Press conference, Daisy Hill Conservation Park, Springwood, Queensland

Subjects: interest rates, fuel security Jim Chalmers: Well today as expected the independent Reserve Bank increased interest rates by a quarter of a percentage point. Australians are under pressure already and we know that this will make things harder for people. The fact that inflation and interest rates are going up right around the world doesn’t take the sting out of this for Australians who are already doing it tough.

The Reserve Bank’s statement makes it really clear that we have an inflation challenge in our economy which is made worse by the war in the Middle East. The statement makes it abundantly clear that one of the main drivers of inflation in our economy is a conflict on the other side of the world, pushing up global oil prices and being felt right around our economy and, indeed, right around the world.

The war in the Middle East is not the only factor when it comes to our inflation challenge, but it is a very, very big factor, and the Reserve Bank statement makes that very clear. Australians are under pressure. We know that, and that’s why we’re providing cost‑of‑living help in the most responsible way that we can in the most responsible budget that we can at the same time as we address some of these longer‑term challenges in our economy like productivity.

If you look at the reform package in the Budget, the productivity package but also the budget repair in areas like the NDIS and more broadly, we take the inflation challenge in our economy very seriously. We take responsibility for our part of the fight against inflation. That’s why we’ve been managing the budget responsibly.

It’s why we’ve been delivering a couple of surpluses and then much smaller deficits. It’s why we’ve made sure that public demand in our economy has slowed rather than gathered pace. If you look at public demand in our economy versus private demand, over the last year or so, for every 5 dollars of demand in our economy, 4 of those have been private demand, one has been public demand.

And we saw public demand growth halve compared to the year before. So, as I said, we do have serious challenges in our economy. Our inflation challenge is being turbocharged by a war on the other side of the world.

Australians are paying a very hefty price for that war in the Middle East. And today that price became a bit steeper with this decision from the independent Reserve Bank. So we do take responsibility for our part of the fight against inflation.

That’s why we will continue to manage the budget in a responsible way, roll out cost‑of‑living help in a responsible way and deal with these longer‑term challenges as well. Now, tomorrow we’ll get the inflation figures for the month of August. Economists expect those figures to show that the big driver of inflation in the month of August has been the re‑escalation of the war in the Middle East combined with the removal of the excise help and the timing of the energy rebates earlier on.

So inflation remains a primary challenge in our economy. A big driver of that is the war in the Middle East. The Reserve Bank has made that clear today in releasing their statement explaining the reasons for their decision.

Now, I’m conscious that Governor Bullock will be up shortly as well and you’ll want to listen to that. So I’ll take 3 or 4 questions and then I’ll let you get on with your day. Journalist: Treasurer, you were accused this morning of gaslighting Australians [inaudible] between the war in the Middle East [inaudible] public spending.

What do you say to those criticisms from Richard Holden? Look, I’m not aware of those criticisms. Obviously I don’t agree with them.

We’ve made it really clear that we take responsibility for our part of the fight against inflation. The Reserve Bank has come to this decision independently today for reasons they’ve set out in their statement. My job, the job that I’m focused on, is getting the budget in better shape.

We’ve made very good progress on that front with more work to do – rolling out the tax cuts, the cost‑of‑living help in the form of more bulk billing and higher wages, making the housing market fairer for first‑home buyers, and also the biggest, broadest productivity package in a budget for some decades. So that’s my focus. That is to work on the areas where I have responsibility.

I accept responsibility for our part of the fight against inflation. Commentators will say what they will. I’m focused on the job at hand.

Journalist: Treasurer, what’s your message to struggling Australians who are financially distressed by today’s news? Are you sorry for the position that they’re in? I do understand that a lot of Australians are doing it tough, and this decision today from the Reserve Bank will make things tougher for a lot of people.

And Australians were already paying a very hefty price for decisions taken about this prolonged war in the Middle East. And today that price got a bit steeper. I understand that and acknowledge that.

But more than acknowledge that, we are acting to respond to the very real, very genuine, very substantial pressures that people are under. That’s why I’m cutting income taxes 5 times in 3 different ways. It’s why we’re boosting bulk billing and strengthening Medicare, because that takes pressure off family budgets.

It’s why we’re boosting wages. It’s why we’re making the housing market fairer. Because we don’t just acknowledge that people are under pressure; we’re doing something about it in the most responsible way that we can, consistent with our approach to the budget and the economy more broadly.

And now if you look at the budget over the last 4 and a half years, the budget is in much better condition than what we inherited. Debt is around $200 billion lower than the trajectory it was on when we came to office. The deficit for the year just finished has halved what we inherited.

It’s even gotten better since the May Budget when it comes to the deficit. But there’ll be a lot of commentary around public demand over the coming days. And I want to make it really clear that public demand in our economy has slowed.

It has halved when you compare it to the year before. It’s only one in every 5 dollars of demand in annual terms over the last 12 months or so. And if you look at public final demand growth in the Final Budget Outcome that I released yesterday, final public demand growth is lower than it has been for more than a decade.

And so I think that’s an important perspective as people digest this decision taken independently by the Reserve Bank this afternoon. Journalist: Treasurer, do you or your government take any responsibility for the economic conditions that have led to this rate rise? I take responsibility for all aspects of my job, including my part in the fight against inflation.

That’s why we’ve been getting these deficits down, slowing public demand. That’s why we’ve been finding $180 billion in savings in our time in office to improve the budget bottom line, but also to make room for our investments in Medicare and bulk billing and providing that cost‑of‑living help. We’ve been managing the budget in a much more responsible way than our predecessors did.

If you look at the debt in the budget, for example, almost two‑thirds of it was added by the Coalition in their 9 years in office, a bit over one‑third was added by 2 Labor governments. And so this is important perspective. We know that there’s always more work to do when it comes to budget repair.

We know that the work of responsible economic management is never finished. We accept responsibility for our part of the fight against inflation, including continuing to manage the budget in the most responsible way we can. Journalist: Is it reasonable for Australians to expect another rate rise in the next 6 months, or is the worst behind us?

Well, obviously I’m not going to make predictions or try and pre‑empt decisions that the Reserve Bank will consider, you know, in the months or the years ahead. I think most Australians will be doing their best to digest the information that’s been provided by the Reserve Bank in the last half hour or so – 40 minutes or so. The decisions in the future are a matter for the independent Reserve Bank.

We’ll continue to focus on our part of the fight against inflation. And I’d encourage you to check out the statement released by the Reserve Bank Board this afternoon. They make it really clear that a main driver of inflation in our economy and, indeed, around the world, is the war in the Middle East.

If you look at the main things that have changed in the last couple of months, we’ve seen public demand actually slowing, but we’ve seen a re‑escalation of the war in the Middle East and very troubling developments on the other side of the world, and the statement also references the pressure being exerted on economies by the AI boom. So I’d encourage people to check out that statement.

Journalist: Treasurer, the RBA has attributed the rise partly in its statement to weak productivity growth that continues to constrain potential growth and that there are uncertainties about the economic effects of the downturn in the housing market. Do you take responsibility for these domestic factors that the RBA has outlined in raising the rate today? I take responsibilities for all of the ways that we can influence the fight against inflation and also dealing with this productivity challenge which has been a feature of our economy for decades now.

Not the last couple or few years, but the last couple or few decades we’ve had a productivity challenge in our economy. I refer you to the May Budget. You know, no government in recent decades has taken more seriously the productivity challenge that we have in our economy.

That’s why we’re cutting red tape, making approvals faster, reforming the foreign investment regime. It’s why, you know, we’re cutting compliance costs by more than $10 billion a year. It’s why we’ve got National Competition Policy to boost the economy working closely with the states and territories.

We have acknowledged, but more than acknowledging, we’ve got a productivity challenge in our economy. That’s the motivations behind the biggest and broadest productivity package in a budget that we’ve seen for some decades. Now, you don’t turn around a productivity challenge which has been that entrenched for so long quickly, not in a couple of months, certainly not in a couple of years either.

We’ve had this challenge for a couple of decades now. It will take some time to turn around. And the steps that we’re taking in the Budget represent a more substantial effort on productivity than any of our predecessors in recent times.

We’ll take 2 more. We’ll take Ellen and then one more and then we’ll – we’re done. Journalist: We now have the highest interest rate in developed economies outside of Iceland.

What are countries like New Zealand, Canada, in the Euro zone and the UK doing that we aren’t? What can we learn from them? Well, you’ve got to make the full comparison.

If you want to make a comparison with other countries and other economies, you need to acknowledge that growth here is faster than a lot of other economies. We’ve got the equal fastest economic growth compared to any major advanced economy, equal to the US and quicker than the other 6. We’ve got faster employment growth than in other economies.

We’ve got much lower debt than every major advanced economy. And so you need to make the full comparison. We’ve got a lot going for us in Australia, but we’ve got a lot coming at us from around the world as well.

That’s clear in the Reserve Bank’s statement. We take all of those challenges very seriously. And when you compare us to the world, there are some things that we are doing much better than the rest of the world on.

Journalist: Is there anything in fiscal policy you would have done differently to prevent this fourth rate rise on your watch? Well, you can see in the Reserve Bank’s statement that the big driver of the inflation that the bank is dealing with right now has come from the war in the Middle East and other factors like the AI boom. But we’ve acknowledged – I’ve acknowledged even as recently as this morning – that our inflation challenge has a number of sources.

The big change in recent times has obviously been the re‑escalation of the war, but that has turbo‑charged an existing inflation challenge that we have in our economy. And that’s why we’ve put so much time and effort into repairing the budget that we inherited. You know, I delivered the first surplus, in fact, the first 2 surpluses for a decade and a half.

And then we’ve got the subsequent deficits down much, much smaller than what we inherited. The debt trajectory, much lower than what we inherited when we came to office. And that’s because we take our part of the fight against inflation very seriously.

That means continuing to manage the budget in a responsible way. And I refer you to yesterday’s Final Budget Outcome. The deficit for the year just finished is about half what our predecessors projected it to be.

And that’s because we found lots of savings, we’ve limited real spending growth. In fact, our average real spending growth has been less than half our predecessor’s and less than it was before COVID. We’ve got that debt trajectory down.

That’s saving us on interest costs at a time when there’s now substantial upward pressure on bond yields and borrowing cost around the world. So all of that represents a very serious effort on the fiscal side to do our bit in the fight against inflation. We have improved the budget very substantially in our time in office, but there’s always more work to do.

Journalist: Thanks, Treasurer. How concerned are you about the potential impacts proposed US diesel tariffs may have on prices here? And is the government going to be doing any lobbying in the background to try and dissuade the Trump administration from proceeding with that?

It is a concerning development because there’s already substantial pressure on fuel supplies around the world, and Australia is really well placed in this regard. I think, from memory, we’ve got 42 days of petrol, 32 days of diesel and 29 days of jet fuel, from memory. And that puts us in pretty good stead when you consider the very substantial pressure on fuel supplies right around the world.

So it would be a concerning development. Obviously we’re monitoring the comments made by the US administration. Obviously we’ve got an ear out for how that would be implemented if they went down that path.

We did import some diesel from the Americans earlier on in the war, but as I understand it. We’re not relying on American diesel for at least the next few weeks in the plans that we have to shore up our fuel supplies. But obviously it would be a concerning development, and obviously we would engage in the usual way in Australia’s national interest.

But primarily our concerns in this regard relate to the impact on the global fuel market. We are in pretty good nick when it comes to our fuel supply. And we’re not relying, at least for the next month or so, on exports of diesel out of the US.

Thanks very much, everyone. Thank you.