CANBERRA, ACT, Feb. 3 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: interest rates, inflation
Karl Stefanovic:
Millions of mortgage holders are watching the Reserve Bank this morning with the RBA tipped to announce the first rate hike in 2years. For more, Treasurer, Jim Chalmers, joins us now live from Canberra where no doubt he's been 'journalating' this morning.
Treasurer, good morning to you. Are you about to lose some serious economic skin today?
Jim Chalmers:
Well, I think you might be asking me to make a prediction about what the Reserve Bank might decide today. Obviously they're meeting today and they'll announce a decision later on today.
Regardless of the outcome from the Reserve Bank Board today this government knows that people are still under pressure, but more than acknowledge that, we're acting on that. We're rolling out cost‑of‑living help, we're rolling out 2 more tax cuts, we're managing the budget in a more responsible way, including the improvements we made to the budget in December just past.
So, we know that there's more work to do, we know that people are under pressure regardless of what the Independent Reserve Bank decides today.
Stefanovic:
That being said, do you remember when you said this?
[Excerpt]
Chalmers:
The worst of the inflation challenge is well and truly behind us.
[End of excerpt]
Stefanovic:
A little early on the mission accomplished?
Chalmers:
Well, of course I remember that, and that remains the case. The worst of the inflation was in 2022. When we came to office inflation was north of 6percent, it was absolutely galloping, it peaked later that year at 7.8percent. It now has a 3 in front of it which is still too high. We've been very upfront about that. It's not that much higher than we expected, but it is much higher than we would like.
That's why we take our responsibilities here very seriously, to roll out this cost‑of‑living help, to manage the budget in the most way that we can, in a way that recognises that even though we've made a lot of progress in our economy together as Australians in the last few years, there are still pressures there and that will be a big focus of the Budget in May.
Stefanovic:
So you think government spending has no impact on inflation?
Chalmers:
Well, if you look at the most recent inflation data, that was about holiday spending, the tick‑up was about holiday spending and the withdrawal of the energy rebates, some weather issues in fruit and vegetables, some more persistent issues in housing. Now all of those are serious issues, but some of them are temporary, and they're not fundamentally about government spending.
If you look at the economy last year, Karl, the big story in the economy was the way that public demand from public spending took a big step back and it was replaced by the private sector. The private sector is driving a lot of demand in our economy. You prefer it that way than the other way, but there are some inflationary pressures that come as a consequence of that. Now in saying that -
Stefanovic:
So no inflationary pressure from government spending?
Chalmers:
Well, as I've said for some years now, budgets aren't the primary determinant of prices in our economy. But I also acknowledge at every opportunity that I can that governments can play a helpful role in this fight against inflation. That's why we found $20billion in savings in the most recent Budget update, it's why we've improved the budget by $233‑odd billion and paid down more than $170billion of Liberal debt.
This is all about recognising that the Reserve Bank and the government have got different responsibilities, but we've got the same objective, which is to try and get on top of this inflation without seeing a big increase in unemployment. We've made a lot of progress the last few years but we know that there's still pressure there, and that's why it's a big focus of the government.
Our opponents are tearing themselves apart - we're not distracted by that, we're focused on the cost of living, we're focused on housing and the economy more broadly, and that focus won't change.
Stefanovic:
So the RBA bases its decisions on Treasury forecasts, right, and Treasury has underestimated government spending. Now the RBA look like amateur chumps?
Chalmers:
Oh, that's not right, Karl. I mean to be fair to the Reserve Bank they use their own forecasts. The Reserve Bank actually has a lot of forecasting capacity, obviously they talk with the Treasury from time to time and compare notes and compare forecasts, but the Reserve Bank does its own forecasts of things like public demand, and they don't rely exclusively on Treasury forecasts, we've seen that -
Stefanovic:
So they look like amateur chumps all on their own?
Chalmers:
Of course I don't agree with that either, Karl. I've got a lot of respect for the independence of the Reserve Bank as you know, that's why I don't make predictions about what may or may not happen later today.
Stefanovic:
But do you take any responsibility for the inflation figures at all?
Chalmers:
I take responsibility for all aspects of my job, including my part in this fight against inflation. But more than that, we're taking action by making medicines cheaper, by making sure there's more bulk billing, student debt relief, the second and third tax cuts which we'll roll out before long. That's about taking -
Stefanovic:
We're just about out of time, but what would you say to someone with a mortgage today who's about to get a big hit to the pocket?
Chalmers:
That we understand that people are under pressure, and that's why we're acting on it with responsible cost‑of‑living relief, getting the budget in better condition that we inherited, because we know that when it comes to this fight against inflation, it's got to be all shoulders to the wheel. The government is doing its bit, but we know that there's more work to do.
Stefanovic:
David Littleproud's standing by. Have you got a message for him?
Chalmers:
I don't give free advice to my political opponents, frankly, I couldn't care less where our opponents sit on the other side of the parliament today. I've got more important things to focus on, like the things we've been talking about today. They are divided, they're divisive, they're in disarray, but the government won't be distracted by that.
Stefanovic:
Thanks for talking to us, appreciate it, Treasurer.
Chalmers:
Thanks, Karl.
Disclaimer: Curated by HT Syndication.
