Australian treasurer warns of budget pressure, but rules out recession planning
Australia's treasurer Jim Chalmers has warned that global economic turmoil is putting intensifying pressure on the federal budget, but said the government is not planning for a recession. He urged critics of government spending to specify which services should be cut.
Australian treasurer Jim Chalmers said on Sunday that the federal budget faces "very substantial and intensifying" pressure from global economic turmoil, while insisting the government is not preparing for a recession ahead of the mid-year budget update.
Chalmers partly attributed Australia's rising inflation to the private sector, while also pointing to the US-led eight-month conflict against Iran, which has severely restricted oil supplies from the region. He described the war's effect on cost-of-living pressures as "disastrous," warning that a prolonged conflict would deepen its impact on both global and Australian growth and inflation.
Inflation and interest rates climb
Inflation rose to 4% in the year to August, up from 3.5%, while the Reserve Bank lifted its benchmark interest rate to 4.6% — the highest level since 2011.
The government is working on identifying further budget savings ahead of the mid-year economic and fiscal outlook, due in December, following cuts of $44.9bn over four years announced in the May budget. Chalmers challenged critics of government spending to specify where cuts should be made if they oppose strengthening Medicare, cutting income taxes, or providing other cost-of-living relief.
Political reaction
Shadow treasurer Tim Wilson called for Chalmers to be sacked, alleging the treasurer's decisions have driven up inflation to boost tax revenue. Meanwhile, government minister Andrew Charlton warned that while a recession would ease inflation, it would come at a steep cost, pushing hundreds of thousands of people into unemployment and sharply reducing demand in the economy.
Chalmers is set to travel to Japan to meet with business leaders and the country's finance minister, aiming to boost investment and strengthen fuel security.
