Interview with James Glenday, News Breakfast, ABC

Subjects: inflation, interest rates, cost-of-living, the Budget, war in the Middle East James Glenday: Treasurer, welcome back to the program. Jim Chalmers: Thanks very much, James. A year ago you were confident that Australia had turned a corner in the fight on inflation but now rates are back up to their highs of last year, fuel’s up, food is up, there’s pressure on rents.

What’s your message to Australians this morning? There were 2 things which were unforeseen at that time. First of all, a much quicker than expected recovery in the private economy, and then of course this war in the Middle East.

And so my message to Australians who are working through this difficult news from the independent Reserve Bank yesterday is that we know that you are paying a hefty price for this war in the Middle East, and this decision on interest rates will make things harder. And that’s why this Budget will be a really responsible budget which takes the inflation challenge seriously, because we know that people are under pressure.

I think some people think well we’re back at square one given that last year’s rate cuts have all been taken back. But are Australians actually in an even worse position now than they were a year ago given that everything is more expensive and that average mortgages are also higher than they were 12 months ago? Even though inflation is still much lower than it was when this government came to office, it’s higher than we would like and higher than it was a year ago, and there are I think obvious reasons for that.

I think a lot of the commentary today tries to pretend that there isn’t a major war in the Middle East pushing up prices, particularly at the bowser but also throughout our economy and so we need to have that perspective. Australians didn’t choose this war in the Middle East, we have no control over when it ends, but we are paying a hefty price for it at the bowser and beyond.

We know that people are under very serious pressure. We know that these price pressures have escalated because of the war in the Middle East, but we had inflationary challenges before that as well. Again, that’s why this Budget is a really important budget, because it will do what we can in this Budget to wind back spending overall, to take some of this pressure off inflation where we can and to continue to manage the budget in the most responsible way that we can.

I think you sort of alluded to it there, inflation was too high before the war, that’s why rates went up in February. The RBA Governor has made that clear. She also suggested pretty pointedly I think yesterday, Treasurer, that the extra cost‑of‑living relief could put more pressure on inflation.

With that in mind, are these media reports of tax hand back, some sort of cash handout, right, is that going to be part of your next Budget? Well, first of all, there’s always speculation in the week and weeks leading up to budget. Some of that speculation turns out to be right and some of it turns out to be wrong.

I’d encourage people to wait and see the detail on Tuesday night. It doesn’t emerge in a vacuum though, does it, Treasurer? I mean a lot of this comes out of people in your government talking about these things.

So is this on the cards, are you going to be handing money back to Australians? I’m not going to add to the speculation that’s out there, James. I’ve made it really clear that the government is already cutting taxes.

There’s a tax cut coming in July, there’s another tax cut coming next July. There’s tax relief in the form of an instant deduction. There’s tax relief in the form of our petrol tax cut as well, which is taking some of the edge off these higher petrol prices.

And so that has already been announced and that will be in the Budget. This is a government which cuts taxes. We’ve cut taxes already and we will cut taxes again.

We’ve made that clear and we’ve made that public. Our opponents opposed those tax cuts and that’s clear as well. So that’s one point.

Now secondly, when it comes to the comments that the Reserve Bank Governor made yesterday, the Governor was asked based on all of this Budget speculation a hypothetical question about how would the bank consider if there was a whole heap of extra stimulus pumped into the economy by the government, and she gave a hypothetical answer to that question. The issue is the Budget won’t be pumping a lot of extra stimulus into the economy.

In fact, overall we’ll be winding back spending in the Budget. We’ve made that clear already. And so that hypothetical question based on that Budget speculation, the Governor did her best to give an in principle hypothetical answer to that question but nobody should assume that the question that was put to Governor Bullock by that journalist is the reality of the Budget.

There won’t be a heap of extra stimulus spending in the Budget. We are managing the Budget in the most responsible way we can, and that’s because we understand and acknowledge these inflationary pressures which were in our economy before the war in Iran, but the war in Iran has made them much, much worse, and part of the Budget’s objectives is to respond to those price pressures that people are under.

Jim, just before I let you go, have you been able to make all the economic changes you wanted or have you been held back perhaps by the Prime Minister, perhaps by world events in this Budget? This will be an ambitious Budget because it’s an ambitious government right through from the Prime Minister down, and we take all of these decisions collectively. That’s a strength of our government that we work through all of these options, all of these deliberations in a collective way, in a collaborative way.

I’m proud of the Budget that we will be handing down on Tuesday night, that Katy Gallagher and I will be handing down on behalf of the whole government. Jim Chalmers, thank you for joining our program. Thanks James.