THE HON JIM CHALMERS MP
TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
TELEVISION INTERVIEW
TEN EARLY NEWS
TUESDAY, 5 JULY 2022
SUBJECTS: New South Wales Floods; Natural Disaster Relief; Interest Rates; Fuel Excise.
LACHLAN KENNEDY, HOST: Ask any economist, it’s pretty much a done deal the Reserve Bank will lift the cash rate again today, and it most likely won’t be for the last time this year either. It’s bad news for mortgage holders but a welcome change for self-funded retirees. Now, joining us from Canberra, is the federal Treasurer Jim Chalmers. Thank you so much for your time this morning. Before we get to the issue of inflation and interest rates, I just want to quickly go to the flooding emergency. It’s now been declared a natural disaster, so that means federal funds will now start flowing to those people who are affected.
JIM CHALMERS, TREASURER: They will, Lachlan, and we’ve made that clear. We’ve been working really closely with the Perrottet Government in New South Wales to make sure that people in those flood-affected areas get the help that they desperately need. Our message to everybody who’s under water in those communities is that we will support you, we will be there for you, we will make sure that you get the help that you need to get through what will be an incredibly difficult time.
KENNEDY: And is it your understanding the Prime Minister will get there pretty quickly after he arrives home from Europe?
CHALMERS: It is. He will be home tonight. My expectation at this stage is that he will join Premier Perrottet, I think, on Thursday in some of the flood‑affected areas. We want to make sure that we have a real‑time understanding of this disaster as it unfolds. Anthony Albanese has been working closely with Murray Watt, our Minister. We’ve been working closely with the State Government and other authorities really around‑the‑clock to make sure that we understand this natural disaster, that the help is getting where it is desperately needed. I think when the weather conditions are at their most difficult, as they are now in parts of Australia, we see the absolute best of Australians and the federal government, the Albanese Government, wants to make sure that we are working with everybody to ensure that people who are already doing it tough enough, that we are there for them and we are there to support them.
KENNEDY: That has been a point echoed by the New South Wales Premier, Domenic Perrottet. Let’s get to the Reserve Bank board meeting today, it’s almost certain the cash rate will go up. Most economists predicting a rise of 50 basis points. If so, that will be the same as last month, which you described as a difficult day for homeowners. How many more difficult days do you foresee on the horizon?
CHALMERS: First of all, you’re right that it is the pretty much universal expectation that interest rates will go up again and that that won’t be the end of it this year. So, unfortunately, for a lot of Australian families who are already doing it tough enough with the skyrocketing cost of groceries and petrol and electricity and other essentials, they will need to find even more room in already stretched household budgets in order to service the mortgage. So for every half a per cent that interest rates go up on an average mortgage, it is about $90 a month; on a $500,000 mortgage it is about $137 a month. Those aren’t small amounts of money and so today’s news, I think, will be really difficult news, really tough news, for a lot of people around Australia who are already doing it tough enough.
KENNEDY: It is a bit of a delicate balancing act for the RBA, isn’t it? How concerned are you that potentially they might go too hard and tip us into a recession?
CHALMERS: I try not to get into any of those predictions. I don’t expect, for example, that outcome that you’ve described, but obviously they do need to strike a difficult balance because we’ve got a whole series of things happening at once. We’ve got high and rising inflation and the rising interest rates that come with it. We’ve got falling real wages. We’ve got natural disasters. And all of those issues combined with issues that are happening around the world, challenges in the global community as well, are putting a lot of pressure on people. The Reserve Bank, when they meet each month, needs to weigh all of that that up. Clearly, they’re very focused on this inflation problem we’ve got which will get worse before it gets better, unfortunately. So, this is the tough medicine that they are prescribing to the Australian economy. How that unfolds for the rest of the year remains to be seen. I won’t pre‑empt future decisions of the Reserve Bank Board, but I think most Australians understand we are in for some months of difficulty. We can get to a better place on the other side of this combination of economic challenges, but first we need to do our best to navigate them together.
KENNEDY: One of those pressures you mentioned are petrol prices. You have previously warned that motorists should prepare for fuel prices to rise because the federal government’s cut to the fuel excise will probably end in September. That will see prices go up by about 22 cents. A lot of people will be asking why can’t that excise be extended considering there is so much household budget pain at the moment?
CHALMERS: I do understand that, Lachlan. I obviously get a lot of feedback about that. What we try to do is be up‑front with people. The petrol price support that was in the last Budget of the last Government was designed to end in September, would cost some billions of dollars to extend, and so we try to be honest about our capacity to do some of these things. We’ve inherited a Budget which is heaving with a trillion dollars in Liberal Party debt and so our ability to provide these kinds of payments is constrained, and we don’t want to pretend otherwise. One of our challenges in addition to inflation and rising interest rates and falling real wages, all of these important challenges in the economy, are also some pretty significant challenges in the Budget. So, our commitment to your viewers is to do our best to make the right decisions, to make our Budget and our economy as resilient as the Australian people have proven to be again and again, and part of that is about being up‑front with people about what’s possible and what might not be possible.
KENNEDY: Honesty is the best policy as they say. Treasurer Jim Chalmers, thank you so much for your time. We really do appreciate it.
CHALMERS: Thanks, Lachlan.
ENDS
