Interview with Rebecca Levingston, ABC Radio, Brisbane

REBECCA LEVINGSTON:

Imagine looking at your budget and finding ten billion dollars in savings. That’s what the Treasurer of Australia has discovered. Jim Chalmers, good morning.

JIM CHALMERS:

Good morning, Bec.

LEVINGSTON:

Twenty‑four hours out from delivering your first Budget, how are you feeling?

CHALMERS:

I’m raring to go, actually. There has been a lot of work, but you get to a certain point, I think, where you’re looking forward to explaining to people where you think the economy is going and how the Budget needs to respond to that. I think most importantly of all, what is the place for ordinary Australians in all of that. So, I’m excited about it. I’m relatively calm but I'm quite excited about tomorrow and looking forward to it.

LEVINGSTON:

You've found ten billion dollars you can save. Where?

CHALMERS:

It's a combination of things. I’ve got this terrific colleague Katy Gallagher, the Finance Minister, and she’s been doing a heap of work with our support to find where spending has been wasteful, where we think we could get more value for money, whether it’s some of these programs that sprung up under the life of our predecessors, where money was being allocated for political reasons rather than good, sound economic reasons, so we’ve found an opportunity to wind some of that back.

We’ve also found a way to time our spending a bit more effectively and when you combine all of that together, there’s almost twenty‑two billion dollars in Budget improvements and that’s important because we’ve got this trillion dollars of debt. We’ve got deficits as far as the eye can see, there’s a structural problem in the Budget, so you’ve got to start somewhere, and we think this is a good place to start.

LEVINGSTON:

Now, hang on a second, Treasurer, twenty‑two billion dollars worth of improvements? I said ten. Our numbers don’t match up. Can you just unpack that figure a bit?

CHALMERS:

Yes, so about half of it is savings and the other half is changing the timing of our spending. In the economic jargon it’s called “re‑profiling spending”. And what that means is, whether it’s big projects or other commitments, finding a way that we can still deliver it on a slightly slower time frame that improves the Budget in the near‑term but it’s also a bit more realistic.

Some of these big projects that have been promised around Australia over the course of the last few years, because we’ve got shortages of building materials and shortages of labour, we’ve been working with the state governments to see whether we can time some of those projects a bit more intelligently, and that delivers a saving to the Budget in the near term.

LEVINGSTON:

Re‑profiling, all right. There might be a few households that may or may not want to use that economic jargon, Treasurer Jim Chalmers.

CHALMERS:

True.

LEVINGSTON:

So what does that mean? Can you be specific - what Scott Morrison funding promises will you scrap?

CHALMERS:

We’ll release a full list tomorrow via Katy but I think people have become accustomed to some of these commitments that are made by our predecessors in election campaigns - some of these big buckets of money where they don’t have enough oversight or enough rigour when it comes to making these commitments, so some of these will be wound back, we’ve been flagging that since before the election. We’ll also make a big save to consultants and labour hire and advertising and travel in the public service which will deliver a decent saving and there are some other areas as well.

LEVINGSTON:

You’re listening to the Treasurer Jim Chalmers on the eve of his first Budget. This is ABC Radio Brisbane and my name’s Rebecca Levingston.

This Budget, Treasurer, will include a “well‑being” statement. What is that?

CHALMERS:

Well, it’s basically picking up on best practice around the world. A lot of countries with which we compare ourselves, they have some version of a well‑being Budget or what I call “measuring what matters” and basically, what it is, is it says we've got all these ways we measure the economy and they are very important and we’re not going to walk away from them, but in addition to that, let’s come up with a hard‑headed, consistent way to measure what matters, not just in our economy but in our society. Let’s do that in a hard‑headed way so we can measure our progress against our objectives, whether it be health or education or environment or intergenerational disadvantage or some of the other things that we're passionate about. Really, it goes to a belief that I have, which is that you can't have a robust and resilient economy unless you’ve got robust and resilient people. I think that was one of the lessons from the last couple of years of this pandemic and so what I’ll do tomorrow is I’ll release a pretty detailed paper as part of the Budget papers – never happened before here in Australia – where it will sketch out how I think we should go about this, with an eye to doing our first wellbeing Budget or our first ‘measuring what matters’ Budget during the course of next year.

LEVINGSTON:

Is GDP an outdated measure of the health of a country?

CHALMERS:

I think it’s important, but it’s not enough. I think it is a very useful indicator and it’s a good way to compare against history and compare with countries around the world but like any stat, it has got its own limitations and I want to just build it out a bit. I want us to think about GDP and wages and unemployment but I also want us to think about  the state of our environment and the state of our health, our mental health. I want us to think in a quite hard‑headed way about what progress looks like in those important areas as well because we want our economy to be strong but we want our society to be strong as well and I’ve always seen those two things as complementary and not at odds.

LEVINGSTON:

Sure. And, Treasurer, you know for families to feel okay about their spot in the world, for families to eat well and have enough time to sleep, go to work and spend time with their kids, they want to be able to afford to pay their bills. What cost‑of‑living relief is there in this Budget?

CHALMERS:

Yes, I think that this is the most important thing about the Budget. The most important influence on the Budget that I’ll hand down is inflation or the rising cost of living. We’ll have some substantial measures in the Budget around childcare, paid parental leave, cheaper medicines, cheaper TAFE fees, plan to get wages moving again, because that’s a big part of the story as well and there’ll be about thirty‑three billion dollars in extra pensions and payments because when inflation goes up, that means payments go up too, and that’s important. There will be cost‑of‑living relief in the Budget, but it will be pretty responsible, pretty restrained and the best way to provide that cost‑of‑living relief is to do it in a way that’s got other advantages for the economy, and that’s how you do it without making this inflation problem that we’ve got in the economy even worse by pushing up prices even further.

LEVINGSTON:

What about that family in Brisbane who now have to find an extra four hundred dollars a month for their mortgage since May? When are interest rates going to stop rising, Treasurer?

CHALMERS:

The independent Reserve Bank takes these decisions without our input, without our interference but they have flagged that they think that rates will go up a little bit more still and that’s because we still have high and rising inflation, and that inflation will hang around for a bit longer than we’d like. And so, they’ve said that people should expect there to be more rate rises. Really, that’s part of the story here for this Budget. One of the reasons why it’s going to be so responsible and so restrained and so careful is because we know from lessons around the world that if you spray too much money around in these circumstances, you do risk pushing up inflation further and you do risk pushing up interest rates even further than they would otherwise be as a consequence and we’re very conscious of that.

LEVINGSTON:

Yeah, is that one of the things that stood out to you from your trip to the US? Like, just give us a sense of what you – when you got on that plane and flew home, what were you thinking?

CHALMERS:

Well, it was pretty confronting because a lot of countries around the world have got very, very real concerns about their economies and the global economy is entering another really difficult phase, and that’s relevant to us as well. We’ve got a lot of going for us here, and I’m optimistic about the future still but we’ve got some difficulties to navigate in the near term, and a big, big part of that is what’s happening in the global economy. And so a lot of my counterparts in some of the big economies around the world, they are concerned about their prospects. Some of them are in recession already, some of them are at risk of recession and we’re in better nick than that, but we need to be much more resilient still.

And so coming back from those discussions, the big lesson was, really, don’t make the inflation problem worse by spending too much and make sure that we’re building those buffers and making our economy much more resilient because the global storm clouds are gathering again.

LEVINGSTON:

Jim Chalmers, I know you’ve got to go – just a couple of quick questions to finish. And, look, just rule out sleep for the next twenty‑four hours ahead of your Budget. Just going back to that term you used – “re‑profiling” – is the Queensland Premier, Annastacia Palaszczuk, going to be disappointed on any fronts with this Budget, whether it’s in terms of Queensland infrastructure projects, because of re‑profiling?

CHALMERS:

I don’t think so. No, I don’t think so. There’ll be big investments in infrastructure in Queensland, very proudly and, indeed, big investments in infrastructure around the country. We’ve been working closely with state governments to make sure that this infrastructure program rolls out. I think Queenslanders will be pleased with the Budget that we hand down.

LEVINGSTON:

What’s the current national debt?

CHALMERS:

It’s heading up towards a trillion dollars. It crosses over a trillion dollars before long - that’s gross debt - and what we hope to do in the Budget tomorrow night is to show that by taking a more responsible approach to some of these increases in revenue we’re getting from our commodity prices being high, we hope to take a bit of a slice out of that debt in the near‑term, but it will still be very high. It will still hit a trillion dollars before long and that’s because we’ve got these big spending pressures in the Budget. We’ve got the Budget in what’s called a “structural deficit”, which is another kind of jargon term for – some of the spending that’s baked into the Budget means that we’re in deficit for the rest of the decade and so, we’ve got to take that seriously too.

LEVINGSTON:

I found myself in the unusual scenario the other day where I recorded a Budget podcast with David Speers and Alan Kohler. I contributed the voice of the people, Jim Chalmers, to that conversation. But in that chat Alan Kohler, who subscribes to modern monetary theory, says don’t worry about debt and deficits. He says that you, Jim Chalmers, should stop talking about it. What do you reckon?

CHALMERS:

Yes, I really like Alan and respect him a lot, listen to him a lot, read all his stuff but what worries me about debt at this level is that the fastest growing area of spending in the Budget is actually the borrowing costs, the interest rates, on that trillion dollars of debt and I would rather those billions of dollars being invested in other ways than having to service this debt, so I do worry about the debt. I know that Alan’s got a slightly different view but I think it does matter. But we need to be realistic about it. You can’t just click your fingers and make a trillion dollars of debt disappear but you do need to be careful about it, because the higher the debt, the more it costs to service it and that’s, I think, a relevant consideration when you put the finishing touches on a Budget.

LEVINGSTON:

Speaking of finishing, this interview is about to finish. But let the people of Brisbane know what’s your wardrobe choice tomorrow night, Jim Chalmers? Have you got a Budget night tie? It’s your first one. This is historic. Have you got any lucky socks? I don’t know, are your kids choosing something for you?

CHALMERS:

Well, on the tie front I think I haven’t decided yet, but something without a mark on it, number one.

LEVINGSTON:

Is it going to be red?

CHALMERS:

Good chance. Good chance it will be maroon I reckon but I haven’t decided yet - all my favourite ties are maroon. But on the sock front, I can report I’ve promised my five‑year‑old, Annabel that I’ll wear the socks that she gave me for Father’s Day which say, “best dad in the galaxy”, so that part of the wardrobe choice is locked down.

LEVINGSTON:

Busy time for you, Treasurer. Thanks so much.

CHALMERS:

Appreciate your time, Bec. All the best.