Treasurer makes case for no-frills budget

The Treasurer doubled down on its commitment to providing a reasonable budget in light of worrying global economic conditions and the fallout from COVID spending.

Treasurer Jim Chalmers said Australia is in a better economic position than many of its international counterparts, thanks in part to unexpected increases in government coffers thanks to high commodity prices.

“Short-term improvements in revenue generated by our resources are not sufficient to adequately pay for the five fastest growing areas of expenditure in the budget: healthcare; national invalidity insurance; elders assistance; defence; and the rising cost of interest we pay to pay off $ 1 trillion in debt, ”said Dr. Chalmers.

His remarks follow a 0.75 percentage point rate hike by the US Federal Reserve on Thursday morning, an aggressive strategy that the central bank president says will put the world’s largest economy at risk of recession.

With the economic challenges looming at home and abroad, Dr. Chalmers said the October budget will contain responsible relief from the cost of living that won’t worsen inflation.

“This means trying to solve the problems in our clogged supply chains that are driving up inflation and providing relief from rising prices that benefits the economy and doesn’t force the RBA’s hand on further price hikes. rate ”, reads a notice. article for The Australian.

Dr Chalmers has set the stage for reforming the way the government manages its finances, which could include tax reform and a new spending priority.

“This is the beginning, not the end, of a great national conversation about our economic challenges, the structural position of the budget for the future and the kind of choices we must make as a country to move forward on our priorities, on what is affordable. and what’s right, “he said.

While Australia faces uncontrollable inflation, rising cost of living has not yet held back spending, with sales up 27.4% from pre-pandemic levels.

Spending data from Mastercard showed that discretionary spending rebounded strongly from the impact of COVID-19 last year, with jewelry sales up 107% in 12 months and apparel up 83%. %.

Australian Retailers Association head Paul Zahra said the level of growth is not surprising given that the two largest states were on lockdown around this time last year.

However, he warned that a slowdown in spending is imminent.

“Although consumer spending is strong at the moment, the concern is that we haven’t seen the full impact of interest rate hikes on household balance sheets,” Zahra said.

He said small businesses were hit hardest by inflationary pressures as they struggled to cope with rising costs of fuel, energy and rent.

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