Labor’s Budget will focus on economic ‘security in uncertain times’

Treasurer Jim Chalmers will meet with world economic leaders in the US— ahead of the May federal budget— to ‘take the temperature’ on the risks for Australia posed by global high inflation and interest rates.

Ahead of the May federal budget Treasurer Jim Chalmers will meet with world economic leaders in the US to “take the temperature” on the risks for Australia posed by global high inflation and interest rates.

Mr Chalmers will travel to Washington DC on Wednesday for meetings with his G20 counterparts discussing a range of global challenges including high inflation, interest rates, slowing economic growth, fragilities in some parts of the world’s banking sector and ongoing energy issues stemming from the war in Ukraine.

“Global conditions have become more complex and confronting than they were even a few months ago,” he said.

“Difficult and uncertain times like these demand more engagement with the world not less.

“Higher interest rates have exposed vulnerabilities in parts of the international banking system, adding to the already significant challenges of persistent inflation, slowing global growth and the ongoing impacts of the war in Ukraine.”

Treasurer Jim Chalmers will head to Washington ahead of May’s federal budget. Picture: Gary Ramage

Treasury Secretary Steven Kennedy and Reserve Bank Governor Philip Lowe will join Mr Chalmers, with the insights shared during the high-level economic meetings expected to inform the Albanese Government’s budget to be handed down on May 9.

“The Budget will be all about security in uncertain times,” Mr Chalmers said.

RBA Governor Philip Lowe will also travel to Washington DC. Picture: NCA NewsWire / Gary Ramage

“That means these key meetings and our upcoming Budget will be all about providing security for our people in uncertain times for the world.”

Mr Chalmers said there could not be a “more important time to take the temperature of the global economy” in order to “calibrate the settings” of the May budget.

“In this uncertain environment, our job is to strike the right balance between dealing with our immediate challenges, preparing for the future and safeguarding our economy against global risks,” he said.

“That’s why our focus is on delivering a responsible budget that provides targeted cost-of-living relief without adding to inflation, lays the foundations for future growth and builds our resilience to international shocks.”

A key component of the government’s budget will be the allocation of $1.5 billion in Commonwealth funding – to be matched dollar-for-dollar by states and territories – toward energy bill relief for lower income Australian households.

Treasurer Jim Chalmers says global economic challenges will impact the next federal budget. Picture: NCA NewsWire / Gary Ramage

Russia’s invasion of Ukraine significantly disrupted global energy supply chains, which in turn sent many nations spiralling into their highest levels of inflation in decades.

The International Monetary Fund warned on the weekend it had forecast the world’s economy would only grow by about three per cent over the next five years as higher interest rates bite.

“Recent tremors in global financial markets have increased uncertainty and downside risks, and the IMF is now forecasting the weakest five year period for global growth in more than three decades,” Mr Chalmers said.

IMF managing director Kristalina Georgieva said with rising geopolitical tensions and inflation still running high that a “robust recovery” for the worlds’ economies following the pandemic “remains elusive”.

“That harms the prospects of everyone, especially for the most vulnerable people and most vulnerable countries,” she said in a speech in Washington.