Federal Treasurer Jim Chalmers says the cost of living will be even tougher in the coming months, with economic “heavy weather” on the horizon.
Inflation is expected to exceed 7% this yearThe treasurer warns that unemployment will riseThe government expects Australians to see real pay rises during this term
Chalmers will make a statement to parliament today on Australia’s economic outlook, warning that inflation will exceed 7% this year.
Economic growth has been revised down by half a percentage point for the previous, current and future years.
Chalmers said the Treasury had also forecast unemployment would rise.
“When you have rising interest rates and you have dramatically slowing global growth … that has implications for the unemployment rate,” he said.
“Things are already very difficult for many Australians. It’s only going to get harder before it gets better.”
But the treasurer pointed to brighter skies further afield, saying inflation would have to peak at 7 per cent before moderating, and that Australians would see real pay rises in their wallets before the end of the government mandate in 2025.
Shadow Treasurer Angus Taylor said the dire economic conditions were not of the government’s making, but it did control how it responded.
“These are difficult circumstances. There is an important global element, there’s no doubt about it,” Taylor told ABC Radio.
“Economic curve balls and health curve balls come at you in government.
“If we had said during the pandemic, ‘We’re not going to do anything until the next budget,’ you and others would have said, ‘Wait, that’s not good enough.’
“What we need to see is a coherent plan, not a picture being painted.”
Angus Taylor says the government does not control the global economic circumstances it faces, but it can control its response.(ABC News: Matt Roberts)
The shadow treasurer urged the federal government to cut spending in light of weakened growth figures.
He suggested the government drop parts of its plan to improve energy infrastructure.
“They’re committed to $20 billion in transmission line investments, for example … It’s not recommended by the market operator,” Taylor said.
“This is an illustration of the kind of spending that is not necessary in an environment where inflationary fires are going to be created.”
Ways to reduce the cost of living