and not enough to show for it.
GILBERT: In 2007 amid a fresh Reserve Bank warning about government spending, inflation and interest rates, Kevin Rudd then at that time said, ‘Mr Howard, this sort of reckless spending must stop’. Is that a line that your opposition leader might pull out for his budget reply, or is this a position where you say it's not ideal but we're cool with it?
CHALMERS: Well obviously, I’m not going to foreshadow Anthony Albanese’s speech on Thursday night. That would be career limiting. But I would say, Mr Morrison, the waste and the rorts and the corruption must stop. Because every dollar wasted or rorted by this government - which is notorious for both things - means a dollar that can’t go to Australians doing it tough or to invest in the future of the economy. That's one of the defining features of their economic mismanagement.
GILBERT: Shadow Treasurer Jim Chalmers, I appreciate your time this evening to look at Budget 2022. Thanks for much.
CHALMERS: Thanks, Kieran.