Source: Australian Parliamentary Secretary to the Minister for Industry

Jim Chalmers:

Thanks, everyone, for being available relatively early. We’ve got a fair bit to cover this morning.

Katy and I will say a few things about the Budget and then Andrew and I on the ACCC and supermarkets.

Then I wanted to also touch on crypto and also the intelligence review which has just been released by the Prime Minister. And then obviously happy to take your questions.

We’re in the home stretch of the government’s fourth Budget. It’s going to be a big day, a full day today, of putting the finishing touches on the Budget so that we can get it off to the printer this weekend. We’re looking forward to telling you all about it on Tuesday night.

The Budget will reflect the progress that Australians have made together. We’ve got inflation down. We’ve got wages and incomes growing again. Unemployment is low. We’ve got the debt down. Interest rates have started to come down, and now growth is rebounding solidly in our economy as well.

But despite all of the progress that Australians have made together, we know that there’s more work to do because people are still under pressure and because there’s all of this global economic uncertainty playing out around the world as well.

The Budget will be focused primarily on 2 things: more cost‑of‑living help where we can do that in an affordable and in a responsible way, and also strengthening our economy and making it more resilient in the face of all of this global economic uncertainty.

So it will have that familiar combination of relief, repair and reform in the fourth Budget, the same as it did in the third. It will be a very responsible Budget. It will help with the cost of living. And it will also continue to clean up the mess that we inherited when came to office 3 years ago.

Australians have made a lot of progress together. The Budget will reflect that progress. And that progress will be a platform for what we need to do into the future.

The Budget will be an economic plan to build on the progress that we have made, help people with the cost of living and also make sure that we’re more resilient because the global economy is such an uncertain, volatile and unpredictable place.

I’ll throw to Katy and then to Andrew.

Katy Gallagher:

Thanks, Jim. Morning, everybody. You’ll see in the next Budget our continued investment in driving gender equality and investments in women, and when you look back over the 4 Budgets you’ll see that each budget or budget update has built on the investments from the October Budget where we started this work.

For too long investments in women had been left behind by the former government. Not enough had been done in 10 years to address women’s wages, to close the gender pay gap, to invest in ending violence against women, to address gender inequality in women’s health and also in investments in the care economy. We know such a big, important part of our economy, highly feminised areas where women’s work was being undervalued and underpaid. You will see continued investment in that.

Over the 4 budgets we’ve invested in those wages for female‑dominated industries. We’ve invested in childcare, in early education and care, in women’s health, women’s safety, in paid parental leave, in putting super on PPL. We’re also addressing the highly gendered nature of our labour force by investing in skills and training and encouraging women into male‑dominated jobs and increasingly with the wages being addressed in the care economy, seeing more men consider those jobs as good and secure jobs for them.

We’ve also made important investments in women and girls’ sport, and because of all of these investments – and you’ll see more of it in the Budget – women are earning on average $217 more per week because of the investments we’ve made both through submissions to the minimum wage but also those investments particularly in aged care and early education and care.

We’ve seen women’s economic participation reach record highs under this government. And we’ve seen the gender pay gap close to the lowest level ever.

So this is what you can do when you have a concerted effort, when you have women’s policy at the centre of your economic policy and when you really take steps through the ERC, through having leadership from the Treasurer, the PM, having the Minister for Women as the Minister for Finance helps –

Chalmers:

Doesn’t hurt.

Gallagher:

– to make sure that you can deliver the outcomes that we want. I should also point out this investment is testament to the caucus in general, who are 50 per cent women. When you have women represented at equal levels in the political process you get better outcomes for women.

Chalmers:

Thanks, Katy. Andrew.

Andrew Leigh:

Well, thanks, Treasurer. Today the government’s released the ACCC’s grocery competition report. This is the first report on the grocery sector in 17 years. Over the last 17 years products like kombucha and kale have hit the shelves, but unfortunately, we haven’t seen a whole lot more competition in the grocery sector.

And, indeed, this report reveals that the market share of the big 2 supermarkets has increased over that period. It’s seen the entry of Aldi but the shrinking of Metcash. And it sounds a cautionary note about what the future might hold, making clear that it doesn’t see a future in which Metcash’s market share grows substantially, nor does it see a significant competitive threat from Amazon.

The report also suggests that the big 2 may have been playing tag team rather than tug‑of‑war. It suggests patterns of specials oscillation which look like a little too cosy for the comfort of many Australians.

It makes a set of wide‑ranging recommendations which the government has said we will accept in principle. Some of those recommendations involve long lead times, others involve consultation with states and territories. We will focus on doing that.

But the report makes very clear that the Coalition’s approach is not the right way of delivering a fairer deal for farmers and a fairer deal for families. The Coalition voted against Labor’s new mandatory Food and Grocery Code, which the ACCC report talks about as an important measure for holding supermarkets to account in their dealings with farmers.

This is a significant report – 400 pages, data analysis that covers over a billion prices. But there’s no suggestion in any of that that the Coalition’s favoured approach of divestment would deliver better outcomes for farmers or better outcomes for families.

Labor’s new mandatory supermarket code of conduct comes into effect next month with multimillion dollar penalties. That’s the Food and Grocery Code that the Liberals voted against. We’ve increased ACCC funding to go after supermarkets who are using misleading pricing tactics. As part of the Treasurer’s merger reforms – the biggest shake‑up in the merger laws in 50 years – we’ve made clear that every supermarket merger and land acquisition would need to be notified.

We’re making it easier for new supermarkets to enter the market with incentives for states and territories to cut planning and zoning red tape through the work that the Treasurer is doing with the Council on Federal Relations, backed by our $900 million National Productivity Fund. We’re clamping down on shrinkflation by strengthening the Unit Pricing Code, funding CHOICE to give shoppers more information on the best value supermarkets and providing over $70 million in low‑cost essentials subsidy scheme to improve food security.

We’re also providing supplier education for those suppliers that find themselves negotiating with supermarkets with one hand tied behind their back. Now, the supermarkets won’t like that, but farmers will. It will be welcome news as we aim to provide more information to those suppliers, particularly in the fresh produce area.

Shrinkflation, sneaky prices, unfair deals – we’re tackling those head on. We are working hard to secure a fairer deal for farmers and a fairer deal for families. We understand that it is critical that the supermarkets do the right thing, and we are holding them to account through our existing reforms and through our in‑principle adoption of this important new ACCC report.

Chalmers:

Thanks, Andrew. We know that Australians are still under pressure, and a lot of that pressure is felt at the checkout.

That’s why we’re cracking down on the supermarkets, and it’s why the Budget will have a real focus on the cost of living.

Even with the progress that we’ve been making on inflation, we know that people are still under the pump, and we know that the weekly trip to the supermarket can be a source of that pressure.

That’s why we’re taking all of the very significant steps that we are to crack down on the supermarkets. Cracking down on the supermarkets is all about getting a fair go for families at the checkout and farmers at the farm gate. That’s what this ACCC report is all about as well. The ACCC report is about more scrutiny, more information and more competition.

We are acting on all those fronts simultaneously. Andrew has run through all of the ways that we are doing that. Our primary focus as a government is the cost of living. And we’re coming at it from every conceivable and responsible angle – cost‑of‑living help which is already rolling out combined with keeping the supermarkets in check at the checkout. These are the important parts of our plan.

It’s important to remember that even with the pressures that people are still under, food inflation was something like 5.9 per cent when we came to office; it’s now around half that at 3.0 per cent. What that means is we are making that progress. That progress is welcome and it is encouraging, but we’ve got more work to do because we know that people are still under the pump.

I wanted to touch on 2 more issues briefly, and then happy to take your questions.

First of all is in relation to digital assets. We’re releasing our statement today to give certainty and clarity to the industry and to stakeholders and to Australians more broadly about the next steps when it comes to crypto and digital assets more broadly.

Crypto and digital assets have a role to play in our economy, and that role will grow over time. We want to make sure that the growth of this really important part of the economy happens in a way that we can be comfortable with.

Data and digital are such an important part of our productivity agenda more broadly, and so with the appropriate framework, we believe that digital assets can make our economy more dynamic.

We see in this area big opportunities for our financial sector, our payments industry, our capital markets and our economy more broadly. So what we’re trying to do here is seize the opportunities that come from digital assets and platforms. We want to encourage investment and innovation and growth, but we also want to make sure that that innovation and growth happens with an element of certainty and security as well.

So we’re working with the industry and with the regulators. We’re proposing a legislative framework in 2025. We’ve already started talking with experts and regulators and interested parties about what that legislation should contain. But it’s quite a detailed statement we’ve put out there today. We’ve done that in the interests of certainty and clarity. It sets out 4 main steps that we’re taking, and it also releases the conclusions of the Board of Tax Review that we did in this really important part of the economy.

We can be enthusiastic about this part of the economy and recognise that, in encouraging that innovation and in encouraging that dynamism that comes from data and digital, that productivity that we get in our financial sector and more broadly, we need to make sure that that’s consistent with keeping consumers and investors safe as the industry evolves quite quickly.

The last thing I wanted to touch on was the Intelligence Review. So the Prime Minister has released the Intelligence Review in the last half hour or so. There’s a lot of uncertainty in the world and there’s a lot of risk. We will see that responded to in the Budget, and we see that responded to when it comes to the conclusions of this Intelligence Review.

I wanted to give a big shoutout and a big thank you to Richard Maude and Heather Smith for doing the review for the government, also Andrew Shearer and his colleagues for the conversations that we have been having with them about the implementation of the Intelligence Review.

We see this uncertainty and we see this risk in the way that national security and economic policy have become more and more intertwined. They’ve always been intertwined to some extent, but they’re now almost inseparable from each other, and that’s because so much of the uncertainty and risk that we see in the world, the geopolitical uncertainty, has an element of economic consequences attached to it as well.

So we commissioned the review to ensure that our intelligence agencies are best placed to understand that and advise on that. We are blessed with outstanding agencies and people, and this is about supporting their crucial work. We’ve released an unclassified version of the report. As you would expect, a lot of the response will be classified, but I wanted to announce today that there will be $45 million in the budget to implement in an initial way the conclusions and recommendations of the Intelligence Review.

This is part of a big 20 per cent increase in funding for national security that we’ve seen under the life of this government, primarily defence but funding our intelligence agencies is an important part of the story as well, $45 million in new funding, responding to the recommendations of the Intelligence Review that we are releasing today.

With that, happy to take some questions, and we’ll start on this side for a change with Pablo.

Journalist:

Treasurer, the ACCC says the margins of the big 2 supermarkets have been rising over the last 5 years. So a lot of customers might be wondering how they possibly are not gouging Australians?

Chalmers:

There is market dominance, and that’s why we’re acting in all of the ways that Andrew ran through.

If you think about our efforts to boost scrutiny, to boost information, to boost competition, it’s all about recognising that there is market dominance in the sector, and that’s what we are responding to in a number of ways. That’s what the ACCC is dealing with.

Now, what the ACCC said was there’s been an increase, obviously, in grocery prices over that 5‑year period, so spanning the life of 2 governments. Those price increases slowed in 2024 in their estimation. Our price increases, they’ve gone up by less than most of the OECD is another conclusion of the report. As I said, food inflation has basically halved during our time in office.

But there still is that market concentration. There still is that market dominance, especially by the 2 major players, and that’s why we’re taking all of the steps that we are taking in competition reform, in planning and zoning, in the mandatory Food and Grocery Code, in empowering CHOICE, funding the ACCC. All of these things are about dealing with and responding to the market dominance that the ACCC identifies.

Journalist:

Treasurer, we’ve spoken to farmers in places like Orange that have had to rip up orchards because of the dominance of the supermarkets. You’ve announced $2.9 million for them to stand up to supermarkets. Some of them may wake up and hear that and think they’ve been short‑changed, or is that all there is for them?

Chalmers:

I’ll say something about that, then I’m going to throw to Andrew because Andrew’s been a very enthusiastic advocate for helping the organisations in the way that we’re announcing today.

This $2.9 million is about strengthening the arm of the groups which represent our farmers and our producers. We want to make sure that when supermarkets are negotiating with our farmers that we can strengthen the arguments and strengthen the arm of the people who produce our food. That’s what this funding is all about.

Now, always organisations will always want more funding. We understand that. We’re realistic about that. But this is a new investment. It’s also not the only thing that we’re doing to empower farmers and suppliers. Making the Food and Grocery Code mandatory, the big penalties that Andrew talked about, all of this is part of the story as well. But I’ll throw to Andrew to say a few more things.

Leigh:

Thanks, Treasurer. It’s very clear from this report that the supermarkets have been stacking the shelves in their favour. We knew that from the report that we asked former Competition Minister Craig Emerson to do on the Food and Grocery Code. That followed a period under the former Coalition government where they had set up a toothless voluntary code and then when they reviewed it when David Littleproud was Agriculture Minister, decided to keep it, the toothless voluntary code.

We brought into parliament multimillion dollar penalties, and the Liberals and the Nationals voted for the status quo, for the toothless voluntary code. Labor’s mandatory Food and Grocery Code of Conduct includes an ability to make anonymous complaints to the ACCC. That gets to the issue of retribution, where suppliers have said they’re too scared to speak out to the independent code assessors for fear that they won’t be able to sell their product. When you’ve got a duopoly accounting for such a big share of the market, that’s a reasonable fear.

We’ve seen particular concerns around fresh produce suppliers, required to sign up to annual contracts but then subject to week‑to‑week bidding with the notion that if a big supermarket doesn’t take their stuff, then they’re faced with getting much lower prices at the markets. So this supplier training, which was not in place under the former government – it’s a new initiative by us – does ensure that the suppliers are going into those negotiations better prepared, better armed, better able to take on the big supermarkets.

We’re looking not only to get a fairer deal for families at the checkout, but also a fairer deal for farmers at the farm gate.

Journalist:

The report’s assessment is that not much can be done about the market dominance, that it will persist, it’s already entrenched and it will keep going. Do you disagree with that? You’ve listed various things that are going on. Do you think your efforts will make a big difference to that?

Chalmers:

Any time you introduce more scrutiny, more information and more competition, that can only be a good thing for consumers. While the ACCC talks about this entrenched market dominance, they also provide 20 recommendations about things that we can do about it. And, as we’ve said, we accept all of those recommendations in principle, and in most of those areas we are already taking substantial steps.

There are things that we can do and there are things that we are doing, remembering that some of the steps that we are taking, including the mandatory Food and Grocery Code, they’re yet to come in. They’re about to come in. So we should give those things the opportunity to work.

I’ll see if Andrew wants to add to that.

Leigh:

Thanks, Treasurer. Just the only thing to add to that very comprehensive answer is the work we’re doing with states and territories around planning and zoning reform. So, Tom, you’d be aware of the $900 million productivity fund. That ensures that there are incentives for states and territories to think about planning and zoning through a competition lens, which hasn’t always happened.

Australians would be familiar with the value that’s come from the growth of Aldi but also the missed opportunity from Kaufland attempting to enter the Australian market and then deciding to back off. Had measures like this been in place we might have seen a different outcome from Kaufland and we might today have a more competitive grocery market.

So this is all about ensuring that the market is there for new entrants who are willing to enter and they have the opportunity to bring an injection of fresh competition, which is so much at the heart of this government’s economic agenda.

Journalist:

Treasurer, on the Budget, you’ll announce a deficit. You’ve said that that’s what you’ll do. And that’s the underlying cash. But the fiscal balance will be substantially larger because of the losses being made by everything from HECS to the Regional Investment Corporation. Do you think there is an argument to properly account for the money that is going into the economy from these off‑budget organisations and entities that are controlled by the federal government?

Chalmers:

A couple of things about that.

First of all, we’re accounting for them in the usual way. We’ve not changed the way that we’re accounting for that. The difference between the headline balance and the underlying balance, what you’ll see on Tuesday is that some of the assumptions about the headline balance have not been quite right in the speculation – I say that respectfully – because in some instances what we have done already is provisioned for and included in one way or another in the mid‑year budget update.

It’s not as simple as taking the mid-year update as the baseline for the headline balance and then adding any of the subsequent announcements. In some cases, we’ve made some responsible provisioning or allowed for it in one way or another.

On the underlying cash balance, you’re right that this will be a deficit, but a smaller deficit than what we inherited – substantially smaller. And one of the defining themes not just of this Budget but of the whole set of 4 Budgets is that we have helped engineer a $200 billion improvement in the budget position over the years that we have been responsible for, and that is the biggest ever nominal improvement in the budget ever.

In addition to that or part of that, we’ve delivered those 2 surpluses, we’ve got a smaller deficit this year, we’ve found more than $90 billion worth of savings, we’ve banked most of the upward revisions to revenue in our time in office, and all of that means that we’ve got the debt down substantially and we’re saving on interest cost.

We’ve been managing the budget very responsibly to here. We will manage the budget very responsibly from here, and you’ll see that on Tuesday night.

Journalist:

Just talking about the Intelligence Review, are you able to say what the Review says about how the L’Estrange‑Merchant reforms from 2017 are actually progressing in terms of turning the ONA into the ONI, an intelligence body that actually directs the broader national intelligence community? And are you looking to boost the ONI’s role in terms of a director?

Chalmers:

The newish role for the ONI is obviously a really important one, and you’ll see when you go through the detail of the unclassified report, which is on the web now, you’ll see how we’ve dealt with the evolution of our agencies from L’ Estrange through to the Maude‑Smith report and what we intend to do about it.

You’ll also see, as I’ve said earlier on, that there are some ways that we can fund in an initial sense $45 million in 2 parts – 30 and 15 – which is all about strengthening the role of these agencies in our intelligence armoury.

I’d encourage you to read the report. I acknowledge it’s only just gone up. You wouldn’t have had a chance to read it in between then and coming to this press conference. But have a squiz at it, and if you want to have a conversation about it separately, we can do that.

Journalist:

You’ve had it for 9 months. You’re releasing it on the same day as this significant ACCC report. What does that say about scrutiny, and is there anything in it that you don’t like?

Chalmers:

It’s a really important report. The reason why we have taken the time – I acknowledge we have taken the time – to go through it. And without going into the detail of the discussions, it’s because we’ve worked through it with the other members of the National Security Committee in a very methodical, very considered, very careful way, because there’s a lot of in it. And I think people would expect us to do that, to work through it in a methodical way.

In terms of the timing of the release. I wanted to release it today because I see it as important.

It is part of the Budget on Tuesday night and I didn’t want it to be lost in that. I wanted to bring it out and indicate – because there has been some commentary about how long we’ve had it – I wanted to make it clear, the Prime Minister wanted to make it clear in making the announcement this morning that the recommendations of the review are really important – important enough for us to allocate an extra $45 million in a tight budget.

Journalist:

Katy, have you identified any more savings in this Budget and, if so, how much?

Gallagher:

You’ll see the same approach we’ve taken in previous budgets so – where we’ve found savings in every budget. We’ll have more to say on that in the lead‑up to the Budget. But we’ve taken the same approach – looking to find savings, reprioritise. The approach we’ve taken on the last 3 Budgets you’ll see in the fourth. But you’ll have to wait a bit more for the detail on that.

Journalist:

The Prime Minister already said you’re going to have a Buy Australian component in the Budget. Is it going to be sort of more than flim flam? Are you worried – or do we no longer need to worry, because we’ve had procurement programs in the past where we’ve had to be mindful of breaching our WTO obligations. Given that Trump’s torn up the rule book, do we care about that anymore when it comes to your decision‑making on procurement?

Chalmers:

I’ll throw to Katy in a sec on procurement, but there are 2 issues here – they’re related but separate.

The issue that the Prime Minister has been talking about in response to the announcement out of DC on the steel and aluminium tariffs is about encouraging Australians to buy Australian and to recognise that we’ve got wonderful Australian products, and if people are unhappy with the tariffs being levied on us then they can vote with their feet and buy Australian products.

There will be some funding in the Budget to support a Buy Australian campaign.

Separate to that is how we procure Australian goods and services, and Katy’s got an important role to play in that, so I’ll throw to her.

Gallagher:

We’ve been doing quite a lot of work under the procurement policy where we can. So in the last month or so we’ve announced with the work I’ve been doing with Ed Husic the definition of an Australian business for the first time. Previously it’s sort of been captured by your ABN, but that doesn’t really, as you know, define an Australian business. So we’ve worked with industry to do that. We’ll have that definition. That will help us track exactly how much we are procuring.

And also in the value‑for‑money assessments, not just having that on cost but broadening out value‑for‑money assessments from the Commonwealth.

We want to use procurement. We’re a big procurer of services and programs, and we want to make sure that we are using the capacity of the Commonwealth to drive better outcomes for Australian businesses.

There are some constraints, as you say, under our free trade agreements and things like that, but we see there’s a lot of opportunity to think about how we use the Commonwealth spend to drive good outcomes here for Australian business.

And all the discussions I’ve had with Australian business, they don’t want favouritism, they don’t want preferential treatment. They just want a level playing field, and that’s what we’re trying to create through the procurement programs.

Journalist:

Will that be in the Budget – sorry, Minister? That procurement stuff, or is it more just the campaign?

Gallagher:

We’ve been rolling out the Buy Australian plan through the last couple of years. We did the announcement on Australian business I think within the last 3 weeks or so. And we’ll update the guidelines, the procurement guidelines and rules.

Chalmers:

I might just say something more broadly about that and then we’ll finish up.

Australians are huge beneficiaries of the rules of international trade. We’re a trade exposed economy. We’ve got a lot of skin in the game when it comes to the way that these trade tensions are escalating.

But the rules of the global economy are being rewritten, which goes to your point about the WTO, Phil.

We’re in a whole new world of uncertainty, and a big part of that is the new policies of a new administration in DC, but that’s not the only part of it.

Two major conflicts – Eastern Europe and the Middle East, slowdown in China, political division and dissatisfaction around the world, places like Korea, France and elsewhere. This is a whole new world of uncertainty.

The reason I finish on this point is because this is one of the key influences on the Budget.

There are 2 big influences on the Budget – global economic uncertainty from which we are not immune. Like everyone around the world, we want to make sure that we can be beneficiaries of the way that the world is churning and changing, not victims of that. Big part of our efforts, huge influence on the Budget.

The other one is the pressures that we acknowledge that people are still under, despite our really quite substantial, significant, meaningful progress on inflation and unemployment and growth rebounding, the private sector reclaiming its rightful role as a driver of growth in our economy. We know that people are still under pressure.

That’s why the Budget is going to be about those 2 things. It’s going to be about helping people with the cost of living where we can do that in an affordable and a responsible way. And it’s going to be about making our economy stronger and more resilient in the face of this global economic uncertainty which is upending the world. That’s what you’ll see on Tuesday night. Those are really the 2 main themes, the 2 main influences and the 2 main sets of responses that you can expect to see.

Thanks very much.

MIL OSI News –