Australia to reveal economic plan for deteriorating outlook

CANBERRA, Australia (AP) – Australia’s new government on Tuesday will propose an economic plan to steer the nation through soaring inflation and interest rates while remaining in debt.

Treasurer Jim Chalmers will present his centre-left Labor Party’s first annual budget for the fiscal year that began in July.

It will be a Labor government’s first budget in nine years and will face unprecedented debt from the COVID-19 pandemic.

Chalmers said that rising inflation was the main influence on how he drafted his economic blueprint.

“The budget will be solid, sensible and appropriate for the times. It will recognize that at a time of extreme global uncertainty, our best defense is a responsible budget at home,” Chalmers told reporters.

“The budget has three objectives: responsible reduction of the cost of living, strengthening the economy and beginning the difficult budget recovery,” he added.

The previous Conservative government had forecast a deficit of 78 billion Australian dollars ($49 billion) for the current fiscal year in its last March budget.

The new government forecasts that deficit will more than halve to AU$36.9 billion ($23.3 billion), mainly due to higher prices for commodities, including iron ore and coal.

However, slowing economic growth was expected to make it even more difficult to repay the debt in the longer term.

The March budget projected that gross debt as a share of economic growth would peak at 44.9%, or AU$1,117 trillion ($709 billion), by mid-2025.

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The budget will help families by increasing childcare subsidies and gradually increasing the right to paid parental leave from 18 to 26 weeks, the government said.

Prime Minister Anthony Albanese said the budget would provide families with living expenses without fueling inflation.

“The priority will be on measures that stimulate the economy, that increase productivity. Cheaper childcare does just that. That also applies to paid parental leave,” Albanian said.

The government will have to get its budgetary measures through parliament, which may require compromises.

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