Radio Interview with David Penberthy & Will Goodings - FIVEaa Breakfast - 15/05/2024

15 May 2024



Subjects: Federal Budget; Energy bill relief; Migration.

DAVID PENBERTHY, HOST: We're joined on the phone by Foreign Minister Penny Wong the morning after the Federal Budget.

Minister, good morning to you.

PENNY WONG, FOREIGN MINISTER: Good morning. Good morning to you and to your listeners.

DAVID PENBERTHY, HOST: Thanks for joining us, Minister. So, this is the third budget, potentially the last one, maybe the second last one before the election. I'm sure that if there is a date, you're not going to tell us what it is in a live radio interview. I guess the key question with this budget is, is it inflationary or not?

FOREIGN MINISTER: Look, it's a tough environment to do budget in because you've got to look at what you have to do now, which is to ease cost of living, but you've got to do it in a way that doesn't put pressure on inflation. And you also have to look to the future. You've got to invest in the future. So, those are three things we tried to do in the budget. The first priority is easing cost of living pressures, and the centrepiece of that is obviously $300 in energy bill relief for every Australian household, which is recognising what's happening with energy bill prices. But we have to do it in a way that puts downward pressure on inflation. And if you look at what we've done, investment in rent assistance and energy price relief, the Treasury says that does put downward pressure on inflation. And we've also got to invest in the future. We've got a big transition to make. Adelaide and South Australia knows about changing economies. We've moved from the car industry to a very different sort of economy. We've got to do something even bigger nationally as we move to a net-zero economy at 2050. That means we've got to make sure we can gain the jobs and industries of that economy. And that's what Future Made in Australia is about.

WILL GOODINGS, HOST: So, it's not arguable. The measures in the budget will bring down headline inflation, they'll bring down the headline CPI number. But the Reserve Bank looks at the core inflation, they look at those underlying factors. What do you think the budget, what message does it send to the Reserve Bank Governor Michele Bullock, do you think?

FOREIGN MINISTER: Well, the Reserve Bank is independent and they have to do their job and we have to do our job. What I can say to you is that as we were sitting around the cabinet table looking at this, we were very conscious both of the importance of the imperative of making sure we gave some cost relief - cost of living relief to Australians. People are really doing it tough and that's why we have the energy bill relief. But doing this in a way that didn't add to inflation, as you said, that's what the Treasury advice is. The Treasury advice, factoring in this budget, has inflation returning to the band that you try and aim for at the end of this calendar year. Now, obviously that's a forecast, but we have to act - we act on the advice the Treasury gives us in how we craft this package to try and meet those objectives. Cost of living, downward pressure on inflation and investment in the future.

GOODINGS: So, then why do millionaires get the $300 off their power bill?

FOREIGN MINISTER: Well, look, some of the measures in the budget are targeted. Obviously, rent assistance is targeted, and cheaper medicines is much more – it is for everybody, but is targeted to pensioners and concession cardholders. And the reality is cost of living pressure goes a long way up the income scale. And as the Treasurer said, the simplest way to provide this relief is to make it across the board.

PENBERTHY: One point that a lot of our listeners are making, Minister, is the cost of power, in a real sense, the actual cost of power hasn't come down as a result of this budget. I mean, it might sound silly because you're giving - the Government's giving us money. So, you know, it. It has come, it has come down in a, you know, ‘at the checkout’ type sense. But the actual sort of underpinnings of the energy market, which was the pre-election promise was power is going to be $275 cheaper under a Labor government that was going to be as a result of structural policies.

This is more just every player wins a prize, you know, here comes your cheque for $300. It sort of feels like all of the uncertainty around the energy mix at the moment, some of the inconsistencies where we'll happily send allegedly toxic minerals, coal and so forth overseas to prop up the budget, bottom line, but we're not allowed to use it anymore in Australia. We've got Labor governments, like in Victoria, banning domestic gas. It feels like structurally the energy system is still a bit of a mess, but everyone's just getting a $300 cheque.

FOREIGN MINISTER: Well, first, you're right to say that we've all got a big job in the Government, and the states in particular have got a big job to do when it comes to changing all of the reforms in energy around supply. And we did inherit a system where we saw energy capacity exit the system and no new capacity entering. And that's because we had ten years of conflict inside the Liberal Party, 22 plus energy policies - now, they've got a nuclear energy policy - which left the market with no certainty about where to invest and what to invest in, and it left investments in the grid. That is how we get energy from one place to another, behind the eight ball. Now, what we have done is worked very hard to bring more energy capacity into the system, to give certainty around gas, to firm up renewables. As we outlined last week, in the future gas strategy, we've got measures to improve the grid that we're investing in.

So, I think where we are compared to where we would have been is better. But you're right, we know that that transition is happening. But while it's happening, we've still got energy prices high. We've had a very large shock to the global economy as a consequence of the Ukraine-Russia war. So, we have to provide, and we want to provide cost of living relief in the interim. And that's what this budget does. $300 for every household in Australia and just a bit more for small businesses as well.

GOODINGS: The other critical issue in Australia at the moment is the housing crisis. Looking at the migration figures in the budget for this financial year 23-24, 395,000 more people. Next financial year, 260,000. Then in 2025-26, another 255,000 people. How is it possible we're going to build enough houses for all these people?

FOREIGN MINISTER: Well, first, those figures are a reduction from where we were trending previously.

GOODINGS: But still, it's a net increase.

FOREIGN MINISTER: Sure, sure. And Australia has run a net migration increase for most years, obviously not in the COVID years. And some of that, as you know, is students. We are investing a very, very large amount across many programs in housing. You're right, we have real problems with affordable housing and real problems with housing supply, which is affecting the market more broadly. So, there's new investment of housing of over $6 billion in this budget. We've got additional monies to the states and territories to deliver housing, additional concessional finance for social and affordable housing, additional finance for additional incentives for student accommodation, which the Treasurer spoke about in his speech. So, there are measures to try and improve the housing market at the same time as trying to moderate the migration numbers.

PENBERTHY: Penny Wong, Foreign Minister and Senator for South Australia. Thanks for joining us today in the wake of the Albanese Government's third budget, and we'll do the same after Peter Dutton does his address and reply. We'll probably talk to Simon Birmingham after that. Thanks for joining us, Penny.

FOREIGN MINISTER: No worries. Good to speak with you both.


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Authorised by Senator the Hon Penny Wong, Minister for Foreign Affairs, Australia.