Jim Chalmers hopeful Australian economy can recover strongly after it tackles inflation and rising cost of living pressures
The Treasurer believes Australia can “take its rightful place” as the number one ranked economy in the world but it first needs to navigate the “choppy waters” ahead which include a prediction the inflation challenge will get worse and subsequently impact the Budget in October.
Treasurer Jim Chalmers believes Australia can have a “stronger economy and society” after it addresses the challenges of inflation and rising cost of living pressures affecting household budgets around the country.
In an address at Sky News Australia’s Economic Outlook forum in Sydney, he flagged the economy would likely be “dampened” by the Reserve Bank of Australia’s (RBA) largest interest rate hike (0.5 per cent to 0.85 per cent) in more than two decades.
Mr Chalmers predicted the challenges of inflation – as indicated by the RBA and the Treasury – were expected to get worst than the 5.1 per cent release in the Australian Bureau of Statistics’ latest data.
House prices and savings will be impacted along with the Australians on the lowest incomes, who are not able to build buffers in their personal finances.
But the Treasurer insisted there “couldn’t be a better time to put our heads together” to navigate the “choppy waters” to deal with Australia’s current and future economic challenges.
“Inflation in my way of thinking is the defining challenge we have in the economy because of its impacts on living standards and real wages, its impact on the economic outlook and also the impact it has on the cost of servicing the debt in the budget,” Mr Chalmers said.
“But even as the economy grows, the challenges to our economy are growing as well.”
The pressures on the economy and society will flow on through to the Budget – which he revealed will be outlined “on or around” October 25, subject to the finalisation of the parliamentary schedule.
Mr Chalmers said he wanted to be blunt about the concerns of inflation so families are not shocked about future interest rate hikes and a “big national conversation” can be had on the economic and societal outlook for the country.
“In my view, there’s no use mincing words when it comes to this inflation challenge which will get worst before it gets better,” he said.
“Inflation will be, in my view, significantly higher than the 5.1 per cent that we sae in the most recent data so we need to be upfront with all of that and we need to work together to address these challenges.”
Mr Chalmers outlined some of the obstacles Australians faced which includes petrol rising more than 10 per cent since the end of April, wholesale electricity up 237 per cent, and wholesale gas prices up more than 300 per cent compared to the average March quarter.
But he hopes to provide an update on the forecast of inflation when parliament returns to provide struggling families an outlook for the future.
The Treasurer finished off his opening remarks on a positive note by his “strong” belief Australia can recover to be the “first rank of national economies in the world”.
“It’s not beyond us. It will get harder before it gets easier but I’m confident with the spirit that I’ve detected in all the conversations I’ve had in the last 18 days … that we an get through a difficult period and we can have a strong economy and strong society after we do,” Mr Chalmers concluded.
The Albanese Government also hopes to deliver a job summit “sometime after parliament” where a white paper will then be released on the challenges faced in the labour market, such as skills shortages and gender pay gap.