CANBERRA, ACT, April 30 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: inflation data, May Budget, housing, tax policy, intergenerational fairness
Karl Stefanovic:
Inflation just surged to its highest level since September 2023 and already Jim Chalmers is warning the worst is yet to come. To discuss, the Treasurer joins me from Logan. Treasurer, good morning. I reckon you've lost the room in your ability to control inflation and it's a big room.
Jim Chalmers:
Morning, Karl. Certainly, the numbers that we saw yesterday were a pretty significant sense of the cost and consequences of this war in the Middle East. Those inflation numbers which were too high yesterday really do reflect the hefty price that Australians are paying at the bowser and beyond that as well for this war in the Middle East.
My responsibility in the Budget and more broadly is we've cut the fuel excise, we're rolling out cost‑of‑living relief. The Budget will be really responsible in 2 Tuesdays' time, and that's the best thing that we can do in the context of these prices which are too high and being pushed higher by a war on the other side of the world.
Stefanovic:
But if you couldn't control inflation before the war, how are you going to control it during and after? How do we have any faith?
Chalmers:
There are a couple of things going on. We had inflationary pressures before the war in the Middle East, but I think any objective observer of particularly the month of March in that data yesterday understands that overwhelmingly this was a story about fuel prices, and fuel prices are all about what's happening in the war in the Middle East. I think people understand that.
There are broader cost pressures in our economy, they have been the focus of the government for some time. It's why we've got this cost‑of‑living help, it's why we cut the fuel excise, it's why we've been managing the budget in a responsible way. But some of these developments are not decided by Australians. Australians are paying a price for something that they haven't decided. We are hostage in lots of ways when it comes to petrol prices to what's happening on the other side of the world. The barrel price for oil was up near $120 today, that's flowing through to prices at the bowser. We expect to see a bit more of that, and for those price pressures to be a bit broader in the economy as well. But I think your viewers understand, Karl, that this is overwhelmingly about a war on the other side of the world.
Stefanovic:
But we did have dramas before, and on the streets and supermarkets, on farms, in small businesses, this is going to mean a good old-fashioned walloping to their wallets.
Chalmers:
Yes, certainly Australians are under pressure. We've acknowledged before that some of these inflationary pressures were hanging around before the war in the Middle East, but overwhelmingly what we saw in those numbers yesterday in the month of March was about fuel prices. Fuel prices are about the international barrel price. Unfortunately, that is being pushed up very substantially by a war in the Middle East.
From an economic point of view, and from an Australian families' point of view facing these cost‑of‑living pressures, the end of this war in the Middle East can't come soon enough.
Stefanovic:
Economists reckon changes to negative gearing and the capital gains tax won't fix housing supply and affordability or help with productivity. But gee I'm glad we've got that good old-fashioned social cohesion.
Chalmers:
A couple of things about that. Those deliberations are ongoing. We haven't finalised the Budget yet, there's always a bit of speculation about what policies will be in the Budget. I think particularly this year there's been a lot of that speculation, and that's fine. We haven't finished the Budget yet.
When it comes to housing policy, we're already doing a lot of things at once. The main game is supply, we've got big investments in supply. We're actually tens of thousands revised up in terms of house building, that will take a bit of a hit because of these building costs that we're seeing flow through our economy. The housing minister will say a bit more about that later on. But one of the big concerns -
Stefanovic:
You were never going to get there anyway, were you?
Chalmers:
It's an ambitious target but I think doable if everyone does their bit. We've seen a revision upwards in how many homes we were building, now that's going to take a bit of a hit because of construction costs. I think people understand where those costs pressures are coming from.
The other concern that people have, as I move around communities like this one here at home, is this idea that it's getting harder and harder for young people to get a toehold in the market, in the housing market. If you look at the numbers for younger people and you look at the numbers for owner-occupiers as a proportion of the housing market there is a lot of concern, and I share it, that it's too hard for younger people to compete with investors and others in the housing market.
As we work through the final deliberations for this Budget, that will be one of the considerations that we take into account as well, in addition to housing supply.
Stefanovic:
But how are changes to negative gearing and capital gains tax going to help young people get into a house?
Chalmers:
You've got to look right across the board at everything we're doing in housing, and also the tax cuts that we're already doing. The standard deduction for tax is all about providing some relief, it has particular benefits for younger people who are typically on lower and middle incomes, but you've got to look right across the board. If we did go down that path, and again we haven't finished the Budget yet, but if we did go down that path I would encourage people to look right across the board at everything that we're doing in housing, not one or 2 policies in isolation.
Stefanovic:
Treasurer, good to talk to you. Thanks for your time, appreciate it.
Chalmers:
Appreciate it, Karl. Thanks.
Disclaimer: Curated by HT Syndication.
