CANBERRA, ACT, Dec. 8 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: New South Wales bushfires, MYEFO, Energy rebates to not be extended, ACCC appointments, BCA meeting, ministerial travel, EV road‑user charge, Foreign Investment Review Board matters
Jim Chalmers:
I want to begin by saying that our hearts go out to the loved ones of the firefighter who died overnight battling those horrendous fires on the New South Wales Mid North Coast. This is a horrible tragedy. It's the ultimate act of selflessness and sacrifice to lose his life in the service of local communities who are at risk.
I wanted to say today, but really every day we're so grateful to our Emergency Services people. We're grateful for their courage, we're grateful for their service, in this case the New South Wales Parks and Wildlife Service, but all of our first responders.
As these natural disasters, these fires and other events become more and more frequent, we call more frequently on the courage and bravery of people like the firefighter we lost overnight. So I wanted to begin by acknowledging his sacrifice in the first instance.
The parliament might be finished, but the work in the Treasury and Finance portfolios is gathering pace, and that's because we're putting the finishing touches on the Mid‑Year Economic and Fiscal Outlook.
The mid‑year budget update will be delivered next week. It will be sensible, not a spendathon. It will be sensible, it will be responsible and it will be restrained. It will recognise the very substantial pressures that we have on the budget right now that the Cabinet is collectively managing.
It won't be a mini budget, it will be an opportunity for us to update the forecasts, but also to make room for some very considerable pressures when it comes to upwards estimates variations in particular, making sure that we are taking the right and responsible decisions to make room for that spending at a time when those pressures on the budget are already very substantial.
There will be difficult decisions in the mid‑year budget update. There will be savings as there have been savings in all of our budgets and all of our updates, and the Cabinet has decided today on one difficult decision in particular.
The Cabinet decided this morning not to extend the electricity bill rebates. There have been 3 rounds of electricity bill rebates, and there won't be a fourth. The Commonwealth has spent almost $7billion on these 3 rounds of energy bill rebates, the states and territories have kicked in another $1.5billion or so.
These were a really important way that we provide help with the cost of living, but they're not the only way that we're providing that cost‑of‑living relief for people who are still doing it tough.
We have said, not just for the last couple of days or the last couple of weeks, but indeed for the last couple of years that these electricity bill rebates are an important part of the budget, but not a permanent feature of the budget. They're an important way that we've been helping people with the cost of living, but not the only way we've been helping with the cost of living. We've encouraged people not to see these as a permanent feature of the budget, and the Cabinet has agreed today, decided today that they won't be extended into a fourth round.
Now this marks a shift in the way that we are delivering cost‑of‑living relief. This shift is from temporary measures, first decided when inflation was almost 8percent, a shift towards ongoing cost‑of‑living help. Whether it's getting wages moving again - as we have been, whether it's the Medicare bulk billing incentives- because more bulk billing means less pressure on families, whether it's cheaper medicines or all of the other ways that we're now providing permanent ongoing substantial meaningful help with the cost of living.
But I think most importantly, we are now not far away from the second and then subsequently the third rounds of tax cuts delivered by this government.
When these energy bill rebates were first put in place, we had not yet rewritten the tax cuts to make sure that everybody got one, and we hadn't yet legislated the second and third tax cuts. And so they are a good illustration of the shift that we have engineered from temporary help with the cost of living to permanent help with the cost of living delivered through the tax system. And so by one measure, the $50 or so a week that Australians would be getting when you combine the 3 rounds of tax cuts, that provides permanent ongoing help, people can use that to help pay their electricity bills or to meet their other cost‑of‑living pressures.
This wasn't an easy decision, but it's the right decision. This was a difficult call that we made as a Cabinet, but it's the right call. It recognises the pressures on the budget, recognises that there is more than one way to provide this cost‑of‑living relief that people still need in their household budgets.
And as the Deloitte report made clear overnight, a lot of these pressures on the budget are intensifying rather than easing. As I said a moment ago, a big task for us as we put the finishing touches on the mid‑year budget update has been to make room for those pressures.
But as Deloitte also points out, our record has been a record of responsible economic management. Responsible economic management is the defining feature of this Albanese Labor government, and it will be the defining feature of the mid‑year budget update as well.
We've found $100billion in savings, we've banked most of the upward revisions to revenue, we've delivered 2 surpluses and then a much smaller deficit, and because of that there's now almost $200billion less debt than we inherited for this point in the cycle from our predecessors.
So we've made progress on the budget, but we know that we need to make more progress, and people should see that in the mid‑year budget update as well. As I said, it's not a mini budget, but there will be savings, and there will be difficult decisions, and one of them is around these energy bill rebates.
Now the main game for the budget is obviously May. A big focus there will be to balance these 2 challenges: our focus on inflation in the near term, our productivity over the medium and longer term as well. We have made considerable meaningful progress on productivity and on reform since the roundtable in August, but there's more work to do.
I wanted to indicate that today I'll be convening members of the BCA to continue our work to do justice to the consensus and the momentum built at the productivity roundtable in August. I'll also be meeting with the Chair of the Productivity Commission, because the PC reports on the 5 pillars of productivity will be released in the coming weeks, certainly before Christmas, and I'll be discussing those with Danielle Wood today.
I'll also be taking part late tonight in a G7+ meeting on critical minerals at the invitation of the Canadian Finance Minister. And this will be a good opportunity for us to engage in Australia's interests when it comes to this really important opportunity for Australia and our economy.
My focus in that meeting will be more global action to diversify critical minerals and rare earths supply chains, more investment in Australia- which has this remarkable opportunity in critical minerals and rare earths, and also more trade with Australia as a trusted supplier of critical minerals as well. So that meeting will take place late tonight our time.
I've also announced today 2 appointments to the ACCC, 2 ACCC Commissioners. We've re‑appointed Anna Brakey and we've appointed Ian Oppermann as full‑time members of the ACCC for a 5‑year period. This is really important work, and these are outstanding appointments, and I'm proud to be making them today.
The last thing I wanted to indicate before I go to Phil first up the back, is to say that a decision on the foreign investment application by Hanwha in the Austal matter, it is imminent. I'd like to make a decision on that in the next week or so.
This is a very complex case. It has warranted us taking a little bit longer than usual to come to, or to try and come to and conclude these discussions and these decisions. I hope to make that decision in the next week or so, but certainly before Christmas I'll be making an announcement around Austal and Hanwha.
We have dramatically sped up the FIRB process. We are approving 99percent of FIRB applications, but this one has warranted a bit more time, a bit more consideration, but a decision on that one is imminent.
I'll take your questions.
Journalist:
Thanks Treasurer, just 2 parts. On the energy rebate does the cancellation affect the inflation forecasts for next year or are they already predicated on an ending at Christmas? And secondly, the biggest, or one of the biggest imposts on the budget, the NDIS, the growth rate was supposed to be 8percent by this year, and Mark Butler signalled early in the year trying to get it down to 5 or 6. Can you give us an update on what MYEFO is going to tell us on that?
Chalmers:
Yeah, I can. So, on your first question, the current inflation forecasts already take into consideration the energy bill rebates finishing this month. But the inflation forecasts will be updated given recent data, obviously from budget update to budget update, the Treasury updates the macro forecasts, and so the inflation numbers will be upgraded - updated - taking into consideration some of that recent data that we have.
On the NDIS, this is obviously a live discussion with the states. It's part of a broader discussion about hospitals and health, which you're all aware of. It's been a matter of public debate and on the public record that we're negotiating these sorts of outcomes with the states and territories. Mark Butler, and others, Jenny McAllister, have been engaged in that work.
You shouldn't anticipate big shifts in the MYEFO necessarily because a lot of these discussions are still ongoing, but I really wanted to pay tribute to Mark and Jenny and to the colleagues for the way that they are recognising our first responsibility is to people in the scheme to make sure we're providing quality care and keeping our commitments there at the same time as we make the scheme sustainable over time. So there's a lot of work going on on that front right now.
We might just keep some order, so we'll go Jacob, Shane, then Michael.
Journalist:
Treasurer, just on the upward revisions that you talked about can you just give us some detail? What are you talking about there? Where's the blow‑out been? And just on the removal of the rebates, the energy rebates, are you worried about sort of the way the politics of that looks when you have- you're getting pressure and flack about some of the personal spending of your colleagues?
Chalmers:
Well, first of all, on the estimates variations, I mean they're still being concluded, the numbers aren't locked down now, but Matt Keogh, I think, at the Press Club last week spoke of upward variations in veterans. There were, I think I've said on other occasions that there are variations in natural disaster spending, and there are others as well.
Really the main thing that Katy and I have been grappling with over the course of recent weeks and months is how we make room for some of these unavoidable pressures, including in those couple of examples that I've given.
Now on the politics of energy bill rebates, we try to make the right decisions by people and by the economy, and others can judge the politics of that. We've been upfront with people and said that these were never going to be a permanent feature of the budget, and as I said before, you know, people will still be receiving very considerable cost‑of‑living help, but it will be permanent and ongoing, through the tax system, through the Medicare system, and in other ways as well, the PBS.
And so the nature of that cost‑of‑living help is evolving over time, but our commitment to providing cost‑of‑living relief is constant. It's just that over time the nature of that cost‑of‑living relief is changing. I think I said Shane next.
Journalist:
Just further to that cost of living and permanency doesn't that mean if you're looking at permanent improvements to cost of living that that also hits your budget bottom line?
Chalmers:
But when we're talking about the tax cuts, you know, we found room for 3 rounds of tax cuts, they're already budgeted for, but round 2 and 3 haven't come in yet. Round 2 is not that far away.
And similarly with the Medicare changes and others as well. This is cost‑of‑living relief that's budgeted for already in a responsible way, but it's permanent and it's ongoing.
The tax cuts, for example, are now baked into the budget and that's a very good thing, and if we had lost the election in May those tax cuts would be repealed.
And so I guess the point that I'm making, Shane, and to everyone here is we won't be extending the energy bill rebates into a fourth round, but we will be continuing to provide meaningful and responsible cost‑of‑living help via the tax system, via the Medicare system and in other ways as well. We'll go to Mike, and then we might go behind and then come back to you.
Journalist:
Treasurer, just on power prices, with the end of the rebates now, we've seen since 2022 Western Sydney, for example, the hardest hit with price rises of up to around 500percent in the capped market prices- $500, sorry- on a $1,500 bill. I'm just wondering now that these rebates are coming off, is this concession by the government that cost‑of‑living relief won't come through electricity prices, given, you know, that the government's Commonwealth agency, the Australian Energy Market Commission, says there are no significant decreases on the horizon?
Chalmers:
Well, we're providing help with electricity bills via the tax system and by providing other cost‑of‑living help. As I've said a couple of times now, that cost‑of‑living help is changing over time, but our commitment to providing meaningful and responsible assistance is constant, and so the tax cuts will help people pay their bills, those bills or otherwise.
I think you would understand better than most that when we've got this challenge in our energy grid where the least reliable ageing parts of the fleet are becoming less and less reliable and will exit the system before long. The key question for governments is how you replace that generation? And we want to replace it with the cleanest, cheapest, most reliable renewable energy where we can, firmed by gas and hydro and backed up by batteries.
That's our approach, and that's because the alternative to that, which is the Coalition's approach, would push power prices up, not down. So over time, we put downward pressure on energy prices by introducing more cleaner and cheaper energy, that's our policy. We've been providing these electricity bill rebates in the interim as well, and now we'll be providing cost‑of‑living help in other ways. Yeah.
Journalist:
Will MYEFO show an uptick in the public service wage bill to account for the increases in wages that we've seen in the last year or 2?
Chalmers:
Yeah, the mid‑year budget update will account for all of the usual changes in the usual way. We haven't finalised all of the numbers. What typically happens the week before the mid‑year budget update is we crunch all of the numbers together and we make a small amount of final decisions, including the one that we took today that we have been discussing. So we'll finalise the numbers in the coming days, and we'll budget for the usual changes in the usual ways. We'll come down the front to Andrew.
Journalist:
Treasurer, you say the mid‑year budget will be full of difficult decisions and it won't be a spendathon. Wouldn't an easy decision be to get rid of the FBT exemption on EV cars which the PBO says is a spendathon on the well‑heeled? And secondly, on a related question, given that premiers across the country want you to implement a road‑user charge, when will you actually do it?
Chalmers:
Well, on the first part of your question, there are no easy decisions when there are billions of dollars at stake, and so I'm not sure that I would characterise our-
Journalist:
Well of taxpayers' money, $23billion over 10 according to the PBO?
Chalmers:
No, I understand. The point that I'm making is that all of these decisions are difficult, and we've committed to a review of the EV scheme, the fringe benefits tax regime for EVs, we've committed to that review already, we'll have more to say about that in due course. And the second part of your question was?
Journalist:
Well, you haven't really answered the first one, I mean that's- it's a stinker, isn't it? I mean [inaudible] cost $55million is going to cost-
Chalmers:
Well, you said to me that it would be an easy decision. I said I didn't believe it would.
Journalist:
Getting rid of it, wouldn't it?
Chalmers:
I don't believe it would be an easy decision. That's me answering your question.
Journalist:
Okay, and the second question is on the premiers all want a road‑user charge. It's costing your budget billions of dollars. Why wouldn't you implement it?
Chalmers:
I'm doing a heap of work with the state and territory colleagues on road‑user charging. We've had a number of very productive discussions about the best way to go about that.
There are a range of views about how quickly it should be put in place and whether it should begin with heavy vehicles and transition towards light vehicles or whether it should be all in from the beginning. I think I've acknowledged that publicly before, that there are those range of views amongst the treasurers about that.
But we're doing the work in good faith. We've said that we're in the cart for a road‑user charging regime. I work closely with Catherine King and Chris Bowen on that, and that work's continuing. Tom.
Journalist:
Thanks, Treasurer. Does family reunion travel entitlements reflect the modern era? Wouldn't it be a good faith gesture to taxpayers to withdraw that given that a lot of Ministers and MPs use it for sporting events and other things that probably aren't core responsibilities to the job?
Chalmers:
Well, I think there are very good reasons why the rules around these sorts of things are made and enforced at arm's length from politicians by an independent body, the IPEA, and that they're disclosed and made transparent in the usual ways. There are good reasons for those decisions to be taken independently and at arm's length.
Journalist:
But the rules are made here, they're not made by IPEA, they're enforced by IPEA.
Chalmers:
Well, the IPEA is responsible for making sure that the allowances and the travel that is claimed is within the rules and within the guidelines, and in recent instances that has been the case.
Now I understand that there is a view about that, I understand that people are concerned about that, and people are interested in that. And that's why, you know, the minister in recent days, the Prime Minister yesterday, has answered a number of these questions at length.
But the reports that have been made public on each occasion have been within the rules, and the rules are policed by an independent authority at arm's length from politicians, and that's as it should be. Andrew.
Journalist:
On Austal, which you flagged earlier, is that decision being delayed because you're receiving direct representations from Tokyo and Washington?
Chalmers:
No, the delay in the Austal decision and Hanwha decision is on me, as I've said publicly on a number of occasions, including out west a couple of weeks ago, and that's because I want to make sure that I'm getting it right. It actually has a lot more complexity than people might appreciate, and I like to make sure that when I make these decisions I'm doing it in a consultative way, in a collaborative way. And so that's why it's taken longer than September to arrive at that decision.
As I said before, overwhelmingly the FIRB system is speeding up rather than slowing down, but from time to time you get a complex case like this one, and it's completely on me that it's taken a bit longer, because I wanted to satisfy myself that all of the work has been done.
But the way that you've characterised the delay is not quite right. We better come over this side. We'll go from the front to the back. That's you, Pat.
Journalist:
I was just wondering how much does the recent uptick in inflation affect your budget strategy, you'd hoped that inflation was a thing of the past if you turned to looking into productivity and other issues. Now that inflation's back do you need to re‑talk the budget strategy?
Chalmers:
Well, it's a strategy in 2 parts, and obviously the balance of that strategy is partly determined by the data. And I've said on other occasions, including on the day that the most recent inflation data came out, it's much lower than we inherited, but it's higher than we would like.
And so obviously our budget updates take into consideration the economic conditions, they always do, and they will this time as well.
But we've got 2 sets of challenges here. At the front end we've got this challenge with inflation, which is more persistent than anyone would like, and in the medium term and the longer term, we're trying to turn around 2 decades of under‑performance on productivity.
We've had some good news recently on productivity, some more difficult news recently on inflation, but those 2 parts of our strategy will be a feature of this mid‑year update, they'll be an even bigger feature when it comes to productivity in the May Budget as well. But there's been some combination of those objectives in all of the budgets and budget updates that we've handed down.
Journalist:
I just want to get your reaction to probably the worst kept secret in politics, Barnaby Joyce joining One Nation. What's your thoughts?
Chalmers:
Well, the Coalition is now so bad that not even Barnaby Joyce wants to hang around them, and I think that says something about the Coalition. The Coalition is so divided and so divisive and so bereft of any economic credibility that they're losing members left, right and centre.
And this is what happens when a Coalition major party goes out of its way just to be a pale imitation of One Nation. If the Coalition had any economic credibility they wouldn't be losing members to their left and to their right, but that's what's been happening. They are hopelessly divided, they are recklessly divisive, and that's why they're losing members.
Journalist:
Treasurer-
Chalmers:
I'll come back to you, Cam, we're going to go up this way and then finish on Cam.
Journalist:
Treasurer, is our defence relationship with Japan factoring into your deliberations on Hanwha's bid? And also, are there conditions that you're considering that might address any concerns the Japanese would have?
Chalmers:
Look, first of all, I'm not prepared to go into any specific influences on our thinking here. The main influence on my thinking is the recommendation of the Foreign Investment Review Board, and I'll get that imminently. Obviously, we care about a whole range of influences and a whole range of factors when it comes to this decision. I'll go Matthew, Ron, and then down to Cam.
Journalist:
Hi Treasurer. Matthew Franklin from Capital Brief.
Chalmers:
Hi, Matthew, it's nice to meet you.
Journalist:
I just wanted to follow up on Jacob Greber's question-
Chalmers:
That's a bad start, Matthew, I wouldn't do that.
Journalist:
No, if you look at what the Liberals and Nats- walking away from net zero, you look at Barnaby Joyce has decided he wants to join One Nation, clearly they've made the political calculation that power bills are their passage back into power. Clearly they've made that calculation.
Does that worry you? Because today you've made the decision that you've explained not to continue with these rebates. How- are you concerned about that sort of political, you know, set‑up, and how important does it make it that you are successful with your gas reservations policy- which I understand we're going to hear about pretty soon?
Chalmers:
Well, a couple of things about that. I genuinely believe that if you make the right decisions the politics will take care of themselves. And we're not talking here about ending cost‑of‑living relief, we're talking about shifting from one kind of cost‑of‑living relief to another, continuing to provide cost‑of‑living relief in other ways.
Of course, our political opponents in their usual way will try to make hay of that. But we try not to be distracted by our political opponents. You know, they go out of their way to diminish the progress that we've made together in our economy over the course of recent years, they're always trying to talk the show down, they're always trying to divide people, and we'll see that- we'll see elements of that when they respond to this decision as well.
But the thing that they need to explain is that for internal party political reasons, their abandoning of net zero will push energy prices up, not down. You know, that's the consistent conclusion of experts and economists and analysts in this important policy area. Theirs is a recipe for high power prices, not lower power prices, and that's clear.
What we've done, we've been providing this help at the same time as we have a policy which is about introducing more cleaner and cheaper renewable reliable energy into the system because that gives us the best chance over time of putting downward pressure on prices. There is a political difference there, but our focus is on making the right economic decisions. Matthew, then Ron, then Cam.
Journalist:
Treasurer, in the savings that you plan to make coming up in the MYEFO, do any of them involve the introduction of any sort of new means testing on anything? And the savings that you make, they sort of- you said that they'd go to unavoidable pressures, but would any of the savings leak into new things, new spending or avoidable pressures? And also today there was an announcement by the National Reconstruction Fund to invest in a big private‑equity‑backed biscuit manufacturer. Do you have any thoughts on that? Are you supportive of that investment, or do you think some of that needs to be rethought?
Chalmers:
Look, I haven't been through all the details of that announcement, but the fund is a really important way with a first‑class board to make those kinds of decisions. And so I'll leave you in their hands. On the savings in the mid‑year budget update, they are all about making room for these pressures. I'm not prepared to go into the detail of those, I've already announced a difficult decision that we've taken today as a Cabinet. There will be other difficult decisions in the mid‑year budget update as well.
But that's because, you know, right throughout, whether it's our first 4 Budgets, or a couple of budget updates in between, it's always been about responsible economic management, it's all about trying to get value for money, making room for our highest priorities, which are tax cuts, strengthening Medicare, building Urgent Care Clinics and the like, and people should expect to see more of that in the mid‑year budget update. Yes, there are pressures on the budget, yes, there will be difficult decisions and savings to be made, but overwhelmingly that's about making room for our priorities.
Journalist:
There's no means testing, new introduction of means testing to get those savings?
Chalmers:
That hasn't been a focus of our deliberations, but you have to wait and see how the numbers stack up when we release them next week. Ron.
Journalist:
Thank you, Treasurer. To follow up from Matt and Tom's question, Finance Minister Katy Gallagher has talked about the finding of 5percent reduction across the bottom 5percent of spending in the public service, that's for the budget, to my understanding. Are you planning on using that again to simply find room for these pressures, or is there other ongoing cost‑of‑living measures that you might like to see those savings paying for?
And just following on from Tom's question, to see if we could get a bit of a direct answer, if that's all right, the question was about whether the family entitlement, the family reunion entitlement is fit‑for‑purpose in the modern day. We've heard plenty from Anika Wells, the Prime Minister's saying it's all within the rules. I think we can take that as read. The question is are the rules appropriate?
Chalmers:
Well, first of all, you're right to say that you've heard a lot from the minister and the Prime Minister. You know, they've fronted up and answered a whole bunch of these questions. I guess the same point that I would make to your question, Ron, which is what I was trying to make in response to Tom's question a moment ago, is that my focus is on the mid‑year budget update, making these decisions, electricity bill rebates and the like. I think it's a good thing that these rules are policed by IPEA at arm's length from politicians.
Journalist:
But they're made by you-
Chalmers:
Well, they're not.
Journalist:
- [inaudible] by the public -
Chalmers:
Well, with respect, I'm putting a mid‑year budget update together, we're taking decisions around Foreign Investment Review Board matters. I understand that these are matters of interest and I understand that these are matters of concern, but they haven't been my focus. The other part of your question?
Journalist:
Just on the budget, 5percent bottom saving.
Chalmers:
So the way that we go about this from budget update to budget update is not always the same, but it's the same kind of objective. And that is really to ask ministers and departments to identify lower areas of priorities so that we can redirect it to higher priorities - Medicare, tax cuts, housing and the like.
And so really that's what we've done on this occasion. You're right that it's primarily about leading up to the May Budget, which will be the main game, but it's not unusual for Katy or for myself, for the finance department to seek input and ideas about the best way to go about that. We're obviously not finalising the May Budget in December, and so the final makeup of any future savings, the priorities in that budget will be to be determined.
We've indicated here today, and on other occasions, there will be a big focus on managing the budget responsibly and making our economy more productive, and that will really guide our thinking between now and then. We'll go to Cam, then yourself, then we're finished.
Journalist:
Treasurer, a lot of talk about rules there, but can I ask you to talk to Australian households who you've just told are now going to lose their energy bill rebate after Christmas. How should they feel? And how did you feel when they see Anika Wells out there spending like it's Black Friday on expensive dinners in Paris and trips overseas and ski trips in Thredbo? How should they view that, and how does that make you feel when you're trying to find savings in MYEFO?
Chalmers:
Look, as I've said on a number of occasions already today, you know, I understand why people are interested in it and I understand why people are concerned about it, but at the end of the day these are within the rules, those rules are policed independently and at arm's length from politicians, and that's what we're seeing on this occasion.
Now when it comes to electricity bill rebates, we've provided those 3 rounds of help with electricity bills. We'll continue to be providing meaningful substantial cost‑of‑living help in the most responsible way that we can.
The emphasis will shift from bill relief in a temporary sense to ongoing relief via the tax system, via the Medicare system and in other ways as well.
Journalist:
You said people are concerned about it, are you concerned about it, Treasurer?
Chalmers:
I've answered your question, Cam.
Journalist:
But does it concern you, Treasurer?
Chalmers:
I've answered your question, Cam. Thank you.
Journalist:
Treasurer, do you think it's fair that given you're here talking about the difficult economic climate, the fact that difficult decisions need to be made, quite blatantly, like is it fair for taxpayers to be paying for business class flights as part of the family reunion allowance when households are making difficult decisions about electricity bills, school fees and it's an expensive time of year?
Chalmers:
Thanks very much. I refer you to the same answer I gave to Cam a moment ago. Thanks very much.
Disclaimer: Curated by HT Syndication.
