CANBERRA, ACT, Sept. 30 -- The Treasurer of Australia issued the following transcript:
Jim Chalmers:
New data from the Australian Bureau of Statistics shows that annual headline inflation rose in August but underlying inflation remained stable.
Headline inflation was up 0.4percent in August compared to 1percent in July. In the year to August headline inflation was 4percent. This compares to 3.5percent in July.
Trimmed mean inflation was 0.2percent in August, which was down from 0.5percent in July. In annual terms it was steady at 3.6percent.
These numbers confirm that the overwhelming reason why inflation went up in August in headline terms was higher global oil prices.
In fact, all of the increase in annual headline inflation was from a combination of higher fuel costs and the unwinding of last year's energy rebates. It's also important to remember that today's increase in annual headline inflation comes after 4 consecutive months of moderation.
The re‑escalation of the war in the Middle East is pushing up fuel costs. It's pushing up inflation and interest rates right around the world, and these numbers show that Australia is not immune from that. Inflation increased in most major advanced economies in August. Most have had a rate rise this month, and all are expecting more to come.
We know that Australians are under pressure and we know that rising global inflation and interest rates are making this harder. So in the face of all of this heightened global instability, it was encouraging to see underlying inflation moderate in the month‑to‑month figures. In monthly terms, headline inflation more than halved and underlying inflation halved.
It is the case that today's result was below the median market expectation but consistent with the increases we've seen in inflation around the world. We already had an inflation challenge in our economy, but the war in the Middle East is making it worse. And that's why, from an economic point of view, the end of the war in the Middle East can't come soon enough.
Inflation is still too high in our economy. That's why it's so important that we are managing the budget in a responsible way. We're providing cost‑of‑living relief in an affordable and ongoing way via tax cuts and boosts to bulk billing and in other ways. And we're also dealing with some of the longstanding economic challenges in our economy around productivity and the like.
So today's figures show annual headline inflation was up, underlying inflation in annual terms was stable, but in the month‑to‑month comparison both underlying and headline inflation at least halved when you compare July to August. It did come in lower than expected, but it is still too high, and that's why our responsible economic management continues to be really important.
Happy to take some of your questions.
Journalist:
Treasurer, the RBA Governor yesterday said inflation is too high and is being driven by domestic capacity pressures. But yesterday you said a main driver of inflation in our economy is the war in the Middle East and you said as much again today. The 2 statements are fatally at odds. So do you think Michele Bullock is wrong?
Chalmers:
I don't agree with your assessment of that for this reason: yesterday I said before the Reserve Bank's decision and after the Reserve Bank's decision that we have an inflation challenge in our economy, and that inflation challenge is made worse by the war in the Middle East. That is entirely consistent with the statement released by the Reserve Bank Board after their decision and entirely consistent with the comments that Governor Bullock made in her press conference.
I have acknowledged for some time that the inflation challenge in our economy has a number of factors associated with it. But as you can see in these numbers- which confirm beyond any doubt- that the main reason why inflation in annual headline terms went from the middle 3s to 4 is because of the extra pressure from the re‑escalation of the war in the Middle East. And so I don't accept your characterisation of the comments made yesterday by myself, by the Reserve Bank Board and by the Governor of the Reserve Bank. It's entirely consistent with what I have said yesterday morning, yesterday afternoon and on other occasions. We have an inflation challenge in our economy. It's made worse by the war in the Middle East, and you can see that in today's inflation figures.
Journalist:
Treasurer, do you accept Philip Lowe's criticism that the government should be running budget surpluses rather than deficits right now? And also about the relationship between your office and the RBA is increasingly strained?
Chalmers:
I don't agree with the second part of that. In fact, I confer regularly and compare notes regularly with Governor Bullock. I like working with her. I work with her closely. We've got similar objectives, which is full employment and lower, stable inflation, but we've got different responsibilities. I recognise and respect the independence of the Reserve Bank. And, you know, we meet or talk regularly, formally, informally, about all of the challenges in our economy. So that characterisation is not correct.
On the first part of your question around the fiscal position, I delivered 2 surpluses, the first in a decade and a half. We've been able to get the deficits much lower than what we inherited. In fact, the deficit for the year just finished is around half of what we inherited when we came to office and $6billion better than anticipated even in the May Budget. So we've been able to improve the budget bottom line. And one of the reasons for that is we found almost $180billion in savings in the Budget, remembering that the last Coalition Budget had no savings in it at all.
We've been able to bank, I think 75percent of upward revisions to revenue. Our predecessors banked 40percent. Howard and Costello banked 30percent. We've got real spending growth down to less than half what it was under our predecessors from above 4 to averaging 2percent. And even if you compare it to pre‑COVID, the comparison is our 2percent and their 2.6percent.
So we've been managing the budget in a responsible way, quite substantially improving the budget bottom line from budget update to budget update because we've been finding the savings to improve the budget bottom line but also to make room for important investments like strengthening Medicare, providing cost‑of‑living help, investing in public hospitals and the like.
So if our political opponents do not support our investments in Medicare or public hospitals, they should say so. They've got more than $110billion in unfunded commitments made just since the election. So under the Coalition, deficits would be bigger and debt would be much, much higher, so that by their own logic inflation and interest rates would be higher under the Coalition than they are under this Labor government.
Journalist:
Treasurer, economists have opposed your view, with one economist saying you are gaslighting the Australian public-
Chalmers:
Which view?
Journalist:
The war in Iran that is fuelling inflation, with economists saying it's high domestic spending, a bit like Jane's question. Are you gaslighting the Australian public?
Chalmers:
Of course not. And we can see in today's inflation figures that the overwhelming reason why annual headline inflation has come up in August compared to July is because of the impact of higher global oil prices flowing through to fuel costs in Australia. I mean, that's not an opinion; that's a fact. You can see that in today's CPI data.
There will be all sorts of commentary made, whether it's that commentary that you're referencing or other commentary. It is clear and self‑evident that the war in the Middle East is putting substantial upward pressure on inflation here in Australia and, indeed, around the world, putting upward pressure on interest rates around the world as well. I don't think any objective observer could contest that after today's figures.
Journalist:
Doesn't Phil Lowe, though, have a point here when he says that the budget position should be better, citing full employment and citing higher commodity prices, indicating that there's an issue in other parts of the budget, and are you not reaping the rewards of full employment and higher commodity prices?
Chalmers:
Well, first of all, mining profits came in lower than anticipated in the budget year just finished. That's the first point. Second point about the fiscal position I think I've run through in some detail, the government's efforts to find savings, limit real spending growth, bank upward revisions to revenue, get those deficits down, deliver a couple of surpluses, public debt is around $200billion better than the trajectory that we inherited when we came to office. It's a sliver of comparable economies around the world, and so I think I've dealt with that element of it.
Now, when it comes to Phil Lowe, obviously Phil's entitled to his view. He expresses it relatively regularly. My focus is on the job at hand, not on the commentary, whether it's on an Institute of Public Affairs podcasts or in other places. My focus is on continuing to provide the responsible economic management that is necessary in uncertain global conditions. That includes rolling out cost‑of‑living relief, cutting taxes, finding savings in an ongoing way, as we have been doing in every budget and budget update since we've come to office, recognising the inflationary pressures in our economy as well as some of the longer‑term challenges around productivity.
Journalist:
So last year [inaudible] Productivity Commission and obviously productivity or low productivity and falling productivity is one of the big issues in the economy. You said that. Michele Bullock said that again yesterday. Do you see an improvement in productivity happening, and what are you looking at to try and understand whether that is happening or not? Because, you know, the Productivity Commission was more than a year ago now? You've been talking about increasing productivity gains since you took office. When is that actually going to happen?
Chalmers:
Well, I'm not sure why you've let out of that chronology the biggest and broadest productivity package in any budget for some decades. So in between that Productivity Commission work and now we made a central feature of the May Budget a very broad, very substantial productivity package because more than acknowledge the productivity challenge in our economy, we're acting on it.
And you can see that across the board- cutting compliance costs by more than $10billion a year, National Competition Policy working with the states and territories, faster approvals, including EPBC and Foreign Investment Review Board processes, a huge effort on productivity which recognises- as the Governor of the Reserve Bank did yesterday- that we've had a longstanding challenge when it comes to productivity in our economy. It hasn't been a challenge for the last couple of years; it's been a challenge for the last couple of decades, and it will take a bit of time to turn it around because if there was an easy solution, an immediate solution, to the productivity challenge we see here in Australia and in most comparable countries, somebody would have done that already.
The truth is, the reality is, that when you've got a long‑term, entrenched challenge like productivity in our economy, you have to work at it across a number of fronts over time, and that's what we're doing, and that's what the budget was all about.
Journalist:
There are a number of proposals being put out there for ways that the government could do more to rein in demand either through fiscal policy, for example, through tax hikes, or through increasing the superannuation guarantee on all workers temporarily. Are you open to any of those temporary measures that you could do more to rein in inflation? And is your department looking at any of those types of proposals?
Chalmers:
Look, we're not attracted to those 2 specific suggestions that you put in your question. Not something that we have been considering or discussing at our end. But when it comes to public demand, there's a couple of important points, I think, which have been missed in the last 24hours or more. Public demand is slowing in our economy. And if you look at demand over the past 12months or so, for every $5 of demand in our economy, $4 is private demand and $1 is public demand. And if you look at the Final Budget Outcome- as I'm sure you did, Matt- on Monday, you see that public final demand growth came in actually lower than was even anticipated in the May Budget.
So public demand growth is slowing. It is a fraction of private demand in our economy. And, once again, it's one of those areas where we have been able to make a difference since we came to office, particularly over the last 12months. And so we do understand that there's a lot of commentary about that. Of course there is. And we take seriously the suggestions that are put to us from time to time. But we have been managing the budget responsibly, and public demand growth has been slowing in our economy, not gathering pace.
Journalist:
You've said that you take responsibility for your role and the government's role in the fight against inflation. Do you think that fight against inflation was botched in late 2025?
Chalmers:
No. What we saw at the end of calendar 2025 was a much quicker than anticipated rebound in the private economy, and you can see that in the investment figures. There was a lot of commentary at the time, including from the Reserve Bank Governor, who has said the same thing. The thing that surprised them, I think, surprised the economic profession more broadly at the end of 2025, was the faster‑than‑expected recovery in the private economy. And that's why, you know, the Governor, myself and others were talking about the crucial role- to go back to the question earlier- of boosting productivity in the context of an economy where the speed limit is not high enough to sustain much faster economic growth and lower inflation.
And so what we saw at the end of 2025 and what has been clear ever since is that productivity is the key. That's why we've got this big, broad productivity package in the Budget. We're working very hard to implement it because at the end of the day that's one of the most important ways that we can grow our economy and lift living standards and lift real wages in a way that limits this unwelcome inflation challenge that we've got in our economy, which is made much worse by developments on the other side of the world.
Journalist:
Treasurer, how many more rate rises will it take for you to accept responsibility for that inflation challenge and accept that government spending is what is driving it?
Chalmers:
Well, on multiple occasions I've taken responsibility for my part of the fight against inflation. I did that multiple times yesterday, doing it again today, and have done it on other occasions in the past. Of course I take responsibility for our part in the fight against inflation. That's why we're managing the budget in a much more responsible way than our predecessors. It's why when we're providing cost‑of‑living relief, we're doing it in an affordable, ongoing and permanent way via tax cuts and in other ways. It's why we're dealing with some of these longer‑term challenges in our economy, including- especially- the productivity challenge, for all the reasons I've been talking to your colleagues and counterparts about today.
Obviously I'm not going to predict or pre‑empt future movements in interest rates. That's a decision to be taken by the independent Reserve Bank from meeting to meeting. We have seen some movement in interest rate expectations from the market today, but they can bounce around. But we have seen them shift quite considerably in the last hour or so.
My job, the job I take responsibility for, is to continue to manage the budget in a very responsible way, only provide that cost‑of‑living relief in a responsible and affordable way, and to deal with some of these longer‑term challenges as well.
I just wanted to add one more thing before we finish up. I see- or 2 more things. One, I see that Alan Kohler has announced his retirement from the ABC. I just wanted to really wish Alan well. I've got a heap of time for Alan, not because he's always especially kind to the government- he's not. But Alan is in lots of ways the very best of journalism. He takes these big, serious issues in our economy very seriously. He deals with them in a considered and sensible way. And so I think he'll be really missed from ABC and from the TV screens in suburbs right around Australia.
He's always done a wonderful job boiling down some of these difficult and complex interactions in our economy. So I've had an exchange with Alan since his retirement from the ABC was announced. I wanted to take the opportunity publicly to say how much he will be missed from the ABC. I hope and expect that he'll continue to make a contribution to economic commentary in this country. His contribution has been immense, and I hope it continues in one way or another. And I expect that it will.
Last point I wanted to make was about the leadership election in the Greens. First of all, I wanted to wish Larissa well. I know her a little bit from travelling back and forth to Brisbane in the course of our parliamentary duties. Very sad to hear that she's been unwell and she's dealing with this condition. Larissa seems to me to be a really wonderful person, and I wish her well as she deals with the challenges in her health. She's continuing to serve, and obviously that is a good thing.
When it comes to the new leadership of the Greens, I haven't met the new leaders of the Greens before. Obviously, on a personal level, I wish everybody well. We play the cards we're dealt in the Senate. No one political entity has the numbers in the Senate on their own, and so we engage in good faith with all parts of the Senate crossbench in an effort to pass important legislation. And I suspect that approach will continue.
I'm told that he was particularly focused on the Labor Party in his introductory remarks. I think it's really important that we focus on the risks posed to workers and to our economy by One Nation, the Liberal Party and the National Party. Any combination or coalition of Liberals, Nationals and One Nation would make Australian workers worse off. We know that from their approach to wages. We know that from their approach to super. And so they will continue to be the main risk posed to our economy and to our workers.
The government, for its part, is focused on delivering on its agenda, delivering real change, dealing with these pressures and challenges in our economy. And in the course of that work, we'll play the cards that we're dealt in the Senate and engage in good faith, as we have been to this point. Thanks very much.
Disclaimer: Curated by HT Syndication.
