In ABC News on Sunday (23 October), Jim Chalmers said inflation will persist for longer than the government had anticipated and wages growth will cross over with inflation some time until at least 2024.
With just one day before his first budget on Tuesday (25 October) evening, Mr Chalmers was using every opportunity to soften the blow that there will be a lot less in this budget than many may have hoped.
He has emphasised it will be “family friendly” budget, and a responsible one that will be felt “around the kitchen table”.
“It will be solid, sensible, and suited to the times, because when you’ve got all of this uncertainty around the world, the best possible response is a responsible Budget at home, and that’s what this will be,” he said.
“Inflation is the primary influence on this Budget. It guides our approach to cost-of-living relief. It guides our approach to targeted investments in a stronger, more resilient economy.
“So, we expect inflation to peak towards the end of the year — higher than we would like. And then it will persist for a little bit longer because of the impact of the natural disasters, but most substantially the impact of the war in Ukraine, which is pushing up energy prices for longer.”
Mr Chalmers said the budget will have two parts — to get wages moving and to help inflation over time by making sure cost-of-living relief is responsible.
“The Budget will show that wages will move substantially, but they won’t cross over in our estimation or the Treasury’s estimation, until we get that inflation under control,” he said.
He said the fastest-growing areas of spending in the budget are interest rates and the borrowing costs on the trillion-dollar debt.
“That’s a big and growing area of spending. Same with the NDIS and aged care and health care and defence,” he said.
“The temporary boost to revenue is very welcome, but not sufficient to cover some of those costs. When it comes to providing relief for people in the economy, we’ve chosen to make sure that any cost-of-living relief that we provide has an economic dividend. That’s why we’ve got a focus on child care and paid parental leave, cheaper energy costs, cheaper medicines and getting wages moving again in a sustainable way.”
