Treasurer Jim Chalmers’ warns Aussies about ‘five pressures’ on the economy before this year’s budget

Jim Chalmers says next month’s budget will be underpinned by ‘five pressures’ on the Australian economy.

Speaking to other G20 finance ministers in Washington, the Treasurer laid out the fine line Australia had to walk in its bid to grow as the economy slowed.

He said five global issues – persistent inflation, slowing growth, rising tensions, fragmenting supply chains and a transforming global economy – will “weigh heavily” on next month’s budget.

“The increasingly complex and worrying set of circumstances we face in the global economy poses a profound challenge for policymakers,” he said.

In a message to colleagues, he said all major economies could benefit from “pursuing realignment” by easing people’s cost of living in a way that takes pressure off inflation; restoring the budget and supply chains; and reshaping the global economy through a focus on investment enablement.

‘In Australia… we have a lot to offer. “A trifecta of moderating inflation, stronger job growth and a faster return of real wage growth than planned,” he said.

“But we are also beset by global challenges and higher interest rates.

“Our economy is slowing, and this will have a material impact on our revenue prospects and our budget.”

Mr Chalmers said that amid global pressures, Australia still “faces the challenge of creating the new net zero economy”.

Prime Minister Anthony Albanese this month announced the Future Made in Australia Act, which will be a centerpiece of the budget and will invest tens of billions of dollars in critical manufacturing

Prime Minister Anthony Albanese this month announced the Future Made in Australia Act, which will form a centerpiece of the budget and invest tens of billions of dollars in critical manufacturing to help the clean energy transition.

In Washington, Mr Chalmers said Australia’s fiscal strategy is evolving in light of both challenges and opportunities.

“We cannot afford to fall behind, or fail to make the investments that will secure our future,” he said.

“Our economic strategy will focus on fighting inflation, but our budget will place a stronger emphasis on economic growth to help us meet the challenge of the coming decade.”

Shadow Treasurer Angus Taylor said on Friday there was ‘no reason to endorse the government’s economic strategy’.

“Yes, the budget position at the moment is a confirmation of years of approving projects in the resource sector, which is providing Australia with a major windfall,” he said.

“This is an administration that has delayed these approvals to the point where they are sclerotic.

“At the same time, we see this government stealing from the household budget to strengthen the government budget so they can spend more money on their latest pet projects, which is what we see 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.”