CANBERRA, ACT, March 18 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: interest rates, savings
Sarah Abo:
Well the Reserve Bank is this morning warning a recession may be the only way to drive inflation out of the economy. To discuss, Treasurer Jim Chalmers joins us live now from Canberra. Good morning to you, Treasurer. So, Australia now has the highest interest rates in the Western world. How does that sit with you?
Jim Chalmers:
Good morning, Sarah. You've got to make the full comparison. We've also got stronger economic growth than any major advanced economy, we've got very low unemployment, we've got lower debt than any major advanced economy. You've got to make the full comparison.
I understand that yesterday's decision from the independent Reserve Bank was not the decision that a lot of Australians were hoping for. We do understand that this puts additional pressure on people who were already feeling these pressures in our economy even before the escalation of the conflict in the Middle East, which is making things harder, particularly at the petrol bowser.
So for my part, more than acknowledging those pressures we're also acting on them. In fuel markets, rolling out cost‑of‑living relief including another couple of tax cuts, and also making sure that the Budget in May is as responsible as it can be.
Abo:
Treasurer, I think it's a valid question to ask whether you do actually understand, because there have now been 14 rate hikes under your government's watch. I mean it's not just a coincidence. As you mentioned, inflation was already on the way up before the Iran war.
Chalmers:
The same people who are saying that this is 100percent because of government weren't saying that when interest rates were cut 3 times last year. We've seen interest rates cut in the course of 2025. In 2026, for reasons that you and I have discussed on a number of occasions now, primarily the big recovery in the private economy towards the end of last year and now these additional pressures, particularly at the petrol bowser‑
Abo:
14 hikes, Treasurer.
Chalmers:
And also 3 interest rate cuts last year. I think any objective observer of those interest rate hikes which began before we came to office in 2022 would conclude that when we came to office interest rates were at essentially COVID crisis levels, and around the world interest rates normalised a bit after that COVID crisis.
The point I'm trying to make to you, Sarah, is that we take our responsibility seriously to deliver a responsible budget, to deal with these issues in fuel markets, to rollout the cost‑of‑living relief in the most responsible way that we can. I take responsibility for doing my part of this, but primarily what we're seeing here in the inflation challenge that existed before the escalation in the Middle East was a big return in the private economy. That was made clear by the Reserve Bank yesterday once again in the statement that they issued. And since then, obviously, these inflationary pressures are becoming harder because of a big spike in the global oil price and the like.
Some domestic issues, some global issues, some before the escalation in Iran and some after. We take this challenge very seriously and it's the government's focus.
Abo:
All right. Well let's look at it at a domestic and microlevel now. Some Australian families are going to be facing mortgage bills up to $2,800 higher and that's annually and then get you've got the fuel on top of that. I mean, everyday Australians are having to make cuts and be responsible with their own spending, and they're showing restraint that the government seems not to be showing.
Chalmers:
I don't agree with that, Sarah. We found $114billion in savings, we delivered a couple of budget surpluses, we got the deficits down, we got real spending growth down from more than 4percent to about 1.7percent in our budgets.
Abo:
But those savings, Treasurer, have come in the form of taxes as well and you've got an inflated public sector, which you can't deny.
Chalmers:
Well, the $114billion in savings doesn't include changes to taxes. That's the first point. Secondly, when it comes to spending as a share of the economy, under our predecessors it was up near a third of the economy, we got it down closer to a quarter, it's now in the 26s. I don't want to give all of your viewers just heaps and heaps of numbers, but what they show in a factual sense is we've got the budget in better nick than what we inherited from our predecessors, but we do acknowledge and we do know and we do take seriously the fact that we have to continue that work. There will be more savings in the May Budget, there will be more spending restraint, and that will be consistent with the very substantial progress we've made so far.
Abo:
I guess it's just alarming when you see that the RBA perhaps doesn't have the same view as you. I mean they're forecasting a potential recession if things don't improve, which you don't seem to agree with. I'm just going to play this grab from the Governor yesterday and from our show this weekend, the interview with you.
[Excerpts play]
Abo:
Have you changed your tune on whether we might be facing a recession this morning, Treasurer?
Chalmers:
No I haven't, Sarah, and I think it's really important that your viewers know that the Reserve Bank is not forecasting a recession either. And we need to be very careful about how we talk about this and talk about it in the most responsible way that we can.
The Reserve Bank's forecasts are not forecasting a recession in our economy. Neither are the government's. The point that the Governor is making is a point that I would be very comfortable making, which is that we have to get on top of this inflation challenge and the global environment is highly uncertain and volatile.
And our forecasts as a Treasury and as a government, consistent with the forecasts of the Reserve Bank, are that neither of us are forecasting or anticipating a recession in our economy. The comments that Governor Bullock made yesterday are entirely consistent with the comments that I've made in recent days and weeks.
Abo:
It's not what I heard. I thought it sounded like she might have been a bit alarmed that that might be around the corner.
Chalmers:
She wasn't forecasting a recession, Sarah, and we need to be careful not to put words in her mouth. She was saying in a world where we don't get on top of inflation, and in an uncertain global environment, things are very unpredictable. But the Reserve Bank is not forecasting, not expecting, not anticipating, a recession in Australia, and nor is the Treasury on its current estimations.
Abo:
All right, Treasurer, thanks so much for joining us this morning.
Disclaimer: Curated by HT Syndication.
