Interview with Glen James, Money money money podcast

Subject: 2026 Budget Glen James: Jim Chalmers, thank you so much for joining us. It’s been a busy life. Jim Chalmers: [Laughs] Thanks, Glen, for the opportunity.

It’s nice to see you again twice in 2 days. I know, aren’t we all so lucky? Hey, just a random question.

How do you manage? Like, forget politics, forget everything. On a personal level, how do you keep your mental health in check?

Because you walk down the street, 50 per cent of people out there might be very pissed off with you at the moment. The other are like, yeah, so how do you manage on the – I haven’t met that second category [laughs]. Look, sometimes I find it difficult and sometimes it’s okay.

And generally, the difference between being able to ride the ups and downs or not is how much I’m exercising. So, I’ve taken up lap swimming a bit lately. Mostly because nobody can ring you in the pool when you’re doing laps.

But swimming or running or something to do with my kids’ sport typically is the difference between being able to ride the ups and downs or not. Yeah, love it. All right, let’s get into some listener questions because even I will get hell for asking you that because it’s not about money.

But my show, I’m on the front page. All right, let’s talk. Your team was gracious enough to clarify something with me on the inflation forecasts in the Budget, and I’ve just got it here.

So, the consumer price index that we’ve modelled kind of this financial year, 5 per cent, the forecast for next financial year, 2 and a half per cent and then it’s a flat 2 and a – is that like the built‑in modelling in the software that Treasury use and we just use that like – because that’s quite ambitious? Not necessarily built in, but one of the things that plays out pretty substantially in these inflation forecasts is we use the market curve for inflation – sorry for Interest rates.

And so sometimes what you will see is a broad assumption that monetary policy is reacting to inflation. And you’ll notice that those are all in the middle of the RBA’s target band, and so I think it’s, it’s not set in stone, but that’s a big factor in the way that they work it out. So, you’re right.

I mean, we think inflation will peak, or Treasury thinks it’ll peak about 5 per cent in the middle of the year and then trail away higher than we would like it to be, higher than it would be absent the war in the Middle East. But we’re trying to give people the best sense of that. You’ll also see that there’s another scenario in there where if oil stays really high for a long time, then obviously we expect higher inflation for longer too.

Yeah. And for those out there who are watching, there’s a scenario – there’s various models that you run, like worst‑case scenario in the budget papers, catastrophic and all that stuff. We’re trying to give you and your listeners, viewers, a sense of the kind of contingencies that we work through.

A really big part of this job that people might not really appreciate is we go through different scenarios, we work out different contingencies. A lot of your investors and people associated with businesses of all kinds, you know, they’re familiar with that kind of scenario planning. So, we’ve tried to give you a sense of that in the Budget.

Yeah. Cool. I do want to talk to you about productivity, like what – and I think you mentioned it last night, like there could be some of the best stuff in the world in this year’s Budget, but it might not get out there.

I’m asking a barber if I need a haircut, type question, but what is, what’s happening with productivity? Because last year you were like, inflation, yeah, baby, we’re all good. Now we’re moving to productivity.

Like, it was a real pivotal point. Talk to us about productivity. Yeah, I mean, I think there’s a couple of interesting elements to that.

If you think about our economy last year, you know, inflation in a much better place. Productivity is kind of a perennial problem in our economy, as you would know. So, really, what I tried to do after the election was to say we’re going to try and make productivity a much bigger focus of the whole government, not just the Treasury.

And that’s because productivity, obviously, is the best way to lift living standards over time. And so, in every budget, in all of our thinking for 4 years, there’s been some focus on productivity, some focus on inflation. And because of the way that our economy was evolving last year, there was a bigger focus on productivity.

Then we get the war in the Middle East that makes – turbocharges inflation again in ways that complicate the story. And so why that matters for the Budget? You know, we’ve had this challenge in productivity in our economy for a really long time, a couple of decades, and productivity growth’s been extremely weak.

Last year, we actually saw some green shoots. Market sector productivity about 1.5 – 1 per cent overall, higher than the 20‑year average, but still too low to deliver the kind of living standards that we want for our people. And so, we have made productivity a big focus, including in the Budget, because of the contentious tax changes, because of the big effort we’ve made on savings in the Budget, it hasn’t got a lot of attention.

But in ordinary times, the breadth and ambition of the productivity package would be a bigger feature in the way that people think about this Budget. Okay. Someone anonymous in our Facebook group asked, how does the Treasurer suggest families create financial security for themselves and their children in this high-inflation, high-taxation environment?

Yeah, I’ve got to be careful here because I can’t give financial advice for obvious reasons. I mean, people will make their own decisions. My job is to make sure that the tax system and the overall investment environment makes it easier for more capital to find its most useful advantageous purpose.

For example, in superannuation, we’ve got some changes to the performance test on the way so that there are fewer deterrents for people, for super funds to invest in areas like housing and energy. But household by household, I’m a bit reluctant to give advice. Okay, this is an interesting one, and I’m sure it’s been kicked around before.

Fun Tiger says, have they considered the option of taxing income as a household rather than individually, as this could enable parents of young children more flexibility to manage caring responsibilities while recognising the contributions of both parents more equally? Yeah, we haven’t considered it seriously. It gets raised with us from time to time.

You know, people will send an email like that effectively to us from time to time, and we answer it the best we can. But in our tax system, I think for good reason, we treat people as individuals, not necessarily as households. There are other parts of the system, family payments and the like, which are a bit different.

But overwhelmingly, I think there are good reasons to treat people as autonomous entities when it comes to the income tax system. Shannon asks how does the Budget benefit those of us who are too rich to get benefits from the government but too poor to get ahead? Yeah, I mean, I think there is a, there are a range of things that we are trying to do to recognise that vulnerable people are doing it especially tough when prices are rising for all kinds of global and other reasons.

But if you go right up and down the income scale, what we’ve tried to do is provide tax relief to everyone. One of our favourite ways to provide a bit of help is to use the tax system. We’re cutting taxes 5 different ways.

We’ve only been here for 4 years. Three income tax cuts, a standard deduction and the new Working Australians Tax Offset. And that’s a lot of that is given towards middle Australia.

People who are doing okay but not great. You know, people who might be trying to save a deposit. That a lot of the time in the policies that we put in place and the budgets that we hand down, middle Australia is really front and centre.

We’re going to wrap this up. Two last questions. One from Thrilling Lychee.

The majority of property investors have one investment property. These are middle‑class workers. Why didn’t you target property investors with more than 1 or 2 properties?

And just for some colour from my point of view, like I asked Larissa Waters, I’m like last year when I interviewed Bandt, he was like ‘yeah, keep it to one property, we’re after the multiple properties’. Your Budget is like nah from the first property. So, we did think about that other model, and we thought the better way of going about it was to continue negative gearing for new properties so that we’d be, people would be making a contribution to housing supply if they access these tax breaks.

And so, you know we had a, we had a few options that we worked through and one of them to be upfront with you and with Lychee ‑ Thrilling Lychee, please come on, bit of respect ‑ – to be up front with you and them is that was one of the options. There was a little bit of worry about integrity risk, how we count and treat those first 2 properties. Whether or not people would try and game it somehow.

And so, we thought the best way to do it would be to say if you’re negatively geared now, you can keep doing that. Obviously, your property at some point will become positively geared. If you want to make a new investment, it’s got to be making a contribution to supply.

And we think that’s the best of the available models. But we did grapple with that one for a bit. Final question.

How confident are you that it will get through the Senate as kind of you want it, as it is now, for want of a better word or yourself? I’m so careful about making assumptions about the Senate. Albo and I always joke with Katy Gallagher that Albo and I don’t speak fluent Senate.

Katie’s our – Senate whisperer? – Senate whisperer, Senate translator. And so, I’m not sure yet. Obviously, we would expect the Senate to pass what we proposed, but we try not to take any outcome for granted.

We try and be really respectful with crossbench colleagues because we can’t pass anything on our own in the Senate. So, we’ll need the support of others, and so we’ll engage with them in good faith. Awesome.

All right, we’ll leave it there. I’ll get you to, if you wouldn’t mind, sign my Budget paper. You know, you’ve got to do it.

Okay, great. Thanks, Glenn. Thanks.