Transcript - Radio Interview - ABC Radio National

E&OE Transcript
Radio Interview
ABC Radio National
THURSDAY, 5 JUNE 2025

SUBJECTS: National accounts, tariffs impact modelling, superannuation, Petroleum Resource Rent Tax.

SALLY SARA, HOST: ‘A decent outcome’, that's how the Federal Treasurer has described the modest growth over the first quarter of this year, with the economy growing by just 0.2 of a per cent. But with global volatility continuing, including escalating trade tensions, of course, and new US tariffs on steel and aluminium kicking in today, what could it all mean for Australia?

The Treasurer, Jim Chalmers, joined me a short time ago.

JIM CHALMERS, TREASURER: Thanks very much, Sally.

SARA: You've previously said that the Australian economy had turned a corner - looking at these GDP figures, was that premature?

CHALMERS: No, I don't believe so. There are some temporary factors in the March quarter, including natural disasters and a drop off in some of the public spending on big projects, particularly at the state level. But overwhelmingly, the Australian economic story is a very compelling one. The economy continues to grow, we've got inflation lower, real wages and income interest rates have started to come down, we've got the debt down in the budget.

Overwhelmingly, Australia's economy is performing relatively well compared with the rest of the world. Yes, that growth was weak and soft in the March quarter, but overall, we are well placed and well prepared to deal with all of this global economic uncertainty that's coming at us.

SARA: Are you confident that we'll see enough growth in this quarter to meet the RBA's growth forecast by the middle of the year?

CHALMERS: It remains to be seen. Certainly the growth in the March quarter was a bit weaker than what the forecasters were expecting. I think that's self-evident for the reasons that I've just run through. But even modest growth in these global circumstances is welcome. We do have a global economy which is characterised by uncertainty and volatility and unpredictability.

That combination that we have in Australia of unemployment in the low fours, inflation lower than two and a half, three years of continuous economic growth, no major advanced economy has been able to achieve that like Australia has. I remain optimistic about the future of our economy despite all of this global economic uncertainty.

SARA: But how does that play out around the kitchen table for many Australians when per head they've been in the situation previously and coming in again to being in a per capita recession?

CHALMERS: A couple of things about that; there were two quite good developments, two sets of good developments in the data that came out yesterday. The first one is that the private sector is stepping up as the public sector is taking a step back. All of the growth in our economy was private sector growth. That's welcome. But secondly, and more directly relevant to your question, is that there was more solid growth in the measure of living standards, which is the measure called real incomes per capita. That was up again in the quarter for the third consecutive quarter.

What that means is that real incomes were falling 1.7 per cent when we came to office. They now have been growing 1.7 per cent through the year to March. And that's because we've got inflation down, we've got that solid wages growth, we've got tax cuts rolling out and that's all central to our economic plan. Plus, we've got two interest rate cuts in the system now. Those March national accounts don't capture even the full impact of that first interest rate cut that we saw earlier in the year. But the fact that we've had two interest rate cuts now means billions of dollars extra flowing into our economy. It also means the market is expecting there to be more interest rate cuts throughout the course of the year and that would obviously provide some additional relief if that were to occur.

SARA: If we're talking about the economy, of course, need to talk about tariffs at the moment. Have you got any updated modelling from Treasury on the impact of increased US tariffs on steel and aluminium?

CHALMERS: Well, we've done three rounds of modelling and we're monitoring the situation closely now. As you know, there are developments from week to week when it comes to these tariff announcements and the escalating trade tensions around the world. We've made it really clear we don't want to see an escalation of tariffs. They are an act of economic self-harm. They are very damaging to the global economy, and we won't be immune from that, even though we're better placed and better prepared than most countries to deal with it.

So, these tariffs, they'll have an impact on our steelmakers, but our exporters are among the best in the world. We're confident that they can find good markets, good, reliable markets for wonderful Australian steel and aluminium.

SARA: When did you last get updated modelling from Treasury on this issue?

CHALMERS: I think I announced it at the time, it would have been seven or eight weeks ago. We do it every couple of months, typically to guide our engagement with American counterparts, like Minister Farrell has been doing in Europe with his American counterpart in recent days. We update that from time to time, typically when there's a new development. But there are new developments very frequently now, as you know, you follow this as closely as anyone. And so, we make sure that our thinking is well informed and the Treasury's got a role to play there.

SARA: You're listening to Radio National Breakfast. And you're hearing from the Federal Treasurer, Jim Chalmers. Treasurer, on the government's plans to increase the tax earnings in super accounts worth more than $3 million. Your new shadow counterpart is firmly opposed to the super tax plans and has all but ruled out any potential compromise that would leave you negotiating with the Greens. Does that mean that this is a take it or leave it deal with the Greens?

CHALMERS: First of all, on my opposite number, one day he said he wanted to have a discussion about it, the next day he said that he didn't. There's a lot of disunity in the Coalition over this. They seem to have different views amongst them and different views from day to day.

We've been very clear from the beginning we don't have the numbers in the Senate to pass our legislation on our own. We need to engage with the crossbench in particular in this instance, and I intend to do that. And I'll have discussions with the spokesperson from the Greens, Nick McKim, whose appointment was announced yesterday. I'll have discussions with him between now and the Parliament returning. But our intention, our preference is to legislate the plan that we announced almost two and a half years ago now.

SARA: Are you ruling out any concessions?

CHALMERS: Well, our intention and our preference would be to legislate what we announced. We've done years of consultation now. We released the legislation in 2023. We released the regulations in March of 2024. It's been on the Parliament's books for a long time now. And we'll engage respectfully with the crossbench, in this case with the Greens in the Senate to try and legislate the plan that we announced all those years ago.

SARA: On a separate issue. According to an ABC article published today, the Petroleum Resource Rent Tax, or PRRT, which you amended last year, is expected to raise around $4 billion less than the government forecast when it first announced a rework of the tax in 2023. Is this tax really failing to deliver adequately?

CHALMERS: I don't believe so. We will collect more tax sooner than if the old arrangements were left in place. The reforms that we put in place are an important way to raise billions of dollars to fund our efforts to strengthen Medicare and provide help with the cost of living and build Australia's future. When it comes to the forecasts of how much these reforms will raise and how much the PRRT will raise, it's not unusual for there to be revision and that's because it is based on expectations of production, but also on the oil price, which is especially volatile. It's one of the more volatile items in the budget when it comes to budget assumptions.

So, it's not unusual for those revenue expectations to bounce around. They're actually revised up in the most recent budget. And that just gives you a sense, I think, of the volatility of those forecasts when it comes to the oil price in particular.

SARA: Jim Chalmers, thank you for your time this morning.

CHALMERS: Appreciate it, Sally. All the best.

SARA: That's the Federal Treasurer there, Jim Chalmers.