Source: Australian Parliamentary Secretary to the Minister for Industry
Jim Chalmers:
Well, inflation was flat in the month of October but ticked up in annual terms. Annual through‑the‑year inflation is higher than we’d like, but it is much, much lower than we inherited from our predecessors. What we saw was inflation of 0.0 in October, but we do acknowledge that the through‑the‑year number was higher than we’d like it to be, but driven, partly, by temporary factors like the removal of state energy rebates.
We understand that Australians are still under pressure, and that’s why our cost‑of‑living help delivered in the most responsible way that we can is so important. It’s why it beggars belief that our political opponents did not want to see this cost‑of‑living relief rolling out while people are doing it tough.
So a welcome outcome in the month of October, but an outcome which is higher than we’d like through the year in headline terms in particular but also in underlying terms as well. We acknowledge that, but more than acknowledge that – we are doing something about it. We’re providing cost‑of‑living help in the most responsible way that we can. We’re managing the budget in the most responsible way that we can. And both of those things are very important in the context of price pressures which are persistent.
I can only take a few questions. So, I’ll start over here with Sarah and try and work my way around.
Journalist:
If I can I just ask: what measures or are you going to have measures in MYEFO, inflation‑busting measures? Will there be new measures in the MYEFO?
Chalmers:
Well, the mid‑year budget update won’t be a mini budget, but people should expect us to update the budget in the most appropriate way. There will be some savings in the mid‑year budget update, but the main game is May. We’re doing a lot of work, as many of you have reported on, to make sure that the Budget in May is as responsible as it can be.
Now, what everyone should acknowledge, including our political opponents, is the budget is in much better nick than what we inherited from our predecessors when we came to office. Our predecessors never delivered a surplus budget – we delivered 2 in our first 3 years, and in our third year a much smaller deficit. Two surpluses and a much smaller deficit versus our opponents who just delivered 9 deficit budgets. They doubled the debt even before COVID. They spent most of the upward revisions to revenue. We won’t be taking lectures from the Coalition about responsible economic management. If they’d had their way and won the election, Australians would be earning less, paying higher income taxes and there’d be bigger deficits and more debt.
Journalist:
Treasurer, 37 per cent increase year on year in electricity prices. Is this the time to withdraw federal household support for energy bills?
Chalmers:
Well, what that number shows and what the October monthly figure – which showed a fall of 10 per cent in electricity costs – what that shows is that the introduction and removal of the energy rebates at the commonwealth level and at the state level do have an impact on these figures. We’re seeing that in the monthly figures and also in the annual figures. One of the reasons why inflation was flat in the month of October is because electricity is down 10 per cent and we’ve also seen housing costs moderate and we saw the price of fuel go down as well.
But what that tells us is that inflation doesn’t always moderate in a straight line. It’s come down very substantially since we came to office. It’s flat in the month of October but higher than we would like through the year.
Now, when it comes to those electricity rebates, they are a really important way that we are helping Australians with the cost of living, taking some of the edge off these electricity price pressures that people are encountering. They’re a really important part of our budget but they’re not a permanent feature of our budget, and we’ve made that clear.
Journalist:
Treasurer, are you happy that this is as high as inflation gets and start trending down a bit? Is this the worst kind of numbers that Australian’s can expect?
Chalmers:
Well, what this shows – and it’s been the case around the world as well – is that inflation, even though it’s moderated very considerably since we came to office, it hasn’t moderated in a straight line. We’ve seen that around the world as well in other comparable countries. Now, obviously what we want to see is lower inflation. We’ve got inflation down. We’ve made a lot of progress. That’s given the Reserve Bank the confidence to cut interest rates 3 times this year. But I’ve acknowledged a number of times now that even though the monthly outcome was very encouraging – flat in the month of October – the annual figure is higher than we would like. That’s why our cost‑of‑living relief is so important and it’s why our responsible economic management is so important as well.
We’ll take a couple more over on this side.
Journalist:
Treasurer, just a question on the APS.
Chalmers:
We might just go in order, if that’s okay. I’ll come to you, Stephie, I promise.
Journalist:
Leading off that question, do you think the size of the APS needs to be reduced?
Chalmers:
What we’ve done in the lead‑up to the May ’26 Budget is the same thing that we’ve done in the lead‑up to other budgets, which is to seek input and suggestions from other ministers and other departments about areas where we could reprioritise lower priority spending and direct that for higher priority purposes. And the evidence of that is that we’ve found $100 billion in savings in our first 4 budgets, and that’s helped make room to fund our efforts to strengthen Medicare and lift bulk billing and build Urgent Care Clinics and cut income taxes 3 times. And so that is an ongoing, permanent, not especially controversial feature of our responsible economic management – to seek input into ways that we can redirect lower priority spending to higher priority causes. We did that in our first 4 budgets. We’ll do it in the fifth budget. And we’ll do it after that as well.
Journalist:
Just the Budget papers this year, already do show a decrease in departmental spending next year. So are the new savings you are looking for, are they in order to meet that forecast or [inaudible]?
Chalmers:
Well, our objective is to manage the budget in the most responsible way that we can and to make room for our priorities, including strengthening Medicare and cutting income taxes 3 times. And so what the Budget papers reflect – not just the most recent Budget papers, but all of them – is that in every single budget that we’ve handed down there have been savings. Now, we’re not proposing here that every department cut its staff or cut its programs or its overall budget by 5 per cent. We’re asking ministers and agencies, departments to provide their best ideas around lower priority spending that we can redirect to higher priority areas.
Now, that’s one of the reasons why we’ve been able to get the budget in much better nick than we inherited, banking most of the upward revision to revenue, finding $100 billion in savings, delivering those surpluses, getting debt down by almost $200 billion and saving on interest costs. All of that is about making room for higher priorities, and that’s what the task that we’re engaged in now.
Yourself and then we’ll go to David.
Journalist:
How concerned are you that you might have to financially bail out Tasmania? Moody’s now downgraded the credit rating is the lowest in the country.
Chalmers:
Obviously I’m aware of developments in Tasmania, and it’s a crucial part of the Commonwealth and a crucial part of our national economy. We haven’t been contemplating any kind of bailout for Tasmania, but what we have been doing is increasing funding quite dramatically to Tasmanian schools, for example. The offer on the table for Tasmanian hospitals, investments in Tasmanian infrastructure. So we very willingly, very enthusiastically invest in Tasmania. We recognise how important it is to the national economy and to the country more broadly, and that’s reflected in the investments that we’re making there.
Journalist:
Just back on the electricity rebate, are you yet to make a decision, and are there any further inputs you’re waiting for to make a decision?
Chalmers:
We’ll make that decision closer to the release of the mid‑year update. You can anticipate that that mid‑year economic update will be after the national accounts so that we can plug in the new data we get in the first week of December from the September quarter to make sure that our forecasts are relying on the most recent comprehensive information. So the mid‑year budget update will be towards the middle of December, as it has been for – on the last couple of occasions. We’ll take a decision about electricity rebates in the context of finalising that mid‑year budget update.
Journalist:
Treasurer, still on energy prices, can you be straight with Australians – when are the bills actually going to start coming down?
Chalmers:
Well, in the month of October electricity bills came down by 10 per cent. But we acknowledge that whether it’s the month of October or the annual figure, it is heavily influenced by the timing of state and Commonwealth energy rebates. What is extremely clear is if you listen to any credible expert, economist or analyst of our power grid is that the best chance to get power bills down over the medium term is to replace this ageing, increasingly unreliable fleet of coal‑fired power stations with cleaner, cheaper more renewable, more reliable energy, and that’s our policy.
And it is absolutely bonkers that the Coalition want to abandon an orderly transition and abandon net zero. That would push power prices up, not down. It will swing a wrecking ball through the budget and through the economy because it will destroy investor confidence. And we know why they’ve taken that position – it’s just to appease the most right wing elements of their party room. It’s not in the national economic interest. The position that we’ve taken on electricity – to provide rebates in the near term, to help with batteries, to cap gas prices and to introduce more, cleaner and cheaper renewable and reliable energy into the system – that is the best combination that gives us the best chance of getting power prices down over the medium and longer term.
Journalist:
Treasurer, 3 months on from your economic roundtable what have you been doing with a lot of the discussion that came out of that – EV, road user charge, [inaudible] productivity issues and the economy? When will we see some results of that meeting?
Chalmers:
Well, we’ve made an extraordinary amount of progress in the hundred days or so since the Economic Reform Roundtable. You know, the list I was making earlier – cutting tariffs, freezing the Construction Code, accelerating housing approvals, fast tracking the EPBC legislation, 400 different ways to better regulate the financial sector, the AI strategy, FIRB reform, we’ve opened the single front door for investors. On Friday I’ll convene the state and territory Treasurers to advance our objectives on Federation reform and National Competition Policy and the National Productivity Fund. And the Economic Reform Roundtable will be one of the primary influences of the Budget that I hand down in May as well.
So there’s been an absolute flurry of activity capitalising on the momentum and the consensus that we built around the cabinet table at the Economic Reform Roundtable. That progress already has been substantial, but there’s also a lot more work going on behind the scenes. And that will help inform the Budget in May.
Charles.
Journalist:
Treasurer, you’ve spruiked real wage growth for the last 18 months or so. Are we now at risk of seeing real wages go backwards and, if so, what does that say about the plan of the government?
Chalmers:
Well, first of all, we’ve seen 2 years of consecutive real wages growth now, which is the first time in almost a decade. That’s a very good thing. When we came to office 5 consecutive quarters of real wages falling. We’ve now had 8 consecutive quarters of real wages growing, and that’s a deliberate design feature of our economic policy. It’s partly because we’ve got inflation down. It’s partly because we’ve got wages growing again, and we’ve also created 1.2 million jobs and 4 in every 5 of them have been in the private sector. And so our labour market has been a real source of strength.
Now, we acknowledge that the forecasts going forward mean that people are anticipating – the bank, the Treasury and others – are anticipating that headline inflation, as we saw today, is a bit higher than it has been and that we need ongoing efforts to make sure that wages continue to grow. It remains to be seen when this run of real wages growth will end, but 8 consecutive quarters of real wages growth, 2 years continuous wages growth for the first time in almost a decade, that’s a very good development because those real wages were falling sharply when we came to office.
Journalist:
Treasurer, the Trump White House and the US State Department have described mass migration to Western nations as an existential threat. And on top of that, State Department officials said a couple of days ago they’ve instructed the US Embassy here in Canberra to press the federal government on this matter. Is that appropriate, and will Australia take its advice on this domestic policy setting from the US?
Chalmers:
Well, obviously we’ll form our own views about the appropriate migration settings for our country. And it’s important to remember that when it comes to net overseas migration I think we’re currently tracking about 17,000 lower than the Treasury forecast. I think we’re down about 40 per cent from the peak, and we’ve had a number of quarters now where net overseas migration has been falling.
And so we’ll form our own views about that. We have been able to get net overseas migration down quite substantially at the same time as we’re building more houses, which are desperately needed in our economy. And so we’ll form our immigration policies and our other policies in our own national economic interest. And so far we’ve made good progress on net overseas migration.
Journalist:
Just on the APS, you said you’re not asking every department to cut jobs or staff by 5 per cent. So do you have an idea of which might be exempt and how many jobs in total, would go?
Chalmers:
Well, none of the budget preparations for May 2026 are finalised yet. You’d expect that in November of 2025. What we’ve done here is what we’ve done on other occasions – we’ve sought in our usual consultative, methodical way, we’ve sought input into ways that we can reprioritise spending in the budget. You know, there are very substantial pressures on our budget. We’ve acknowledged that. Even with all the progress we’ve made with this $200 billion turnaround that we’ve helped engineer in the budget, there are still pressures. And so the onus on us, the responsibility for us, which we embrace, is to make sure we’re getting maximum value for money for taxpayer dollars. And that’s what we’re doing here. We haven’t finalised the May 2026 Budget in November 2025. You wouldn’t expect us to. But the work is ongoing.
Journalist:
But you have some priority areas you don’t want to see cuts?
Chalmers:
Well, we’ve demonstrated already that when it comes to our big investments in the public service, including in areas like veterans, dealing with the backlog that we inherited on processing veterans’ claims, we shown a willingness to make sure that the public service has the resources and the people they need to provide the services that Australians deserve. That’s been our approach. We’ve worked very hard to turn external contractors into public servants because you get more value for money that way. That work is ongoing as well. But it shouldn’t be a surprise to anyone at a time of very substantial fiscal pressures that we are working out where is the low priority spending and how can we direct it to higher priority areas. And, again, I direct you to our record – $100 billion in savings has helped make room to cut interest – to cut income taxes 3 times and to make room to strengthen Medicare and lift bulk billing and build Urgent Care Clinics. And that’s the process that we’re engaged in right now.