CANBERRA, ACT, July 29 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: inflation data, fuel excise, new Victorian Premier, new UK cabinet, One Nation
Jim Chalmers:
Well, we've just had some new data from the ABS, which shows that headline inflation moderated in both monthly and quarterly terms, and we also saw the monthly trimmed mean measure of inflation was steady as well. This means inflation has come in lower than expected, lower than forecast in the Budget or by the Reserve Bank, but it's still higher than we would like it to be.
These are welcome numbers in the circumstances, but we know that we still have an inflation challenge in our economy. What these numbers show is that inflation across a number of measures is lower than what the market expected, certainly lower than what we expected at Budget time and lower than was forecast by the Reserve Bank as well.
This is the third consecutive month now where annual headline inflation has come down. It is an encouraging outcome that shows that we have made some progress on inflation since the Budget, even in the face of very intense global economic uncertainty.
Now, if you compare this outcome with the forecasts that we provided at Budget time and the forecasts provided by the Reserve Bank, both institutions were expecting headline inflation to be in the high 4s or even 5percent. Today, it has come down very substantially lower to 3.9percent. That's obviously a much better outcome in these volatile circumstances around the world.
If you look at the monthly data, headline inflation was 3.8percent in the 12months to June, down from 4percent the month before. When you look at the month‑on‑month measure, headline inflation fell in that regard as well. In the quarterly data, headline inflation was 3.9percent through the year, down from 4.1percent through the year to March. If you look in quarterly terms, inflation more than halved in the June quarter. Headline inflation was 0.6percent in the June quarter. That's down from 1.4percent in the March quarter.
So, we already had an inflation challenge in our economy before the war, but the war in the Middle East is making inflation higher than it would otherwise be. We also know that the developments in the Middle East, even in the month of July, are adding substantial complexity and volatility to the outlook as well. These numbers go up to June. In July, we've seen very substantial volatility, including when it comes to the oil price. It's been anything from around $70 up to more than $100, the global oil price per barrel. And earlier this morning, it was about $85 a barrel. That gives you a sense of the very substantial volatility that we still have in the global economy playing out here in Australia, even with these encouraging developments in the inflation figures to June.
The oil price has fallen around 12percent since the end of last week, but it's about 22percent higher than it was when the conflict started. We also know from these numbers that while the initial impact of the war in the Middle East was on fuel, we're seeing it broaden out into other areas of our economy, including things like dwelling construction costs as well.
If you look at the trimmed mean measure of underlying inflation, in the quarterly data, it is 3.6percent compared to 3.5percent in March, but that is lower than the 3.8percent which was forecast by the Reserve Bank. So, it's come in lower, even the trimmed mean measure of underlying inflation has come in lower than the Reserve Bank was expecting.
Now, if you look at the period of time from March until now, inflation has gone up since March in most major advanced economies, but it has come down in Australia. It is, of course, still much lower than what we inherited when we came to office. When we came to office, inflation was higher than 6percent and rising rapidly. It's now much lower than that. Underlying inflation is also lower than what we inherited.
So we know that people are still under pressure. We know that inflation is still higher than we would like it to be. We know that the war in the Middle East and the uncertain developments even in the last couple of weeks risks that outlook as well. But in the circumstances that we find ourselves in, these numbers today are encouraging. They have come in lower than what was anticipated, and obviously that's positive news, even as we recognise the ongoing inflation challenge in our economy, turbocharged by a war on the other side of the world.
We don't get too carried away by one set of data, one set of numbers, from day to day or from week to week. But obviously, it's a positive development that these numbers have come in lower than expected by the market, by the Treasury and by the Reserve Bank as well.
So, we made some progress in our economy, but we know that there is much more work to do on the inflation front when it comes to the cost of living, but also at the same time as we make our economy more productive in the face of all of this very intense, very substantial global economic uncertainty.
And with that, happy to take some questions.
Journalist:
Despite today's fall, the RBA Governor this week said inflation is still too high, and you've just said it's higher than you'd like it to be. Could more spending restraint by the government bring inflation right down?
Chalmers:
Well, the government has shown very substantial spending restraint. In the Budget in May, we saved more than we spent, and similarly in the midyear update before that. We had more than the usual amount of savings in the Budget, more than offsetting spending in the Budget. And that speaks to the very responsible way that we are managing the budget settings, recognising the inflationary environment that we are in, made more challenging by war in the Middle East.
Journalist:
And can more be done beyond the spending restraint in the Budget?
Chalmers:
Well, every time that we've handed down a budget or a budget update, we've found savings and reprioritisations. And that's because we recognise that we've got a helpful role to play in the fight against inflation. We've seen inflation come off a bit since the Budget. That's obviously a welcome development. But we know that this requires ongoing vigilance. Nobody pretends that these inflationary pressures have disappeared overnight. On the contrary, we know that the global environment is uncertain. We know that developments in the Middle East have pushed up global oil prices at times during the month of July. And that's why we will continue to manage the budget in the most responsible way that we can.
Journalist:
The cut to the fuel excise is due to end on Sunday. Will that be extended?
Chalmers:
Look, we've made it really clear on a couple of occasions that the fuel excise relief will taper off on Monday. We made that clear when we announced it. One of the reasons why we extended it at half the rate is because we have always intended for that to taper off. So that fuel excise relief will end midnight on Sunday. And that's because it has played a really important role helping to take some of the sting out of these cost‑of‑living pressures. But as I've made clear and as the Prime Minister and others have made clear, it was never the government's intention for that to be permanent. We planned to taper that off at the start of the month deliberately so we could provide a bit more cost‑of‑living help, so we could smooth out the transition from the full 32cents to half of that throughout the course of July. I've said on a number of occasions, the PM has said, I think, as recently as yesterday, that people shouldn't expect that that fuel excise support will continue beyond the weekend.
Journalist:
Inflation may have come in softer than expected, but the trimmed mean is still running above target at 3.6percent. It's the 12th straight month underlying inflation has been above 3percent. Is that a sign your government is losing the battle against inflation?
Chalmers:
Look, we continue to have an inflation challenge in our economy. We recognise that, acknowledge that, we've been upfront about that. But these numbers, including the trimmed mean measure of underlying inflation, has come in lower than what the Reserve Bank forecast in its most recent set of forecasts. So, inflation continues to be higher than we would like but lower than expected by the market, by the Treasury or by the Reserve Bank.
Journalist:
Just on Angus Taylor, he says that no payment was made when he was asked about whether he made donations to the Reformers Group. Are you satisfied with that response?
Chalmers:
It sounds like Angus Taylor has some questions to answer here. You know, I don't want to interfere with the ICAC process that his political allies are involved in at the moment. But I think as Murray made clear yesterday, there are a number of questions to be answered here, and he should front up and explain any involvement he's had in this. Beyond that, I'm reluctant to get into the discussions that are being had at the state level by ICAC.
Journalist:
Jacinta Allan, yesterday, argued that high government debt was necessary to pay for great government services. Do you agree with her?
Chalmers:
Look, it's not for me to react to all the views expressed by different state leaders and former leaders from different political persuasions. I've made it clear - whether I've been responding to budgets handed down by LNP state governments or budgets handed down by Labor governments - all of our budgets are under pressure in one way or another, and we've all got a responsibility to provide decent services in the context of a budget managed in the most responsible way. And so, I don't have any criticisms to make of the way that the states have gone about trying to achieve that difficult balance. Not just today, I think on other occasions when I've been asked to provide a view on those sorts of things, I have been reluctant to.
But you've given me an opportunity to say something a bit more broadly about the change of leadership in Victoria. I saw Jacinta Allan on Friday of last week. Jacinta Allan is a really good person, a wonderful person. And on a personal level, these kinds of changes can be really difficult, and I really wanted to wish her and her family well. I've got a lot of time for her. She is a good person, and I hope that she is dealing with these developments okay and that she's surrounded by her loved ones.
I think Ben Carroll will be an outstanding Premier. He is pragmatic, he is decisive, he, I think, offers the government of Victoria and the people of Victoria the very best chance of a fresh start when it comes to his leadership. And I think you could see that decisiveness when it came to the announcement of the royal commission, for example. And the reason why we support that is because it's consistent with our zero tolerance at the federal level for corruption and the steps that we've taken, for example, to crack down on the CFMEU. It's consistent with the great work that Catherine King does, making sure that we get value for money when it comes to government‑supported projects.
So, I wish Ben Carroll well. I know him a bit. I've had a little bit to do with him over the years, and I look forward to having a lot to do with him in the months and hopefully years ahead. I think he will be outstanding, not just for Victorian Labor but for Victoria.
Journalist:
Just to the UK, the ABC understands you've been in touch a number of times to check in on former Chancellor Reeves, who he went to the backbench following the change of leader. [Indistinct] spoke to her multiple times. Are you able to clarify what you were speaking about?
Chalmers:
I've checked on Rachel Reeves on a couple of occasions since the reshuffle brought about by the change of leadership in the UK. A bit consistent with what I said about former Premier Allan - you know, we're talking here about human beings. And when there are changes made to the leadership - whether it's on the other side of the world or in Victoria - these sorts of changes can be tough on people. I just think the world of Rachel Reeves. She's an absolutely terrific friend of Australia and a friend of mine. So, I don't think it's unusual or surprising that I check in to see how she's faring in a world where she's gone to the backbench.
I also had a really good opportunity to speak with my new counterpart, John Healey, the new Chancellor of the Exchequer, yesterday evening. I actually spoke to him from my kid's under‑12 basketball training. And I know from Richard Marles what a great friend of Australia John Healey is from his time and their time as defence ministers together.
We had a very good discussion about how we work together at the G20 and in other forums in areas of common interest - economic resilience, for example - how we work together when it comes to AUKUS and defence funding. So, we did have a really good initial conversation. I have checked in a couple of times with Rachel Reeves. A couple of really good people. I think it says something about the churn in UK politics that this is now my sixth Chancellor of the Exchequer in a bit over 4years as Treasurer. I've been really fortunate - people from both sides of politics have been great counterparts over there. I expect John will be a wonderful counterpart, just like Rachel was.
Journalist:
In Queensland, Pauline Hanson's One Nation Queensland Division is 3years behind in filing audited financials to the Office of Fair Trading. It's a fairly basic legal requirement to be an incorporated association in Queensland. What does it say about Senator Hanson and her party that they are not complying with these legal requirements?
Chalmers:
Well, I think whether it's the Liberals, the Nationals or One Nation, they're a 3‑ring circus, and it's not especially surprising to hear that they're not capable of meeting even the most basic standards. That is important, but what's more important, I think, is the very dangerous risk that One Nation poses to wages and working families in this country. And the thing about One Nation is there is no way that the Liberals and Nationals can govern without being in coalition with One Nation. And those 3 parties - that 3‑ring circus - they share a very divisive anti‑worker agenda. They are a very dangerous proposition when it comes to the wages and working conditions of working people in this country.
So I'm not surprised to hear that they've got that wrong, but I think more importantly, more substantially, they pose a very serious and dangerous risk to working people in this country, and that's what we're focused on.
Journalist:
Treasurer, Hancock Prospecting wants a public apology from the ABC over a controversial Race Around the World segment that graphically depicted violence against Gina Rinehart, but the ABC is refusing to do so. So, for a bit of context, the segment talks about mixing her guts up. Do you condemn that sort of content, and does it have no place on the national broadcaster?
Chalmers:
Look, I haven't seen the program that you're referring to. I'm not questioning your summary of it, but I haven't seen it. I'm not aware of that process that's underway. Obviously wherever we can we need to make sure that we are talking in respectful terms of each other.
Journalist:
Just back to the topic of inflation and the cost of living, your department has warned you that the worst is probably yet to come given the war in Iran looks to be spreading and the fuel crisis is worse the longer it continues. Can you level with Australians - how bad could this get? Is the government prepared to roll out new cost‑of‑living help [indistinct]?
Chalmers:
Well, a couple of important parts of your question. I mean, first of all, what the Treasury advice that we circulated shows and consistent with what I've said publicly. The end of the war can't come soon enough, from an Australian point of view, from a cost‑of‑living point of view, from the point of view of Australian families who've already paid too hefty a price for this on-again, off-again conflict on the other side of the world.
We are monitoring developments, just like every country is, because so much hinges on it. The key conclusion of the Treasury advice is that the longer this war drags out the harsher the consequences for global growth, global inflation, Australian growth and Australian inflation. So we've been very upfront about that.
We are hostage to developments in the Middle East. Now, we've had these encouraging numbers today, which go to the end of June, but even in July, we've been hostage to this quite extraordinary price volatility playing out in our own economy and not just when it comes to fuel but more significantly now in areas like building costs.
When it comes to cost‑of‑living help, what we are deliberately engineering here is a shift from temporary help with the cost of living in the form of the energy rebates and then the petrol excise assistance into permanent cost‑of‑living help - tax cuts, help via Medicare and bulk billing, cheaper medicines, via the wages system. So there's been a transition underway from temporary help to permanent and ongoing help, and that's because we know that Australians are still under very substantial cost‑of‑living pressure. They were before the war, but the war made it worse. We're very attentive to providing that cost‑of‑living help in the most responsible way that we can and increasingly in a permanent way rather than a temporary way.
Journalist:
Sorry to jump around- can I go back to Victoria? Is a last‑minute switch of leaders - you've been very complimentary of MrCarroll - is a last‑minute switch of leaders enough for Victorian Labor to win the election?
Chalmers:
Well, it remains to be seen. I've got enough on my plate without making predictions about the outcome of state elections a few months down the track. I am really confident that Ben Carroll will be an outstanding Premier. I know enough about him, I've seen enough, even in the course of the last 24hours or so, to give me confidence that Ben will help Victorian Labor put its best foot forward. I think the way that he is dealing with serious issues augers well for his premiership. He does represent, I think, a fresh start, a fresh start that Victorians are looking for when it comes to some of these issues. And the alternatives to Ben Carroll and Labor in Victoria would be, you know, a strange, dangerous coalition between Liberals, the Nationals and One Nation. And that can mean only one thing, which is a cut to services and worse conditions for working people.
So the stakes are high in Victoria. I'm confident that Ben will be a wonderful Premier, and I'm confident that if he gets the opportunity to set out his agenda for Victoria and also contrast that with the risks posed, the very dangerous and substantial risks posed by One Nation in coalition with the Liberals and Nationals, then he will give Victorian Labor a chance.
Thanks very much. Really appreciate it, everyone. Thank you.
Disclaimer: Curated by HT Syndication.
