2GB Breakfast 25/05/22

25 May 2022

SUBJECTS: Economic Outlook; Meetings with RBA and regulators; Costs Of Living; Multinational Taxes; Operation Sovereign Borders






SUBJECTS: Economic Outlook; Meetings with RBA and regulators; Costs Of Living; Multinational Taxes; Operation Sovereign Borders

BEN FORDHAM, HOST: Well, we’re being warned inflation is almost out of control. And it’s going to be a major challenge for the economy going forward. And the warning comes from the incoming Treasurer, Jim Chalmers. He says there’s no use sugar-coating it, we’re in a serious economic situation. The RBA expects the inflation rate to hit six per cent by the end of the year. We’re dealing with sky‑high petrol prices. We’re told today power prices are about to shoot up by hundreds of dollars a year. The new Treasurer says Labor has a plan to deal with the rising cost of living. The new Treasurer is Jim Chalmers. He’s on the line. Mr Chalmers, good morning to you.

JIM CHALMERS, TREASURER: Good morning, Ben. Thanks for having me on the show.

FORDHAM: Congratulations, first of all, on the new gig. You’ve got a hell of a job in front of you.

CHALMERS: We’ve certainly got a pretty serious combination of difficult issues to manage that we have inherited. I think your summary of it is bang-on. We’ve got a cost-of-living crisis in the economy at the same time as we’ve got real wages going backwards, and our ability to deal with some of these issues is constrained a bit by the fact that we are inheriting a trillion dollars of debt in the Budget with not enough to show for it.

The last few days, from my point of view, from Sunday, has been about getting the briefings from Treasury. I’m meeting with the Reserve Bank Governor today and with the heads of the other economic regulators because we do need to work together to get on top of some of these issues. I’ve got to be up‑front with your listeners and say that nobody can flick a switch and make a trillion dollars of debt disappear or flick a switch and make all of these cost‑of‑living pressures disappear overnight, but the hard work has already begun.

FORDHAM: We know the hard times have been happening now for the last two years because of COVID and that’s added to that debt, but what about petrol prices because we had that change in the last Budget and you guys supported it saying, “Okay, we can halve the fuel excise”, but it runs out in September, and now we’ve got them going even higher? Is that something that’s still on the table – the possibility of keeping that temporary relief going a little longer?

CHALMERS: First of all, just on that debt point that you made, we do remember that the debt had been doubled even before COVID. It’s not only COVID in there, it’s a much longer-term problem that we have to try to start to deal with. But on the petrol price relief, petrol has spiked again, as every single one of your listeners would know - north of $2, in some places well north of $2. It would be 22 cents a litre more expensive without that relief, but the big parties agreed in the last Budget. That comes off in September in the legislation that was improved before the election. Obviously, when the time comes, around then and in our October Budget, if there are things that we can do to make things easier for people, we will. But we have to think about being responsible with the Budget. That’s why it will be hard to extend the petrol price relief beyond September. There’s a lot of pressure on the Budget. It cost billions of dollars to do that. So, we’ll always do the best we can, but we need to be responsible and measured with the Budget. There’s not room in the Budget, with a trillion dollars in debt, to do everything that we would like to do, or to do even all of the good ideas, so we need to weigh up our priorities and try to sequence things as well.

FORDHAM: The Australian Energy Regulator is saying we need to prepare for higher power prices too. They set the maximum amount that consumers can be paid for power; they say that they’re looking at lifting that amount by at least 10 per cent, so that might be $200 a year extra for the average Aussie family. On energy, you’ve got a battle on your hands when it comes to new coal and gas projects, because the Greens want to block any new developments. They’re on track to gain the balance of power in the Senate. They want to scrap all new coal and gas projects. I know in the lead‑up to the election, for example, Kurri Kurri, you said originally – you guys were opposed to it then you supported it before the election. So, can you still give that support to Kurri Kurri now that you’re in Government?

CHALMERS: Yeah, our plan for Kurri Kurri is to build the power station but to make sure that it is able to take advantage of the big developments in hydrogen, and so we’ve got a better plan for Kurri Kurri than the plan that the former Government had. On energy prices, I’m meeting with the Energy Regulator today as well, but you’re right: people are in for a difficult period in the near term on power prices. We are expecting to see a power price spike before things get better. That’s why it’s so important that we do implement our Powering Australia Plan, which is about getting those power bills down over the medium term, getting cheaper and cleaner energy into the system at the same time as we boost investment, create jobs and modernise our economy. 

FORDHAM: When can you see that happening? When you talk about the near and the medium term, when can you see that happening?

CHALMERS: First of all, we’ve inherited this spike hike in the electricity system. No Government, three days old, can kind of turn that around, but what we’ve said in our policy and the economic modelling of our policy – it is about $275 a year by 2025. So, there’s some cost‑of‑living relief in the Budget now that we agreed with the Government before the election, and after that we’ve got a plan for power prices, child care, medicine costs, and to get real wages moving again, because once that relief runs out, we will still have skyrocketing costs of living and we need to do what we can to deal with them.

FORDHAM: You also promised to crack down on multinationals not paying enough tax, like Facebook; they made a billion dollars in Australia and only paid $24 million in tax. Are you going to get more money out of Facebook and how do you plan on doing so?

CHALMERS: This is a big challenge, I think, when you consider the weakness in the Budget and you consider that ordinary working folks are paying their fair share of taxes, we cannot have multinationals paying little or no tax here. We need to start working on that. We’ve got a policy, which has got four parts. I won’t run through all the four parts and bore all your listeners, but certainly the developments in the digital economy are a big part of our plan. We’ve already booked about $1.9 billion in Budget improvements out of that. The world is moving in a direction to try to deal with this issue as well. We want to be part of that. All of the major economies of the world in the next year or two will be implementing plans to make multinationals like Facebook pay their fairer share of tax, and we want to be part of that action too.

FORDHAM: You will be a magician if you get more money out of them. Just on another issue, the people smugglers who’ve already attempted to send boats Australia’s way – we know that one was intercepted by Border Force on election day, and those onboard were sent back to Sri Lanka. The Greens again having their say and they’ve got the sway in the Senate their immigration spokesperson Nick McKim says the turnback is “a shameful continuation of Scott Morrison’s brutal policy”. So, will you be taking tips from the Greens when it comes to border policy?

CHALMERS: No, of course not. We support Operation Sovereign Borders and we were disappointed, frankly, when the former Government tried to politicise that arrival on election day. What we have done is implemented all of the arrangements under Operation Sovereign Borders in the same way that they would have been implemented before Saturday, to return those 12 passengers safely to Sri Lanka. Our message into the region to the people smugglers is that if people try to get here that way, take that dangerous journey, they won’t make it to Australia. They will be turned back, if it’s safe to do so, or they will be processed offshore.

FORDHAM: Just on the politicisation of that issue, I should just share something with you - and I haven’t said this on‑air until now - but on Friday morning, I sent a message to Peter Dutton saying, “I’ve received this from a source. It’s about a boat that left Sri Lanka on its way towards Australia. Can you confirm?” He wrote back, “I’ll try to find out.” I never heard back anything from him. So, there was an opportunity there on Friday, the day before the election, to try to politicise that issue. He didn’t take it. Is it really politicising something anyway? If something’s true, if there’s a boat coming towards Australia, is there any harm in telling people?

CHALMERS: The Liberal Party sent text messages into marginal seats politicising it. I don’t – I’m not making a judgement on… 

FORDHAM: But if it’s true, it’s true, right?

CHALMERS: Yes, but they sent a political message out by text message. I’m not making a judgement on your communications with Peter Dutton. I’m making a judgement on the text messages sent out on election day trying to politicise it, when people should know - certainly the people smugglers should know - that we remain committed to Operation Sovereign Borders. Those 12 passengers were returned on that basis during the course of this week, and the people smugglers should know that if they try to restart their vile trade, they will be no more successful under us than they were under the previous Government.

FORDHAM: Alright. You’ve got a big job on your hands, and we hope for the stake of the country you’re going to be successful. Thanks for joining us.

CHALMERS: Thanks, Ben. All the best.

FORDHAM: Jim Chalmers, the new Treasurer of Australia.