Jim Chalmers says next month’s budget will be underpinned by “five pressures” on Australia’s economy.
In a discussion with other G20 finance ministers in Washington overnight, the Treasurer laid bare the fine line Australia had to walk as it sought to grow while the economy slowed.
He said five global pressures – persistent inflation, slowing growth, rising tensions, fragmentation of supply chains and a changing global economy – would “weigh heavily” on next month’s budget.
“The increasingly complex and worrying set of conditions we face in the global economy presents a profound challenge to policymakers,” he said.
“The increasingly complex and worrying set of conditions we face in the global economy presents a profound challenge to policymakers,” Chalmers told a meeting of G20 finance ministers in Washington.
In a message to his counterparts, he said all major economies could benefit from “pursuing realignment” by providing cost-of-living relief to people in a way that removes pressure on inflation; repair budget and supply chains; and reform the global economy by focusing on enabling investment.
‘In Australia… we have a lot going for us. “A combination of moderating inflation, stronger employment growth and a return to real wage growth sooner than expected,” he said.
‘But we have also been hit by global challenges and higher interest rates.
“Our economy is slowing and this will have material implications for our revenue prospects and our budget.”
Mr Chalmers said amid global pressures, Australia was still “facing the challenge of creating the new net zero emissions economy”.
Prime Minister Anthony Albanese this month announced the Future Made in Australia Act, which will be a centerpiece of the budget, investing tens of billions of dollars in critical manufacturing.
Prime Minister Anthony Albanese this month announced the Future Made in Australia Act, which will be a centerpiece of the budget, investing tens of billions of dollars in critical manufacturing to help the transition to clean energy.
In Washington, Chalmers said Australia’s fiscal strategy was evolving in the face of challenges and opportunities.
“We cannot afford to be left behind or not make the investments that will serve to secure our future,” he said.
“Our economic strategy will focus on fighting inflation, but our budget will see a greater emphasis on economic growth, to help us meet the challenge of the next decisive decade.”
Shadow treasurer Angus Taylor said on Friday there was “no reason to support” the government’s economic strategy.
“Yes, the budget situation at the moment is a backstop to years of project approvals in the resources sector that are delivering a huge windfall to Australia,” he said.
‘This is a government that has slowed down those approvals to the point where they are sclerotic.
“At the same time, what we are seeing with this government is that they are stealing from the household budget, to shore up the government budget, so that they can spend more money on their latest pet projects, which we are seeing this government doing. . and with their MIA bill… (and) it is very clear that they are being widely criticized for the approach they are taking.”