Source: Australian Parliamentary Secretary to the Minister for Industry
Jim Chalmers:
Labor is the party of responsible economic management. We’ve delivered 2 surplus budgets, we’ve got the deficit down in the third year, we found $100 billion in savings, and we’ve got the Liberal debt down by almost $200 billion.
We won’t be taking lectures on responsible economic management from a Coalition which took to the election a policy for lower wages, higher taxes, bigger deficits and more debt to pay for nuclear reactors.
If the Coalition had its way and won the last election, Australians would be earning less, they would be paying more tax, there would be bigger deficits and there would be more debt. And to make things worse, as bad as it was that they took to the election a policy for higher taxes, bigger deficits and more debt, as bad as it has been that they have opposed our cost‑of‑living help for people doing it tough, they now have this economically insane approach to the energy transformation.
The Coalition’s approach to net zero would swing a wrecking ball through the budget and through the economy, and would push power prices up, not down. What the Coalition is proposing to appease the extreme far‑right in their own party room is a recipe for higher power prices, not lower prices. It’s a recipe for less investment in our economy and it’s a recipe for billions of dollars in taxpayer subsidy for ageing coal‑fired power stations.
Now, Ted O’Brien has an opportunity at the Press Club today to explain how much it will cost the budget for them to extend the least reliable, most expensive parts of the energy grid. We know from sensible analysts and experts and economists that upward pressure on energy prices is not coming from the new renewable, reliable, cleaner and cheaper energy. It’s coming from the fact that the ageing parts of the system are becoming less and less reliable. This harebrained idea from the Coalition in abandoning net zero would cost the budget billions of dollars. It would push power prices up and it would swing a wrecking ball through investor confidence, the budget and the economy more broadly. So, he has an opportunity to explain himself today.
As I understand it, he wants to talk about fiscal rules. The Coalition’s fiscal rules were not worth the paper they were written on. All they delivered was deficits. All they left us was a trillion dollars in debt. They weren’t able to contain their spending. The budget was chock full of waste and rorts. So Ted O’Brien and the Coalition are precisely the last people that we will take lectures from when it comes to responsible economic management. This Albanese Labor government is defined by responsible economic management. We’ve got the budget in much better nick than we inherited from our opponents at the same time as we’re cutting income taxes 3 times and providing the cost‑of‑living relief that people need and deserve when they’re under pressure.
Happy to take a few questions.
Journalist:
Treasurer, are you expecting inflation to go up or down today?
Chalmers:
We’ll see what the numbers say later today, but certainly economists expect the headline number to tick up a little bit as a consequence of the end of some of those state energy rebates. For that reason, a lot of economists I think will focus more on the underlying figure today.
But whatever the number says today, it will be extremely clear that inflation is very substantially lower than what we inherited from the Coalition. When the Coalition left office, inflation was north of 6 per cent and skyrocketing. We’ve been able to get it down substantially since then. And because of our responsible economic management and because of the progress that Australians have made together on inflation, that’s given the Reserve Bank the confidence to cut interest rates 3 times already, and that’s providing some welcome relief to millions of Australians with a mortgage.
Journalist:
Treasurer, asking departments and agencies to find 5 per cent of what they’re doing to no longer do, you may not want to call it a cut, but that is an unprecedented amount. Efficiency dividends are normally one per cent, that’s a massive cut. Did you know before the election that your budget was in this bad position? Should you have been clearer about this in advance?
Chalmers:
Oh look, there are a series of things in your question which I wouldn’t agree with. For example, we’re not talking about imposing a 5 per cent efficiency dividend on departments. We’re not asking departments to cut their staff or their budgets by 5 per cent.
What we’re doing in the lead‑up to this budget is what we’ve done in the lead‑up to every budget, which is asking departments and agencies and ministers to identify lower priority spending that we could consider redirecting to higher priority areas. And in our first 4 budgets we found $100 billion in savings, and that has helped us make room to strengthen Medicare and build Urgent Care Clinics, invest in bulk billing, and cut income taxes 3 times.
So, it’s not unusual or unprecedented or especially controversial for treasurers and finance ministers to ask others, other ministers and other departments, to identify areas of lower priority spending. We’re not asking every department to cut their staff or to cut their budgets by 5 per cent.
Journalist:
But you concede jobs will be lost?
Chalmers:
We’re doing what responsible economic managers do, which is to identify lower priority areas to redirect that, if we want to and need to, to higher priority areas. And so the approach that we’re taking to our fifth budget is the same as the approach we’ve taken to the first 4, and because of that responsible economic management we’ve delivered 2 surpluses and a smaller deficit in the third year. We’ve improved the budget by $200 billion, we’ve got the Liberal debt down by almost $200 billion. That’s saving Australians in debt interest, at the same time as we’re building Urgent Care Clinics and strengthening Medicare and cutting income taxes.
Now our approach to staffing levels in the public service is to make sure that the public service has the people that they need to provide the services that Australians deserve. For example, in Veterans’, we’ve provided more people and more resources to get through that shameful backlog that we inherited from our opponents and make sure that more claims are processed more quickly.
That’s been our approach to people in the Australian Public Service. Our approach to the budget is a responsible one. The contrast with our opponents couldn’t be clearer.
Journalist:
[inaudible]
Chalmers:
We’ll just go here and come back, Tom.
Journalist:
You’ve spoken about redirecting funds from low priority areas to high priority. What, to you, is a low priority area?
Chalmers:
Well, we’ve made it clear in the past with $100 billion in savings that there are areas of the budget that we can trim in order to make room to strengthen Medicare and cut income taxes 3 times. Again, this is not an especially unusual or controversial process. I see it as an important part of ensuring that we’re getting maximum value for money for taxpayer dollars.
There are pressures on the budget. We have made good progress in cleaning up the mess that we inherited but there’s more work to do. That work is ongoing. And from time to time, you will ask us, you know, ‘Will there be savings in the Budget in May?’ Ideally there are savings in every budget because it helps us make room for some of those higher priority areas.
So, we ask the departments in the months leading up to budgets each time to identify areas where we can make savings if that money could be better spent elsewhere, and that’s what we’re doing on this occasion too.
Journalist:
Just on the coal sweating, sorry, Treasurer, the costing you’ve got out today, are you able to indicate the figure that the government currently spends to keep coal‑fired power stations open for longer at federal and state levels, and if you were to turn off coal‑fired power today what sort of impact do you think that would have on power prices?
Chalmers:
Well, nobody’s proposing to do that. Nobody’s proposing to turn coal off today. No responsible person is suggesting that. When it comes to the cost of the Coalition’s economic insanity on net zero, what we’re saying today is that if they want to continue to sweat these assets across the board for a much longer period than what is sensible, that will cost the budget billions of dollars. It will push power prices up, not down. And that’s because as you know, Tom, as I assume you know, the pressure on electricity prices is coming from the ageing part of the fleet, not the new part of the fleet. To extend the fleet in ways that they seem to be proposing would cost the budget billions of dollars.
Now, the Shadow Treasurer has an opportunity to answer these important questions later on at the National Press Club, and if he’s asked, he needs to come clean. How much will it cost to extend these ageing coal‑fired power stations? And what would that mean for prices?
The government’s energy policy is clear. Our approach to net zero is clear. We’re playing catch up because so much energy left the system in the life of the former government. We’re introducing new, cleaner and cheaper, more renewable, more reliable energy into the system, because that’s what gives us the best chance over time of putting downward pressure on prices.
Journalist:
Treasurer, just on Ted O’Brien’s speech, if you take the politics out of this and focus purely on policy, would you agree that a set of formal rules governing how much the government can spend would be a useful addition to when you’re putting the Budget together?
Chalmers:
We have fiscal rules in the Budget and because of the way that we’ve managed the budget responsibly, we’ve delivered the first 2 surpluses in a couple of decades and we got the deficit for the year just finished down substantially. Debt, Liberal debt, is down almost $200 billion, and that’s because we have fiscal rules in the Budget and it’s because we’re managing the budget in the most responsible way that we can.
Unlike our predecessors, for example, over the life of this government we’ve banked more of the upward revisions to revenue than we spent. Our predecessors used to spend most of them. Right across the board we’re taking a more responsible approach to the budget. Now, our predecessors had fiscal rules, they weren’t worth the paper they were written on. They promised a surplus every year and delivered only deficits. They doubled the debt even before the COVID pandemic. When we came to office, spending as a share of the economy was close to a third. We got it down closer to a quarter and there’s more work to do on that front as well.
So, Ted O’Brien can talk all he likes about fiscal rules. They failed on every front when they were in office and they’ve just taken to the election a policy for higher income taxes, bigger deficits and more debt to pay for nuclear reactors. So once again, precisely the last people that anyone should take advice from on responsible economic management is the Coalition. One more question and then we’re done. Phil?
Journalist:
Treasurer, when you talk about, you’re doing power cheaper than they’ll do it, does that include the cost of the transmission infrastructure? Do you still think it’ll be cheaper with that combined with it?
Chalmers:
Yeah, the point that we’re making is the same point that sensible, rational economists and analysts and experts have made, which is the cheapest form of new energy is renewable energy. Any government of any political persuasion has to make decisions about how we replace the coal‑fired power which is exiting the system. That’s not an ideological point of view or a partisan point of view, it’s a fact of life in our economy that these ageing coal‑fired power plants are slated to come out of the system. So, governments have to decide what they replace that with and any rational, sensible person knows that the cheapest, most efficient way to replace that energy is cleaner and cheaper, more renewable, more reliable energy, and that’s our approach. Now we all know –
Journalist:
And that’s inclusive of the transmission cost?
Chalmers:
Yes, and we all know what’s happening here. The Coalition has completely abandoned responsible economic management, and they do that to appease the far‑right in their own party room, and they do that to appease Pauline Hanson and others. They have vacated the field on the economy. They can talk all they like about fiscal rules and the all the rest of it, the fact is that if the Coalition won the election and had their way, young people, every worker would be paying higher income taxes, there’d be bigger deficits and more debt. They said so in their own costings document that they released in the couple of days before election day.
We’re managing the budget responsibly. We’re managing this net zero transformation in the way that makes the most economic sense. We’re cutting taxes 3 times to make the tax system fairer for workers, for young people in particular, and to return more bracket creep.
If they won the election, taxes would be higher, there’d be less bracket creep being returned, bigger deficits and more debt to pay for nuclear reactors, and that’s why the last people that anyone should take advice from on responsible economic management is Ted O’Brien and the Coalition.
Thanks very much, everyone.