Treasurer Jim Chalmers defends budget over ‘failed’ election promises

Treasurer Jim Chalmers has hit out at criticism arguing the government “failed” to deliver on key election promises in the budget.

Treasurer Jim Chalmers has defended the first Labor budget in about 10 years over criticism the government “failed” to deliver on two key election promises.

Mr Chalmers warned there would be “hard days to come” as he handed down his first budget on Tuesday, stressing the government had shown “restraint” and made “responsible” decisions.

But when he appeared on Sunrise the following morning, co-host David Koch, who is well known for his experience and knowledge in the business sector, took the Treasurer to task over election promises he believed the government had reneged on.

Earlier in the year, Labor made an election promise to slash the price of electricity bills by $275.

But now by the end of the year, Treasury estimates retail electricity prices will increase by 20 per cent nationally, while in 2023-24 that figure will blow out to 30 per cent.

David Koch said Labor did not deliver on two of its election promises. Picture: Adam Taylor

Mr Chalmers defended the move, saying Australians understood the external factors that were impacting power prices.

“When you‘ve got a war in Europe which is causing panic on global energy markets and that has consequences for electricity prices here in Australia, I think people understand that,” he told Sunrise on Wednesday.

When he later appeared on the Today show, it was put to him these factors were already in place during the election, but he argued they had grown worse over the last several months.

“But these challenges have intensified, I think that is pretty clear,” Mr Chalmers said.

“Some of these electricity price rises by the way were happening under our predecessor. They tried to hide it during the election.

“But I think more broadly, war in Ukraine is causing havoc with energy markets. It’s pushing up electricity prices.”

“Our job is to get more renewable energy into the system which is what we’re doing. It’s to empower the regulators, which is what we’re doing as well.”

On when prices could finally start coming down, Mr Chalmers said “that remains to be seen”.

During the election voters were also told Labor was the only party with a “plan to get wages moving”.

But in his speech last night, Mr Chalmers said real wages were not expected to start growing again until 2024 when inflation moderates.

“Wages are growing faster now than they were before the election, but that welcome news is tempered by rising electricity prices and grocery bills eating into pay packets,” he said on Tuesday.

When confronted by Koch on Wednesday, Mr Chalmers again pointed to high inflation levels and others factors that are impacting Australia’s economy.

Treasurer Jim Chalmers said other factors were at play. Picture: NCA NewsWire / Gary Ramage

“Wage growth is happening again after a decade of wage stagnation, but when we’ve got inflation as high it is right now and as high as it is accepted to be, higher for longer than we would like as a consequence of the war in Ukraine and natural disasters and other factors, it will take some time for wages to grow,” he said.

It led to Koch commenting “that is two failed election promises” before moving on.

He then accused the government of undervaluing iron and cole, with the price of both forecast to fall.

“You have also fudged the figures a bit haven’t you as well and built a slush fund on the income side. You have fudged the income figures,” Koch said.

“Our two biggest exports, iron ore and coal, you have simply undervalued the outlook for that as well, haven’t you?”

But Mr Chalmers defended the government’s conservative approach to commodity prices.

“When you think about how volatile these prices have been … you need to be careful with these commodity forecasts,” he said.

Koch was sure the estimated prices would be wrong.

“How about we have a bottle of red on the outcome at the end of June? I reckon it will be nowhere near your assumptions and we will see how we go. Up for it? he asked.

Mr Chalmers wasn’t willing to take up Koch on that bet.

“I think it’s important we are conservative about it,” he said.

“I am off the reds, but I hope the prices stay strong. Everyone does.”

Koch believed the budget undervalued the price of iron ore and coal. Picture: NCA NewsWire / Gary Ramage

Speaking earlier on Tuesday, Mr Chalmers said inflation would “hang around for a bit longer than we would like” for two reasons.

“Electricity prices because of the war in Ukraine, and secondly the natural disasters will push up the price of groceries because some of the flood-affected communities are some of the best farming land in the world,” he told ABC News Breakfast.

“So we will have a cost of living challenge ahead for longer than we would like. That’s why the cost of living relief is important.

That’s also why we’ve been restrained in our spending. You don’t want to make this inflation challenge worse, to have the Reserve Bank to jack up rates more than they would have.”