Jim Chalmers has said Australians could receive more help with cost-of-living relief in the budget next May and confirmed the government is working up new policy measures to accelerate the transition to net-zero emissions.
In an end-of-year interview with Guardian Australia following the release this week of the mid-year budget update, the treasurer said the government would consider further interventions to help households between now and the May budget as long as measures didn’t fuel inflationary pressure, which has been moderating.
“People are still under pressure,” Chalmers said. “It won’t just get to January 1 and all of a sudden all that pressure people feel will just disappear unfortunately – if I could click my fingers and make it disappear I would.”
The treasurer said that between now and next May, the government would “factor in the pressures that [people] are under, the budget position, and the economic circumstances … to see whether we will provide some further assistance, and some further relief”.
As well as potential measures to ease the squeeze, Chalmers said the government was working up “options to consider in the budget context” to ensure Australia can develop new low-emissions export industries and attract capital to invest in the net-zero transition at a time when the United States and the United Kingdom are offering generous incentives.
“We’re doing a heap of work,” the treasurer said. “My role in this is to make sure, not just that we can attract the capital that we need, but that we can absorb it and deploy it, and that means making sure we’ve got the human capital right, that’s a big concern, and we’ve got the regulatory piece right – the planning and approvals.”
Chalmers acknowledged the United Nations-led climate talks in Dubai had ended this week with a deal that for the first time called on all nations to transition away from fossil fuels to avert the worst effects of the climate crisis.
Asked whether voters in his home state of Queensland were ready to accept that Australia’s future lay in clean energy and that the age of fossil fuels would end, the treasurer said: “I think people understand that the source of our energy is going to change over time – I don’t think that’s a revelation to people.
“What Cop28 recognised, I think, in a welcome way, is that the world has got to manage this transformation … and I don’t think that will come as a surprise necessarily to resource communities.”
He said the government wanted to engage in a “placed-based” transition giving people the assurance “there are big industrial economic opportunities in some of these really great towns around Australia”.
‘Of course I take responsibility’
Opinion polls suggest voters have become increasingly frustrated with the Albanese government for not taking enough action to ease cost-of-living pressure despite a range of interventions on childcare, pharmacy and energy costs.
The final Guardian Essential poll for 2023 showed voters are irritated with a lack of action on energy prices (77% of respondents said more needs to be done), housing affordability (76%), grocery prices (76%) and wages (61%).
Chalmers acknowledged voters were looking for more from the government. “I understand that people would always like more help. I get that. I understand that. But I also think people understand that when it comes to inflation in the economy, the government can’t be part of the problem, it has got to be part of the solution.”
Asked whether the current voter frustration reflected a failure of substance or salesmanship on the part of the government, and whether or not he accepted responsibility the backlash, Chalmers said: “I think we can always communicate more clearly, our options and our decisions.
“And so, to the extent that the progress we are making is not being felt, of course I take responsibility for that,” the treasurer said. “I take responsibility for when we can communicate better and I take responsibility for the decisions we have taken in two budgets and the budget update.”
Chalmers said he had tried not to talk down to the Australian people, but instead “give people a sense of the things that governments grapple with”.
“I’ve tried to convey to people here are the trade-offs, and one of the trade-offs right now is to make sure that when we provide help to people, we are not putting fuel on the inflationary fire.
“I know that’s not always broadly understood and I don’t pretend otherwise. But we are trying to give people a sense of the sorts of challenges and choices we are grappling with in the budget and in the economy.”
He said the current disaffection was “a reflection of the pressure, legitimate pressure, that people are under”.
This week’s budget update shows households are being squeezed by high prices at the same time as the tax take is increasing. Chalmers said the latest budget update had shone a light on bracket creep – a phenomenon where income growth means people end up paying higher average rates of tax.
“Bracket creep is partly about more people earning more and that’s a good thing, and that’s what has refocussed people’s minds on the tax cuts that come in,” the treasurer said.
“I do believe that returning bracket creep is a worthy aspiration when governments can afford to do it.” The controversial stage-three tax cuts package is legislated to take effect in July 2024.
Chalmers is asked frequently whether or not he intends to overhaul the package in order to skew the return of bracket creep towards workers on low and middle incomes rather than the highest earners.
The treasurer offered a formulaic response about the government’s deliberations to date: “We haven’t changed our position.”
Asked to clarify whether that meant the government could change its position in the future, Chalmers repeated: “We haven’t changed our position.”
