Author
- Michelle Grattan
Professorial Fellow, University of Canberra
The mid-year budget update would normally be big news. But this week it's been entirely overshadowed by the devastating Bondi terror attack .
To discuss the government's response to that deadly attack, as well as the outlook for Australia's economy in 2026 and beyond, for our last podcast of the year we're joined by Treasurer Jim Chalmers.
On the Bondi terror attack, Chalmers acknowledges the federal government needs to do more.
Even though the government has taken a number of steps to combat this hateful antisemitism, we know that there's more work to do. There's more to do with the envoy, Jillian Segal. There's work to do to make sure that we are cracking down on antisemitism every way that we can. And we need to do that at the same time as we take other meaningful steps in areas like tougher gun laws.
And the point that I've been trying to make through the course of the week this is not an either/or: dealing with antisemitism, tightening our gun laws. We have a responsibility to do both simultaneously. And that's the approach that we're taking.
On the budget update, Chalmers says rising inflation is one of "the three big challenges" for Australia's economy, along with the need to boost productivity and manage global economic uncertainty.
He says the government has been conscious of "not making this inflation challenge worse", which could add pressure on the Reserve Bank to raise interest rates.
The issue with inflation is not government spending. That's been made clear by the Reserve Bank [… which] has not mentioned public spending as a factor in their decisions for some time. And if the government's budget is the key determinant of interest rate decisions, we've had three rate cuts this year, including two since the most recent budget […] What we see in [today's] budget numbers is really progress on the first six updates we did: we're always doing savings, we're always trying to get things in much better nick.
On the rise of illegal cigarettes and plummeting tobacco excise revenue flowing into the budget, Chalmers dismisses calls to reduce that tax. Instead, he foreshadows the federal government will support greater crackdowns on organised crime and the illegal tobacco market.
We see this as a very serious challenge. We don't dismiss or diminish this challenge from a law and order point of view, or from a budgetary point of view. We've provided an extra A$350 million for compliance and policing. There's actually been some quite effective raids done in recent times; very encouraging to see the authorities doing some great work.
I don't believe that if we unwound the last couple of excise changes that all of a sudden the difference between a legal packet of cigarettes and an illegal packet of cigarettes would be eliminated. And I don't believe that would stop the crooks from being part of this industry. We see British American Tobacco and our opponents and others calling for a tobacco tax cut. I don't think that's the right way to go about it.
[…] What we hope will be effective is all of these extra resources being poured into compliance. I'm also prepared to say that […] we have been discussing next steps in this area to crack down on this illegal tobacco, which poses most importantly a risk to public health, but also a risk to the budget […] And the minister for home affairs, Tony Burke, we hope will have more to say about this before long.
Looking ahead, Chalmers says ten priority areas from August's economic reform roundtable will help shape next year's federal budget.
Having just handed down the mid-year update an hour or two ago, I'm sort of reluctant to get too much into the detail of [next year's] budget. But the roundtable will be one of the big influences on the budget […] We set ten directions out of the roundtable [… and] those directions will be really the main influence on the reform part of the budget in May.
He disputes that progress since the roundtable has been too slow, nominating reforms to Australian environmental laws , releasing a new artificial intelligence plan , reforming the construction code and other areas where changes have been made.
Chalmers also talks up Australia's opportunities in artificial intelligence, if we can get the balance right between ramping up AI and its potential risks - including for people's jobs.
The AI revolution will be game changing, absolutely game changing. And what we've seen in recent data in our own economy is we've had now four consecutive quarters of productivity growth, at the same time as we've this enormous ramp up in investment in technology.
A big part of my day each day is dealing with interest which is being shown around the world in Australia as a place to build AI infrastructure, for example data centres. And so I think it's an enormous opportunity for Australia […] The task for us is to maximise the upside of it, and to minimise the risks to people, including in the labour market.
Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
