CANBERRA, ACT, March 17 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: Reserve Bank interest rate announcement, ACCC action over fuel pricing, petrol rationing
Jim Chalmers:
As you know, the Reserve Bank decided to increase interest rates to 4.1percent today. You can see in the statement that it was a close vote and it was a close call, and I think that reflects the uncertainty that we're seeing in the global economy, and the statement refers to risks in both directions in that regard.
This is obviously not the decision that lots of Australians were hoping for. It's not a surprising decision, but that doesn't make it any easier for millions of Australians with a mortgage. We've got an inflation challenge in our economy already, and developments in the Middle East are making that worse. The impacts of what we're seeing in that part of the world are already substantial, but we don't know yet how enduring those very substantial economic pressures will be. It depends very heavily on how long the conflict in the Middle East continues for.
At a time of great uncertainty, this will put additional pressure on people. We're not just acknowledging that, we're not just acknowledging those pressures; we're acting on them as well. We're working very hard on the issues in fuel markets and questions of resilience more broadly. We're cutting taxes and rolling out cost‑of‑living help to take some of the pressure off people where we can. We've strengthened the budget over the course of the last 3 and a half years, and there will be more of that in May.
These global risks are very substantial. We're not immune from them, but we are better placed than most to deal with them. And I'll have a bit more to say about that in the main pre‑Budget speech that I'm giving on Thursday in Melbourne.
But the main point from this decision is that we know we had an inflation challenge already in our economy. Developments in the Middle East are already making that challenge harder rather than easier. And the Reserve Bank board has taken this decision independently today to increase interest rates in the face of those pressures, but also this very substantial global economic volatility and uncertainty.
I wanted to just say something about the ACCC meeting today, and then happy to take your questions. The suppliers and the retailers have been hauled in today by the ACCC to explain themselves, and that's a good thing. I spoke to the Chair of the ACCC this afternoon after the meeting. They have, or they are about to issue their own statement about the discussions, and so I would refer you to that statement for a detailed summary of the discussions that Gina led with the suppliers and the retailers and the automotive groups as well.
The ACCC has the powers that they need to crack down on any dodgy behaviour in these markets. We've increased surveillance. We will be increasing penalties in the legislation that I look to introduce to the parliament next week, once we get the agreement of the states. We're also making it easier to coordinate fuel for regional communities in particular.
Our message, once again, is very simple - suppliers and retailers must not treat motorists as mugs. They are on notice. If they do the wrong thing, the ACCC will throw the book at them.
Another important part of the conversations today with the ACCC was around supply, which is obviously a big focus of the government and the government's work as well. There was around the table, I'm told, confidence that ships are enroute and ships are arriving, that the supply is there, and there's a lot of work going into coordinating efforts in the regions in particular.
It's also really important that the big players in the fuel markets don't treat this as a chance to mess with the independents who play a really important role in the bush. And so there's effort here - whether it's the ACCC with the government's support - to make sure that the major suppliers can coordinate their efforts for the time being while there are these pressures, particularly in regional areas, but we want to make sure that they don't see that as an opportunity to shut out the smaller players or the independents. Those smaller players and independents play a crucial role, particularly in the regions, but not just in the regions. And we want to make sure that they are treated fairly as we go about this important work as well.
And with that, happy to take a couple of questions. We'll start with Clare, then Katina and then Greenie.
Journalist:
Treasurer, diesel has cracked the $3 mark in your home state. The average national mortgage has just gone up about $100 a month. There're warnings already of the fuel costs being passed on through things like groceries. Did the government do enough to give Australia a chance of absorbing the kinds of shocks we're seeing coming as a result of the war in the Middle East? Do you acknowledge maybe more could have been done? And what's your message to people who are looking at these cost‑of‑living pressures, knowing there's a tough Budget coming down the line and holding out hope for help?
Chalmers:
Well, there's a lot in that, so let me try and step through some of the issues in your question. First of all, I think the average outstanding mortgage is 460 grand, which is - this decision means an extra $73 a month, I think. But I accept that a lot of people have got bigger mortgages than that. For every $500,000 that people owe, it means about $79 a month. And so that is substantial additional pressure on household budgets, which are already stretched. I acknowledge that.
What we've tried to do as a government and what we've done as a government really over the course of the last 3 and a half years is not just to recognise these pressures that people are under but to act on them, to respond to them in a number of different ways, whether it's cheaper medicines or more bulk billing or student debt relief or, most particularly, the tax cuts which, when you add the 3 tax cuts together, they're about 50 bucks a week for the average worker. We've tried to do what we can to anticipate and respond to these cost‑of‑living pressures, which are real.
You know, we don't pretend for one moment that the pressures on families and pensioners around the kitchen table, that those pressures aren't real. They are. We know that. But more than acknowledge that, we're acting on it. And so we say to Australians around the country who are hearing about this news of an interest rate increase, who are dealing with some of these global pressures at the petrol bowser, that we know that those pressures are real and that we will do what we responsibly can to respond to them. That's been the approach we've taken over the first 3 and a half years, and it will be the approach that we continue to take.
Journalist:
Thanks, Treasurer. We're about to see the Senate committee report on capital gains tax. How closely will you be reading that to see where the Greens are starting from in terms of negotiating with them over your proposals that will be in the Budget?
Chalmers:
We expect to see that report, as you do. And, you know, this parliamentary committee has been conducted in the usual pretty public way, and so I think we can anticipate some of the conclusions that the other parties will reach based on some of the evidence that was provided to the committee. No doubt, the committee has made a range of findings. We'll consider those in the usual way as part of our broader work. We try and engage in the most respectful way that we can.
But these decisions ultimately get taken by the cabinet, not by parliamentary committees. And when it comes to budgets, they're usually finalised closer to May than the middle of March. And so obviously I'll be briefed on the contents of the parliamentary committee's report. It will, no doubt, identify some issues which are familiar to us, including some of the facts which I've been presenting in the tax expenditures and insights statement that I substantially revamped and upgraded. But I'll read it. Of course I will. I've said that the government's policies haven't changed in this area. Any further steps will be a matter for the cabinet.
We'll go to Andrew, then Anna and come back here, then we'll go up the back, and then we'll come to Matthew. I'm conscious that we've got the governor up at 3:30, so I'll try and be swifter.
Journalist:
Treasurer, the markets had largely factored in a rate hike this month before the war. They're already factoring in a rate hike in the May meeting. What cost‑of‑living measures are you now contemplating in the Budget, given that fuel excise cuts have been ruled out? And what about government spending? How serious are you looking at that?
Chalmers:
Well, a couple of things about that. Well, I mean, first of all, I think I said on Andrew Clennell's show on Sunday, I think the expectations of a rate hike at this meeting were about 1 in 10 before hostilities in the Middle East, and they became about 2 in 3, I think, from memory, in the lead‑up to the meeting. And, I mean, the banks made clear, and I've made clear that there are inflationary pressures already. The Middle East added to those pressures. And so Governor Bullock can talk through those things. But clearly the bank is responding to both and not just one or other - not just the pre‑Iran situation but the pre‑ and post‑Iran situation, including what's happening in petrol markets.
When it comes to cost‑of‑living relief, we're already rolling it out - tax cuts, cheaper medicines, more bulk billing, student debt relief, all of the things that you are familiar with. We've engineered a bit of a shift from those temporary cost‑of‑living measures to something more enduring and more permanent, including in the wages system. And so always we take into consideration the pressures on people, the economic circumstances and the fiscal circumstances. And that's the approach that we will continue to take.
Now, on government spending, you know, obviously, my opposite number will tell all kinds of lies about this in the course of the rest of the day. But I refer you to the statement. The statement, when it comes to government spending, says, 'Growth in private demand strengthened substantially more than was expected in mid‑2025,' and that in the statement is why they attribute the higher capacity pressures towards the end of last year. That's the way that I've described it as well. I'm going to get into this in some detail on Thursday at the Australian Business Economists because that's an important factor in these considerations and in the government's work. I've said - and I meant it when I said - there'll be more savings in the Budget in May.
Journalist:
Treasurer, what's your message to the Trump administration about the economic impacts of pursuing this war further? And will you have to change your Budget settings to set aside more for defence into the future, given the US is already calling on allies to provide more help?
Chalmers:
Yeah, again, a couple of elements of that. I mean, first of all, I'm not going to give free advice to the Trump administration on their conduct of this conflict.
Journalist:
You don't have any view on whether or not the economic impacts on key allies should be taken into consideration?
Chalmers:
Well, the economic impacts are substantial, not just on us but on other countries around the world. And the key thing that will determine just how tough those consequences are will be how long the war continues for. But I'm not going to personalise that as free advice for President Trump.
And now I've forgotten the other part of your question.
Journalist:
Are you going to have to increase defence spending, change the Budget settings? The US is already asking allies for more.
Chalmers:
Well, we're big and enthusiastic investors in defence. We've already quite significantly increased funding for defence. We keep that under more or less constant review. As your colleague next to you and others will know, and you'll know from covering this from a long period of time, there are always pressures to spend more in defence, and we take them seriously, particularly at a time when the global environment is so uncertain. I'm obviously not going to front‑run any of those discussions or any of those considerations that are led appropriately by Richard Marles and Paddy Conroy.
Journalist:
Treasurer -
Chalmers:
I almost missed you then.
Journalist:
Thank you, Treasurer. The ACCC has said today, after the meeting, it's urging petrol retailers to be open and honest about it. Can you confirm at this point that no actions have been taken so far in relation to price gouging? Have you taken any [indistinct]?
Chalmers:
Well, these are relatively new developments. We're only talking about the course of the last fortnight or so. And when it comes to the new penalties - the doubling to $100million - we have to legislate that. And before we legislate it, we've got to consult the states. And so we're doing that as quickly as we can.
Under the old regime, there have been penalties issued. I think I've given the example before of the $16million fine that Mobil had to wear for misleading their customers. That's a bit of an indication of the sorts of powers and the magnitude of the sorts of fines that the ACCC is able to issue.
The other thing that we changed was we made it possible for the ACCC to issue on‑the‑spot fines. So some go through the court system, some are on‑the‑spot fines. There's a good example in Mobil's case of a fine from not that long ago - I think last month. But in terms of the new regime, we'll try and get that through the parliament as soon as we can.
Journalist:
Could any tax reform that becomes a fiscal drag on the economy help the RBA slow down inflation? And just following the ACCC meeting, is it now your judgment that there has been dodgy behaviour from petrol companies?
Chalmers:
First of all, my answer to that is conceptually, but that's not really the way that we've been coming at these questions around tax reform. The 3 key priorities in tax reform is, you know, fairness in intergenerational terms and for workers, number one; number 2, whether there's an affordable way to attract more investment in our economy; and, thirdly, simplification. Those have been the guiding principles that we've been working through. And, again, you know, we haven't changed any of our tax policies or made any decisions, and any changes to tax policy would be a matter for cabinet. But I've said on a number of occasions now, there's a willingness on my part to provide those options. That objective that you described - to try and take more money out of the economy - has not really been the thing that we've been focused on as we've been considering options on tax reform.
On the ACCC, I'm sort of reluctant to go much deeper into a meeting that I wasn't at. I've had that good conversation with Gina, who's doing a terrific job, by the way. I spoke to her before dawn the other day on some of these matters, and her team. I wanted to give a shoutout to the ACCC colleagues and particularly the Chair for the work that they're doing. And she will be able to run through that and issue a statement about that.
From my point of view, there have been concerning developments in prices, obviously. And the reason it's so important that they were called in to explain themselves to the ACCC today is because these price changes need to be justified. And if they're not justifiable, if they're not possible to be justified, then the ACCC has got the powers that they need to punish people for that. That's as the system should be. And that's why I think this discussion today that Gina led is so important.
Journalist:
Treasurer, you mentioned the legislation to double the penalties. That will obviously come into effect almost a month after this sort of crisis erupted. Are you perhaps willing to backdate that to the start of the conflict in a way that, you know, punishes people, as it's not just part of the cost of doing business. And during these periods, the commodities traders, the oil companies, the gas companies, they historically have made an absolute motza, not necessarily for doing anything wrong; just because that's the way the market works. Does this give you more cover or does it give you political coverage to say maybe they need to pay more tax in the future?
Chalmers:
I'm not seeking that kind of cover. On your - the first part of your question, I mean, we had already dramatically increased the penalties to 50million and given the ACCC the powers to issue those on‑the‑spot fines. So we've already taken some very substantial steps. And so it's not like there is no regime until the legislation comes in. And that's pretty swift - bringing legislation in that quickly. I'm actually obligated to consult the states for a much longer period, but I've asked them to come back much sooner so that we can get this moving much quicker, and a number of states have already responded. I appreciate that as well.
Now, also I wanted to kind of take the opportunity to remind people that, you know, the work we're doing with the ACCC, the work we're doing to get fuel into communities, the price surveillance, the penalties regime, you know, those are really important parts of what we're doing but not the only work that we're doing. On supply - and here I credit Minister Bowen and the other colleagues - you know, releasing 20percent of the MSO, relaxing the fuel standards, convening the National Coordination Mechanism, engaging with farmers and suppliers and the like, this is taking a lot of the government's time. And so it should. You know, this is a big, pressing, near‑term issue that we're dealing with, and we're coming at this really from a whole bunch of different perspectives, coordinating or efforts in the government, and that's important.
Journalist:
Speaking of things taking quite a long period of time, 2 and a half years ago, a parliamentary committee led by the late Peta Murphy produced the 'You win some, you lose more' report on gambling harm. Why is the government, when is the government going to respond to this very important report, doing that committee the courtesy of a response, plus the people of Australia and your own backbench? When?
Chalmers:
Well, we've done a lot on problem gambling - more than what a lot of people will acknowledge. But I also acknowledge that there's elements of that report that government continues to work through. I don't have a final date for you on that. I don't have - it's not something that I've been focused on every day. I think it's fair to say that most of us, if not all of us, miss Peta Murphy every day that she's not here, an extraordinary colleague and very much missed. And her work is important, and we respect the work that she did before she passed. We've done a lot of on problem gambling. We know that there are a lot of views about doing more, and that's the - but that hasn't been the main thing that I've been focused on in recent days. I think you'd understand that.
Journalist:
Treasurer, this morning the Deputy Prime Minister suggested in one breakfast TV interview, I think that petrol rationing longer term, was possible, then appeared to soften his comments on that shortly after. Is it the truth of this that if this war goes on long enough, and here you've expressed, petrol rationing will be necessary in this country?
Chalmers:
Well, I think Chris Bowen said it best this afternoon, but also my sense of what Richard said this morning - I didn't see all of it - is that that outcome is not something that we're anticipating. Now, obviously, there's a lot of volatility and unpredictability in how this plays out through the coming weeks and months. But that outcome is not something that we're anticipating, and that's something that Chris -
Journalist:
Nor could rule out?
Chalmers:
Well, I mean, as always, you monitor the situation, especially when things are as volatile and unpredictable as they are. But it's not an outcome that we're anticipating. In fact, if you think about the confidence that was expressed to the ACCC today at their meeting that they had, you know, the ships are enroute, ships are arriving, we've got very substantial stockpiles, we've released more into the system, we've relaxed the fuel standards. And so there is a level of confidence that we will avoid that situation that you are describing. And we're just being upfront in saying obviously when developments are as fast‑moving and as unpredictable as they have been over the course of the last couple of weeks, obviously we keep that - the situation under more or less constant review.
Now, on your final point that you made, Tim, in your question, really a big focus for us - all of us, but in my case, in terms of trying to land this Budget - is that we need to not assume that when hostilities end, whenever that is, that things can necessarily very quickly return to normal. We're talking about a strait which is being sea mined. We're talking about infrastructure that has been damaged or switched off and can't just easily be switched back on. So one of the things I encourage you to think about and write about and talk about - like we are - is we now know that the impact is very, very substantial on the global economy. How enduring that is, is really the key question now. It feeds into all of our assumptions and all of our forecasts about the economy and, indeed, the policy response as well. And that's why we've got a big focus on resilience at the same time as our focus on inflation and productivity, and obviously, the global uncertainty more broadly.
Journalist:
Treasurer, given that households are facing this dual struggle with higher interest rates and higher fuel rates - petrol rates, sorry, and that diesel has that flow‑on effect on the economy when it comes to transport, agriculture, all that, does that give more of an argument to lowering the fuel excise in the upcoming Budget?
Chalmers:
Thank you, and that reminds me that Andrew or someone asked about that - I didn't mean to skip over that lightly. We think there are other ways to help people with the cost of living. And we know that there are views about the fuel excise. It's not something that we have been considering, but we know that some people would like us to go down that path. Our job is to try and make the biggest positive difference we can to the pressures that people are under, recognising the fiscal constraints and trying to work out the best way through. And for us, we think the combination of cost‑of‑living help that we've got in the system is the right one - tax cuts, all the work we're doing on wages, in addition to whether it's in the health system and the like. We've expressed a preference or a transition to that ongoing cost‑of‑living help rather than the temporary cost‑of‑living help.
And, again - a bit like Tim's question before - it's not something we're considering. We haven't changed our view. It's not on the list of things that I've been working up for the Budget or before the Budget. But there will always be a range of views about whether we should go down that path. We obviously keep it under more or less constant review, respecting the views that are put to us.
And you've got a follow‑up, and then we'll finish.
Journalist:
So with the increase in the cost of diesel, that disproportionately affects farmers, people in the transport sector. If not a blanket fuel excise cut, is there space for a more targeted sort of relief for those communities, especially in regional Australia, who are feeling the brunt?
Chalmers:
Yeah, well, first of all, we do understand that some of these pressures are being felt disproportionately, including in regional areas. We haven't been contemplating the specific course of action that you have just described. There is an interaction between a fuel excise cut and how it flows through to heavy commercial vehicles, which we can't ignore as well. But, again, it hasn't been something that we've been working on.
Journalist:
I just want to double‑check something you said earlier, so the doubling of fines for petrol stations found to be gouging, that has to be legislated, and it's not been legislated yet. So why have you and the PM and Chris Bowen and other ministers been saying for the past week that this is something you've done?
Chalmers:
Because we are consulting with the states, and we will legislate it. And we've already increased the penalties to 50million and given the ACCC the powers to issue on‑the‑spot fines. And so we have changed our policy. This is something that we have done. We have to -
Journalist:
Will the fines be backdated if they are issued in the future?
Chalmers:
Well, it will be a matter for the legislation that I introduce when parliament resumes next week. Parliament is not sitting today, and there's an obligation on us - we have to consult every state and territory and get their agreement on matters like this. Some of them have been very swift. I have no doubt there'll be others that will come back to us soon as well. But this is fast‑moving. And hoping to introduce that legislation next week when the parliament returns. But it doesn't mean there's been no regime operating in the interim. In fact, there's been a much tougher regime operating in the interim because we put it in place.
And that reminds me, by the way, that when it comes to these questions of fuel security, when we updated the arrangements towards the end of last year - 3 or 4months ago - to make our fuel more secure and to take the necessary steps to do that, the Coalition voted against it. Thanks very much.
Disclaimer: Curated by HT Syndication.
