JIM CHALMERS MP
TREASURER 

SENATOR THE HON KATY GALLAGHER
MINISTER FINANCE
MINISTER FOR WOMEN
MINISTER FOR THE PUBLIC SERVICE
MINISTER FOR GOVERNMENT SERVICES

E&OE TRANSCRIPT
PRESS CONFERENCE
SYDNEY
MONDAY, 7 APRIL 2025

SUBJECTS: Pre-election Economic and Fiscal Outlook 2025; Treasury Tariff Modelling; Work from Home; Public Service; Super Cyber Attack; Global Economic Outlook; OECD Energy Inflation.

JIM CHALMERS, TREASURER: We've got three main jobs today, first of all, to make some comments on market movements today. Also to speak about the Treasury modelling of the American decision on tariffs, which we've released earlier today. And also to speak to the Pre-election Economic and Fiscal Outlook, which the Treasury released late this morning as well.
 
In uncertain times, the Australian economy is well placed because of the progress the Australians have made together these past three years. These escalating trade tensions are casting a dark shadow over the global economy. We are not uniquely impacted by these tariffs, but we are uniquely placed and we are well prepared as well.
 
We are seeing very substantial volatility now in global stock markets and in our own markets as well. Today, in Australia, the market lost about 4 per cent of value on Friday. The US about 6 per cent. Asian markets have fallen quite dramatically today because they were closed for longer. Hong Kong was down about 9 per cent when I last looked. We're also seeing this volatility in markets for gold, as people look for safe assets, we're seeing it in the tumbling oil price as well, and we're seeing it in our own economy too.
 
When it comes to the Australian dollar bouncing around either side of 60 cents. That is largely a reflection of people's concerns about the Chinese economy, but it also reflects the fact that markets are now expecting around four interest rate cuts in Australia this calendar year.
 
There's even a more than even money expectation in the markets, more than 50 per cent expectation in the markets that the next Reserve Bank interest rate cut in May might be as big as 50 basis points, and so the Australian dollar is reflecting that those concerns about China, but also the very different expectations now about the future trajectory of interest rates here in Australia. I don't predict or pre-empt those decisions, but the market is certainly now expecting multiple interest rate cuts over the course of the year, beginning in May.
 
What we're seeing here is the impact of a series of bad decisions taken about tariffs, and the whole world is trying to get their head around the impacts on their own economies and the global economy as well. For Australia, there's really three channels that we are monitoring very closely. The overall impact on the global economy and global demand is obviously troubling.
 
The direct impact of these tariffs, we believe to be manageable in the Australian economy.
 
Also, thirdly, the difference between the 10 per cent levied on Australian exports into the US versus some higher tariffs being imposed by other countries as well. So you can see all of these considerations reflected in the Treasury modelling that we have released around an hour or two age. This modelling has been briefed to the opposition as well, consistent with the right protocols in this caretaker period.
 
What our modelling shows is that we expect there to be big hits to American growth and Chinese growth and a spike in American inflation as well. We expect more manageable impacts on the Australian economy, but we still do expect Australian GDP to take a hit, and we expect there to be an impact on prices here as well.
 
There are some pretty substantial caveats around the Treasury modelling that's been released today. For example, forecasting is difficult enough in more stable times, but especially so in uncertain times. Clearly, a series of decisions are still to be taken around the world when it comes to how countries may or may not retaliate to the decisions taken and announced by President Trump in the last week or so.
 
There is an element of uncertainty around the modelling, and there's an element of uncertainty, of course, on the economic impacts more broadly. The Treasury has now updated this modelling three times, and obviously, as the situation evolves, the Treasury under a government of either political persuasion will continue to monitor and analyse and model and forecast the economy the best that they can in these very volatile and uncertain times.
 
Last night, I spoke to the UK Chancellor of the Exchequer, Rachel Reeves, about developments in the global economy, the considerations that the UK is going through. I was able to brief her on our expectations here in Australia and the response that Prime Minister Albanese announced in the immediate aftermath of the American decision being made public last week.
 
I also spoke this morning, before the market opened, with Governor Michele Bullock to compare notes on their expectations, on what happens now in our economy. We're obviously seeing these very substantial falls in the share market, but we're also comparing notes when it comes to the impact on the real economy. Obviously, both of us, her in her independent way and the Government, are working out how to ensure that we are best calibrated for this economic uncertainty that we're all anticipating ahead.
 
As I've said before, Australia is really well placed and we are well prepared to deal with this global economic uncertainty. A big reason we are so well placed and well prepared is because of the progress that Australians have made together over the course of the past three years.
 
We've got inflation down substantially. Real wages are up. Unemployment is low. We've got the debt down. Interest rates have started to come down already, and growth is rebounding solidly in our economy. And when we came to office, inflation was multiples of what it is now, and it was rising fast. When we came to office, there were only deficits, very big deficits in the forward estimates. There was a trillion dollars of debt, much earlier than is now anticipated. So Australia has made a lot of progress together over the course of the last three years, but we know that there's more work to do, because people are still under pressure, and also because of all of this global economic uncertainty.
 
So what we're seeing around the world really vindicates and validates the strategy that we have taken to fight inflation without ignoring the risks to growth, and that strategy is more important than ever now that we are seeing this very substantial volatility in the world
 
Before I throw to Katy to talk about the fiscal story, I also wanted to point out that when It comes to this progress that we have made together, the OECD overnight released some analysis which showed that Australia has the lowest energy inflation in the developed world over the last year.
 
They ranked all of the OECD nations, and Australia has the best outcomes for energy inflation in all of the OECD, and that is part of the progress that we've been able to make on inflation. It's also a reflection of the cost-of-living help that we are providing. So I'll ask Katy to go through the fiscal story. I want to make one or two extra comments and then happy to throw it over to you.
 
KATY GALLAGHER, MINISTER FOR FINANCE: Thanks very much, Jim, and thanks for coming. So PEFO has been released today, and that shows that independent analysis by Treasury and finance has reaffirmed the integrity of the numbers that we handed down in the March budget on the 25th of March.
 
That shows the biggest nominal fiscal improvement in a single term ever. An about $207 billion improvement shows that the budget position is better today and every year from what we inherited when we came to government three years ago.
 
That we were able to turn those two large liberal deficits into two substantial Labor surpluses. We paid down liberal debt. Gross debt $177 billion lower in 24-25 than what we inherited.
 
This has meant we've avoided about $60 billion in interest payments on that over the next decade, gross debt will peak at 37 per cent of GDP, which is about 7.9 per cent lower than the 2022 PEFO was forecasting. We've done this through spending restraint, through returning upward revisions to revenue to the budget to repair those fiscal buffers, identifying $95 billion in savings and addressing those structural spending pressures in two key areas, in the NDIS and in aged care.
 
That approach has meant that our budget, shown by PEFO, is in much better shape than the budget that we inherited, and in much better shape to deal with some of the uncertainty and volatility that Jim just took us through.
 
We inherited a budget that was weighed down by debt and waste and rorts. We've cleaned that up. We cleaned that up, one because it was the right thing to do, and two, because we needed to find room for cost-of-living help for Australian households when inflation was higher than we would have liked. We were able to provide those investments into Medicare, medicines, energy bill rebates, into help in education and investments in housing, and we did that again, because these areas have been left unaddressed for too long. They were under pressure, and we've managed to find room in the budget to do that whilst cleaning up that mess and doing that substantial turnaround work that I just took you through.
 
Whilst we've been doing that, the Opposition has been saying no to pretty much everything they've said no to all of that cost-of-living help. Today we've seen their policy shambles play out in real time. If could just make a couple of comments on the shambles that is their public service policy and their work from home policy.
 
So after campaigning for years on cuts to the public service, cutting 41,000 jobs, including mentioning it in the budget reply just a couple of weeks ago, Peter Dutton is now saying he didn't really mean it on working from home when he said workers had to return to the office five days a week. Apparently he didn't really mean that either.
 
He tells us that 41,000 jobs will be cut by natural attrition, but frontline services will be protected. The reality is, where those high turnover departments are, where we see turnover in public service, they're in frontline public service agencies. So it's simply not believable.
 
Last week, he wanted to abolish the health and education departments. Then he wanted working from home, just restricted or ban on that in Canberra. And then he told us he was going to copy John Howard in his approach to the public service, which was again cutting 1000s of jobs. He's also said that they were going to save $7 billion a year in expenditure on the public service. And depending on what policy you believe and what day that he speaks to it, that now presents him with a very significant fiscal challenge if we are to believe the policy you've spoken about today. Thank you.
 
CHALMERS: The global risks are real, but we are in good shape in Australia, and we are in good stead because of the progress that we've made in the budget and the progress that Australians have made together in the economy.
 
I invite you to compare and contrast the methodical and considered way that we've managed the budget and the economy over the course of the last three years with what we've seen from Peter Dutton and the Coalition today.
 
The Peter Dutton Coalition is an absolute bin fire of cuts and chaos which would make Australians worse off. There could not be a worse time to risk wages and tax cuts and secret cuts in a world which is this uncertain.
 
Peter Dutton represents an unacceptable risk to our economy and to household budgets at the same time. There couldn't be a worse time for Peter Dutton's lower wages and higher taxes and secret cuts to pay for nuclear reactors in uncertain times like these.
 
Labor is providing cost-of-living help. We are growing wages, we are cutting income taxes, we are strengthening Medicare, we are making our economy more resilient, and we are building Australia's future.
 
Whether it's the modelling that's released today, the Pre-election Outlook released today, or all of this global volatility that we are seeing in markets, the choice of this election is now more important than ever. Labor helping with the cost of living and making our economy more resilient. Or Peter Dutton, whose cuts and chaos would make Australians worse off in uncertain times.
 
Happy to take some questions.
 
JOURNALIST: APRA has written to super funds asking for their rectification plans for the cyber breach. Do you believe that members should be compensated for the breach, and how can that be done in a way that doesn't disadvantage other members by paying for members funds?
 
CHALMERS: First of all, we've done a lot of work as a government and the relevant agencies, including the National Office of Cyber Security, are coordinating engagement across the government, including the regulators, and with industry and stakeholders to provide advice on this significant cyber event.
 
Once again, we encourage super fund members to check their accounts and to be vigilant around potential fraud, and obviously contact their funds if they have concerns. APRA and ASIC are engaging with all of the potentially impacted super funds to support safe outcomes for members. On Friday, we convened the Council of Financial Regulators agencies to get an update on their ongoing response to this incident as well. That Council of Financial Regulators is working around the clock with the impacted funds and the relevant authorities in response to the incident, and that's all about protecting fund members and improving security measures. We encourage all impacted super funds to continue to work with government agencies to assist in responding to this incident. We are not currently contemplating some of the steps that you have mentioned in your question, but we will do what is necessary to make sure that super funds are safe in the first instance. That means making sure that the National Office of Cyber Security is co-ordinating that work, working closely with the funds and with the regulators as well, and that's our focus.
 
JOURNALIST: There will be a few worried voters out there whose superannuation might have taken a hit over the last 24 hours. What's your message to them about what the next four years of Donald Trump will mean for their household savings, and what's the government doing to restore some of the confidence into the market.
 
CHALMERS: I can assure people that in a world of volatility and uncertainty, Australia is better placed and better prepared than our peers.
 
Everyone with a super fund, everyone with shares, I think probably every Australian, is seeing what's happening on global share markets and in our own share market with a degree of trepidation about all of this uncertainty.
 
I say to them that the work that we have done together over the course of the last three years, strengthening our economy, getting inflation down, helping with the cost of living, repairing the budget. All of these things are our best defence against this global uncertainty. One of the big pressures on the budget that we released not that long ago was these escalating trade tensions, which do cast a dark shadow over the global economy and we won't be immune from that. But we are better placed, we are better prepared, and Australians should take comfort from that.
 
JOURNALIST: Treasurer this Treasury modelling you mentioned that was released today, just for clarity, is that modelling a worst case scenario, best case scenario, or is it modelling, for want of a better term in the middle, the median?
 
CHALMERS: So this is the Treasury's best estimate of the impacts. It's effectively the central case as they consider it. But they acknowledge, and I've acknowledged today, that there is more than the usual amount of uncertainty and volatility when it comes to forecasting economic outcomes.
 
This is the third update of this modelling. No doubt there will be more updates under a government of either political persuasion. But what this represents is the Treasury's best efforts to get a handle on the impact on growth in the US, in China and in Australia. The Treasury expects the impact on the American economy and the Chinese economy to be significant. They do expect a substantial spike in prices in the US, and they expect impacts on the Australian economy, though a bit more modest and a bit more manageable than what we're seeing in other countries.
 
Now we've released this modelling publicly, and we've ensured that the Opposition has been briefed on it, because we want to work together with the people of Australia to understand the risks here, so that people can understand what's going on, what our expectations are, and how we are responding.
 
We're responding with cost-of-living help and lower income taxes, a more resilient economy, more diverse export offering, more engagement with the world. It's more important than ever, the work that we've been doing together to engage in our own region, for example. All of these things are our best defence against this global economic volatility.
 
JOURNALIST: Treasurer, what can the government do while in caretaker mode to soften the pain? Are you considering ideas like stimulus measures, for instance?
 
CHALMERS: One of the things that we are proudest of is in all of our four budgets we have been able to anticipate an element of global economic uncertainty.
 
Now, of course, that uncertainty is accelerating now, the world is becoming an even more volatile place. But what we've been able to do in each of our budgets is to provide cost-of-living help, to rebuild wages and incomes, and to make sure that we're making our economy more resilient.
 
The Future Made in Australia agenda is about making our economy more resilient. We have been anticipating these difficult global conditions, we have been positioning the budget and the economy the best we can to make sure that we make the best of a bad situation. Now I'm realistic about the impacts of these escalating trade tensions on the global economy, but I'm quite optimistic about Australia's capacity to make the best of a bad situation. That’s because of the progress that we've made to here, it's about the plan that we have from here, and it also sharpens the choice in the election.
 
Peter Dutton does pose an unacceptable risk to household budgets and to the Australian economy more broadly. We've seen that with this bin fire of cuts and chaos earlier today, but not just earlier today. So this would be the worst time to risk a change of government, to a Coalition government, which would make wages lower, taxes higher, and who has secret cuts to pay for nuclear reactors.
 
JOURNALIST: So the government's just going to weather the storm. Is that the current position?
 
CHALMERS: We announced in response to the tariff decision taken by President Trump, a series of additional steps that we would take to help our businesses find new markets, to strengthen our anti-dumping regime, to encourage Australians to Buy Australian, to open up an economic resilience stream in the National Reconstruction Fund, to take steps towards a strategic reserve for critical minerals. These are the additional steps that we announced last week. But overall, our strategy for three years now has been to make our economy more resilient. That's more important now than ever.
 
JOURNALIST: Just back on super could I ask why you're not contemplating compensation? And if it's because it's the super funds to blame and not a lack of government oversight, should trustees of the funds like unions and employer groups pay to top up accounts?
 
CHALMERS: First of all, don't read too much into my answer before, which was to say that our focus right now is working with the authorities and with the regulators. That's our focus.
 
There are usual arrangements that apply where people have got adverse outcomes in the financial system. But really, I guess the point I'm trying to impress on you Paul is that our focus in the last few days has been the National Office of Cyber Security co-ordinating the response, it's been talking with the members of the Council of Financial Regulators, it's about encouraging people to be vigilant with their balances and to raise any concerns that they have with their funds. They're our focus. Some of these other considerations will be considered in due course.
 
JOURNALIST: Sort of related to my colleague's question and noting what you and the government did after the tariff announcement, with the Wall Street crash and the dollar down, and a lot of forecasts pointing to global recession if that were to happen, and in that case, how confident are you that Australia can avoid going into recession? How could the country avoid that scenario?
 
CHALMERS: Obviously we take seriously the warnings from economists around the world of the risk of a global recession. We expect, and the Treasury expects, the implications for growth and inflation in the US and elsewhere to be very substantial. This is one of the many reasons that we describe the tariff decision to be ill considered and unwarranted. The damage being done by that tariff decision is now very clear for all to see.
 
Now you can see in the forecasts in the Pre-election Outlook, that our Treasury is not expecting the Australian economy to go backwards. In fact, what we are forecasting, or what they are forecasting in our economy, is for growth to continue to gather pace. But it acknowledges that there are now much more substantial risks to that output. So we expect the Australian economy to continue to grow in welcome and encouraging ways but the risks are obvious and they are substantial, and they're laid out in the PEFO document too.
 
JOURNALIST: Minister Gallagher. Minister, the Commonwealth has obviously unveiled a new Convention Centre in Canberra. Canberrans have felt neglected over the last few decades, but they shook up politics in 2022 in the Territory. Should this be seen as an indication that getting independents into position actually gets results?
 
GALLAGHER: I don't accept that. I think that’s an indication that two Labor governments work together to deliver for the people of the ACT and it helps to have a Canberran sitting around the Cabinet table making sure we get a fair deal, and we've done what we can. The PM loves Canberra, lives there, prioritises it as the nation's capital, but this has all been about Labor governments working together.
 
CHALMERS: Thanks very much.

ENDS