Australian Treasurer Jim Chalmers on Global Tariff Impact
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Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. On today's episode, we'll bring you a conversation with Australia's treasurer, Jim Chalmers, plus a look at the broader market landscape with Mark Nachman. He is the global head of asset and wealth management at Goldman Sachs.

Australian Treasurer Jim Chalmers is warning of seismic impact from the Trump administration's tariff policies. Chalmers' remarks come ahead of his fourth national budget. It's due to be handed down on Tuesday. Here's Chalmers speaking earlier to Bloomberg's Ben Westcott in Canberra.

So this is your fourth budget. Your first three were really defined by controlling inflation and setting up new sources of growth. How do you define your fourth budget? Well, this will be a responsible budget which focuses on cost of living relief without ignoring our responsibilities to the future. The uncertainty in the global economy casts a shadow over the world and it casts a shadow over this budget.

And so our job is to provide that cost of living relief in a responsible way at the same time as we make our economy more resilient to these external shocks. Now, you've said that the underlying budget bottom line will be pretty close to what it was at Maifo, but economists, including those at Bloomberg, expect a revenue upgrade potentially as much as $15 billion. Now, obviously that's nothing compared to your first

budget upgrades, but is that discrepancy because you plan to spend that revenue upgrade? Well, a couple of important points about that. I mean, first of all, the mid-year budget update was only about three months ago. The March budget is relatively unusual in Australia. We usually go in May. And so the bottom line will be roughly the same that we saw then we saw in December.

When it comes to revenue upgrades, there'll be quite a small revenue upgrade, much, much smaller than what we've seen in earlier years. Nothing like what you're suggesting in your question. But what the bottom line will reflect is the really responsible way that we've gone about managing the budget. We have helped engineer the biggest ever nominal improvement in the budget in a single parliamentary term. You know, a $200 billion turnaround in the budget

Two surpluses in our first two years, a much smaller deficit in the third year than what we inherited from our predecessors. All of that means less debt and less interest on that debt, which is a big structural pressure on the budget. So one of the defining features of the fourth budget of this government, a bit like the first three, is responsible economic management, not instead of helping with the cost of living and investing in the future, but as well as.

Now you've mentioned cost of living measures and there's widely expected to be new measures in this budget, including potentially electricity subsidies. But given the fact that global growth is slowing and that inflation is coming down, rates are coming down, do you expect that you're reaching the end of your sort of inflation curbing policies and starting to shift to a more stimulatory fiscal policy? Well, cost of living is still front of mind for most Australians and it's front and centre in this budget.

And we recognise that despite the very substantial progress that we've made together on inflation, people are still under pressure and the budget will help with some of those cost of living pressures. We're making medicines cheaper, a huge investment in bulk billing because more bulk billing means less pressure on families. We will extend the energy bill rebates for six months because that's hip pocket help for households.

So this is a real theme, the central theme of the budget, helping with the cost of living, recognising that even as we make this very substantial progress on inflation, from higher than 6% and rising when we came to office to now in the bottom half of the Reserve Bank's target band at 2.4%, we know that people are still under pressure. And so there's still a focus on cost of living in the budget. But if you take a step back from that, you ask me about the progress that we've made in our economy. The Australian economy is turning a corner.

We've got inflation down, real wages are up and incomes are strengthening. Unemployment is very low by historical standards. We've got the debt down, interest rates have started to come down and now growth is rebounding solidly in our economy as well, led by the private sector.

So all of those things are very welcome developments, but we know that there's more work to do because people are still under pressure. There's all of this global economic uncertainty. Those are the two big pressures on the budget and they fuel the two big priorities in the budget, which is cost of living, health and investing in the future to make us more resilient. You said they are extending the electricity subsidies by three months, was it? No, by six months. By six months. Why not longer? Why not a year?

Well, we're doing what we responsibly can. You know, we have to make the budget add up. We need to do everything that we can, but in the most responsible way that we can. The energy bill rebates have played a really important role in taking some of the edge off electricity bills over the last couple of years. We want to extend that for six months. This is the hip pocket help that households need and deserve.

which recognises that even with all this progress that we've made in inflation, people are still under pressure. And whether it's cheaper medicines, helping with electricity bills, more bulk billing, cutting student debt, these are all of the ways that we can responsibly help. Interesting. Now, obviously, you mentioned there the global uncertainty issue.

Will we see more support for critical minerals and domestic industry in this budget in response to the America First policies of the US administration? Well, our future made in Australia policy is all about making our economy more resilient. And you've seen that we've announced in recent months and we will budget in the budget

for billions of dollars of investments in green metals, for example, because we think this is an important way that we make ourselves indispensable to the global net zero transformation and also to supply chains as they're being reconsidered and recast around the world. Now, this is a whole new world of uncertainty that we're dealing with here. The changes out of the US, for example, are not surprising, but they are seismic.

We're seeing uncertainty, policy uncertainty out of the US. China is slowing. We've spoken about that on a number of occasions. We've got conflicts in the Middle East and Europe.

We've got political uncertainty and division around the world. And so the budget is designed not just to respond to all of that uncertainty, but to make ourselves more resilient in the face of those external shocks. And the future made in Australia is really the most important way that we're going about that. And there's billions of dollars in new investments in green metals as part of that effort. Unannounced ones or just the ones you've announced? The ones that we've made clear already. They'll be budgeted for

on Tuesday night. I mean, we've got a huge agenda that brings together our industrial possibilities, the energy transformation, the strengths and advantages that we have in critical minerals and in other areas. And so we intend to play that winning hand. The world is changing all around us.

The world is fragmenting, supply chains are being reconsidered and rebuilt, and we think we've got a very compelling offer to the world. And so the budget is about making the most of that opportunity, maximising our advantages in the interests of middle Australia. Now on that, I mean,

about a week after you hand down this budget, in fact almost exactly, we're going to see new tariffs unveiled by the US administration on April 2nd. Are you worried that those tariffs could throw all your hard work in the budget completely off track if they are particularly big or impressive?

Well, obviously, we're concerned about these escalating trade tensions around the world. As I said before, they are casting a shadow, not just over the budget, but over the global economy more broadly. Australia's got a very trade-exposed economy, and we are concerned about these trade tensions.

Nobody wins from a trade war, least of all a country like ours. And so we're obviously engaged with the US administration, with our counterparts there, but we're also designing a budget which is all about making sure that we are beneficiaries, not victims of the way that the world is changing.

Future Made in Australia is part of that. The Buy Australia plan is part of that as well. All of this is about recognising the way the world's changing and trying to make sure not that just we're not victims of that change, but that we can benefit from those change as countries around the world are looking for reliable partners like us. Now, you've mentioned the sort of negative side from the US, but there's a potential positive side in that the new tariffs put on China might unleash a wave of economic stimulus from Beijing. I mean...

Obviously, there's a few unknowns at this point, but in your opinion, in the Treasury modelling, do you think that will end up being a net negative or a net positive to Australia when balancing those two factors? Well, we've seen a number of steps taken by the administration in Beijing to try and support growth in the economy, but we're still seeing China slowing. What you'll see in the budget is Treasury's forecast for China and for the US,

they expect and they will forecast a slowing in both economies and there's downside risks in both places. And when you've got the two biggest economies in the world,

presenting some risk to the global outlook, very weak period of global growth, then obviously we take that into consideration. We're not revising down the American forecast, for example, in the budget documents on Tuesday night, but we do talk about all of the downside risks from the two big economies in the world with their own share of challenges, their own share of uncertainty,

And I think the announcements that we anticipate between now and the start of April out of DC is just one of those elements of all of that uncertainty. - I mean, if we're revising down US and Chinese growth, I mean, you've talked about Australia turning a corner, won't that inevitably impact our own growth? - Well, first of all, we're not revising down the expectations for growth in those places, but we are expecting a slowdown in growth.

in both of those places. And we won't be immune from that. We've made that really clear. We've been very upfront about our concerns about where this is all heading. We do see this as a new world of uncertainty. And that's why it's so important that we have got the budget in much better nick. It's why we are investing in the future of our economy. It's why we are making our industries more resilient.

in this context, in the face of all of this unpredictability and volatility. That's our responsibility. We take that responsibility. We embrace the opportunity, not just to help people in the near term, but to build Australia's future as well. And that's what the budget will be all about.

Treasurer, final question. We're expected to head to an election within weeks potentially. Your first term has been really dominated by the inflation crisis, the cost of living crisis. What would a second term of a Labor administration look like?

Well, the budget is really where we bring it all together, the progress that we've made to here and our plans to make the most of it from here. And if you think about that progress, inflation down considerably, real wages and incomes strengthening, unemployment low, interest rates coming down, debt down, growth rebounding solidly. We have actually built together as Australians a pretty remarkable platform for prosperity into the future. And so the budget is really all about making the most of

of the decisions and the sacrifices that we've made together to ensure that we can build a future that we can all be proud of in the face of all of this global international, global economic uncertainty.

But inflation is really, it has been the defining focus of the first term. But we haven't lost sight of the productivity challenge. The second term will probably rebalance that a little bit, a bigger focus on growth and productivity in the second term without forgetting our responsibilities on cost of living and inflation. That was Australian Treasurer Jim Chalmers speaking yesterday to Bloomberg's Ben Westcott in Canberra.

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Welcome back to the Daybreak Asia podcast. I'm Doug Krisner. Volatility certainly has been the name of the game as the trading week kicks off in the APAC region. For more on the broader outlook for markets, we heard from Mark Nachman. He is global head of asset and wealth management at Goldman Sachs.

He spoke earlier with Bloomberg's Paul Allen and Heidi Stroud-Watts in Sydney. Every day, it's sort of, you know, variations on a theme of global volatility and uncertainty and trade. How is that kind of broader macro environment benefiting or affecting your business? Sure. I think it's interesting. It's a really interesting time right now, given the uncertainty that you mentioned. And I think what we're really focusing on, number one, having a lot of

dialogue with our clients, both on the institutional side and on the wealth side, and really having a long-term perspective in terms of how people should think about asset allocation, what geographies, what products. And so I think that's been the focus of

of the work that we're doing with our clients and kind of staying away from the daily volatility and taking a longer perspective around all these themes. Is there more of an opportunity for geographic diversification? I mean, you're here in Australia, I believe you're off to Singapore as well on this trip. Sure.

We continue to be excited about all the regions. There's opportunities in all of them. We continue to build up our business in Australia, for example. There's a lot of interesting opportunities for us to invest in Australia. And there's interesting opportunities for us to help Australian companies invest abroad. At the same time, a lot of Australian investors are looking at

the global landscape and becoming broader and diversify themselves. So there's lots of opportunities for us to work with clients here across the global scale. Of course, we've seen a lot of volatility in the past few weeks on public markets, but you work a lot in the private space as well. Can you talk to us about some of the opportunities that you're looking into there? Sure. Yeah, we continue to think that the private markets are really attractive. And I think we've seen

kind of that shift in terms of number of companies staying private, number of companies staying private longer in terms of some of the unicorns on the tech side. And so we think that the private space continues to be very interesting. I think global investors, both on the institutional and on the high net worth side, are

continue to increase their allocation of their capital into the private space. And so we see interesting opportunities there on both the private credit side, the private equity side, the secondary side. And we think the flows into private assets will continue. At the same time, we also see that the boundaries between the public and private markets will continue to kind of

become softer and we'll see more of a continuum between the two markets. Is the enthusiasm for private markets related to some extent to the way that they're insulated for some of the global upheaval that we're seeing at the moment? I'd say that at the core, and this is why I mentioned earlier the kind of long-term investing focus, when you look at long-term returns on a long-term basis, private equity has outperformed the public equity markets.

I think you look at a longer term basis, private credit has outperformed public credit. And so those are really the trends that large global investors are looking at and why they are allocating more into private assets. There's a lot more regulatory scrutiny when it comes to private markets now. Is that something that

you can predict what that regulatory response is going to be, particularly with some of the probes that are happening in Australia? Sure. Look, I think we operate globally. We operate globally under various different regulatory regimes. I think private markets are still a relatively new thing. And so the regulators in all the jurisdictions are trying to get their arms around how to get involved in them. And we work very closely with the regulators around that.

And we continue to want to make sure that these markets function properly. So I think that there's something we're going to spend a bunch of time on in all the jurisdictions to continue to work with our regulators on. Where are you trying to grow the business most across the world? Where are you sort of investing the most, hiring the most?

Yeah, I'd say we have one of the great things about our asset and wealth management business is we have a multitude of growth opportunities. So we're growing our wealth business globally, including in Australia, and we've been growing materially in Australia over the last couple of years.

We're growing our asset management business. We're both public and private side. I'd say on the alternative side, private credit, secondary are the two areas that have been the fastest grow over the last couple of years. But we think private equity, growth equity will continue to grow. And on the public side, it's really our solutions type businesses. I think one of the things we continue to see as an interesting trend is

people outsourcing the management of their pension funds to larger asset managers. And so we've been doing this with pensions as big as $50 billion, where a pension fund realizes that a large asset manager has a lot of economic scale, a lot of risk management tools, a lot of sophistications.

around a lot of these products. So we continue to see the big growth opportunity there as well. That's going to be a massive opportunity in Australia given the pension pile here, right? Yeah, I think we see it's interesting. We see that opportunity across the globe. And I think typically what happens is moments of uncertainty end up creating more opportunities because the trustees of the pension funds who really want to safe keep the long-term pension for the pensioners really are looking at

who is going to be able to provide the best risk management, best return over long term for their pensioners. And so we see that as a big opportunity here. We see it in Europe, in the US, in Japan. Are there any specific sectors or themes that your clients are talking about at the moment? And just for an example, we've seen a huge run up and a lot of excitement around AI, but there are now some discussions about whether or not we're seeing shades of dot com here. Can you talk to us a little bit about that?

I mean, when you think about over the last kind of 12 to 18 months, you talk a lot about private credit. That's an asset to asset kind of

is new in a sense and I think has some very attractive characteristics. And I think it took people a while to figure out where in their asset allocation to put private credit. So on the one hand, it's kind of fixed income instrument, on the other hand, it's private. And so people had to figure that out. So the private credit from a product perspective was very interesting. From a scene perspective, obviously AI

Well, infrastructure is a big theme. When you think about digitalization, decarbonization, all these kind of trends will continue to drive more infrastructure needs. So, we see a lot of interest in those needs. I think as with all themes, those are going to go a bit in cycles. People will get ahead of themselves and the market will consolidate a little bit. But these are big themes that over a long period of time will have a lot of growth in them.

You're often, your name is often floated as one of the names to potentially come up for the top job. Is that something that you sort of think about or you know that you're open to? I think at this point moment in time my key job is to run our asset and wealth management business and as I mentioned earlier

We have a lot of growth opportunities there, so I'm plenty busy focusing on that. Very quickly then, in your current role, if there's a top position that Goldman's isn't in yet, what's your focus? Where would you like to be number one where you're not?

Look, I think generally speaking as a firm, we'd like to be kind of top contender in everything we do. I would say that on the alternative side, we kind of view ourselves as a top five or six player. So we still have a good amount of room to make up to kind of be a top three player. So that is a big area of focus for us. That was Mark Nachman, Global Head of Asset and Wealth Management at Goldman Sachs.

Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen. Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Krisner, and this is Bloomberg.

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